DETROIT -- A federal jury already has decided former Detroit Tiger Denny McLain and two associates, Roger Smigiel and Jeffrey Egan, looted $3 million from the Peet Packing Co. pension fund.
They're also being sued in federal court by the defunct Chesaning meat packers' pension fund board, which is seeking to reclaim the money. But because the three men are serving prison terms for pension fraud, they're unlikely to repay much.
Thus the jockeying continues between the two deepest pockets on the Peet civil suit's list of other defendants: Michigan National Bank, Farmington Hills; and First of America Bank, Kalamazoo.
The latest move came Jan. 14, when Michigan National filed a cross-complaint against First of America in Peet's civil suit. (In federal court, a cross-complaint is a lawsuit by one defendant against another.)
Each bank had been the holder of the plan's $12.5 million in assets at some point during 1994. First of America was terminated as the pension fund's trustee in February 1994 by Messrs. McLain and Smigiel, who had purchased Peet Packing on Jan. 20, 1994. Messrs. McLain and Smigiel subsequently hired Michigan National to be custodian of the plan's assets; they appointed themselves trustees of the fund.
Michigan National's lawsuit contends First of America "knew or, in the exercise of prudence, should have known" that "McLain and Smigiel did not qualify as successor trustees and should not have control of plan assets ceded to them."
Pension fund documents stated that only a bank or trust company, and not an individual, could be a pension trustee. And Mr. McLain was, at any rate, ineligible to serve under federal pension law because of earlier felony convictions for racketeering and cocaine trafficking.
Messrs. McLain and Smigiel eventually ordered Michigan National to wire $3.06 million of pension fund assets to a company they controlled. The money was later spent on motorcycles, condominiums and investments in other companies they controlled.
Michigan National's cross-complaint came nine days after U.S. District Judge John O'Meara denied its motion to be dismissed from the case.
Michigan National had argued that as custodian, without investment responsibility, it should not be responsible for the theft. But Judge O'Meara ruled Jan. 5 that the bank met the legal requirements for fiduciary duty to the pension fund and that the complaint should not be dismissed.
Last March, the Peet Packing pension fund board sued both banks; Messrs. McLain, Smigiel and Egan; and a number of companies they controlled. The suit argues Messrs. McLain and Smigiel should not have been given the money by either bank.
In the cross-complaint, Michigan National accuses First of America of breach of fiduciary duty and of violations of federal pension and banking law in releasing the money from its trust accounts and sending it to Michigan National as custodian.
Michigan National attorney David Vigna declined to comment.
First of America attorney John Allen, a partner at Howard & Howard of Kalamazoo, said: "First of America has no liability to Michigan National. First of America followed reasonable and lawful directions of the plan and its attorneys and fiduciaries and properly delivered all of the funds to Michigan National."
First of America had filed a similar cross-complaint against Michigan National early in the case.