DOL Sues Pennsylvania Benefit Firms, Lawyers for Alleged Abuses
The Department of Labor has sued Penn-Mont Benefit Services Inc. of Bridgeport; its owner, John Koresko V; Koresko's law firms; and an attorney for the firms over alleged improper administration of death benefit plans marketed nationwide. The defendants allegedly underpaid benefits to participants, improperly withdrew more than $1 million in plan assets from the plans' trust, and illegally used assets to pay unreasonable and unnecessary lobbying expenses (Solis v. Koresko, Civil Action Number 2:09-cv-00988).
The defendants allegedly violated the Employee Retirement Income Security Act (ERISA) regarding more than 100 welfare benefit plans that participated in the Master Trust for the Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association (REAL VEBA), and the Master Trust for the Single Employer Welfare Benefit Plan (SEP).
Among others, the suit names Jeanne Bonney, an attorney with the law firms, Penn Public Trust, a company related to Koresko, and the plans' trustee, Community Trust Co. of Camp Hill, Pa. At the time of the alleged improper actions, Penn-Mont was the plans' administrator. The plans were sponsored by employers throughout the United States and offered death benefits or other welfare benefits to employees.
An investigation conducted by the Labor Department's Employee Benefits Security Administration (EBSA) determined that Penn-Mont failed to properly pay full death benefits to the families of deceased participants and unlawfully withdrew from the trusts more than $1 million, which was subsequently deposited in bank accounts belonging to Penn-Mont, the law firms and Penn Public Trust. In addition, plan assets were used to pay for unreasonable and unnecessary lobbying activities.
Filed in the U.S. District Court for the Eastern District of Pennsylvania, the suit seeks full restitution and accounting of the plan assets by a special master appointed by the court. The suit also asks that the defendants be removed as fiduciaries and service providers, and replaced by new fiduciaries for the plans.