Feds: Restore $34M to supplier’s pensions

August 21, 2012
Feds: Restore $34M to supplier’s pensions
Labor Dept. suit says investment advisers misused funds
By DAVID SHEPARDSON / Detroit News Washington Bureau
Washington — The U.S. Labor Department filed suit Monday to restore more than $34 million in assets to two retirement funds of a Michigan-based vehicle parts manufacturer.

The administration said Metavation LLC improperly used the funds in violation of the Employee Retirement Income Security Act.

The department named in its lawsuit George Hofmeister, chairman and director of Metavation; and Bernard Tew, managing director of Tew Enterprises LLC and Bluegrass Investment Management LLC.

The two companies acted as investment advisers to the two plans. The suit also names Metavation LLC, a subsidiary of Revstone Industries LLC.

“Retirees who rely on pension plans should not have to worry about whether these funds are secure,” said Labor Secretary Hilda Solis in a statement. “That is why those who are entrusted with managing pension funds are held to the highest legal standards and will be held accountable by the Labor Department if they violate that trust.”

In 2008, privately held EaglePicher Corporation sold Inkster-based Hillsdale Automotive to Cerion, which renamed the company Metavation, and took control of the pension plans. Bloomberg News reported the company has plants in Hillsdale, Mount Pleasant, Vassar and Traverse City, as well as in Luis Potosi, Mexico. Today Metavation’s parent company, Revstone, is headquartered in Southfield and in Lexington, Ky.

The suit, filed in the U.S. District Court in Kentucky, follows a government investigation that found numerous violations beginning in February 2009, just three months after Hillsdale was acquired.

The Labor Department said the firms loaned funds to related companies within the Revstone Industries corporate family and made other improper transactions.

The department said about $12.1 million from the Hillsdale Salaried Pension Plan and approximately $22.5 million from the Hillsdale Hourly Pension Plan were improperly used.

Together, the plans report having assets valued at approximately $36 million, covering about 1,500 people.

The department’s suit seeks an order forcing the firms to correct all prohibited transactions, restore losses to the pension plans — with interest — and transfer to the plans all gains resulting from their violations.

The suit also asks the court to remove the defendants as responsible for the plans and prohibit them from serving as fiduciaries or service providers in the future. The government wants an independent fiduciary to administer the plans.

Revstone Industries LLC designs, engineers and manufactures components for use in the transportation and heavy truck industries, the Labor Department said.

Revstone Industries wholly owns Cerion LLC, which wholly owns Metavation LLC. George Hofmeister also is the chairman of Revstone Industries.

A Revstone spokeswoman didn’t immediately return a message seeking comment.

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