Renco facing fraud allegations
By KIM LOCCISANO
Times Leader Staff Writer
New civil allegations of fraud – particularly with regard to certain pension commitments – were alleged in a filing made in federal court in New York on Monday on behalf of the Pension Benefit Guaranty Corporation (PBGC) against The Renco Group and a number of its subsidiaries.
The suit alleged the actions by Renco and its subsidiaries has caused “damages to PBGC in the amount of $97,182,432.
The suit alleges “The Renco Group, Inc. engaged in and consummated a financing agreement, a principal purpose of which was to evade the pension liabilities of the defined benefit pension plans of its subsidiary RG Steel LLC.”
According to the filing, Renco knowingly made these false material representations to PBGC with the intent of inducing it to not initiate termination proceedings for the plans.
The suit alleged, as of Aug. 31, 2012, the plans are estimated to have total underfunded benefit liabilities of about $87 million, unpaid minimum funding contributions of $4.9 million and termination premiums of more than $5 million.
The PBGC is a wholly owned United States Government corporation established to administer and enforce the pension insurance program created under Title IV of the Employee Retirement Income Security Act of 1974, generally known as ERISA.
“PBGC reasonably relied on Renco’s misrepresentations and omissions of material facts when it agreed to refrain from exercising its right to terminate the plans. Had PBGC taken steps to terminate the plans.
Renco and the Renco Controlled Group Members would have been liable for the plan obligation as controlled group members.
“Renco committed actual fraud by making the above material representations which were false,,, with the intend of inducing PBGC to rely upon such false representations, which reliance in turn has caused PBGC to incur damages in the amount of $97,182,432.
Renco is described in the suit as a private holding company. According to the filing, Renco and its subsidiaries employ more than 20,000 people worldwide and “currently have revenues in excess of $5 billion annually.
Loccisano can be reached at email@example.com