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Bakery insurance fund target of investigation
Independent fiduciary sought to manage assets
Saturday, July 10, 2004

A multi-employer plan that provides death benefits to bakery workers in Pittsburgh is in shambles and the U.S. Labor Department has sued a local union, plan trustees and a plan employee whom the government alleges used benefit money for personal uses.

The lawsuit also asks the U.S. District Court for Western Pennsylvania to appoint an independent fiduciary to take control of the fund and to distribute benefits of the plan to its participants.

"Bills for the plan are not being paid, beneficiaries' claims are not being processed and checks made out to the plan are not being deposited. A group life insurance policy is in arrears and will be terminated if payment is not received by July 29," the lawsuit said.

The fund in question provides death benefits to members of the former Local 12 of the Bakery Confectionery, Tobacco Workers and Grain Millers union, which represented employees at the defunct Nabisco plant in East Liberty and other bakery and related firms.

Jean Machiz, deputy regional administrator of the Employee Benefit Security Administration in Philadelphia, said the plan had 265 participants as of October, 2002, and assets of $355,000.

Local 12 was merged into Cleveland-based Local 19 earlier this year after Bake-Line Corp., its largest employer and the most recent operator of the former Nabisco plant, closed and filed for Chapter 7 bankruptcy protection.

Local 19 was charged as a successor to Local 12. Its attorney, Richard Ross, said the Cleveland local knew nothing of the plan or its problems until the Labor Department began an investigation.

The lawsuit also names fund employee Marilyn Constable and four plan trustees from the Pittsburgh area who are accused of unlawfully abandoning the fund and failing to perform their duties.

The trustees include former Local 12 President Myron Rodzay, former Local 12 officer Agostino Corso and employer representatives Randy Cellone of Cellone Bakery Inc., and James Gallicic of Mallet & Co., a bakery industry supplier.

Rodzay said he served briefly as trustee and resigned from that post and the post of union president in 1999, the year Nabisco closed the plant. He said he knew nothing of unlawful dealings.

Corso, no longer involved in the union, said he did not believe he was ever a trustee of the fund. He said he had no control over the fund's business activities and had no supervisory influence over Constable.

The others named by the government as trustees did not return telephone messages seeking comment.

"It looks like they're suing everybody within 10 miles of the dead body," said Rodzay's attorney, Jason Mettley.

Constable, daughter of retired Local 12 President Sam Papa and an employee of the plan since 1986, is accused of unlawfully assuming custody of the plan's assets without direction from the trustees and beginning in 1999 of withdrawing money from plan accounts for personal use. Calls to her home yesterday went unanswered.

The lawsuit gave no financial details of the plan or the alleged misuse of monies. Rita Ford, a spokeswoman for the Labor Department in Washington, said an investigation was continuing.

The government asked the court to appoint David Lipkin, president of Pittsburgh-based Metro Benefits, as the fund's independent fiduciary, replacing the trustees who allegedly abandoned it.

First published on July 10, 2004 at 12:00 am
Jim McKay can be reached at jmckay@post-gazette.com or at 412-263-1322.