William Loeb, controversial publisher of New Hampshire's largest daily newspaper, today settled out of court two costly lawsuits that accused him of mismanaging his employes' pension plan.
Under a consent order signed by Leob's lawyers and attorneys representing a former pressman and the U.S. Department of Labor, one-quarter of the common stock of the Union Leader Corp., which owns the Manchester Union Leader, will go on sale before the end of the year.
Estimates of the stock's value range from $750,000 into the millions. Leob admitted no wrongdoing in the consent order. However, the order clearly penalized the publisher and his corporation.
Sale of the 1,250 shares will mark the first time since Leob purchased the newspaper in the 1940s that a significant portion of the newspaper stock will be out of his control. The lawsuit was settled today in U.S. District Court here just as the cases brought against Leob and the pension plan were about to go to trial.
In the consent order, Leob and the Union Leader Corp. will also have to pay $195,000 in legal fees and expenses to the Manchester law firm of Sheehan, Phinney, Bass and Green, which represented Raymond Mahoney, the retired pressman who initiated the suit. Mahoney will receive $10,000, according to the consent order.
The Labor Department became involved, claiming Loeb had violated federal law that regulated the "fiduciary responsibility" provisions for those in charge fo corporate pension plans. Loeb, sole trustee of the pension plan, will remain in that position, although he no longer will be allowed to manage investments. Under the consent order, an independent investment manager will be selected to control the pension fund for the newspaper.
The investment manager will be required to meet standards set forth by the Labor Department and - although appointed by Loeb - will have to act under the scrutiny of the court and demonstrably in the interests of the employes.
The shares of Union Leader stock to be sold once belonged to Loeb. From 1956 through 1960 Loeb invested $375,000 of the pension fund's assets in the purchase of the stock. Then, according to Labor Department lawyers, at Loeb's direction the pension plan bought a printing press between 1972 and 1975 and sold it to the newspapers for approximately $500,000.
All this had the practical effect of steering more than 80 percent of the pension fund assets into a close financial relationship and investment in the newspaper corporation, lawyers said.
Loeb acknowledged that no dividends were paid on the stock belonging to the pension plan, according to court records.
The case started when Mahoney left the newspaper in 1976, claiming total disability. Two years ago he filed suit claiming the pension fund owed him money.
Union Leader officials told him he would receive roughly $4,200 but that the money would be transferred to the company's credit union to repay money Mahoney had borrowed. Mahoney's lawyers then questioned the entire pension plan arrangement.
The consent order released today was drafted so as to ensure that if no bid for the Union Leader stock was higher than $750,000, then the Union Leader Corp. would have to buy the shares for that amount.
However, lawyers close to the industry speculate the stock may be worth as much as $3 million. Once the stock is sold, retirement accounts in the pension plan will be adjusted upward -meaning a potential bonanza for retiring employes.
The Labor Department action against Loeb focused in large part on the sale and purchase of the printing press. Labor Department lawyers claimed Loeb, in his role as trustee of the pension plan, directed sale of the press to the newspaper on or before Jan. 1, 1975, and asserted this directly violated the law regulating pension plan activities.
Loeb continued to deny this, but he says he has repaid the money owed the plan for the printing press, according to court records.
Loeb was in Canada, accordiing to his lawyers, and could not be reached for comment.