WASHINGTON (AP) -- Federal officials are accusing Cincinnati-based Fifth Third Bancorp of causing a union pension fund to lose more than $20 million in a Detroit real estate investment.
The Labor Department, which filed the lawsuit last month in U.S. District Court in Detroit, says the bank mismanaged the development and sale of a property owned by the pension fund for Operating Engineers Local 324.
The lawsuit, filed Dec. 28 and announced Thursday, said the Troy, Mich.-based pension fund bought the property for $5 million in 1999.
Acting on a strategy created by Fifth Third Bank, the fund invested more than $23 million to renovate the Detroit property, the suit says. The bank "reversed its development strategy and sold the property to the Cavaliere Group for only $4.5 million in 2004," by which time the fund had invested more than $28 million, the department said.
"The department's action protects the workers, retirees and their families who are counting on the (pension fund) for their retirement security," Bradford P. Campbell, a Labor Department assistant secretary, said in a statement. "We are seeking to recover, with interest, all the funds that are owed to the pension plan."
Fifth Third operates in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania and Missouri.
"We believe the case is without merit," said Debra DeCourcy, a company spokeswoman, declining to comment further because the litigation is ongoing.
Shares of Fifth Third rose 53 cents, or 2.3 percent, to $23.69 Thursday.