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Former Ajax Employee Fights Government for His Pension
By Dan O'BrienArthur Racco cranes his neck upward, slides his fingers beneath the rims of his glasses and rubs both eyes. Then he looks down and returns to sifting through the pile of documents spread before him on the table."This is America," he says with irritation. "There's something wrong with what happened here."After more than two years, at least 500 telephone calls, appeals to his former employer and correspondence with 11 attorneys, a state senator, a con-gressman's office and the government agency that protects workers' pensions, Racco still hasn't received one cent of what he believes he's owed.Racco, a Cortland resident who spent 35 years working for Ajax Magnethermic Inc., Howland, has been dogged in his quest to find out what became of his share of an $8 million pension fund set up specifically for employees of the company. "Why won't anyone help us? Who do you turn to?" he asks in frustration.His quest began in May 2002, when he and 56 other senior employees were terminated during the first round of layoffs at Ajax. "I was terminated by a message left on my answering machine," Racco says bitterly. "That's how I was fired after working there for 35 years." Racco, today 58 and still unemployed, earned close to $60,000 a year as a supervisor in the company's laboratory. Ajax Magnethermic -- today Ajax Tocco Magnethermic -- designs, engineers and manufactures induction heating systems for major manufacturers in the pipe and tube, steel, automotive and forging industries. Ajax Magnethermic shut down in July 2002 and was purchased two months later -- Sept. 10, 2002 -- by Park-Ohio Holdings Corp., Cleveland. The company emerged as Ajax Tocco and today employs about 145. Racco was one of the 200 employees not recalled to work, and is fighting to recover the $113,000 in pension money he says is his. "I've not received a dime," he adds.What is most disturbing, Racco relates, is that less than a year before his dismissal, company officials reassured employees at Ajax that their pension plan was fully funded. A memo to all Ajax employees, dated Oct. 4, 2001, from D. Douglas Ward, former chief operating officer, states: "The pension plans are not in default. As of Dec. 31, 2000, the pension plans were fully funded. As you know, the stock market has declined in value since that date. However, your benefits have not been affected."Under the company's pension plan, terminated employees had the choice of receiving their benefit in a lump sum or in monthly installments, Racco says.When Racco was fired May 9, he says, he and the others immediately requested lump sum payments from their employer. "When the company was purchased, there was $8 million in the fund. We requested our money in May, when it was in good shape," he says.But something went terribly wrong, Racco contends. Instead of being awarded a lump sum of $113,000 -- an amount calculated by Watson Wyatt & Co. of Cleveland, the consulting firm hired to oversee the fund -- he claims he was shut out. Racco's request for a lump sum benefit was not processed before the plan was terminated in September 2002, he says. "This is what I'm entitled to," he charges, "and somebody interfered with my right to get my money." Based on Watson Wyatt's calculations, Racco was eligible to receive a lump sum benefit of $113,154 in July, 2002, a full two months before the plan was terminated."Why wasn't it done?" he asks. "No one has given me an answer."That was just the beginning of Racco's ordeal. At the end of that month, he was admitted to University Hospital in Cleveland where he underwent quadruple bypass surgery, replacement of an aortic valve and repair of an aneurysm -- conditions his doctor says were exacerbated by the stress from losing his job.Racco was covered under his wife's health insurance policy, which limited expenses. "If my wife weren't working, I'd have lost everything," he says.He began pursuing other avenues to recoup his money, or at least obtain information on how to collect. Since then, he's contacted 11 attorneys -- all who have turned him down, telling him there was insufficient cause for a lawsuit -- or that it would be impossible to collect from a company that no longer exists.A meeting with state Sen. Marc Dann, D-32, also proved fruitless, Racco relates. As a attorney in private practice before being appointed to the Senate, Dann championed the cause of the 57 laid-off workers in May 2002 by suing Ajax and its owner -- Citicorp Venture Capital Ltd. and eight other banks -- for violating the Worker Adjustment and Refinancing Notification Act, or WARN. WARN requires employers to give at least 60 days' notice to employees before they are laid off or terminated, which Ajax did not do. "Dann told me it was way above his head, and there was little he could do," Racco says. Calls to U.S. Rep Tim Ryan's offices also went nowhere, he complains.Other former employees of Ajax are also having trouble collecting their pensions. Tom Kearney, a former outside sales manager for Ajax terminated after Racco, says requests for his benefits were also ignored.Kearney says he sent letters to the company's secretary, statutory agent, and other top officials with questions regarding the disbursement of his pension. "I never got an answer," he adds. Kearney says he knows of at least 30 other former Ajax employees who also are seeking information regarding their pensions.With nowhere else to turn, Racco set out to track down where and how the pension money was dispersed. In June 2003, Racco contacted David Holmquist, an attorney who served as plan administrator for the Ajax pensions when Racco submitted his request for a lump-sum payout. In a written response dated July 10, 2003, Holmquist responded that Racco's request was moving through the normal channels of processing when he was fired in June 2002, a month after Racco was let go, as plan administrator and house counsel.Holmquist writes: "Due to the heavy load of terminations occurring at or about the same time as yours, the process was not completed, numbers were not obtained and your spouse did not sign off on your request prior to my own termination on June 28, 2002."At this time and at all times since my termination as plan administrator and house counsel, I have no knowledge whatsoever as to what has happened to the Ajax pension plan, the request for payments from the pension plan or any of the funds belonging to the plan."Eleven days after that letter was written, the U.S. Pension Benefit Guaranty Corp. assumed control of the Ajax plan.The PBGC is a government agency that assumes responsibility for private pension plans when companies can no longer fund them. The agency is funded through collecting premiums from employers that sponsor insured plans, interest earned through investments and from money already invested in the plans it takes over.According to information retrieved from the PBGC's Web site, Ajax Magnethermic terminated its pension plan Sept. 10, 2002, the day the company's assets were sold and four months after Racco's request for a lump sum. The PBGC, however, didn't officially assume trusteeship of the fund until July 21, 2003, one year after the company shut down and 10 months after Ajax was sold.Why it took so long for the agency to assume the pension is a mystery to Racco.Suspecting the funds might have been turned over to the PBGC, Racco relates he first contacted the agency in November 2002. "They had no idea what I was talking about. They didn't even know the plan had been terminated. Nobody told them," he says. "According to them, I didn't even exist."Racco relates that subsequent conversations with PBGC representatives revealed the agency was having difficulty obtaining information from Ajax, where the personnel files were still stored. "They said no one was cooperating," he recalls.That couldn't be further from the truth, counters Thomas Illencik, who worked for Ajax Magnethermic 18 years before it was sold, and is now vice president of operations at Ajax Tocco."We tried to contact them to get things arranged," Illencik says of the PBGC. "The new company has been very cooperative." The human resources department of Park-Ohio, Ajax Tocco's parent, made numerous attempts to get the process moving as quickly as possible, Illencik states. "We've aggressively maintained contact with the PBGC," he says. Also, meetings are held each month to keep current employees who hold a vested interest in the plan abreast of the latest developments.Illencik says he has just as much personal interest in resolving the issue as anyone because his money is also invested in the plan.In March, PBGC officials finally arrived at Ajax Tocco to copy the files of Racco and some 350 other former and current employees, Illencik reports. "We had four or five people working with the PBGC when they came in," he adds. What is unfortunate, Illencik says, is the pensions were associated with a company no longer in business, which makes it difficult for everyone involved. "It's unfortunate the company had to close," he says.Racco says the PBGC issued subpoenas to Ajax's former owner, Citigroup, and Ajax Tocco that went unanswered through most of last year, delaying the process. "I called and they said they were having difficulty processing the pensions, but it would be resolved soon," he says.When it wasn't resolved, Racco persisted. "People kept telling me something would happen. When it didn't, I kept calling." As best as Racco can put the pieces together, the plan bounced from one person to another at the PBGC and a regional office in Richmond Heights, adding more confusion and frustration to his search. It wasn't until earlier this year that a PBGC representative informed Racco it would take months of work before it could make any headway on the case, that the issue was nowhere close to being resolved. "They really led us astray," he laments.Last April, when PBGC officials arrived at Ajax Tocco to copy the personnel files, Racco says the agency told him it was to determine whether he and his colleagues qualified for pension benefits. Thus, it was nearly two years after Racco lost his job that officials even started the process, he states.Then, about a month ago, Racco received papers saying he'd been accepted into the pension plan. The PBGC was requesting personal information and Racco was asked to fill out the requisite forms so he can start collecting his benefits -- now calculated at roughly $700 a month -- since the PBGC does not issue lump-sums payments. He expects his pension payments to start at the beginning of October.But shortly after Racco completed the paperwork and sent it to the agency, another stumbling block appeared. "I got a call from them [PBGC] saying I haven't been accepted yet, and the person who sent me those forms did so in error," he says angrily.The reason for the delay this time came after Racco informed the agency he was collecting disability from Social Security because of his medical condition. The PBGC requested a letter verifying that when he applied for those benefits. At first, Racco couldn't remember when he applied because of how sick he was at the time. Moreover, the PBGC said itcouldn't obtain the records on its own authority because doing so would violate agency regulations. Racco would have to get the records himself and forward them."I spent about six hours on the phone one day tracking them down," Racco boils. The records are stored in the Social Security office in Chicago, and to obtain those records, Racco had to get an official written request from the local office in Warren."It appalls me. Now, I've got to clear this mess up!" Racco says, his voice rising. "I was always hoping to go back to work -- I've worked steadily since I was 14 years old. I never expected this."The sad part is, there are thousands of guys like me throughout the country," he adds. "It's destroyed my life."Once the request is received in Chicago, that office will send the records to Warren, and that office will contact Racco. Then, he can pick up the material and forward the information to the PBGC, who will then officially determine whether he can participate in the government pension program. The Warren Social Security office said it will make copies of Racco's records available to him --at a service charge of $50.Contact Dan O'Brien at [email protected]"