Press Release

Federal Court Orders United Employee Benefit Fund's Former Attorney and Law Firm to Pay $883k in Restitution to the Fund, $176k in Penalties

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

May 7, 2024

Partial settlement latest step in holding fiduciaries accountable for more than $2.8M in losses

CHICAGO –The U.S. Department of Labor has obtained a federal consent order and judgment requiring three service providers of the United Employee Benefit Fund a Chicago-based multiple employer welfare arrangement, to restore $883,333 to the fund and pay $176,666 in penalties for violations of the Employee Retirement Income Security Act.

On May 1, 2024, Judge Nancy L. Maldonado in the Northern District of Illinois, Eastern Division issued the order and judgment that partially settles a lawsuit filed by the department. The lawsuit alleged that attorney L. Steven Platt, the law firm of Robbins, Salomon & Patt, Robbins DiMonte Ltd. and other individuals violated ERISA when they misused more than $2.8 million in fund assets and mismanaged the fund to near depletion. 

In February 2022, following an investigation by the department’s Employee Benefits Security Administration, the department filed a complaint alleging that the fund’s fiduciaries and Platt committed multiple ERISA violations from 2015-2018, including transferring more than $1.6 million in fund assets to pay personal expenses to third parties, paying $895,000 in unreasonable compensation to service providers, and making $265,000 in improper loans to related parties. 

The complaint also alleged violations by former fund trustees Gary Meyers and John Fernandez, former administrator David Fensler, and former trustee and service provider Herbert McDowell and his company, United Preferred Companies Ltd. The department’s litigation against these parties is ongoing. 

“This partial settlement agreement restores more than $880,000 to the United Employee Benefit Fund and is the latest step in the Department of Labor’s ongoing effort to hold the fund’s fiduciaries and others liable for their alleged misuse of more than $2.8 million in assets,” said Regional Solicitor Christine Heri in Chicago. “The department will take all necessary legal action to protect the assets of employee benefit plans and to hold fiduciaries responsible for failing to discharge their legal duties to protect these assets.” 

The UEBF previously provided death benefits to approximately 60 individual employer-sponsored benefit plans. Along with the restitution of losses and penalties, the order bars Platt — the fund’s former attorney — from serving as a fiduciary, trustee, administrator or service provider to any ERISA-covered plan in the future.

In August 2023, the judge issued a preliminary injunction to protect the UEBF’s remaining assets and appointed an independent fiduciary, Receivership Management Inc., to oversee the fund and manage its remaining assets. On April 23, 2024, Receivership Management Inc. filed a proposed termination and plan of liquidation for the fund

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“The alleged actions of the United Employee Benefit Fund fiduciaries violated the Employee Retirement Income Security Act and caused losses to the fund assets that may have affected its ability to pay benefits to the fund’s participants nationwide,” said Employee Benefits Security Administration Regional Director Ruben R. Chapa in Chicago. 

This is the second partial settlement in this matter. On Dec. 19, 2023, a federal consent order and judgment required David Schwalb, an attorney who knowingly participated in prohibited transactions, to restore $136,364 to the fund. Previously, Schwalb restored more than $1.4 million to the fund before the department’s litigation. Schwalb was also barred from future service as a fiduciary, trustee, administrator or service provider to the fund.

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