Summary of the Lawsuit
This lawsuit, Ahrendsen et al. v. Prudent Fiduciary Services. et al., brought on behalf of participants and beneficiaries of the World Travel Employee Stock Ownership Plan (“ESOP”), alleges several violations of the Employee Retirement Income Security Act (“ERISA”) in connection with the sale of World Travel, Inc. to the ESOP. The suit contends that World Travel’s founders sold the company to the ESOP at an inflated price, incurring a multimillion-dollar loss to the ESOP and financially jeopardizing employees’ retirement accounts.
A federal class action was filed in the United States District Court for the Eastern District of Pennsylvania (2:21-CV-02157-HB) on May 11, 2021. The lawsuit alleges that World Travel founders James A. Wells, James R. Wells, and Richard G. Wells (together, the “Selling Shareholders”), and the ESOP’s Trustee (Prudent Fiduciary Services, LLC and its owner, Miguel Paredes) breached their fiduciary duties to the participants and engaged in prohibited transactions in relation to the sale of the company to the ESOP in 2017.
Specifically, Plaintiffs allege that the Selling Shareholders created the ESOP and then sold 100% of their World Travel stock to the newly-created ESOP at an above-market price. These actions saddled the ESOP with over $200 million in debt and resulted in employee participants being allocated fewer shares of stock. Further, despite selling 100% of their stock ownership, the Selling Shareholders retained full control of the company. Further, Plaintiffs allege that the Trustee, who represented the ESOP and its employee participants, had the discretion to authorize and negotiate the sale, yet it failed to independently investigate the fair market value of the company and the merits of the ESOP purchasing the company.
The lawsuit is brought on behalf of all participants and beneficiaries in the World Travel ESOP from December 2017 or any time thereafter who vested under the terms of the ESOP. The case arises out of the sale of 100% of the stock of World Travel to the ESOP for approximately $200 million. Plaintiffs allege that this price was above the fair market value and did not take into account existing company liabilities that were known by the Selling Shareholders but not included in financial records. By permitting the sale, the Trustee failed to act in the best interest of the ESOP. Plaintiffs allege that the Selling Shareholders and the Trustee violated ERISA in a number of ways.
The World Travel ESOP covers past and present employees of World Travel, Inc. who are participants in the World Travel ESOP. Excluded from the Class are Defendants and their immediate family; any fiduciary of the ESOP; the officers and directors of World Travel, or of any entity in which a Defendant has a controlling interest; and legal representatives, successors, and assigns of any such excluded persons.
Status of the Litigation
Plaintiffs filed an initial Complaint on May 11, 2021, and an Amended Complaint on August 30, 2021, in the United States District Court for the Eastern District of Pennsylvania. The case is assigned to Judge Harvey Bartle III. Defendants filed their Motions to Dismiss on September 23, 2021, seeking dismissal of all five Counts of the Amended Complaint.
On February 1, 2022, the Court largely denied Defendants' motion to dismiss, allowing Plaintiffs lawsuit to move forward. Plaintiffs filed their Second Amended Complaint on July 14, 2022, and Defendants filed their Answers on July 28 and 29, 2022. After the parties engaged in fact discovery, they began negotiating settlement. On January 25, 2023, Plaintiffs filed an Unopposed Motion for Preliminary Approval of Settlement and Certification of Settlement Class, which was granted on January 31, 2023. A Fairness Hearing has been set for June 12, 2023 at 2:00pm in the United States District Court for the Eastern District of Pennsylvania, in the courtroom of Judge Harvey Bartle III, located at the James A. Byrne U.S. Courthouse, 601 Market Street, Courtroom 16-A, Philadelphia, Pennsylvania 19106.
Whom to Contact for More Information
If you are a participant in the Triad ESOP, or if you have information which might assist us in the prosecution of these allegations, please contact:
Michelle C. Yau, Esq. - email@example.com
Daniel R. Sutter, Esq. - firstname.lastname@example.org
Doron Hadar, Paralegal - email@example.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600