The trustee of Miller's Health Systems Inc.'s employee stock ownership plan cheated that plan and its employee owners in a September 2007 transaction, the U.S. Department of Labor alleges in a lawsuit.
The suit, filed within the past week in northern Indiana's U.S. District Court, seeks to recover those losses. The amount is unspecified.
Warsaw-based Miller's Health Systems owns and operates Miller's Merry Manor, a group of 32 residential nursing homes with more than 3,000 employees in Indiana.
Louisville, Ky.-based PBI Bank Inc., the trustee, authorized a $40 million payment for company stock on behalf of the employee stock ownership plan, or ESOP, six years ago.
The Labor Department alleges that bank officials should have known the sale price was "an amount far in excess of the fair market value of the stock" for various reasons outlined in the court filing.
Federal officials say a series of maneuvers from September 2007 rewarded four members of the Miller family and some members of the company's executive management team at the expense of workers.
The Millers and company executives are not named as defendants.
Those financial dealings were carried out in documents prepared by PBI Bank's attorney, the government alleges.
Lori ÖHaug, Miller's chief financial officer, provided the following statement after receiving a copy of the court filing from The Journal Gazette.
"Miller's Health Systems, Inc. has been a proud 100 percent employee-owned company since 2007," she wrote in an email. "The (Department of Labor) believes that PBI Bank as trustee of the ESOP caused our ESOP to pay more than fair market value for the shares of the company stock in 2007. If that is the case, we expect PBI to reimburse our ESOP for any overpayment. We intend to continue our cooperation with the DOL in this investigation and expect a fair resolution for our employees."
The Journal Gazette has been unable to contact PBI Bank officials.
For more on this story, see Friday's print edition of The Journal Gazette or go to www.journalgazette.net after 3 a.m. Friday.