ELECTRICAL WORKERS (IBEW)
Judge Allows DOL's McAuliffe Suit to Proceed
U.S. Dist. Judge Alexander Williams, Jr., (D. Md., Clinton) allowed
the Dep't of Labor to proceed with its suit June 15 alleging that trustees
of the Nat'l Elec. Benefit Fund, which
is linked to the Int'l Bhd. of Elec. Workers, breached their ERISA fiduciary
duties by investing in Am. Capitol Group I Assets LP, a Fla. real estate
firm, tied to Democratic Nat'l Committee chairman Terence
R. McAuliffe and his wife. In 1999, DOL sued trustees Jack Moore and
John Grau alleging imprudent real estate deals.
Williams denied the defendants' motion for summary judgment rejecting their argument that they didn't breach their duties because the deals had beneficiary results. Williams said, while "[m]uch of the Defendants' brief is devoted to heralding the beneficial results", this is not the correct legal standard. "Moreover," Williams added, "it is unclear what was the basis for Moore's belief that [Am. Capitol] was 'doing well.'" He found that genuine issues of material fact exist as to whether NEBF's investment in Am. Capitol was a prudent investment. He noted that NEBF had not obtained an independent appraisal of the fair market value of Am. Capitol. He also found that genuine issues of material fact existed on whether NEBF had suffered losses as a result of the Am. Capitol investment.
The case is currently scheduled to go trial Oct. 30, 2001. DOL was represented by Joan M. Roller, Myrna A. Butkovitz, and Richard T. Buchanan. Moore and Grau were represented by James M. Kefauver of Shulman, Rogers, Gandal, Pordy & Ecker, Rockville, Md. [BNA 7/12/01; Chao v. Moore, No. AW99-1283 (D. Md. 6/15/01)]
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