Rocky Mountain News
Union pension fund official calls lawsuit 'irresponsible'
By John Accola, News Staff Writer
April 24, 2001
The chairman of a Denver-based union pension fund facing investment losses of more than $20 million has denounced a negligence lawsuit against the plan's trustees as frivolous litigation that will only further drain the fund's assets.
In an April 19 letter to the "sisters and brothers" of the Sheet Metal Workers' Local Union No. 9 Pension Trust, Dwayne Stephens accused plaintiff attorneys of "irresponsible conduct" for stating that the $100 million pension plan is in financial jeopardy.
Stephens, who heads the six-member pension trust board, said the retirement plan remains "fully funded and fully capable of paying current and future benefits."
A class action suit filed last week by two Colorado retirees in Denver federal court alleges otherwise. Attorneys for plaintiffs Norbert Piet and Samual Duran charge that as much as a quarter of the pension plan's assets may have disappeared in the September collapse of the Portland money management firm, Capital Consultants LLC.
Stephens, who also serves as business manager of Local 9, has declined to provide an estimate of the fund's losses. But according to U.S. Labor Department records two years ago, the sheet metal pension fund had more than $30 million invested with Capital Consultants, which is now in receivership.
In his letter, Stephens said the pension board intends to mount a "vigorous defense" to the lawsuit, which alleges that some trustees ignored basic federal laws requiring "prudent" oversight of union trust plans.
The lawsuit also alleges that some trustees were influenced to retain Capital Consultants by "gifts" they received from the firm.
The Rocky Mountain News reported April 14 that three of the eight trustees named as defendants in the suit participated in a Capital Consultants fishing junket to Sitka, Alaska.
Stephens said the pension board had fired Segal Advisors, a national investment consulting firm, for "repeatedly telling us that the investments in Capital Consultants were safe.
"The plaintiffs have hired four separate and distinct law firms to sue us," Stephens wrote. "It is a travesty that so much money will now be spent on lawyers when we should be spending that money to try to get back such assets as we can."
Even if the pension fund was unable to meet monthly payments, Stephens said retirees would still be protected by the government's Pension Benefit Guarantee Corp., which insures traditional union pension plans known as Taft Hartley funds.
Plaintiff attorney Daniel Feinberg characterized Stephens' letter as "propaganda" designed to deflect pointed questions from rank-and-file members about the real status of their retirement benefits.
"If it is necessary for the Pension Benefit Guarantee Corp. to step in and take over this plan, there are a lot of things this agency doesn't cover," Feinberg said.