John Orecchio, former president of private equity firm Investment firm AA Capital Partners, was ordered by a federal court to return to five Michigan pension funds $50 million of the funds’ assets he misused for himself and his firm, according to a Department of Labor news release.
The ruling, in U.S. District Court in Chicago, also bars Mr. Orecchio from serving as a fiduciary or service provider to ERISA plans.
The pension plans that suffered losses are the Carpenters Pension Trust Fund of Detroit and Vicinity, Operating Engineers Local No. 324 Pension Fund, Michigan Regional Council of Carpenters Annuity Fund, Millwrights’ Local No. 1102 Supplemental Pension Fund and Michigan Teamsters Joint Council #43 Pension Fund.
The Department of Labor sued AA Capital Partners on April 10, claiming that Mr. Orecchio, AA Capital CFO Mary Elizabeth Stevens and affiliate AA Capital Liquidity Management misused plan assets and charged excessive investment fees. An amended complaint, filed in July, also claimed AA Capital Partners imprudently invested plan assets in Xyience, a manufacturer of food, vitamins and beverages.
From 2002 to 2006, according to the news release, the defendants used $25.9 million in plan assets to pay the firm’s operating expenses and renovation of a horse farm and strip club owned by Mr. Orecchio.
“Fiduciaries have a legal obligation to ensure plan assets are used only to pay benefits and reasonable expenses of a plan. Those who violate that trust will be held accountable for their actions,” Secretary of Labor Hilda L. Solis said in the news release.
Mr. Orecchio and AA Capital officials could not be reached by press time.