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The U.S. Department of Labor today filed a lawsuit against the industrialist Dr. Robert Pamplin Jr. and his company, R.B. Pamplin Corp., in U.S. District Court in Portland, alleging that Pamplin violated the Employee Retirement Income Security Act (ERISA) by intentionally engaging in more than 100 real estate transactions with his company’s pension fund that benefited him and his company at the expense of unwitting pensioners.
“The process that Dr. Pamplin and R.B. Pamplin Corporation used to transfer the real properties to the Pension Plan was highly deficient and imprudent,” the complaint says.
The feds demand that Pamplin “restore losses and remedy other harms to the R.B. Pamplin Corporation & Subsidiaries Pension Plan,” and they seek to “permanently bar” him from acting as trustee of a pension fund.
The lawsuit follows a February 2022 WW cover story and more than a dozen follow-up stories over the past two years reporting on Pamplin’s increasingly desperate financial maneuvers. In the complaint, the Department of Labor highlights many of the transactions WW first reported and confirms the assertions WW quoted from experts saying those transactions violated pension law and harmed the pensioners whose interests Pamplin was supposed to protect.
Related: The Decline of Robert Pamplin’s Family Empire Leads to Financial Measures That Alarm Experts
He did so, the agency alleges, by executing more than 100 transactions, many of them involving un- or underused industrial real estate owned by R.B. Pamplin Corp. and its affiliates and subsidiaries to the $100 million pension fund. The feds frown on transactions in which companies sell real estate to related pension funds because of the possibilities for abuse and excessive risk. The lawsuit says nearly all the deals Pamplin did consistute “prohibited transactions.”
In effect, Pamplin dumped unwanted land on unsuspecting pensioners in exchange for cash, which he then used to prop up his struggling industrial empire. Pamplin gave himself an unusual, dual role that allowed him to execute the real estate transactions without any oversight.
As the CEO and owner of R.B. Pamplin Corp., he acted as the seller of the properties; as the trustee of the R.B. Pamplin Corp. and subsidiaries pension plan, he acted as the buyer of the properties. Pension experts have told WW that such a dual role is rare and a conflict of interest. (One example: When Pamplin sold Ross Island to the pension fund, he not only failed to document the transaction properly, the complaint says, he failed to factor in the more than $6 million in environmental liabilities attached to the property’s state-ordered reclamation.)
The lawsuit says such a conflict was also a violation of the Employee Retirement Income Security Act, or ERISA.
“Pamplin and R.B. Pamplin Corporation caused the Pension Plan to acquire and hold over 50 percent of its assets as employer real property,” the lawsuit says. “In doing so, Dr. Pamplin and the R.B. Pamplin Corporation breached their fiduciary duties to Pension Plan participants, including by causing the Pension Plan to acquire and hold employer real property in violation of ERISA, engaging in transactions prohibited by ERISA, and violating their duties of loyalty, prudence, diversification, and to follow plan documents in violation of ERISA.”
As WW has reported, Pamplin appeared on the Forbes list of the 400 wealthiest Americans in the 1990s, boasting a net worth larger than any other Oregonian except Nike co-founder Phil Knight. He inherited his fortune from his father, the longtime CEO of the Georgia-Pacific Corporation, the forest products company formerly headquartered in Portland. The elder Pamplin parlayed his timber earnings into private investments such as Mt. Vernon Mills, a chain of textile mills in the Southeastern U.S., and Ross Island Sand & Gravel, which mined the bottom of the Willamette River in central Portland to provide the raw materials with which much of the city was built.
The Pamplins gave generously: Their name is on the business school at the University of Portland; the gymnasium at Lewis & Clark College; and in the halls of the Portland Art Museum.
But the younger Pamplin, now 83, proved a far less adept businessman than his father. He invested in Christian broadcasting and publishing, and a string of AM radio stations, and built and acquired 24 Oregon newspapers (recently sold). He also owned a winery, a 55,000-acre ranch, the sprawling Columbia Empire Farms in Yamhill County, and much of Shaniko, a ghost town in Central Oregon.
Records show the Pamplin Corp.’s financial problems have grown dire in recent years. Creditors regularly sued the company and its subsidiaries for non-payment, and in May, the Oregon Department of State Lands socked Ross Island Sand & Gravel with a $2.9 million penalty for failure to comply with its obligation to refill the giant hole its mining operations left in the Willamette River bottom.
As early as 2019, the Department of Labor complaint says, some Pamplin Corp. employees let Pamplin know they recognized he was improperly putting their pensions at risk.
“A memorandum to Dr. Pamplin dated on or about November 12, 2019 from five employees of Mount Vernon Mills, Inc., an R.B. Pamplin Corporation subsidiary, indicated that Dr. Pamplin had caused the Pension Plan to acquire property in excess of 10 percent of the assets of the Pension Plan, against their prior advice,” the lawsuit says. (Ten percent is the upper limit that the Department of Labor considers prudent for pension funds, if the property involved is marketable, acquired at a fair price and will not result in a geographic concentration of holdings. The feds says that’s not case in most of the transactions in question.)
But Pamplin company officials repeatedly told WW their boss had done nothing wrong.
The Department of Labor’s complaint alleges the properties Pamplin put into the pension fund were not only excessive in terms of the percentage of the fund’s assets they comprised and in their geographic concentration (most are located in Oregon), but they were also inappropriate in numerous other ways. “The Pension Plan’s acquisition of these employer real properties constituted imprudent investments for the Plan,” the complaint says. ”Many of the properties were saddled with unpaid property taxes, and some were saddled with liens. At least three of the properties—Albina, Tait, and Ross Island—require or required substantial and costly environmental remediation.”
Pamplin officials justified some of the transactions in response to WW’s questions by saying that the parent company, R.B. Pamplin Corp., was leasing back the properties it sold to the pension fund. But the feds say those leases were also improper.
“Dr. Pamplin and R.B. Pamplin Corporation caused the Pension Plan to sign lease agreements to lease back the employer real properties with terms highly favorable to R.B. Pamplin Corporation and its subsidiaries,” the complaint says. “To date, R.B. Pamplin Corporation owes the Pension Plan over $2 million in late lease payments.”
The lawsuit says pensioners suffered because they owned a disproportionate amount of risky, low-value real estate rather than stocks and bonds and says that Pamplin must compensate them for the lost earnings. The Department of Labor wants the court to “require Dr. Pamplin and R.B. Pamplin Corporation to restore all losses the Pension Plan has suffered resulting from their fiduciary breaches, plus interest,” and “as necessary, require rescission of any prohibited transactions.”
Robert Pamplin Jr. could not be reached for comment.