After nearly six years of litigation, a federal district court in Philadelphia recently entered a $39.8 million judgment, protecting the rights of workers who participated in more than 400 death benefit plans mismanaged by John J. Koresko V; companies he controlled; and a former associate, Jeanne Bonney. The defendants are permanently barred from serving as fiduciaries to any employee benefit plan and, with the exception of Bonney, must make restitution to the plans. 

The decision follows a 2009 lawsuit filed by the U.S. Department of Labor. The judge ruled that Koresko of Bridgeport, Pennsylvania, and other defendants diverted tens of millions of dollars in plan assets through more than 21 accounts using more than 18 different entities at more than eight different banks. Spanning more than 12 years, the scheme saw assets from the plans' trusts, used for real estate purchases in South Carolina and the Caribbean island of Nevis, to pay outside attorneys, lobbying expenses, operational expenses of Penn-Mont Benefit Services, Inc., and Koresko's law firms, and for Koresko's personal expenses, such as boat rentals and utilities. The misuses of assets violate the Employee Retirement Income Security Act.

The plans primarily provided death benefits to participants nationwide and were established in connection with Koresko's Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association and Single Employer Welfare Benefit Plan. 

The court found that Koresko and the following defendants transferred plan assets out of the plans' trusts, in violation of ERISA:

• Penn-Mont Benefit Services, Inc., of Bridgeport, which is owned by Koresko; 
• Koresko's current and former law firms; 
• Jeanne Bonney, an attorney formerly associated with the law firms; and 
• Penn Public Trust, a company controlled by Koresko.

Nearly $20 million of the amount due to the plans is frozen in accounts under the control of an independent fiduciary, after a July 2013 court order. Announced on Feb. 6, the decision found the defendants, with the exception of Bonney, liable for $19,852,114 in restitution for losses and disgorgement of profits, which represents the remaining balance of the total diverted assets.