On April 11, 2018, U.S. District Judge Wendy Beetlestone was asked to grant the preliminary approval of a $10 million settlement in a putative class action ERISA suit against Farmers & Merchants Trust Company of Chambersburg (“F&M”) in which more than 200 employees of the company allegedly paid into more than 500 employee benefits plans, and had millions of their dollars from their retirement funds diverted by a former attorney, John Koresko (“Koresko”).
The settlement would resolve allegations that F&M breached its fiduciary duty under ERISA by allowing Koresko to divert $38.4 million of plan assets to his personal accounts, which money was allegedly spent “on boat rentals, property purchases in South Carolina and the Caribbean, and lobbying expenses, among other things.”
According to the complaint, F&M, now known as Community Trust Co., oversaw the two trusts that Koresko established to allegedly steal nearly $40 million from plan participants for over a decade. Koresko set up the trusts through now-defunct companies in order to market life insurance policies to various employee-benefits plans, the complaint alleged. After more than 500 plans purchased the policies, Koresko allegedly placed the plan assets into the trusts.
Court documents detailed how Koresko transferred the interest from the trusts into more than 20 accounts he controlled, then allegedly used a portion of the money to make unauthorized loans that damaged the financial health of the life-insurance policies.
As the trusts’ administrator, F&M should have stopped this behavior, the plaintiffs said in the 2015 lawsuit against the company.
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Bran, Emily. “Workers Reach $10M Deal in ERISA Suit Over Pension Ripoff.” Law360. Last Modified on April 12, 2018.