06/25/2013 4:32PM

U.S. alleges pension mismanagement by former Highland Farm owner


The U.S. Department of Labor has filed a lawsuit accusing George S. Hofmeister, the former owner of Highland Farm, and Nelson Clemmens, the chief executive of the account-wagering company Amwest, of violations of a federal securities act for allegedly diverting $5 million in pension funds to benefit companies owned or controlled by Hofmeister.

The suit is the latest in a series of legal troubles that have surrounded Hofmeister since he placed Highland Farm on the market in 2001. The Department of Labor also filed a suit against Hofmeister in 2012, also involving the mismanagement of pension funds.

The latest suit, filed in the U.S. District Court of Eastern Kentucky on May 31, alleges that Hofmeister and members of his company's investment committee approved transactions benefiting companies controlled by Hofmeister. Clemmens was named as one of three other defendants in the suit as a member of the pension fund's investment committee.

The pension fund benefited the employees of Fairfield Castings, an Iowa manufacturing company Hofmeister bought in 2010. Hofmeister and the members of the investment committee were responsible for overseeing the fund's assets.

The suit includes five counts, including an allegation that the investment committee approved the purchase of a property in Texas for the pension plan that was owned through a series of shell companies by Hofmeister's children's trusts. In addition, the suit states that the pension fund provided loans to other companies that Hofmeister or the trusts controlled.

Clemmens and an attorney for Hofmeister did not immediately return phone calls Tuesday afternoon.