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Counsel to the Independent Fiduciary

July 2009
Arthur Holtzman


Pedersen & Houpt recently represented an Independent Fiduciary appointed by a federal judge to administer plan assets held in a judicially imposed constructive trust.  The Independent Fiduciary was also charged with identifying expenses improperly paid by two qualified plans and in violation of the Employee Retirement Income Security ACT ("ERISA").  The United States District Court removed the president and sole shareholder of a company from his position as trustee over two employee benefit plans.  The Court ordered the Independent Fiduciary to carry out its fiduciary duties in accordance with the requirements of ERISA and in the best interests of the plans' participants.

The Secretary of Labor and the company and its former trustee were also parties to the litigation.  Each was also represented by counsel.  In addition to Pedersen & Houpt, the Independent Fiduciary also retained forensic accountants and appraisers, among others, to assist it.  The Independent Fiduciary was able to sell the primary asset of the plans at a much higher value than had been negotiated by the former trustee.  In addition, the Independent Fiduciary along with its counsel and accountants conducted an investigation of the plans to determine whether the former trustee's previous withdrawals from the plans were all proper.

Prior to the Independent Fiduciary's involvement, the two plans had been terminated, the assets ostensibly distributed and fund annual reports filed.  Pedersen & Houpt attorneys worked with the Independent Fiduciary and outside accountants on ERISA, income tax, and other legal issues relating to the recovery and distribution of the recovered assets to the participants.  Documents were analyzed and legal analyses were performed.  Reports and recommendations were presented to the Court.  A reallocation process and procedure for making and calculating restorative payments to former participants were prepared and presented to the Court.

Ultimately, the Independent Fiduciary through Pedersen & Houpt recommended that the company and the former trustee repay and restore certain funds to the plans.  The Independent Fiduciary also made a recommendation as to the tax treatment these restored funds should receive.  The Court agreed with these recommendations.

Pedersen & Houpt was well suited to work on this matter and assist the Independent Fiduciary.  Arthur Holtzman is a former senior trial attorney with a federal government agency who has conducted internal investigations of companies, sued and defended fiduciaries, and led a number of trials and appeals.

This communication is provided as a general informational service to clients and friends of Pedersen & Houpt. It should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. This material may be considered Attorney Advertising in some states. Please note that any prior results discussed in this material do not guarantee similar outcomes.

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