A U.S. District Court in Dallas has frozen the assets of the Association of Trust and Guaranty, Arlington, Texas, its employee benefit plans and their operators after more than $1 million intended to provide health and workers' compensation benefits allegedly was siphoned off by ATG and its president, according to the Pension and Welfare Benefits Administration, Washington.
The temporary restraining order obtained by the Department of Labor also appointed an independent manager to oversee the association and its plans.
According to the PWBA, ATG "purportedly" marketed health and workers' compensation benefit programs through sham labor unions it created. The PWBA said each union has sponsored a plan that covers participants in 20 states. ATG, operating under a number of business names, collected both union dues and plan contributions from participating employers.
Named as defendants in the lawsuit are Lawrence Kenemore, president of ATG; his wife, Sherry; and ATG and plan trustees Chris Kellum, David Murphree, Pat Postle and Tim Congle.
Mr. Kenemore directed the formation of the unions, according to the PWBA. He allegedly used the sham unions to market the benefit programs to workers but siphoned the money for himself and ATG.
Trustees were charged with allowing Mr. Kenemore and ATG to manage plan money without any substantial oversight over plan assets, agreeing to let ATG make loans from employer contributions and permitting the association to retain 20% of contributions as compensation for minimal service allegedly provided to the plans.
The complaint seeks reimbursement to the plans for any losses resulting from the trustees' deeds and the removal of the defendants from their positions with the plans, as well as barring them from further activity on ERISA-governed plans.
It also asks for an independent manager to liquidate the plans and pay benefit claims.
