Businessman sued over alleged misuse of pension
DES MOINES – The U.S. Department of Labor said Tuesday it sued a Kentucky businessman claiming he and others took $4.9 million from the pension plans of a Fairfield foundry’s union workers and a related Michigan company to use for their own business interests violating a federal law that protects worker pension assets.
The lawsuit, filed in federal court in Lexington, Ky., claims George Hofmeister of Paris, Ky., and business associates used money from the pension plan for workers at Fairfield Castings for loans to other companies Hofmeister controls.
The government claims Hofmeister and others who were responsible for overseeing the pension plan “failed to act solely in the interest of the participants and beneficiaries…”
Fairfield Castings, formerly Dexter Foundry, makes thousands of iron parts for automotive, agriculture, railroad, and construction industry customers located in the United States, Canada, and Mexico.
Shortly after buying the company in 2010, Hofmeister and business partners used assets from the Fairfield workers’ pension fund to buy property in Fort Worth, Texas, and handing out millions of dollars in loans to several of Hofmeister’s other business entities.
The DOL also alleges that nearly $278,000 was paid in investment advisory fees from the Fairfield Castings plan from December 2010 through March 2013.
“Such fees were excessive and not commensurate with the services provided…” the lawsuit said.
Assets from a pension plan for workers of Fourslides Inc. of Madison Heights, Mich., also were used in inappropriate transactions, the DOL said. In one case $300,000 was taken out for a loan to another business entity and never repaid.
Court documents said that between 2006 and 2011 dividend checks from an annuity that should have been paid to the pension fund were deposited in corporate accounts for use by the company and in many cases deposited to the pension fund weeks or months later.
Hofmeister is the chairman of both companies which are owned by an irrevocable trust he set up for his three children.
The DOL seeks to have Hofmeister and others responsible for oversight of the pension plans to be removed from those responsibilities for committing “serious breaches of their fiduciary duties with respect to these plans by imprudently and disloyally using plan assets and by illegally transferring plan assets to parties in interest.”
The DOL asks the court to order the Hofmeister and others to repay the money to the plans and to prohibit Hofmeister and others from overseeing any other retirement plans.
“Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money being there for them when they retire,” said Phyllis C. Borzi, the assistant secretary of labor who heads the Employee Benefits Security Administration. “Our aim is to make this right for those workers.”