Newark Watershed Asks Bankruptcy Judge for Help With Insolvent Pension Woes
The Watershed also asked the judge to reduce or eliminate a claim for more than $1.8 million, which is needed to make the pension fund solvent.
March 20, 2019 at 04:34 PM
4 minute read
Trustees of the Newark Watershed Conservation and Development Corp. have asked a judge in U.S. Bankruptcy Court for a break from its obligations relating to the agency's insolvent pension plan.
Counsel for the Watershed group asked U.S. Bankruptcy Judge Vincent Papalia on Tuesday to void claims for pension benefits by the agency's former executive director, Linda Watkins-Brashear, and Donald Bernard Sr., its former senior projects manager. The Watershed also asked the judge to reduce or eliminate a claim for more than $1.8 million by the U.S. Pension Benefit Guaranty Corp., which represents the amount that agency says is needed to make the pension plan solvent.
Watkins-Brashear is the largest beneficiary of the pension fund and claims to be entitled to a benefit of approximately $5,500 a month. She filed a claim for a lump-sum payment of $478,615 in 2015. But the pension plan administrator maintains that Watkins-Brashear forfeited her right to benefit payments by breaching her fiduciary responsibilities as a plan trustee when she improperly inflated compensation for herself and enrolled ineligible people in the plan.
Watkins-Brashear pleaded guilty to a wire fraud scheme and filing false tax returns and was sentenced to eight and a half years in prison in 2017.
Bernard filed a claim in May 2018 seeking $176,123 from the pension fund. The administrator also claims Bernard is not eligible for benefits under the plan because he did not perform 1,000 hours of service per year and therefore is not an eligible employee of the Watershed group.
Bernard pleaded guilty to use of interstate facilities to promote and facilitate bribery, in violation of the Travel Act, and to filing a false tax return. He was sentenced to eight years in prison in 2017.
The Watershed also contends that the $1.8 million sought by the Pension Benefit Guaranty Corp. is excessive and that the fund will be solvent if the claims for Watkins-Brashear and Bernard are voided.
The trustees are represented by Daniel Stolz of Wasserman, Jurista & Stolz in Basking Ridge.
The PBGC said it would “take that into consideration,” but did nothing until it filed the $1.8 million claim with the bankruptcy court, Stolz said. The amount of that claim is far higher than the shortfall of $400,000 to $500,000 that was calculated by the Watershed's own actuaries.
The pension issue is “a very unusual circumstance,” said Stolz, but he added “we believe the bankruptcy court has jurisdiction over claims against the bankruptcy estate” by the pension agency and would-be beneficiaries.
The Newark Watershed Conservation and Development Corp., which supervised a series of reservoirs, dams and water treatment facilities that provide water to Newark, was dissolved in 2013 after a series of scathing reports detailing corruption, kickbacks, self-dealing and no-show contracts awarded by administrators, including Watkins-Brashear and Bernard. Two court-appointed trustees, former Appellate Division judge Dorothea O'C. Wefing and attorney Edwin Stier, run the Watershed, which filed for Chapter 11 bankruptcy in 2015. They seek to recover the Watershed's lost funds on behalf of the city.
Besides the pension issue, the last major item on the agency's agenda is a legal malpractice suit against law firm Trenk, DiPasquale, Della Ferra and Sodono of West Orange, whose attorneys, Elnardo Webster II and Jodi Luciani, advised the Watershed at the time the alleged corruption took place. That case is still pending, and is in the later days of discovery in U.S. District Court in Newark, Stolz said.
A spokesman for the Pension Benefit Guaranty Corp. declined to comment.
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