Auto supplier misused $34.6 million in pension funds, U.S. alleges
DETROIT -- The U.S. Department of Labor earlier this month filed suit against Southfield-based Metavation LLC and its chairman and director, George Hofmeister, to restore $34.6 million to two pension funds.
The Labor Department, in an announcement Monday, said Hofmeister made prohibited loans from the pension funds to companies within his automotive supplier parent company, Revstone Industries LLC, with its operational headquarters in suburban Detroit. Revstone is also the parent to Metavation.
According to the suit, filed on Aug. 9, Hofmeister, on behalf of the plans, also used pension assets to buy and lease property; buy customer notes and pay adviser fees; and allocate income and expense payments between the pension funds. The suit alleges the defendants engaged in prohibited use of about $12.1 million from the Hillsdale Salaried Pension Plan and approximately $22.5 million from the Hillsdale Hourly Pension Plan.
As of November 2010, there were 367 people in the salaried plan and 1,161 in the hourly plan, according to a statement by the labor department.
The labor department is suing to have the misused funds, plus interest, returned to the pension funds and to have the defendants be removed as fiduciaries of the plans, it said in a statement.
"The Department of Labor is committed to protecting the assets of workers' pension plans from misuse by plan fiduciaries and service providers," Assistant Secretary of Labor for Employee Benefits Security Phyllis Borzi said in a news release Monday. "These workers are relying on their money being there for them when they retire. Our aim is to make this situation right."
Revstone denies any wrongdoing, the company said in a statement late Monday night.
"Revstone Industries fully supports its subsidiary Metavation in its denial of the allegations contained within the complaint filed by the Department of Labor," the statement said.
"We have always upheld our company's principles of operating with integrity, transparency and being a top quality employer of more than 3,000 employees. Metavation has fully cooperated with the Department of Labor and has provided access to all information and provided all documentation requested relating to the plans' assets."
Other defendants in the suit include Bernard Tew, the investment adviser to the funds and the managing director of Fayetteville, N.C.-based Tew Enterprises LLC and Louisville, Ky.-based Bluegrass Investment Management LLC; Metavation subsidiary Mids LLC; and the two pension funds.
The case is being litigated from the labor department's Chicago office and charges were filed in the U.S. District Court Eastern District of Kentucky.