The Department of Labor is suing a Michigan vehicle parts manufacturer Metavation and its investment adviser to recover $34 million in defined benefit plan assets that the agency claims were misused.
The suit, filed Aug. 9 in U.S. District Court in Lexington, Ky., alleges numerous ERISA violations in the managing of Metavation's two plans, Hillsdale Salaried Pension Plan and Hillsdale Hourly Pension Plan, Lexington, Ky., which have combined assets of $36 million.
Defendants in the suit are Metavation Chairman George Hofmeister and investment adviser Bernard Tew, who is managing director of Tew Enterprises and Bluegrass Investment Management.
Metavation, which is also named in the lawsuit, is a subsidiary of Revstone Industries. Revstone spokeswoman Myra Moreland declined to comment on the case pending legal review.
The Labor Department's Employee Benefits Security Administration began investigating issues with the two defined pension plans in February 2009, after Hillsdale Automotive was acquired by Revstone subsidiary Cerion and the named was changed to Metavation.
The alleged violations include prohibited loans to Revstone-related companies from the pension plans, prohibited use of plan assets, prohibited purchase of customer notes from Revstone companies, prohibited investments, excessive fees paid to service providers, and improper payments between the pension plans. The suit alleges that the prohibited transactions involved $12.1 million from the salaried plan and $22.5 million from the hourly plan.
In addition to restoring losses to the plans, plus interest, the lawsuit is seeking to remove the fiduciaries and bar them as ERISA service providers.
In a statement, Revstone denied the EBSA allegations, saying that the plans’ investment strategy “has been executed in the best interests of both the plan and its participants,” and that it fully supports its investment advisers. The company acknowledged some deficient transactions representing less than 10% of plan assets, which it reported to EBSA.