Havens employees, retirees sue former execs

Employees and retirees of Havens Steel Co. have sued four former top executives, claiming that they let retirement money evaporate as they collected bonuses and that the CEO approved executives' reimbursement requests for expenses at strip clubs and pricey restaurants.

Named in the suit are former CEO Kenneth McCullough and company officers Donald Price, Jesse Bechtold and Tom Collins. The suit was filed in U.S. District Court in Kansas City.

The four served on Havens' board and on the committee that oversaw the company's employee stock-ownership plan, whose assets financed Havens' employees' retirement plan, attorney Neil Sader of Sader & Garvin LLC in Kansas City said Wednesday.

"In reviewing the records, it is our belief that there is a conflict," Sader said.

The ESOP committee was not obliged to invest retirement assets only in Havens Steel, the lawsuit alleged, but by doing so the executives allowed $40 million in retirement reserves to vanish by the time Havens filed for bankruptcy on March 18, Sader said.

"To see that value now at zero is a staggering situation," Sader said.

According to federal law regulating retirement plans, the executives had a duty to protect the retirement reserves, and they knew as company directors that Havens stock wasn't a prudent investment for the reserves in 2002-04, the suit said.

The suit faults the men for receiving bonuses totaling $2.3 million in 2002, which allegedly were borrowed from Commerce Bank.

The plaintiffs also complained that in 2003, McCullough "authorized substantial personal loans to executives of the company, and approved executive expense account spending, including thousands of dollars in ATM cash withdrawals and payments for expensive meals and strip clubs."

Sader declined to elaborate on the amounts allegedly spent.

Bankruptcy proceedings typically halt other lawsuits, but Sader said the suit should proceed because it targets the four men, not the company.

McCullough and Bechtold did not return phone calls, and Price and Collins couldn't be reached for comment.

The class-action suit asks the court to designate a class of plaintiffs who lost retirement assets because of the executives' alleged actions.

The named plaintiffs are Jack and Janet Kirse, Betty Jean Pitchford, Lori Michaels, James Hall, Glenna Grafton, Ronald Berr and Keith Feuerborn.