Employee Benefits

Washington, DC: (Apr-28-08) The US Labor Department brought charges against Ullico Inc. which sparked off an investigation into the company's employee benefit plan. The complaint stated that the company self-dealt with the employee benefit plan, which resulted in the union-owned insurance holding company suffering huge losses. Ullico was first cited in March 2002, when the Labor Department filed suit against subsidiaries Trust Fund Advisors and Union Labor Life Insurance Co., claiming that the units violated ERISA when they used $10 million in pension-plan assets to buy 120 acres in the desert outside North Las Vegas in 1995. Records show that two years later, the development was scrapped with no lots sold.

Sources close to the case stated that the two sides reached a settlement in which, Ullico agreed to pay $20 million to the Labor Department to resolve allegations. Under the Labor Department deal, subsidiary Union Labor Life Insurance Co. paid $16.7 million in compensation to plans that participated in the company's Separate Account, which officials said invests in secured mortgages on commercial and residential projects constructed by unions affiliated with the Building and Construction Trade Department of the AFL-CIO. The deal also required Ullico pay $3.3 million in taxes and ERISA penalties and implement a simplified J for Jobs fee structure. [TMC NET: LABOR DEPARTMENT SETTLEMENT LEADS TO ULLICO POSTING FULL-YEAR LOSS]

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Published on Apr-30-08