In March 2015, a lawsuit (Kalan et al. v. Farmers and Merchants Trust Company of Chambersburg, et al. (Case No. 2:15-CV-01435-WB)) was filed against F&M Trust, the banking subsidiary of Franklin Financial Services Corporation, as successor in interest to Community Trust Company, and several other Defendants in the United States District Court for the Eastern District of Pennsylvania. This lawsuit was brought as a class action. The named putative class representatives are participants, fiduciaries, or owner/employees of employee health and welfare benefit plans or sponsoring employers of such plans, whose assets are held by trusts known as the Regional Employers Assurance League Voluntary Employees’ Beneficiary Association (“REAL VEBA”) and the Single Employer Welfare Benefit Plan (“SEWBP”). The putative class includes all participants and beneficiaries of benefit plans, and the benefit plans themselves, whose assets are held by the REAL VEBA and the SEWBP trusts. The Defendants are fiduciaries, co-fiduciaries, or recipients of commissions or other monies from the REAL VEBA and SEWBP trusts. F&M Trust, as successor to Community Trust Company, which F&M Trust acquired by merger in November, 2008, and in its own capacity, is alleged to have served as the trustee of the REAL VEBA and SEWBP trusts from 2002 until January 15, 2010, when F&M Trust was discharged from its role as trustee pursuant to the court’s order in the case of Perez v. John J. Koresko, IV. et. al., Case No. 2:09-cv-00988, in the United States District Court for the Eastern District of Pennsylvania (the “Perez Action”).
Plaintiffs allege that between 2004 and the end of 2013, John Koresko and affiliated individuals in the course of operating multiple-employer welfare arrangements known as REAL VEBA and SEWBP, converted and misused assets of the trusts in an amount in excess of $35 million, as set forth more fully in the Perez Action. The Court, however, entered judgment against the Koresko defendants in the Perez Action in the amount of approximately $19 million, the shortfall in trust assets as found by the Court. Plaintiffs allege that the Defendants are either co-fiduciaries who failed to take appropriate steps to prevent the conversions, co-fiduciaries or parties-in-interest who improperly benefited from transactions involving the trusts, recipients of the improperly spent funds, or parties who otherwise knowingly participated in such breaches. As to F&M Trust, Plaintiffs allege that the F&M Trust failed to perform its fiduciary duties in accordance with the prudent man standard of care, knowingly participated in and facilitated misconduct by its co-fiduciaries, and failed to take reasonable steps to prevent or remedy any fiduciary breaches of co-fiduciaries. Plaintiffs purport to state claims against F&M Trust under the Employee Retirement Income Security Act (ERISA) and common law.
In March 2015, a lawsuit (Kalan et al. v. Farmers and Merchants Trust Company of Chambersburg, et al. (Case No. 2:15-CV-01435-WB)) was filed against F&M Trust, the banking subsidiary of Franklin Financial Services Corporation, as successor in interest to Community Trust Company, and several other Defendants in the United States District Court for the Eastern District of Pennsylvania. This lawsuit was brought as a class action. The named putative class representatives are participants, fiduciaries, or owner/employees of employee health and welfare benefit plans or sponsoring employers of such plans, whose assets are held by trusts known as the Regional Employers Assurance League Voluntary Employees’ Beneficiary Association (“REAL VEBA”) and the Single Employer Welfare Benefit Plan (“SEWBP”). The putative class includes all participants and beneficiaries of benefit plans, and the benefit plans themselves, whose assets are held by the REAL VEBA and the SEWBP trusts. The Defendants are fiduciaries, co-fiduciaries, or recipients of commissions or other monies from the REAL VEBA and SEWBP trusts. F&M Trust, as successor to Community Trust Company, which F&M Trust acquired by merger in November, 2008, and in its own capacity, is alleged to have served as the trustee of the REAL VEBA and SEWBP trusts from 2002 until January 15, 2010, when F&M Trust was discharged from its role as trustee pursuant to the court’s order in the case of Perez v. John J. Koresko, IV. et. al., Case No. 2:09-cv-00988, in the United States District Court for the Eastern District of Pennsylvania (the “Perez Action”).
ReplyDeletePlaintiffs allege that between 2004 and the end of 2013, John Koresko and affiliated individuals in the course of operating multiple-employer welfare arrangements known as REAL VEBA and SEWBP, converted and misused assets of the trusts in an amount in excess of $35 million, as set forth more fully in the Perez Action. The Court, however, entered judgment against the Koresko defendants in the Perez Action in the amount of approximately $19 million, the shortfall in trust assets as found by the Court. Plaintiffs allege that the Defendants are either co-fiduciaries who failed to take appropriate steps to prevent the conversions, co-fiduciaries or parties-in-interest who improperly benefited from transactions involving the trusts, recipients of the improperly spent funds, or parties who otherwise knowingly participated in such breaches. As to F&M Trust, Plaintiffs allege that the F&M Trust failed to perform its fiduciary duties in accordance with the prudent man standard of care, knowingly participated in and facilitated misconduct by its co-fiduciaries, and failed to take reasonable steps to prevent or remedy any fiduciary breaches of co-fiduciaries. Plaintiffs purport to state claims against F&M Trust under the Employee Retirement Income Security Act (ERISA) and common law.
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