Court Finds I-1082’s Prime Sponsor Breached Trust

(Olympia, WA) – Judge Carol Murphy of the Thurston County Superior Court found that the Building Industry Association of Washington and its affiliates (BIAW) have mishandled tens of millions of dollars in member trust funds received as part of the State Department of Labor and Industry’s retrospective refund program. The Judge found that the BIAW violated its legal duties to 6,000 small businesses involved in the program by:

1. Failing to provide an annual accounting to its members;
2. Failing to have a CPA review the finances of the Trust;
3. Commingling trust funds with the funds of the BIAW’s for profit subsidiary Member Service Corporation (MSC);
4. Allowing the MSC rather than the Trust to accrue well over a half a million dollars in interest earned on Trust assets;

Commingling funds and skimming interest are serious financial improprieties. The judge stated that she was ordering the BIAW, MSC, and the Washington Builders’ Benefit Trust to comply with state law, with the governing trust documents, and with her ruling on the breaches of trust.  The lawsuit was filed by Seattle attorney Mike Withey and Knoll Lowney with the assistance of Andy Friedman and Tonna Farrar from Pheonix Arizona. 

BIAW is I-1082’s prime sponsor and has spent more than half a million dollars to pass it. Under I-1082, the BIAW would broker its members to big insurance companies, like AIG, in return for a cut of the premiums.

 Judge Muphy’s decision Thursday concludes a three-year-old case alleging breach of trust between the BIAW – one of Washington’s biggest conservative political funders – and its members.

 Five small businesses filed suit claiming that the BIAW failed its fiduciary duty in managing funds from the “retrospective rating” (retro) program through the Washington Builders Benefit Trust. This program is meant to promote worker safety by refunding part of workers’ compensation premiums to safe workplaces.

Today’s decision comes on the heels of the BIAW’s $584,000 settlement last week with the Office of the Attorney General for campaign finance violations in 2008. This fine – the second largest from the Public Disclosure Commission in recent history – also came from the BIAW’s financial mismanagement of retro dollars.

Knoll Lowney and Michael Withey, lawyers for petitioners, can also be reached for comment at (206) 650-1044 or knoll@igc.org and mike@witheylaw.com.

Public Justice recently joined in a lawsuit against airplane manufacturers over toxic bleed air.  Flight attendants are experiencing permanent injuries after breathing in the oil fumes from these defectively-designed airplanes.  We will keep you posted as the case progresses.