F&G ESOP Under Further Scrutiny

Washington—As customers, former employees, and fellow catalogers try to figure out what went wrong with Foster & Gallagher, lawyers and politicians are pressing on to determine if the now defunct Peoria, IL-based cataloger acted improperly regarding its Employee Stock Ownership Plan (ESOP). Attorney Dean B. Rhoads, who in April filed a class action lawsuit on behalf of F&G’s ESOP in the U.S. District Court in Peoria, says a pretrial conference is scheduled for July 30. At that time, Rhoads says, a trial date for the lawsuit will likely be set.

F&G, which filed for Chapter 11 bankruptcy protection on July 2, may also come under the scrutiny of the U.S. Secretary of Labor. In a letter obtained by Catalog Age, Sen. Peter G. Fitzgerald (R-IL) urged secretary of Labor Elaine Chao to investigate the matter. Writes Fitzgerald: “A number of my constituents are among the more than 4,000 participants in the F&G ESOP and have contacted me to express concerns regarding various actions which have taken place with regard to the ESOP. In particular a number of individuals have expressed concern about a particular stock purchase transaction that took place in 1995 that resulted in the ESOP incurring $70 million in debt.”

Under the 1966 Employee Retirement Income Security Act (ERISA), claims can be brought by participants, fiduciaries, and the Secretary of Labor.

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