WORKPLACE : Former Employees Win Settlement in Pension Fund Suit

Eighteen employees of the defunct Adams Insulation Co. of Santa Ana have received $427,366 in a settlement of a lawsuit alleging that owners of the company illegally used its employee pension fund to their personal advantage.

The U.S. Department of Labor announced last week that it had settled its lawsuit against Rodney and Judith Adams.

The complaint, filed Dec. 4, 1986, in the U.S. District Court in Los Angeles, accused the Adamses of violating their fiduciary responsibilities under the Employee Retirement Income Security Act.

Among the activities that the Labor Department disapproved of were three loans totaling $1.4 million that the Adamses made to themselves from the pension fund’s assets in 1981 and 1982.

The Labor Department claimed that the loans were not adequately secured and did not bear reasonable rates of interest. Moreover, the Adamses were accused of improperly allowing the pension plan to accept an interest in real property owned by the Adamses in lieu of cash payments of interest that became due on the loans.

Daniel Teehan, the regional solicitor representing the Labor Department in the case, said the Adamses agreed to the settlement “without admitting or denying guilt.”

“Employees are getting back 100% on the dollar. There are no losses,” said Robert A. Levinson, attorney for Adams Insulation.