Press Release

Federal Court Orders Kentucky Bankers Association to Pay $1,561,818 In Losses to Benefits Plan After U.S. Department of Labor Finds Violations

Issued by Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Oct. 15, 2020

LOUISVILLE, KY – After an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the U.S. District Court for the Western District of Kentucky entered a consent order and judgment against the Kentucky Bankers Association (KBA), Participating Employer Committee (PEC), Association Healthcare Consortium Inc., and the current and former trustees of the Kentucky Bankers Association Health and Welfare Benefit Program and the KBA Benefits Trust holding them jointly and severally liable to pay $1,561,818 in losses to the Trust. The current and former trustees include Ballard W. Cassady Jr., W. Fred Brashear II, Neil S. Bryan, Burt Bellamy and Jack W. Strother Jr.

The order permanently enjoins and restrains the defendants from violating provisions of Title I of the Employee Retirement Income Security Act (ERISA) and the Department also assessed the defendants a penalty of $312,363.

EBSA’s investigation found the defendants violated ERISA when they authorized KBA and its for-profit wholly owned affiliate, KenBanc Insurance Inc. (KBI), to receive impermissible insurance commissions, fees for administrative tasks, and reimbursements from the Trust’s assets for employee salaries and office space lease payments from Feb. 4, 2011, through Sept. 22, 2017. 

During this period, multiple defendants simultaneously served as trustees of the trust and directors and officers of the KBA or KBI. EBSA found the defendants failed to ensure KBA and KBI did not receive more than their permissible direct expenses for services performed for the Trust. As a result, the defendants caused $1,489,231 in losses to the trust in addition to $72,587 in lost potential earnings.

“This settlement restores money to those plan participants and employers who were harmed by the violations," said EBSA Regional Director L. Joe Rivers in Cincinnati, Ohio. “Plan trustees must work solely in the interest of plans and participants.”

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