Investigation returns $39.8M to more than 400 benefit plans nationwide

News Release
EBSA News Release: [02/18/2015]
Contact Name: Joanna Hawkins
Phone Number: (215) 861-5101
Email: Hawkins.Joanna@dol.gov
Release Number: 15-0246-PHI

Investigation returns $39.8M to more than 400 benefit plans nationwide

Judge orders restitution and bars defendants as fiduciaries, service providers to ERISA-covered plans

BRIDGEPORT, Pa. — After nearly six years of litigation, a federal district court in Philadelphia recently entered a $39.8 million judgment, protecting the rights of workers who participated in more than 400 death benefit plans mismanaged by John J. Koresko V; companies he controlled; and a former associate, Jeanne Bonney. The defendants are permanently barred from serving as fiduciaries to any employee benefit plan and, with the exception of Bonney, must make restitution to the plans.

The decision follows a 2009 lawsuit filed by the U.S. Department of Labor. The judge ruled that Koresko of Bridgeport, Pennsylvania, and other defendants diverted tens of millions of dollars in plan assets through more than 21 accounts using more than 18 different entities at more than eight different banks. Spanning more than 12 years, the scheme saw assets from the plans' trusts, used for real estate purchases in South Carolina and the Caribbean island of Nevis, to pay outside attorneys, lobbying expenses, operational expenses of Penn-Mont Benefit Services, Inc., and Koresko's law firms, and for Koresko's personal expenses, such as boat rentals and utilities. The misuses of assets violate the Employee Retirement Income Security Act.

"The defendants completely disregarded the duty of loyalty they owed to the employee benefit plans and the workers who rely on them," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "In an ideal world, this does not happen. When it does, there is justice in undoing this massive fraud, and in banning the defendants from coming anywhere near employee benefits again."

The plans primarily provided death benefits to participants nationwide and were established in connection with Koresko's Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association and Single Employer Welfare Benefit Plan.