U.S. v. D.C. Transcript of 4/18/16 Court Conference

THE COURT: Well, who cares, to be perfectly honest with you. Necessary, appropriate, and prudent, I, without knowing more, I would disagree. It seems to me -- and I've been in business myself in the private sector for a long period of my career. This kind of thing is done all the time. It's called an audit. And it's an audit by an outside independent to see if in fact they're right. It's not uncommon for people who have a vested interest in the performance, in saying things are hunky dory and healthy, doing well, don't think it's necessary, etc., etc., it's very common to have that reaction. But from my point of view it's not very comforting.

MR. McGUIRE: I could revisit it with the trustees, your Honor, but I'm fairly confident they will again make the same decision.

THE COURT: And why? Why do they think that it's unnecessary? Yes. You tell me an audit is too expensive to do, costs a hundred thousand dollars and a waste of money. So I don't know if it's too expensive or, you know, we're doing so well, or why.

MR. McGUIRE: Well, this kind of audit, by another firm, of your investment advisor, in fact is highly uncommon in that part of the world.

THE COURT: Oh, that's nonsense. I don't mean to be rude. But all the time, financial performance is monitored, and all the time are outside persons called in to -- it's not necessarily an evaluation to see if there's wrongdoing. It's just an evaluation to see if this money could be better invested. It's not a big deal.

THE COURT: So to your knowledge, Mr. McGuire, has the Department of Labor done a recent audit of the benefit funds?

MS. O'LEARY: There was a pension fund audit, your Honor, done last year that ended with no action, and the Department of Labor has just commenced a welfare fund audit.

THE COURT: What did they say about the issues I'm raising?

MS. O'LEARY: They just asked for a number of documents and then they just said -- they don't tell you specifically what their focus is.

THE COURT: That's not really what I have in mind.

MR. McGUIRE: Your Honor, DOL ordinarily does not evaluate your performance returns.

THE COURT: That's my point. That is exactly my point.

MR. McGUIRE: But the law has entrusted that responsibility to an equal number of union trustees and management trustees. The only guidance provided in the law is that you have to ensure that you secure expert advice, which we've done, and you have to have widely diversified investments, because --

THE COURT: And they don't care what return on investment you get.

MR. McGUIRE: They don't.

THE COURT: They don't.

MR. McGUIRE: No.

THE COURT: Really. That's astonishing.

Court Transcript NYCDC 4/18/2016