The U.S. Department of Labor has obtained a final judgement against John J. Koresko, a disbarred attorney and former benefits plan administrator who was involved in a long-running nationwide employee benefit plan scheme that diverted $40 million from more than 400 employee benefit plans.
Spanning more than 18 years, the scheme carried out by Koresko and other defendants diverted assets from employee benefits plans’ trusts to participants nationwide and used the funds to pay for real estate purchases in South Carolina and the Caribbean island of Nevis, outside attorneys, lobbying expenses and Koresko’s personal expenses, such as boat rentals and utilities.
On Aug. 19, U.S. District Court for the Eastern District of Pennsylvania issued a final order closing the case, with a judgement that added nearly $4 million to costs previously assessed against Koresko, resulting in a judgment of more than $42 million against Koresko and his companies.
“Attorneys with the U.S. Department of Labor and investigators with the Employee Benefits Security Administration [EBSA] worked tirelessly with the court, the independent fiduciary and the forensic accountant to marshal and distribute plan assets to their rightful owners,” Philadelphia Regional Solicitor Oscar L. Hampton III said. “We held John J. Koresko and his fellow defendants to account for violating the law and upheld the equitable principles of the Employee Retirement Income Security Act.”
The court’s order follows the final distribution in 2021 of $17.7 million to more than 200 employee benefit plans nationwide harmed by Koresko and others, bringing the total distribution to the affected plans to $68 million, the DOL announced late last week. In 2016, Koresko was imprisoned for more than two years, after he was found in civil contempt and picked up by federal marshals for failing to transfer $1.68 million in assets back to the plans he defrauded.
“From the start of EBSA’s investigation, Koresko refused to cooperate and the department sought court orders to enforce subpoenas issued by EBSA. The court later found Koresko in contempt,” the DOL said in a statement.
“The plans’ participants suffered much harm due to the defendants’ action,” EBSA Philadelphia Regional Director Michael Schloss said. “The conclusion of the litigation provides those participants with relief and demonstrates the U.S. Department of Labor’s commitment to ensuring that employers take seriously their responsibility to provide benefits to their employees and their beneficiaries.”
The case stems from an investigation that began in 2003 by the DOL’s EBSA Philadelphia Regional Office of Koresko, the Regional Employers Assurance Leagues Voluntary Employees’ Beneficiary Association Trust and other affiliated companies.
The agency found that Koresko and others had diverted tens of millions in plan assets for their personal benefit through a variety of illegal transactions—money that they pocketed and used for purposes such as purchasing personal, as well as boat rentals and other improper personal uses.
The case stems from an investigation that began in 2003 by the DOL’s Philadelphia Regional Office, the Regional Employers Assurance Leagues Voluntary Employees’ Beneficiary Association Trust and other affiliated companies.