Fiduciaries of National Multi-employer Benefit Plan Ordered to Pay $4.7 Million

The Labor Department found that the defendants operated the plan for a fake union.

A federal judge has found the fiduciaries of a defunct national multi-employer benefit plan based in Cherry Hill, N.J., are liable for approximately $4.7 million in assets that were improperly diverted. According to a report from the U.S. Department of Labor, James Doyle and Cynthia Holloway, fiduciaries to the Professional Industrial Trade Workers Union Health and Welfare Fund, must make restitution to the plan, with interest, for violating the Employee Retirement Income Security Act.

The decision resolves a lawsuit filed by DOL in 2005 and subsequent legal proceedings stemming from an investigation conducted by the department's Employee Benefits Security Administration.

"Doyle used this benefit plan as the guise for an illegal moneymaking scheme that jeopardized the well-being of countless workers and their families. Holloway was in a position to put an end to the fraud, but failed to act," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "The department's persistence in pursuing this case through an appeal should send a message to those who think they can get away with conducting such an outlandish scheme."

The court determined that Doyle and others used the fake Professional Industrial Trade Workers Union as a front for a scheme to operate a purported, union-sponsored employee benefit plan. To obtain medical benefits from the plan, employers and workers across the United States were required to join the phony union and make payments. Rather than use the funds to pay out health care benefits and pay reasonable costs of administration, most of the payments were used to cover bogus expenses including "union dues." While Doyle diverted money that should have been used to pay benefits, Holloway failed to act as a prudent and loyal fiduciary by failing to put a stop to the scheme, according to DOL.

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