Class Accuses Verizon of Grade-A Screwup

CHICAGO (CN) – Foreign citizens accuse Verizon of “systematically” subjecting them to “the reckless, perhaps fraudulent, administration of their retirement benefits and deferred compensation for years … and, among other things, an attempt to aid and abet perjury.”

     The federal class action, led by plaintiffs from Panama and Italy, claims that Verizon “wrongfully shortchanged” its foreign workers and ignored U.S. tax laws by deducting U.S. Social Security, Medicare and income taxes from foreign employees’ retirement benefits. Named plaintiff Mario Boeri, of Italy, claims Verizon underpaid him by more than $50,000 in the first of two lump-sum benefits, and underpaid him again on the second payment, for the same reason.
     Boeri and Ramon Mejia, of Panama, say they made “Herculean efforts over the years to recover the amounts that were wrongfully withheld from their employee benefits.” And they say that when Verizon “finally determined these taxes were wrongfully withheld, rather than informing the class members of the problem and advising them to seek reimbursement from the IRS, they instead asked the class members to commit perjury by averring under oath that their Verizon-assigned, internal-employee-identification numbers were, in fact, Social Security numbers.”
     On behalf for the class, Mejia and Boeri say: “Verizon and its plans’ fiduciaries have systematically subjected these people to the reckless, perhaps fraudulent, administration of their retirement benefits and deferred compensation for years, resulting in the loss of their promised and earned retirement income.”
     They class – estimated at thousands of workers – consists of foreign workers who never lived or worked in the United States but from whom Verizon deducted money for Social Security, Medicare and federal income taxes.
     The complaint states: “(S)ince at least 1998, Verizon and the agents under its direction have bungled the tax treatment of its foreign employees’ income and retirement benefits. This mismanagement continues through to the present day, despite several acknowledgments by Verizon that its tax treatment is faulty and that its current and former foreign employees have been wrongly injured by the company’s reckless administration of benefits.”
     The class claims the first red flag went up in March 2000 when foreign workers received an IRS discrepancy notice regarding deductions of U.S. taxes from a Verizon stock option program. Verizon blamed it on the stock option management company’s inability to tell the difference between a global identification number, given to each foreign worker, and a U.S. Social Security number, the class says.
“Verizon’s July 2000 letter assured the class members that Solomon Smith Barney was “‘taking steps to resolve this issue with the U.S. Internal Revenue Service’ and stated that Verizon was assigning them each a new Global ID to ‘prevent this issue from reoccurring for stock options you exercise in the future,'” the class claims.
     The foul-ups continued as Verizon and its administrators listed class members as U.S. citizens, though the phone company’s own records showed they were not, and that they neither worked nor lived in the United States.
     During the plaintiffs’ “Herculean efforts,” the class claims, Verizon sent a “mass mailing” that in effect suborned perjury, according to the complaint: “As with the March 2000 letter regarding the IRS discrepancy notice from Solomon Smith Barney … arose out of problems with the Global ID numbers Verizon assigned to its foreign employees for tax withholding purposes.
     “The letter stated that the class members’ Global ID numbers were flagged during an annual audit because they matched the Social Security numbers ‘of a deceased individual.’ The letter then threatened that each class member’s ‘future pension and/or health and welfare benefits will be suspended effective January 1, 2010, until you respond and mail back the enclosed affidavit.’
     “The enclosed ‘Letter of Affidavit’ asked each class member to swear under penalty of perjury that ‘I was born on [date of birth], with a Social Security number [Verizon-issued Global ID number], and presently reside at,’ followed by a blank space for the class member’s current address.
     “The defendants involved in drafting and sending this letter and affidavit knew or should have known that the class members could not truthfully swear that they were born ‘with a Social Security number’ matching their Global ID number because (1) they were born outside the United States, (2) the Global ID numbers were issued by Verizon, and (3) the same problem had occurred at least once before with Salomon Smith Barney,” according to the complaint.
The class seeks damages for ERISA violations, breach of fiduciary duty, breach of contract, tort, wrongful denial of benefits and attempting to aid and abet perjury.
     It seeks restitution, equitable remedies, appointment of a neutral auditor, costs, and wants Verizon and its codefendants removed as fiduciaries and administrators of class members’ retirement programs.
     It is represented by Matthew Heffner with Susman Heffner.
     The defendants are Verizon Management Pension Plan, Verizon Excess Pension Plan, Verizon Executive Life Insurance Plan, Verizon Income Deferral Plan, Verizon Employee Benefits Committee, Verizon Communications Inc., AON Corporation, Wells Fargo & Company, FMR LLC, Morgan Stanley Smith Barney LLC and John Does 1-25.

%d bloggers like this: