The Labor Department sued the trustees of Sheet Metal Workers Local 33 pension fund, Cleveland, for imprudently placing assets in risky investments with Capital Consultants.
Between 1998 and 2000, the trustees permitted $5.8 million of plan assets to be used by Capital Consultants to make loans, in violation of the plan's investment guidelines. They also allegedly allowed the plan to invest more than 10% of its assets managed by Capital Consultants with a single borrower, Wilshire Credit Corp., in violation of the plan's investment agreement with Capital Consultants.
The Labor Department's lawsuit, filed in U.S. District Court in Cleveland, seeks to require that the defendants — Alan Chernak, Ken Castro, Donald Skala Jr., Richard Rohaley and Robert Finley — restore the money lost by the plan and forfeit any benefits owed them by the plan. The lawsuit also seeks to institute new procedures and controls over the plan's investments.
The system had $95.9 million in assets on April 30, 2003, the latest information listed by the Labor Department.