Free Response - District Court of Connecticut - Connecticut

Case 3:03-cv-00383-WIG

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UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT ______________________________ WASLEY PRODUCTS, INC., ET AL. : : Plaintiffs, : CASE NO. 3:03-CV-383(MRK) : V. : : BARRY LEONARD BULAKITES, : ET AL. : : Defendants. : AUGUST 31, 2005 ______________________________: BULAKITES DEFENDANTS OBJECTIONS TO SPECIAL MASTER S FINAL REPORT DATED JULY 26, 2005 The Defendants, Barry L. Bulakites, James A. Winslow and Joshua Adams Corporation (hereinafter the Bulakites

Defendants ), hereby respectfully submit the following responses and objections to the Special Master s Final Report ( Report ) dated July 26, 2005. These responses and objections are based

on a review of the Report, the exhibits to the Report, and all presently available documentation. The Bulakites Defendants responses and objections set forth herein are not intended as a final analysis, defense, admission, or answer to the claims asserted against them or to the issues

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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raised by the audit of the benefit plans at issue.

The

Bulakites Defendants reserve the right to modify and/or to supplement any position set forth herein whether in future proceedings before the Special Master (Alan R. Mandell) or before the Court. These responses and objections shall not be

construed as a waiver of any defense, claim, setoff, or right which the Bulakites Defendants may possess against any party. 1. The Report Excludes Analysis of Entire Time Period

Identified in Consolidated Lawsuits. These consolidated lawsuits cover the period from January 1990 through November 2002. However, the Report only covers the (Report, pg.

period from January 1992 through December 2002. 1).

The Bulakites Defendants object to the exclusion of

relevant information from this time period. 2. The Report Incorrectly States that a Defined Benefit

Plan was Established in 1991 with Provident Mutual Life Ins. Co. ( PMLIC ). The Report states that a defined benefit plan was (Report, pg. 2).

established with PMLIC in March of 1991.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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This is incorrect because a group annuity contract (rather than a defined benefit plan) was established in 1991 for the purpose of investing the plans 3. retirement funds.

The Report Fails to Recognize and Credit that Check

No. 6247 for $14,975.42 Constituted a Life Insurance Premium Payment by Wasley Products, Inc. to PMLIC on Behalf of John Wiblyi. The Report found that check no. 6247 dated Feb. 27, 1996 cleared Wasley Product, Inc. s bank account but has not been found or traced to any depository. It further states that none

of the parties involved have been able to shed light on the check. (Report, pp. 3-4). The Bulakites Defendants object to

such findings because they have represented that this check constituted a Wasley Products, Inc. payment for a life insurance premium on behalf of John Wiblyi (one of its salaried plan pensioners). Moreover, the Bulakites Defendants believe that

the Special Master was provided with a P.A.C.T. sheet on 3/16/04 showing the premiums paid on this life insurance policy.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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4.

The Report Wrongly Assumes that Funds Were Diverted to

Winslow Simply Because Wasley Products, Inc. s Checks Were Addressed to Winslow. The Report states that checks no. 5789 and no. 6247 from Wasley Products, Inc. have not been traced to any depository since being issued and then implies that the funds from these two checks were diverted to James Winslow simply because the checks were addressed to him. (Report, pp. 3-4, 8). The

Bulakites Defendants object to such an implication and assumption on the part of the Special Master. Notably absent

from his findings is that all the Wasley Products, Inc. checks were addressed to Mr. Winslow, including the accounted for money. 5. The Report s Page 6 Chart Incorrectly Calculates

Credits Due to the Bulakites Defendants. The chart on page 6 of the Report fails to calculate the full credits due to the Bulakites Defendants. (Report, pg. 6).

First, the Report attributes only $34,185.78 to deposits from Debra Bulakites, which is incorrect. In addition to this sum,

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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Debra Bulakites provided Wasley Products, Inc. $33,211.96 on Nov. 30, 1994 to allow it to make insurance premium payments and deposited $10,000.00 into the Wasley Pension Account on Oct. 2, 1996. Thus, the total deposits from Debra Bulakites was Second, the chart fails to

$77,397.44 (rather than $34,185.78).

credit the Bulakites Defendants with providing Wasley Products, Inc. with $19,583.80 on May 18, 1994 for yet another insurance premium payment. Lastly, the Report fails to credit a $30,000

deposit made by Mr. Bulakites into the Connecticut Agency Account to support Wasley Products, Inc. s payment of annuities. (Report, pp. 6, 10). Therefore, the Bulakites Defendants should

be credited with an additional $92,795.76, which brings the total on the first chart on page 6 to $362,318.70 (rather than only $269,522.94). 6. The Report Unfairly Assumes that the Bulakites

Defendants Owned and Controlled the Connecticut Agency Account. The Report represents that the Connecticut Agency Account did not belong to PMLIC and that Mr. Bulakites exercised some control over said account because he provided copies of eight

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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checks from this account signed by him.

(Report, pp. 10-11).

The Bulakites Defendants object to these findings because this account belonged to PMLIC, not Mr. Bulakites. The checks Provident At the

themselves note that the title of the account is

Mutual Life Insurance Co. Connecticut Agency Account.

very least, it is improper to attribute control over the funds in said account to any party at this time because full records of this account have not been produced. 7. The Report Wrongly Assumes that Winslow s $13,380.00

Withdrawal from the Bank One Account was Wasley Products, Inc. s Money. In the Disbursement to Barry Bulakites et al. table of

the Report, the Special Master lists a payment to James Winslow from the Bank One account in the amount of $13,380.00 and implies that this disbursement came from funds owned by Wasley Products, Inc. (Report. Pg. 6). However, the documentary

evidence shows that while $46,280.00 of Wasley Products, Inc. s funds were deposited into that account during the relevant period, $65,278.25 was paid from the account to retirees and

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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Wasley Products, Inc.

Thus, the Bulakites Defendants object to

the claim that the disbursement of $13,380 came from Wasley Products, Inc. s funds. 8. The Report Wrongly Assumes that All Money in the

People s Bank Account Belonged to Wasley Products, Inc. and Incorrectly Deducts Bulakites the People s Bank Account. The Report represents that Mr. Bulakites withdrew $262,390.00 of Wasley Products, Inc. money from the People s Bank account. (Report, pg. 6). However, this is based on the Withdrawal of $262,390.00 from

incorrect assumption that the account was used exclusively for Wasley Products, Inc. s distributions. 9. The Report Incorrectly Calculates the Amount of

Payments Made to Retirees. The Report states that payments to retirees totaled $519,034.07. (Report, pg. 8). This is incorrect because such

payments totaled $523,429.98.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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10.

The Report Incorrectly Offsets a Death Benefit Payment

to Mr. Mamerrow with a Distribution from Travelers. The Report represents that a death benefits payment of $50,000 was made to Mr. Mammerow from Wasley Products, Inc. s money and that Travelers Insurance Company reimbursed said funds with a payment of $50,402.00. (Report, pg. 8). The Bulakites

Defendants object to this because the Special Master failed to recognize that there were two separate death benefit payments for Mr. Mamerrow: one $50,000 payment from the 401(k) plan and Thus, the second

another $50,000 payment from the UAW plan.

$50,000 payment should not be offset by the Travelers reimbursement. 11. The Report Incorrectly Credits Wasley Products, Inc.

with Check No. 5956 ($22,308.82) When Said Check Constituted Reimbursement to the Connecticut Agency Account for a Premium Payment to Mass Mutual Insurance Company. The Report represents that Check No. 5956 dated Sept. 1, 1993 in the amount of $22,308.82 is a credit to Wasley Products, Inc. and represents a 401(k) deduction. (Report, Exhibit titled

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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Wasley Products, Inc. Disputed Items Classified as Missing by Wasley ). This is incorrect because the $22,308.82 was a

reimbursement to the Connecticut Agency Account for a premium payment made on Wasley Products, Inc. s behalf to Mass Mutual Insurance Company. 12. The Report Incorrectly Credits Wasley Products, Inc.

with Check No. 9052 ($5,000.00) When Said Check Constituted Payment for a Service Outside the Administration of the Pension Plans at Issue. The Report represents that Check No. 9052 dated July 21, 1992 in the amount of $5,000 is a credit to Wasley Products, Inc. (Report, Exhibit titled Wasley Products, Inc. Disputed Such a representation

Items Classified as Missing by Wasley ).

is incorrect and a credit should not be given to Wasley Products, Inc. because the $5,000 payment to the Bulakites Defendants was for services unrelated to the pension plans at issue.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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13.

The Report Incorrectly Represents that a Deposit of

$112,222.38 was Not Received by PMLIC and that $1,787,595.84 was Intended to be Deposited with PMLIC. The chart on page 8 of the Report represents that Wasley Products, Inc. issued checks totaling $1,787,595.84 to PMLIC and that $929,470.90 of that total was actually received by PMLIC. (Report, pg. 8). The chart then concludes that $858,124.94 was

not received by PMLIC but rather was received by other institutions/individuals. (Report, pg. 8). Specifically, it

states that $112,222.38 was received by Shawmut/Fleet rather than PMLIC. (Report, pg. 8).

The Bulakites Defendants object to these representations on the following grounds. One, the chart is incorrect that all the

Wasley Products, Inc. s checks (totaling $1,787,595.84) were intended to go to PMLIC. Second, the $112,222.38 should be

credited as received by PMLIC because the Shawmut/Fleet account is the Connecticut Agency Account, which belonged to PMLIC.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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14.

The Report Incorrectly Credits Wasley Products, Inc.

for Check No. 345 ($52,310.00) When Said Check Constituted a Repayment to the Plan for a Loan Wasley Products, Inc. Took to Pay Health Insurance Premiums. The Report states that Wasley Products Inc. disbursed

funds totaling $1,787,595.84 on behalf of its employees for either contributions to its defined benefit plan, its 401(k) plan and fees. (Report, pg. 2). This amount includes check

no. 345 dated Feb. 21, 1994 in the amount of $52,310.00. (Report, Chart attached to Report titled Analysis of Checks

Drawn on Wasley Account for Pension or 401(k) Contributions ). The $52,310 should not be credited to Wasley Products, Inc. as a contribution because it was instead a repayment to the plan for a loan Wasley Products, Inc. took out to pay health insurance premiums.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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Respectfully submitted, THE BULAKITES DEFENDANTS Barry L. Bulakites, James A. Winslow, and Joshua Adams Corporation

BY: ____________________________ STEVEN J. ERRANTE, ESQ. ERIC P. SMITH, ESQ. NANCY FITZPATRICK MYERS, ESQ. Fed. Bar No. ct04292 Lynch, Traub, Keefe, & Errante 52 Trumbull Street New Haven, CT 06510 Telephone: 203-787-0275 Facsimile: 203-782-0278 CERTIFICATION I hereby certify that a copy of the foregoing was mailed on August 31, 2005 to all counsel and pro se parties of record via the United States Postal Service, postage prepaid, as follows: Joseph V. Meaney, Jr., Esq. Cranmore, Fitzgerald & Meaney 49 Wethersfield Avenue Hartford, CT 06114 Telephone: 860-522-9100 Facsimile: 860-522-3379

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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Ian O. Smith, Esq. Thomas G. Moukawsher, Esq. Moukawsher & Walsh Capitol Place 21 Oak Street, Ste. 209 Hartford, CT 06106 Telephone: 860-278-7000 Facsimile: 860-548-1740 Bryan D. Short, Esq. Deborah S. Freeman Sara Simeonidies, Esq. Bingham & McCutchen One State Street Hartford, CT 06103 Telephone: 860-240-2972 Facsimile: 860-240-2818 Albert Zakarian, Esq. Eric L. Sussman, Esq. Victoria Woodin Chavey, Esq. Day, Berry & Howard City Place 185 Asylum Street Hartford, CT 06103 Telephone: 860-275-0290 Facsimile: 860-275-0343 Jean Elizabeth Tomasco, Esq. Theodore J. Tucci, Esq. Robinson & Cole 280 Trumbull Street Hartford, CT 06103 Telephone: 860-275-8323 Facsimile: 860-275-8299

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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Douglas W. Bartnik, Esq. Day, Berry & Howard, LLP CityPlace I Hartford, CT 06103-3499 Telephone: 860-275-0100 Facsimile: 860-275-0343 James J. Reardon, Jr., Esq. LeBoeuf, Lamb, Green & MacRae, LLP 225 Asylum Street Hartford, CT 06103 Telephone: 860-293-3500 Facsimile: 860-293-3555

____________________________ Steven J. Errante, Esq.

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LYNCH, TRAUB, KEEFE AND ERRANTE, P. C. ATTORNEYS AT LAW 52 TRUMBULL STREET P.O. BOX 1612 NEW HAVEN, CONNECTICUT 06506-1612 TELEPHONE (203) 787-0275 FACSIMILE (203) 782-0278
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