Seven men who oversaw Buffalo Color Corp.'s pension funds will repay $300,000 that was used to buy debt issued by the company's bankrupt parent, under a court settlement with the U.S. Labor Department.
The seven fund trustees used $458,000 from workers' pension funds to buy notes issued by parent company Lanesborough Corp. in December of 2000, the government's lawsuit said.
The purchase, coming about three months after Lanesborough filed bankruptcy, violated the trustees' duty to protect pensioners, according to the suit. The Lanesborough bonds became worthless and never paid interest.
In the settlement filed last week in U.S. District Court in Buffalo, the defendants neither admitted nor denied the allegations. They specifically denied committing crimes linked to the government's allegations, the settlement agreement states.
The pension fund trustees named in the lawsuit and participating in the settlement were: Kenneth Funsten, Armen Dekmejian, Lawrence Kaminski, Michael Lindaman, Frank Giumpa, Lawrence Zollinger and Frank Miller. The amount must be paid within 60 days, court papers said.
Funsten, chairman of Buffalo Color, operated a California fund called FamCo that invested in high-yield bonds. Dekmejian, the chairman of Lanesborough, worked for FamCo, the lawsuit said.
Attorneys for the two were unavailable on Monday.
A maker of indigo dye for blue jeans based on Lee Street, Buffalo Color filed for bankruptcy protection in 2002 and ceased production. The company, which had employed 100 workers, listed assets of $4.25 million and debts of $15 million.
The company's pension plans for hourly and salaried workers were taken over by the U.S. Pension Benefit Guarantee Corp. in October, 2004.
A total of 524 hourly and salaried workers are owed benefits from the two plans, the pension agency said. The plans had combined assets of $9.9 million when taken over -- $32.9 million short of the amount necessary to cover expected benefit payments.
The settlement "shouldn't have any effect on what (workers) are getting," agency spokesman Marc Hopkins said.
The pension agency guarantees monthly pension payments up to $3,664.77 for plans terminated in 2003. The average amount being paid to Buffalo Color retirees was unavailable.