UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

James Smith, on behalf of himself and all 

others similarly situated, and on behalf of the

Triad Manufacturing, Inc. Employee Stock 

Ownership Plan,

Plaintiff,

vs.

GreatBanc Trust Company; the Board of 

Directors of Triad Manufacturing, Inc.; David 

Caito; Robert Hardie; and Michael 

McCormick;

Defendants.

 Case No. 

 CLASS ACTION COMPLAINT

I. NATURE OF ACTION

1. This is a civil enforcement action brought pursuant to Sections 502(a)(2) and 502 

(a)(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), 29 

U.S.C. § 1132(a)(2) and (a)(3), by Plaintiff James Smith, on behalf of the Triad Manufacturing, 

Inc. Employee Stock Ownership Plan (“Triad ESOP,” “the ESOP,” or “the Plan”) and the

participants and beneficiaries of the ESOP.

2. The Triad ESOP is an ERISA protected retirement plan whereby the individual 

retirement accounts of current and former employees are invested entirely in the stock of Triad 

Manufacturing, Inc. (“Triad” or the “Company”). There is no recognized market for Triad stock; 

thus, the value of the stock must be determined based on a private valuation of the Company.

3. Plaintiff’s claims stem from the creation of the Triad ESOP in December 2015 and, 

shortly thereafter, the sale of 100% of the Company’s stock to the Triad ESOP at an inflated value 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 1 of 38 PageID #:1
2

(the “2015 Transaction” or the “Transaction”) by the Co-Presidents of Triad, Defendants David 

Caito, Robert Hardie, and Michael McCormick. 

4. The Transaction occurred on December 17, 2015, when Defendants caused 

employees’ retirement accounts in the ESOP to purchase 1.83 million shares of the Triad’s voting 

common stock at $58.05 per share ($106.2 million in the aggregate) from the sellers of the stock, 

including Defendants Caito, Hardie and McCormick (collectively the “Selling Shareholders”). The 

ESOP financed the purchase of Triad shares by assuming a loan of $106.2 million, which Triad 

itself guaranteed. Because Triad was required to make contributions to the ESOP sufficient to pay 

all loan payments due, Triad’s future cash flows were reduced by the amount necessary to service 

the ESOP’s Transaction debt of $106.2 million.

5. The employee-participants did not negotiate the Transaction price of $58.05 per 

share or any of the terms of the transaction. In fact, the employee-participants who purchased the 

Triad stock had no input on the terms negotiated and agreed to by the ESOP Trustee, GreatBanc 

Trust Company (“GreatBanc”), and the Selling Shareholders. Nor did the employees consent to 

the terms of the 2015 Transaction. 

6. Defendants Caito, Hardie, and McCormick (the “Co-Presidents”), who together 

owned most of the Triad stock sold to the ESOP and who were all members of the Triad Board of 

Directors, hand-picked GreatBanc to act as the ESOP trustee to approve the Transaction terms and 

the price of $58.05 per share. They retained: (i) control of Triad because, as Board members, they

retained voting power for a majority of the Triad stock they sold to the ESOP, and (ii) power over 

GreatBanc because, as Board members, they retained the power to remove GreatBanc from its 

Trustee position.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 2 of 38 PageID #:2
3

7. As alleged below, the valuation report (i.e., the stock appraisal) relied upon by 

GreatBanc to justify the price that the ESOP paid for Triad stock was based on unreliable and 

unrealistic projections of Triad’s future cash flows and earnings. The stock appraisal also failed to 

account for the control the primary Selling Shareholders retained over the Company and the 

Board’s ability to dramatically dilute the ESOP’s ownership of the Company, and Triad’s

shrinking customer base due to the closure of brick and mortar stores. The ESOP’s auditor 

disclosed in its audit letters filed with the Department of Labor that Triad’s management (i.e., the 

Co-Presidents) instructed it not to review or audit certain financial information relevant to the 

ESOP’s holdings in Triad stock and thus the auditor was “not able to obtain sufficient appropriate 

audit evidence to provide a basis for an audit opinion” concerning the Triad ESOP’s financial 

statements for the period December 17, 2015 to the present. For these reasons and others detailed 

below, GreatBanc and the Co-Presidents caused the ESOP to overpay for the Triad stock purchased 

at $58.05 per share.

8. The stock appraisal relied heavily on a discounted cash flow method of valuation 

where the stock’s value is driven by financial projections of Triad’s future cash flows and earnings, 

which were unreliable and inflated. Specifically, the Co-Presidents controlled the financial 

projections of Triad’s future cash flows and earnings used in the stock appraisal, even though they 

were conflicted because as Selling Shareholders they directly benefited from any inflation in those 

projections which would inflate the price they received for Triad stock in the Transaction. 

9. Before approving the Transaction terms, GreatBanc failed to consider and account 

for Triad’s guarantee of the ESOP’s $106.2 million, which: (i) significantly affected Triad’s 

balance sheet and the value of the common equity purchased by the ESOP, and (ii) negatively

impacted Triad’s future cash flows because Triad was obligated to contribute millions of dollars 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 3 of 38 PageID #:3
4

to the ESOP on an annual basis to allow the ESOP to make all loan payments due to the Selling 

Shareholders. 

10. According to the ESOP’s financial statements filed with the Department of Labor, 

the ESOP reported that the value of Triad stock was $1.85 per share, or $3,386,000 in the 

aggregate, on December 31, 2015. Thus, the value of the Triad stock reported by the ESOP less 

than a month after the sale was only 3% of what the ESOP paid for it.

11. This was not an aberration or mistake. One year later, on December 31, 2016, the 

ESOP’s financial statements filed with Department of Labor reported that the value of Triad stock 

was $1.15 per share. And the ESOP’s financial statements reported that the value of Triad stock 

was again $1.15 per share as of December 31, 2017, and $0.96 per share as of December 31, 2018.

12. GreatBanc and Triad’s Board (including each of the Co-Presidents who were 

members of the Board) had a fiduciary duty under ERISA to act prudently and in the best interest 

of the employee participants. See 29 U.S.C. § 1104(a)(1)(A)-(B). However, at all relevant times, 

they failed to do so. Among other things, they failed to perform adequate due diligence to ensure 

the $58.05 per share stock appraisal was based on reliable cash flow and earnings projections,

disregarded other structural problems with the Transaction and ongoing conflicts of interest, and 

failed to take into account Triad’s shrinking customer base due to the widespread closure of retail 

stores. As a result of Defendants’ actions, ESOP participants suffered tens of millions of dollars in 

losses, and their retirement accounts are worth far less than they would have been had Defendants 

not violated ERISA through their actions in connection with the 2015 Transaction.

13. Under ERISA, each Defendant is liable for any losses in connection with the 2015 

Transaction that violated ERISA’s strict fiduciary standards and prohibited transaction rules. 

ERISA also provides that Plaintiff and the ESOP participants are entitled to equitable relief, 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 4 of 38 PageID #:4
5

including disgorgement of any profits obtained by Defendants (including any nonfiduciary Selling 

Shareholders) in the Transaction. 

14. ERISA authorizes participants such as Plaintiff to sue in a representative capacity 

on behalf of a retirement plan. See 29 U.S.C. § 1132(a)(2), (3). Pursuant to that authority and 

Federal Rules of Civil Procedure, Plaintiff brings this action on behalf of the ESOP and all 

participants and beneficiaries of the ESOP.

II. JURISDICTION AND VENUE

15. Subject Matter Jurisdiction. This Court has subject matter jurisdiction over this 

action pursuant to 28 U.S.C. § 1331 and ERISA § 502(a), 29 U.S.C. § 1132(a).

16. Personal Jurisdiction. This Court has personal jurisdiction over Defendants 

because they transact business in, and have significant contacts with, this district.

17. Venue. Venue is proper in this district pursuant to ERISA § 502(e)(2), 29 U.S.C. § 

1132(e)(2), for at least the following reasons:

a. Defendant GreatBanc resides in this district because its offices and 

headquarters are located in Lisle, Illinois, which is in DuPage County;

b. GreatBanc’s alleged breaches of fiduciary duty took place in this district at 

its offices located in Lisle, Illinois; and

c. Other Defendants may be found in this district, as Triad Manufacturing 

transacts business and employs individuals in Chicago, Illinois and the 

surrounding area.

III. PARTIES

A. Plaintiff

18. Plaintiff James Smith is a former employee of the Company and a former 

participant in the ESOP within the meaning of ERISA § 3(7), 29 U.S.C. § 1002(7). Plaintiff Smith 

worked for Triad from 2015 to 2016 and was a participant at the time of the 2015 Transaction. At 

the time he left the Company, Plaintiff was 20% vested in the Triad shares allocated to his ESOP

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 5 of 38 PageID #:5
6

account and he has suffered a financial injury as a result of Defendants’ unlawful conduct 

described herein. 

19. Plaintiff Smith received a distribution for 20% of the 174.7088 shares allocated to 

his retirement account in the ESOP, or 34.9418 shares. His retirement distribution was paid to him 

in 2019 based on $0.96 per share, which was the fair market value of Triad stock reported in the 

ESOP’s year-end 2018 financial statements. Plaintiff Smith’s total retirement distribution from 

his ESOP account was $33.54 for his two years of service with Triad. He has a colorable claim to 

additional retirement benefits from the ESOP because his distribution of $33.54 was less than he 

would have received had GreatBanc and the Board Defendants not violated ERISA and not caused 

losses to his ESOP account.

B. Defendants

20. Defendant GreatBanc Trust Company is located in Lisle, Illinois. GreatBanc is 

the Trustee of the Triad ESOP and holds, manages, and controls the ESOP’s assets. GreatBanc is 

a fiduciary of the Plan within the meaning of ERISA § 3(21), 29 U.S.C. § 1002(21), because it 

exercises discretionary authority or discretionary control respecting management of the ESOP, 

exercises authority and control respecting management or disposition of the ESOP’s assets, and/or 

has discretionary authority or discretionary responsibility in the administration of the ESOP.

21. GreatBanc, on behalf of the ESOP, approved the purchase of Triad stock from the 

Selling Shareholders to the ESOP for $58.05 per share, which was greater than fair market value.

GreatBanc, on behalf of the ESOP, also approved all Transaction terms, including the ESOP’s 

borrowing of the entire purchase price necessary to complete the Transaction, and the Company

guarantee of the borrowed amount.

22. Defendant Triad Board of Directors: According to the ESOP Plan Document, the 

Board of Directors appoints the Trustee of the ESOP and has at all relevant times had the power 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 6 of 38 PageID #:6
7

to remove the Trustee. The members of the Board of Directors appointed GreatBanc as Trustee 

prior to the 2015 Transaction. As such, each of them was at all relevant times a fiduciary with 

responsibility for monitoring GreatBanc to ensure that it fulfilled its fiduciary obligations to the 

ESOP and did not cause the ESOP to engage in prohibited transactions.

23. According to the financial statements filed with the Department of Labor, even after 

the Transaction, the Board of Directors retained the power to vote all of the ESOP’s Triad stock 

not yet allocated to participant accounts. The portion of the ESOP’s stock that was not allocated 

to participant accounts was an absolute majority from the time of the Transaction through the filing 

of this lawsuit and would remain so until approximately 2026.

24. All of Triad’s actions must be exercised by or under the ultimate direction of the 

Board Defendants. In particular, Board members and Co-Presidents Caito, Hardie, and 

McCormick managed the activities and affairs of the Company at all relevant times.

25. As part of their corporate oversight responsibilities, the Board Defendants were 

involved in the preparation, review, and/or approval of the Company’s financial statements and

projections.

26. Defendant David Caito: At the time of the Transaction, Defendant Caito was CoPresident of Triad and was one of the Selling Shareholders who sold stock to the Triad ESOP. At 

the time of the Transaction he was, and continues to be, a member of the Board of Directors of 

Triad and thus a fiduciary to the ESOP. 

27. Defendant Robert Hardie: At the time of the Transaction, Defendant Hardie was 

Co-President of Triad and was one of the Selling Shareholders who sold stock to the Triad ESOP. 

At the time of the Transaction he was, and continues to be, a member of the Board of Directors

and thus a fiduciary to the ESOP.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 7 of 38 PageID #:7
8

28. Defendant Michael McCormick: At the time of the Transaction, Defendant 

McCormick was Co-President of Triad and was one of the Selling Shareholders who sold stock to 

the Triad ESOP. At the time of the Transaction he was, and continues to be, a member of the Board 

of Directors.

29. Each of the Board Defendants, including Caito, Hardie, and McCormick, is also a 

“party in interest” to the ESOP as defined in ERISA § 3(14)(H), 29 U.S.C. § 1002(14)((H).

30. The Board of Directors, Caito, Hardie, and McCormick are collectively referred to 

as the “Board Defendants.”

IV. FACTUAL ALLEGATIONS

31. Triad is a company that engages in custom fixture manufacturing. Founded in 1991, 

today the Company employs approximately 325 employees.

32. At the time of the sale of the Company to the ESOP in December 2015, Triad was 

100% privately owned by the Selling Shareholders, including Defendants Caito, Hardie, and 

McCormick.

33. In December of 2015, the Company created the Triad ESOP.

34. Prior to the creation of the ESOP, Triad employees were eligible to participate in a 

non-ESOP defined contribution plan which offered a menu of mutual funds such as stock funds, 

bond funds, and money market funds in which to invest their retirement savings.

35. After December 2015, retirement savings for Triad employees are invested in Triad 

stock for which there is no public market.

A. The Sale of the Company to the Triad ESOP

36. On December 17, 2015, the Triad ESOP purchased 1.83 million shares of the 

Company for a purchase price of $58.05 per share, or $106,232,630 in the aggregate. 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 8 of 38 PageID #:8
9

37. To finance the purchase of shares, the Triad ESOP entered into a 30-year term loan 

agreement with the Company for $106,232,630.00, with an interest rate of 2.61%.

38. On December 21, 2015 (notably, after the Transaction was reported to have taken 

place), the Board Defendants appointed GreatBanc as the Trustee of the Triad ESOP to represent 

the ESOP and approve the terms of the Transaction on behalf of the ESOP.

39. According to the ESOP’s 2015 financial statements filed with the Department of 

Labor, the reported value of Triad stock on December 31, 2015 was $1.85 per share or $3,386,000

million in the aggregate, which equals 3% of the value employees paid for the Triad stock. It was

further reported on those financial statements that the Triad ESOP incurred an “investment loss”

of negative “$102,847,130” in the “[p]eriod from December 17 to December 31, 2015.”

40. The ESOP’s 2016 financial statements filed with the Department of Labor reported 

that the Triad stock was appraised at $1.15 per share as of December 31, 2016, and also reported 

that the ESOP suffered an “Investment Loss” from the “Net Depreciation in fair value of Triad 

Manufacturing, Inc. common stock” which was negative $1,281,000 for the year ending 2016.

41. The ESOP’s 2017 financial statements filed with the Department of Labor reported 

that the Triad stock was appraised at $1.15 per share as of December 31, 2017 and that the ESOP’s 

holdings in the common stock were flat, meaning no “Investment Loss” was reported on the Triad 

stock for the year ending 2017.

42. The ESOP’s 2018 financial statements filed with the Department of Labor reported 

that the Triad stock was appraised at $0.96 per share as of December 31, 2018, and also reported 

that the ESOP suffered an “Investment Loss” from the “Net Depreciation in fair value of Triad 

Manufacturing, Inc. common stock” which was negative $347,700 for the year ending 2018.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 9 of 38 PageID #:9
10

43. Each of the ESOP’s financial statements from the ESOP’s inception in 2015 to 

2018, state that the ESOP’s “[i]nvestments in the Company’s common stock are valued by an 

annual independent appraisal.” 

44. Plaintiff has never had any access to any stock appraisal of Triad shares and the 

underlying data or assumptions used in those stock appraisals.

45. Plaintiff also has no information concerning the exact fiduciary process conducted 

by GreatBanc, the Board members, or other fiduciaries of the ESOP. However, it is reasonable to 

infer, based on the facts alleged, that Defendants’ fiduciary processes were deficient and 

inadequate to protect the interests of ESOP participants and beneficiaries, and resulted in ESOP 

participants overpaying for Triad stock in the Transaction. 

B. GreatBanc and the Board Defendants violated their Fiduciary Duties in 

Connection with the 2015 Transaction.

46. GreatBanc approved and caused the ESOP to purchase 1.83 million shares of Triad 

stock for $58.08 per share, which was more than fair market value. 

47. The Board Defendants failed to monitor GreatBanc and ensure that it complied with 

its ERISA fiduciary duties to the ESOP participants and that the ESOP did not pay more than fair 

market value for the Triad stock. 

48. To finance the ESOP’s purchase of Triad, GreatBanc approved and caused the 

ESOP to enter into loans to the Selling Shareholders, which totaled $106.2 million (the entire 

purchase price), and under the terms of the Transaction the $106.2 loan was guaranteed by Triad.

49. The Company’s guarantee of the ESOP’s $106.2 million loan crippled Triad 

because the loan is classified as debt on Triad’s balance sheet and is a charge to shareholders’

common equity. 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 10 of 38 PageID #:10
11

50. Additionally, under the terms of the Transaction, Triad was obligated to make 

contributions to the ESOP in an amount sufficient to cover the loan payments, resulting in a 

significant cash drain on the Company. 

51. Specifically, under the Plan Document, the Company was required to make 

retirement contributions on the employees’ behalf of no less than the amounts necessary to make 

any ESOP loan payments due in that year. These retirement contributions that the Company was 

required to make to service the ESOP’s debt significantly impaired Triad’s cash flows and earnings 

after the 2015 Transaction.

52. The retirement contributions made to employee individual accounts are an 

important part of Triad employee compensation under ERISA. See 26 U.S.C. § 404; 26 C.F.R. § 

1.404(a)-1(b). 

53. For each retirement contribution, some is used to pay interest to the Selling 

Shareholders on the ESOP’s loan and the remaining amount results in the allocation of Triad shares 

to participants’ accounts based on the $58.05 per share Transaction price.

54. For example, the ESOP’s 2016 financial statements filed with the Department of 

Labor reported that Triad made retirement contributions of $8,651,353 to the ESOP during 2016.

Some of those retirement contributions were used to pay interest expense on the ESOP’s 

Transaction debt, and the remainder were allocated to individual retirement accounts in the ESOP 

at the $58.05 Transaction price, which resulted in approximately 105,144 Triad shares being 

allocated for 2016.

55. However, the value of the Triad stock was reported as $1.15 per share as of 

December 31, 2016. Thus, while $6.1 million was allocated to participants’ retirement accounts in 

2016, the value of those shares that was allocated to employee accounts was just $0.1 million at 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 11 of 38 PageID #:11
12

year end 2016. The economic reality for employee participants is that while Triad stock was 

purchased and allocated to their account at $58.05 per share, the fair market value of that Triad 

stock was reported as $1.15 per share at year end 2016.

56. Similarly, the ESOP’s 2017 financial statements filed with the Department of Labor 

reported that Triad made retirement contributions of $6,495,420 to the ESOP during 2017. Some 

of that was used to pay interest expense on the ESOP’s Transaction debt, and the remainder of the 

retirement contributions for ESOP participants were allocated to participant accounts at the $58.05 

per share Transaction price, which resulted in approximately 79,682 Triad shares being allocated 

for 2017, which were reported to be valued at $1.15 at year end 2017.

57. The ESOP’s 2018 financial statements filed with the Department of Labor reported 

that Triad made retirement contributions of $5,153,050 to the ESOP during 2018. Some of that 

was used to pay interest expense on the ESOP’s Transaction debt, and the remainder was allocated 

to participant accounts at the $58.05 per share Transaction price. This resulted in approximately 

77,744 Triad shares being allocated for 2018, which were reported to be valued at $0.96 at year

end 2018.

58. Because the ESOP was created in 2015, no employee was able to sell their Triad 

shares until the end of 2016 (or after) as vesting service began to accrue in 2015 and at least two 

years of vesting service are required for employees to be vested in any portion of the Triad shares 

allocated to their ESOP retirement accounts.

59. On or after December 31, 2016, employees who were eligible for distribution of 

their retirement accounts received just $1.15 (or less) for each share of Triad stock allocated to 

their account.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 12 of 38 PageID #:12
13

60. GreatBanc and the Board Defendants failed to consider that, as part of the 

Transaction, Triad would undertake two significant obligations that affected whether the 

Transaction was prudent and in the best interest of the employee participants:

• Triad guaranteed the $106.2 million loan to the ESOP, which was required to be 

classified as debt on Triad’s balance sheet and a charge to shareholders’ equity; and 

• Triad obligated itself to make contributions to the ESOP in an amount sufficient to 

cover the loan payments, resulting in a significant cash drain on the company. 

61. Had GreatBanc and the Board Defendants adequately considered these two 

significant obligations that affected Triad’s balance sheet and future cash flows and operating 

income, they would have recognized that it was not prudent and in the ESOP participants’ best 

interest to complete the Transaction and be bound by those terms.

C. GreatBanc and the Board Defendants caused the ESOP to overpay for Triad 

stock because the $58.05 per share was greater than Fair Market Value.

62. Consistent with its fiduciary obligations under ERISA, GreatBanc was required to 

ensure that the ESOP did not pay more than fair market value for Triad stock taking into account 

all aspects of the Transaction. However, GreatBanc failed to do so, and overlooked many important 

facts that should have caused it to more critically examine the stock appraisal and the purchase 

price of $58.05 per share. 

1. The Stock Appraisal Was Based on Unrealistic and Inflated Financial 

Projections of Triad’s Future Cash Flows and Earnings.

63. The stock appraisal upon which GreatBanc relied was based on unrealistic and 

inflated management projections of Triad’s future cash flows and earnings. These unrealistic and 

inflated projections of Triad’s future cash flows and earnings were created by the Co-Presidents 

(Caito, Hardie, and McCormick), all of whom were Selling Shareholders and would thus 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 13 of 38 PageID #:13
14

personally profit from any increased value in the stock price paid to them by the ESOP in the 

Transaction.

64. As reported in the ESOP’s filings available from the Department of Labor, since 

the inception of the ESOP in 2015, “the approach to determining fair value of the [Triad] common 

stock” has been primarily based on a “[d]iscounted cash flow method [which] values a company 

based on projected cash flows.” Specifically, the ESOP’s filings state that “the Discounted Cash 

Flow Method was emphasized in the valuation.”

65. As a result, the main determinants of the price the ESOP paid for Triad stock were 

the financial projections underlying the discounted cash flow method. These projections of Triad’s 

future cash flows, revenue, and earnings were prepared by the Co-Presidents (Caito, Hardie, and 

McCormick), who were conflicted. The more aggressive their projections were, the more they 

profited. 

66. Their financial projections underlying the valuation (i.e., the stock appraisal) were 

unrealistic, and did not accurately reflect Triad’s future cash flows, revenue, and earnings.

67. One reason for this is that Triad’s primary customer base—brick-and-mortar retail 

stores—was shrinking rapidly for several years before and after the Transaction. As the following 

Credit Suisse presentation demonstrates, closures of brick-and-mortar retail stores have been 

increasing for the past two decades. For instance, in 2015, there were more retail store closures 

than any year since the Great Recession.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 14 of 38 PageID #:14
15

68. The closure of brick-and-mortar stores has corresponded with the growth of ECommerce sales. The following graph from the Federal Reserve Bank of St. Louis demonstrates 

the steady growth in the share of E-Commerce sales during the past two decades. 

69. The financial projections underlying the $58.05 share price paid by the ESOP did 

not realistically reflect that Triad’s revenues came from providing shelving and fixture for retail

stores with physical locations, which was an industry that had been contracting for years before 

and after the Transaction due to the dramatic increase in online purchasing from 2010 to the 

present.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 15 of 38 PageID #:15
16

70. Had GreatBanc engaged in a prudent and loyal due diligence process based on 

undivided loyalty to the ESOP participants, it would not have approved a price of $58.05 per share 

as the Transaction price the ESOP paid. 

71. Had the Board Defendants properly monitored GreatBanc and ensured that it 

conducted adequate due diligence on whether the financial projections underlying the stock 

appraisal were realistic and achievable, GreatBanc would not have approved the ESOP’s purchase 

price of $58.05 per share. 

72. The ESOP’s 2018 financial statements confirm that the financial projections used 

in the stock appraisal did not accurately reflect Triad’s true future prospects, stating: “Under the 

terms of the purchase agreement, if the Company did not achieve a target level of earnings for the 

three year period ending 12/31/2018, the principal balance of the loan is subject to reduction. As 

a result of the Company failing to achieve the target level of earnings, the principal balance of the 

loan was reduced by $13,845,500 during 2018. Prepayments made in 2015 and 2017, as well as 

the reduction in the principal balance for the Company’s failure to achieve a targeted level of 

earnings, accelerated the final payoff date ....” In other words, the stock appraisal used to justify 

the $58.05 per share price paid by the ESOP in 2015 was based on unrealistic financial projections 

that the Company was unlikely to meet.

73. Despite this recognition that the $58.05 per share price paid by the ESOP was based 

on unrealistic targets of earnings, and the reduction of the ESOP’s debt to reflect a lesser share 

price of $50.48 per share, the ESOP never restored the excess price paid by participants to their 

individual accounts. As a result, ESOP participants’ accounts which were allocated Triad stock at 

$58.05 per share were never made whole. The reduction of the ESOP’s loan by $13,845,500 (or 

$7.57 per share) did not remedy the ERISA violations in connection with the Transaction at $58.05 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 16 of 38 PageID #:16
17

per share because the amount of overpayment by the ESOP for Triad stock was significantly 

greater than $7.57 per share based on the facts alleged herein.

74. Notably, the financials that were relied upon for purposes of the cash flow analysis 

underpinning the Transaction were not audited or approved by the ESOP’s auditor, BDO USA, 

LLP (“BDO”). BDO disclosed in its audit letters filed with the Department of Labor that it was 

“not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion” 

concerning all of the ESOP’s financial statements from inception on December 17, 2015 to 

December 31, 2018 (emphasis added). The financial statements that were not audited for accuracy 

included a discussion of the “fair market value” of Triad stock at the time of the Transaction and 

thereafter.

75. For all financial statements covering the period December 17, 2015 to year end 

2018, the ESOP’s auditor’s “Basis for Disclaimer of Opinion” stated: “the Plan Administrator 

[Triad] instructed us not to perform, and we did not perform, any auditing procedures with respect 

to the information summarized in Note 4.” 

76. The ESOP’s auditor expressly disclaimed providing an audit opinion on the 

information presented in the ESOP financial statement and stated, “Because of the significance of 

the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to 

obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, 

we do not express an opinion on these financial statements.” (Emphasis added).

77. The BDO audit letter also stated that Triad’s “[m]anagement is responsible for the 

preparation and fair presentation of these financial statements.... including the design, 

implementation, and maintenance of internal control relevant to the preparation and fair 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 17 of 38 PageID #:17
18

presentation of financial statements that are free from material misstatement, whether due to fraud 

or error.”

78. If Triad management, specifically the Board Defendants, had fulfilled their 

fiduciary duties of loyalty and prudence to monitor GreatBanc and required that the ESOP auditor 

review and audit all relevant financial data and information underlying the stock appraisals and 

financial statements throughout the class period, then the ESOP would not have overpaid for Triad 

stock.

2. The Stock Appraisal Failed to take into Account that the ESOP did not 

obtain control of Triad and that the Board Defendants retained power to dilute the 

ESOP’s ownership interest significantly.

79. Additionally, GreatBanc and the stock appraisal upon which it relied to approve the 

$58.05 share price failed to fully account for the fact that the Board Defendants, including Caito, 

Hardie, and McCormick, retained the power to direct the Trustee on how to vote the vast majority 

of the ESOP’s Triad stock. 

80. The ESOP’s financial statements from 2015 to 2018 state that the Board Defendants 

direct the Trustee how to vote all Triad Stock owned by the ESOP that is not yet allocated to 

participant accounts. Thus, the Board Defendants retained the power to vote an absolute majority 

of the ESOP’s Triad stock from the time of the 2015 Transaction through the filing of this 

Complaint because the proportion of Triad shares allocated to participant accounts was 

substantially less than 25% throughout 2020. 

81. The Board Defendants will have the power to vote an absolute majority of Triad 

shares owned by the ESOP through approximately December 2026 because each year the 

necessary employer contributions to service the ESOP’s debt result leave only enough funds 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 18 of 38 PageID #:18
19

remaining to allocate approximately 80,000 shares to participant accounts in the ESOP, meaning 

that the proportion of allocated shares will be less than 50% through approximately 2026.

82. Board members Caito, Hardie, and McCormick, who were also Selling 

Shareholders in the 2015 Transaction, sold their stock to the ESOP while retaining control over 

Triad through their power to vote a majority of the Triad stock sold to the ESOP and their power 

over GreatBanc as the Trustee appointed by the Board.

83. In other words, even though the ESOP purchased 100% of Triad’s common stock, 

the Board Defendants (including Caito, Hardie, and McCormick) retained control over the 

Company based on their power to vote the majority of the Triad stock owned by the ESOP until 

approximately 2026.

84. The price that the ESOP paid and that GreatBanc approved should have been 

reduced by a discount for lack of control, given that the ESOP did not actually obtain full control 

over the Triad stock.

85. On December 21, 2015, the Company’s Articles of Incorporation were amended to 

give the Board Defendants the authority to issue up to 1,170,000 additional shares of common 

stock, which would bring the total shares outstanding to 3,000,000.

86. GreatBanc and the stock appraisal upon which it relied failed to fully account for

the dilutive effect of the potential 1.17 million shares that the Board could authorize. These 1.17 

million shares, if authorized, would shrink the ownership interest of the ESOP from 100% to just 

61%.

D. The Transaction was Structured and Implemented to Benefit the Selling 

Shareholders at the Expense of ESOP Participants.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 19 of 38 PageID #:19
20

87. Prior to the Transaction, Defendants Caito, Hardie, and McCormick owned the 

majority of Triad’s private stock and sought other exit strategies for their ownership interest in 

Triad. 

88. Several years before the Transaction, Defendant Caito stated that his goal was to 

take Triad public and that his attorneys were working on the process. The goal of taking Triad 

public never came to fruition. 

89. Defendants Caito, Hardie, and McCormick then considered a third-party buyer for 

the Company, but likewise this exit strategy did not materialize. Ultimately, they planned and 

executed the sale of Triad to their employees through the ESOP Transaction.

90. Defendants Caito, Hardie, and McCormick were advised by an investment bank, 

Butcher Joseph. As reported in a press release regarding their sale of Triad Manufacturing to the 

ESOP, the Transaction came after they explored their “exit strategies” and determined that selling 

their Triad stock to their employees through the ESOP “would best fit their objectives.” The press 

release did not state whether the ESOP’s purchase of the stock would fit the employees’ retirement 

objectives.

91. Caito, Hardie, and McCormick were Co-Presidents and members of the Board of 

Directors before and during the Transaction. Because they were at the highest levels of Company 

management, each of them was directly involved in the preparation of all financial projections 

used in appraisals of Triad stock at all relevant times. Specifically, they were involved in and

directed the preparation of the financial projections for Triad’s future cash flows and earnings that 

formed the basis of the stock appraisal relied upon by GreatBanc in determining the share price 

paid by the ESOP of $58.05. 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 20 of 38 PageID #:20
21

92. The ESOP’s financial statements from 2015 to 2018 state that Triad’s 

“[m]anagement is responsible for the preparation and fair presentation of these financial statements

in accordance with accounting principles generally accepted in the United States of America; this 

includes the design, implementation, and maintenance of internal controls relevant to the 

preparation and fair presentation of financial statements that are free from material misstatement, 

whether due to fraud or error.” The financial statements further state that “management 

accumulates the data for the appraiser from the audited financial statements of the Company.”

93. Caito, Hardie, and McCormick were aware of all facts alleged herein because they 

were Co-Presidents and members of the Board of Directors prior to and through all events that 

culminated in the completion of the sale of their Triad stock to the ESOP. Thereafter, they were 

involved in the ESOP’s financial statements from 2015 to the present.

94. As Board members, Caito, Hardie, and McCormick had a duty to monitor 

GreatBanc and ensure that it was acting based on correct financial data and projections. Instead, 

they actively withheld information from GreatBanc, including their knowledge that: (i) the 

financial projections underlying the Triad stock valuation at the time of the Transaction did not 

realistically reflect the Company’s future revenues, cash flows, and earnings; (ii) the stock 

valuation did not adequately reflect that the ESOP did not obtain voting control over Triad despite 

purchasing 100% of the stock; and (iii) the stock valuation did not adequately reflect the ability of 

Board to dilute the ESOP’s ownership interest by authorizing 1.7 million additional Triad shares.

E. Selling Shareholders Retain the Ill-Gotten Gains Received from the ESOP 

Transaction.

95. Based on the best information available to Plaintiff, each of the Selling 

Shareholders deposited his or her share of the proceeds from the ESOP Transaction in his or her 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 21 of 38 PageID #:21
22

personal account, and each such account continues to exist in the possession of the Selling 

Shareholders.

96. Additionally, the Plan Document contemplates that some or all of the Selling 

Shareholders would invest the proceeds of the ESOP Transaction in “qualified replacement 

property” pursuant to Section 1042 of the Internal Revenue Code (“I.R.C.”), in order to avoid 

capital gains tax on the sale of their Triad stock to the ESOP. Under I.R.C. § 1042, the gains on 

the sale of stock to the ESOP are taxed when the qualified replacement property is sold, and capital 

gains taxes can be eliminated entirely if the qualified replacement property is held by the Selling 

Shareholders until death.

97. Thus, the Selling Shareholders who invested the proceeds in qualified replacement 

property continue to hold such property to avoid the adverse tax consequences.

98. Each Selling Shareholder who sought deferral of capital gains pursuant to I.R.C. 

§1042 was required to complete a signed Statement of Purchase that identified and declared the 

specific securities that represent the qualified replacement property that was purchased to avoid 

taxes on the receipt of proceeds from the ESOP Transaction. The Statement of Purchase for each 

Selling Shareholder who elected I.R.C. § 1042 deferral would be filed with his/her tax return.

V. CLASS ALLEGATIONS

99. Plaintiff brings these claims as a class action pursuant to Fed. R. Civ. P. 23 (a) and 

(b), on behalf of the following class:1

All participants in the Triad ESOP on or after December 17, 2015 who vested under 

the terms of the Plan, and those participants’ beneficiaries, excluding Defendants 

and their immediate family members; any fiduciary of the Plan; the officers and 

directors of Triad or of any entity in which a Defendant has a controlling interest; 

and legal representatives, successors, and assigns of any such excluded persons.

 

1 Plaintiff reserves the right to revise his class definition, and to propose other or additional classes 

in subsequent pleadings or his motion for class certification, after discovery in this action.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 22 of 38 PageID #:22
23

100. Numerosity. The Class satisfies the numerosity requirement because it is 

composed of hundreds of persons. The Plan currently has approximately 310 participants. The 

number of Class members is so large that joinder of all its members is impracticable.

101. Commonality. As to the members of the Class, this case presents numerous 

common questions of law and fact, among them:

a. Whether GreatBanc engaged in a prudent and loyal investigation of the 

proposed purchase of 1.83 million shares of Triad stock by the ESOP in the 

2015 Sale, including whether the Transaction terms and price were fair and 

in the best interest of ESOP participants;

b. Whether GreatBanc improperly failed to account for the lack of control the 

ESOP received over Triad in the Transaction;

c. Whether GreatBanc improperly relied on unrealistic financial projections of 

Triad’s future cash flows and earnings, for purposes of assessing the value 

of Triad stock; 

d. Whether GreatBanc failed to properly consider Triad’s guarantee of the 

ESOP’s $106.2 million loan, which would be classified as debt on Triad’s 

balance sheet and a charge to shareholders’ equity;

e. Whether Greatbanc failed to properly consider the reduced cash flow the 

Company would suffer due to its obligation to make contributions to the 

ESOP in an amount sufficient to cover the ESOP’s loan payments;

f. Whether Caito, Hardie, and McCormick were involved in the preparation 

of all financial projections used in appraisals of Triad stock that formed the 

basis of the stock appraisal relied upon to set the ESOP purchase price for 

Triad stock at $58.05; 

g. Whether Caito, Hardie, and McCormick, who were all Board members at 

all relevant times, breached their fiduciary duties to ESOP participants;

h. Whether the Board Defendants breached their fiduciary duties by failing to 

adequately monitor GreatBanc; 

i. Whether the Plan engaged in prohibited transactions;

j. The amount of losses suffered by the ESOP as a result of the unlawful 

conduct alleged herein;

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 23 of 38 PageID #:23
24

k. The proper form of equitable and injunctive relief; and

l. The extent to which any non-fiduciary Defendants are subject to equitable 

remedies and relief.

102. Typicality. Plaintiff’s claims are typical of the claims of the Class because (among 

other things): (a) he was employed by Triad and was a participant in the Plan; (b) to the extent that 

Plaintiff seeks relief on behalf of the Plan pursuant to § 502(a)(2) of ERISA, his claims are not 

only typical of, but the same as, a claim under § 502(a)(2) brought by any other Class Member; 

(c) to the extent that Plaintiff seeks equitable relief, that relief would affect all Class Members 

equally; and (d) all of the Class members were injured and continue to be injured in the same 

manner because each of them overpaid for Triad stock due to the same alleged breaches of 

fiduciary duty and prohibited transactions. 

103. Adequacy. Plaintiff will fairly and adequately protect the interests of the Class and 

is committed to the vigorous representation of the Class. Plaintiff’s retained counsel, Cohen 

Milstein Sellers and Toll PLLC (“Cohen Milstein”) and Nichols Kaster, PLLP (“Nichols Kaster”), 

are experienced in class action and ERISA litigation, and Plaintiff has no interests antagonistic to 

or in conflict with the interests of the Class.

104. Rule 23(b)(1)(A). Class certification is appropriate pursuant to Fed. R. Civ. P. 

23(b)(1)(A). Fiduciaries of ERISA-covered plans have a legal obligation to act consistently with 

respect to all similarly situated participants and to act in the best interests of the ESOP and its

participants. This action challenges whether Defendants acted consistently with their fiduciary 

duties or otherwise violated ERISA as to the ESOP as a whole. As a result, prosecution of separate 

actions by individual members would create the risk of inconsistent or varying adjudications that 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 24 of 38 PageID #:24
25

would establish incompatible standards of conduct for Defendants relating to the ESOP. The Class 

may be certified under Rule 23(b)(1)(A).

105. Rule 23(b)(1)(B). Class certification is also appropriate pursuant to Fed. R. Civ. P. 

23(b)(1)(B). Administration of an ERISA-covered plan requires that all similarly situated 

participants be treated the same. Resolving whether Defendants fulfilled their fiduciary obligations 

to the ESOP and engaged in prohibited transactions with respect to the Plan would, as a practical 

matter, be dispositive of the interests of the other participants in the ESOP and would substantially 

impair or impede their ability to protect their interests if they are not made parties to this litigation 

by being included in the Class. Further, the relief granted by the Court, including any equitable 

relief, injunctive relief, or accounting of profits, may be dispositive of the interests of other class 

members.

106. Rule 23(b)(2). Additionally and alternatively, class certification is appropriate 

pursuant to Fed. R. Civ. P. 23(b)(2) because Defendants have acted or refused to act on grounds 

generally applicable to the Class, making appropriate declaratory and injunctive relief with respect 

to Plaintiff and the Class as a whole. This action challenges whether Defendants acted consistently 

with their fiduciary duties or otherwise violated ERISA as to the ESOP as a whole. The members 

of the Class are entitled to declaratory and injunctive relief to remedy Defendants’ fiduciary 

violations. Further, as ERISA is based on trust law, any monetary relief consists of equitable 

monetary relief that is either provided directly by the declaratory or injunctive relief or flows as a 

necessary consequence of that relief.

107. Rule 23(b)(3) requirements. Additionally and alternatively, class certification is 

appropriate pursuant to Fed. R. Civ. P. 23(b)(3) because questions of law and fact common to all 

Class members predominate over any questions affecting individual members of the Class, and 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 25 of 38 PageID #:25
26

because a class action is superior to other available methods for the fair and efficient adjudication 

of this action. Common questions related to liability will necessarily predominate over any 

individual questions because Defendants’ duties and obligations were uniform to all participants 

and therefore all members of the Class. Plaintiff and all Class members have been harmed by the 

ESOP paying more than fair market value for Triad stock in the 2015 Sale. As relief and any 

recovery will be on behalf of the Plan, common questions as to remedies will likewise predominate 

over any individual issues.

108. A class action is a superior method to other available methods for the fair and 

efficient adjudication of this action. As the claims are brought on behalf of the ESOP, the issues 

in this litigation will be most efficiently resolved in a single proceeding rather than multiple 

proceedings. The losses suffered by individual Class members are small compared to the expense 

and burden of individual prosecution of this action. In addition, class certification is superior 

because it will obviate the need for unduly duplicative litigation which might result in inconsistent 

judgments about Defendants’ duties with regard to the ESOP.

109. The following also favor certification of this case as a class action:

a. No other litigation concerning this controversy has been filed by any other 

members of the Class;

b. The names and addresses of the Class members are available from the 

ESOP.

110. Notice will be provided to all members of the Plaintiff Class to the extent required 

by Rule 23.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 26 of 38 PageID #:26
27

VI. CAUSES OF ACTION

Count I

Breach of Fiduciary Duties Under ERISA §§ 404(a)(1)(A) and (B), 

29 U.S.C. §§ 1104(a)(1)(A) and (B)

(Against GreatBanc)

111. Plaintiff incorporates the preceding paragraphs as though set forth herein.

112. ERISA § 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A), requires that a plan fiduciary 

act “for the exclusive purpose of providing benefits to participants and the beneficiaries of the 

plan.”

113. ERISA § 404(a)(1)(B), 29 U.S.C. § 1104(a)(1)(B), requires that a plan fiduciary act 

with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent 

person acting in a like capacity and familiar with such matters would use in the conduct of an 

enterprise of a like character and with like aims.

114. In the context of a sale of the sponsoring company/employer to an ESOP, the duties 

of loyalty under ERISA § 404(a)(1)(A) and prudence under ERISA § 404(a)(1)(B) require a 

fiduciary to undertake an appropriate investigation to ensure that the ESOP and its participants pay 

no more than adequate consideration for the company’s assets and the participants’ account in the 

ESOP.

115. Pursuant to ERISA § 3(18), adequate consideration for an asset for which there is 

no generally recognized market means the fair market value of the asset determined in good faith 

by the trustee or named fiduciary pursuant to the terms of the plan and in accordance with the 

Department of Labor regulations.

116. GreatBanc was required to undertake appropriate and independent due diligence 

and an investigation of the fair market value of the Triad stock before approving the Transaction. 

Among other things, GreatBanc was required to conduct a thorough and independent review of 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 27 of 38 PageID #:27
28

any “independent appraisal” (i.e., the stock appraisal) to make sure that reliance on that appraisal 

was reasonably justified under the circumstances of the 2015 Transaction; to investigate the 

reliability and reasonableness of the management projections for Triad’s future revenue, earnings,

and cash flow upon which the discounted cash flow method used in the appraisal was based; and 

to make an honest, objective effort to read and understand the valuation reports and opinions, and 

question any uncertain methods and assumptions.

117. As alleged above, a prudent and loyal investigation of all the relevant Transaction 

terms, financial projections, and assumptions in connection with the Transaction would have 

revealed that the Transaction price of $58.05 per share, and the $106.2 million price in the 

aggregate, ultimately paid by the ESOP was greater than fair market value of the Triad stock at the 

time of the Transaction.

118. A prudent and loyal investigation by GreatBanc also would have revealed that it 

was imprudent to approve the debt structure of the Transaction.

119. A prudent and loyal investigation by GreatBanc also would have revealed that the 

Transaction terms, taken together, were not in the best interest of the ESOP participants.

120. By failing to act prudently and loyally in participants’ best interest in connection 

with the 2015 Transaction, and by failing to restore the losses caused thereby, GreatBanc breached 

its fiduciary duties under ERISA § 404(a)(1)(A) and (B), 29 U.S.C. § 1104(a)(1)(A) and (B), and 

caused losses to the ESOP and the individual retirement accounts of the participants in the ESOP. 

121. GreatBanc is liable for appropriate relief under ERISA §§ 502(a)(2) and (3), 29 

U.S.C. §§ 1132(a)(2) and (3), and ERISA § 409, 29 U.S.C. § 1109, for these violations of ERISA 

§§ 404(a)(1)(A) and (B), 29 U.S.C. §§ 1104(a)(1)(A) and (B).

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 28 of 38 PageID #:28
29

Count II

Failure to Monitor in Violation of ERISA §§ 404(a)(1)(A) and (B),

29 U.S.C. §§ 1104(a)(1)(A) and (B) 

(Against Board Defendants)

122. Plaintiff incorporates the preceding paragraphs as though set forth herein.

123. Any fiduciary with the power to appoint and/or remove other fiduciaries has an 

obligation to monitor the appointed fiduciary to ensure that he/she is acting in compliance with the 

terms of the Plan and in accordance with ERISA. See 29 C.F.R. § 2509.75-8 (FR-17). If the 

appointed fiduciary has violated or continues to violate ERISA, the monitoring fiduciary must 

remove the appointed fiduciary and attempt to restore any losses to the plan caused by the ERISA 

violations.

124. The ESOP Plan Document provides that the Board Defendants appoint and have 

the power to remove the Trustee of the ESOP. Because the Board Defendants appointed GreatBanc 

as the ESOP Trustee, they had a duty to monitor GreatBanc and remove it if necessary.

125. The Board Defendants breached their duty to monitor GreatBanc. Among other 

things, the Board Defendants:

a. failed to monitor and evaluate the performance of GreatBanc, or have a 

system in place for doing so, standing idly by while participants suffered 

substantial losses as a result of the fiduciary breaches of GreatBanc;

b. failed to monitor the fiduciary processes of GreatBanc to ensure it was 

acting based on realistic and reliable financial projections for Triad’s future 

cash flows and earnings;

c. failed to ensure that GreatBanc conducted adequate due diligence regarding

the financial projections underlying the Triad stock valuation at the time of 

the Transaction; 

d. failed to ensure that GreatBanc fully considered that the ESOP did not 

obtain voting control over Triad (despite purchasing 100% of the stock)

when approving the $58.05 per share price; 

e. failed to implement a system to avoid conflicts of interest; 

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 29 of 38 PageID #:29
30

f. failed to remove GreatBanc when they knew that its performance was 

inadequate for the reasons described herein; and

g. failed to ensure that GreatBanc took appropriate remedial action after the 

2015 Sale.

126. The Board Defendants are liable for appropriate relief under ERISA § 409, 29 

U.S.C. § 1109, and ERISA §§ 502(a)(2) and (3), 29 U.S.C. §§ 1132(a)(2) and (3), for their failure 

to appropriately monitor their appointees.

Count III

Prohibited Transactions in Violation of ERISA § 406(a), 29 U.S.C. §§ 1106(a)

(Against GreatBanc)

127. Plaintiff incorporates the preceding paragraphs as though set forth herein.

128. ERISA § 406(a)(1), 29 U.S.C. § 1106(a)(1), requires that a plan fiduciary “shall not 

cause the plan to engage in a transaction, if he knows or should know that such transaction 

constitutes a direct or indirect (A) sale or exchange, or leasing of any property between the plan 

and a party in interest,” or a “(D) transfer to, or use by or for the benefit of, a party in interest, of 

any assets of the plan.”

129. ERISA § 406(a)(1)(B), 29 U.S.C. § 1106(a)(1)(B), provides that a plan fiduciary 

shall not cause the plan to engage in a transaction, if he knows or should know that such transaction 

constitutes the direct or indirect loan of money between the plan and a party in interest.

130. ERISA § 3(14), 29 U.S.C. § 1002(14) defines a “party in interest” to include

• “any fiduciary ... of such employee benefit plan”

• “an employer any of whose employees are covered by such plan”

• “an employee, officer, or director ... or a 10 percent or more shareholder” 

of an employer whose employees are covered by the ESOP

• “a relative (as defined in paragraph (15)) of any individual described in 

subparagraph (A), (B), (C), or (E)[.]”

29 U.S.C. § 1002(14)(A), (C), (H), and (F).

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 30 of 38 PageID #:30
31

131. To the extent Caito, Hardie, and McCormick did not directly own the Triad stock 

sold to the ESOP, their family members or family trusts owned the stock. As such, all Selling 

Shareholders are parties in interest to the ESOP within the meaning of ERISA § 3(14), 29 U.S.C. 

§ 1002(14).

132. GreatBanc, acting as the Trustee of the ESOP and a fiduciary of the ESOP, 

approved and caused the ESOP to purchase 1.83 million shares of the Company from the Selling 

Shareholders, each of whom was a party in interest to the ESOP. This was a prohibited transaction 

because the 2015 Transaction constituted an exchange of property between the ESOP and the 

Selling Shareholders in violation of ERISA § 406(a)(1)(A), 29 U.S.C. § 1106(a)(1)(A), as well as 

a transfer of the ESOP assets to the Selling Shareholders in violation of ERISA § 406(a)(1)(D), 29 

U.S.C. § 1106(a)(1)(D).

133. Additionally, thereafter each individual payment to the Selling Shareholders by the 

ESOP constituted another exchange of property between the ESOP and the Selling Shareholders 

in violation of ERISA § 406(a)(1)(A), 29 U.S.C. § 1106(a)(1)(A), as well as a transfer of the ESOP 

assets to the Selling Shareholders in violation of ERISA § 406(a)(1)(D), 29 U.S.C. § 

1106(a)(1)(D).

134. As Trustee, GreatBanc caused the Triad ESOP to borrow over $106 million from 

the Company, which constituted a prohibited transaction in violation of ERISA § 406(a)(1)(B), 29 

U.S.C. § 1106(a)(1)(B).

135. GreatBanc, as Trustee, caused each payment by the ESOP of principal or interest 

to the Selling Shareholders in connection with the $106 million loan. Each of those payments 

constitutes a separate violation of ERISA § 406(a)(1)(D), 29 U.S.C. § 1106(a)(1)(D).

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 31 of 38 PageID #:31
32

136. Defendant GreatBanc is liable for appropriate relief under ERISA § 409, 29 U.S.C. 

§ 1109, and ERISA §§ 502(a)(2) and (3), 29 U.S.C. §§ 1132(a)(2) and (3), for the prohibited 

transactions set forth herein.

Count IIV

Prohibited Transactions in Violation of ERISA § 406(a), 29 U.S.C. §§ 1106(a)

(Against Defendants Caito, Hardie, and McCormick)

137. Plaintiff incorporates the preceding paragraphs as though set forth herein.

138. ERISA § 406(a)(1), 29 U.S.C. § 1106(a)(1), requires that a plan fiduciary “shall not 

cause the plan to engage in a transaction, if he knows or should know that such transaction 

constitutes a direct or indirect (A) sale or exchange, or leasing of any property between the plan 

and a party in interest,” or a “(D) transfer to, or use by or for the benefit of, a party in interest, of 

any assets of the plan.”

139. ERISA § 3(14), 29 U.S.C. § 1002(14) defines a “party in interest” to include

• “any fiduciary ... of such employee benefit plan”

• “an employer any of whose employees are covered by such plan [the 

ESOP]”

• “an employee, officer or director ... or a 10 percent or more shareholder” 

of an employer whose employees are covered by the ESOP.

• “a relative (as defined in paragraph (15)) of any individual described in 

subparagraph (A), (B), (C), or (E)[.]”

29 U.S.C. § 1002(14)(A), (C), (F), and (H).

140. To the extent Caito, Hardie, and McCormick did not own directly the Triad stock 

sold to the ESOP, their family members or family trusts owned the stock. As such, each of the 

Selling Shareholders is a party in interest to the ESOP within the meaning of ERISA § 3(14), 29 

U.S.C. § 1002(14).

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 32 of 38 PageID #:32
33

141. Selling Shareholders Caito, Hardie, and McCormick were also Board members 

before and after the 2015 Transaction and thus fiduciaries to the ESOP at all relevant times.

142. The ESOP’s purchase of 1.83 million shares of Triad voting common stock from

the Selling Shareholders constituted an exchange of property between the ESOP and the Selling 

Shareholders in violation of ERISA § 406(a)(1)(A), 29 U.S.C. § 1106(a)(1)(A). 

143. Additionally, thereafter each individual payment to the Selling Shareholders by the 

ESOP constituted another exchange of property between the ESOP and the Selling Shareholders 

in violation of ERISA § 406(a)(1)(A), 29 U.S.C. § 1106(a)(1)(A), as well as a transfer of the ESOP 

assets to the Selling Shareholders in violation of ERISA § 406(a)(1)(D), 29 U.S.C. § 

1106(a)(1)(D).

144. Because Defendants Caito, Hardie, and McCormick were Triad Board members 

who breached their fiduciary duties in failing to monitor GreatBanc’s actions during the relevant 

period (see Count II above) each of them caused the numerous prohibited transactions alleged in 

this Count.

145. Alternatively, if Defendants Caito, Hardie, and McCormick are not found to be 

fiduciaries who caused the prohibited transactions alleged in this Count, each of them is still liable 

as a non-fiduciary party in interest under Harris Trust and Sav. Bank v. Salomon Smith Barney, 

Inc., 530 U.S. 238 (2000) because each of them knowingly participated in transactions which 

violated ERISA § 406(a)(1)(A) and (D).

• As Co-Presidents and Board members they were involved in and directed the 

preparation of the financial projections underlying the stock appraisal relied upon 

by GreatBanc which was the basis of the purchase price of $58.05 per share the 

ESOP paid for the Company and the subsequent stock appraisals of Triad stock at 

year end 2015 to 2018.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 33 of 38 PageID #:33
34

• Given their role in the preparation of Triad’s financial statements and its operations 

for decades before the Transaction, they knew that the Triad projections underlying 

the stock valuation to justify the $58.05 price were unrealistic and unreliable. 

• They knew that the ESOP’s auditor expressly declined to provide an audit opinion 

on the accuracy of the ESOP’s financial statements including the reported value of 

the Triad stock from 2015 to 2018. 

• They knew that the unrealistic and unreliable financial projections would result in 

the ESOP overpaying for Triad stock in the Transaction.

• Based on their position and unique access to company financial information, they 

knowingly participated in the fiduciary violations of GreatBanc alleged above, and 

knew that GreatBanc had no basis for approving the Transaction.

146. Thus, Caito, Hardie, and McCormick are alternatively liable for appropriate 

equitable relief as nonfiduciary parties in interest, including the disgorgement of any ill-gotten 

gains they received. 

147. Caito, Hardie, and McCormick are also noteholders of the ESOP’s loan used to 

complete the transaction. As parties to the loan and signatories of the loan agreements, they

knowingly participated in each payment by the ESOP of principal and/or interest to themselves, 

each of which constitutes a separate violation of ERISA § 406(a)(1)(D), 29 U.S.C. § 

1106(a)(1)(D). For this reason as well, Caito, Hardie, and McCormick are liable for appropriate 

equitable relief under ERISA.

148. Defendants Caito, Hardie and McCormick are liable for appropriate relief under 

ERISA § 409, 29 U.S.C. § 1109, and ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2) for the prohibited 

transactions set forth herein.

149. Alternatively, Defendants Caito, Hardie and McCormick are liable as non-fiduciary 

parties in interest for appropriate equitable relief under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3) 

for their knowing participation in the prohibited transactions set forth herein.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 34 of 38 PageID #:34
35

Count V

Co-Fiduciary Liability Under ERISA § 405(a), 29 U.S.C. §§ 1105(a)(1) and (a)(3)

(Against Defendants Caito, Hardie, and McCormick)

150. ERISA § 405(a)(1), 29 U.S.C. § 1105(a)(1) provides that a fiduciary “with respect 

to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to 

the same plan ... if he participates knowingly in, or knowingly undertakes to conceal, an act or

omission of such other fiduciary[.]”

151. Co-Presidents Caito, Hardie, McCormick were the highest-level management at 

Triad and were involved in and directed the preparation of the financial projections underlying the 

stock appraisal relied upon by GreatBanc in determining (i) the purchase price of $58.05 per share 

the ESOP paid for the Company; and (ii) the subsequent valuations of Triad stock at year end 2015 

to 2018.

152. The Co-Presidents are also members of Triad’s Board of Directors at all relevant 

times.

153. Given their role in the preparation of Triad’s financial statements as well as the 

ESOP’s financial statements, the Co-Presidents knew that the projections were unrealistic and 

unreliable. 

154. The Co-Presidents also knew that the ESOP’s auditor expressly declined to provide 

an audit opinion on the accuracy of the ESOP’s financial statements including the reported value 

of the Triad stock from 2015 to 2018. Given that those unrealistic and unreliable financial 

projections were the foundation of the discounted cash flow method for the Triad stock from 2015 

to 2018, the Co-Presidents also knew that the incorrect financial projections they prepared would 

result in the ESOP overpaying for Triad stock in the Transaction.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 35 of 38 PageID #:35
36

155. Based on their position and unique access to company financial information, the 

Co-Presidents knowingly participated in the fiduciary violations of GreatBanc alleged above, and 

knew that GreatBanc had no basis for approving the Transaction. 

156. As such, under ERISA § 405(a)(1), 29 U.S.C. § 1105(a)(1), the Co-Presidents are 

liable as co-fiduciaries for the ESOP’s losses as a result of GreatBanc’s fiduciary violations.

157. Defendants Caito, Hardie, and McCormick are liable as co-fiduciaries for 

appropriate relief under ERISA § 409, 29 U.S.C. § 1109, and ERISA §§ 502(a)(2) and (3), 29 

U.S.C. §§ 1132(a)(2).

VII. PRAYER FOR RELIEF

Plaintiff on behalf of himself and the Class, prays that judgment be entered against 

Defendants on each Count and that the Class be awarded the following relief:

A. Declare that GreatBanc and the Board Defendants have each breached their 

fiduciary duties under ERISA;

B. Enjoin GreatBanc and the Board Defendants from further violations of their 

fiduciary responsibilities, obligations. and duties;

C. Remove GreatBanc as the Trustee of the Triad ESOP or bar it from serving as a 

fiduciary of the ESOP in the future;

D. Appoint a new independent fiduciary to manage the Triad ESOP and order the costs 

of such independent fiduciary be paid for by Defendants;

E. Order each fiduciary found to have violated ERISA to restore all the losses resulting 

from their fiduciary breaches and to disgorge all profits made through use of assets 

of the ESOP;

F. Order that Defendants provide other appropriate equitable relief to the ESOP, 

including but not limited to providing an accounting for profits, ordering surcharge 

against Defendants to restore losses to the ESOP, and imposing a constructive trust 

and/or equitable lien on any funds wrongfully held by any of the Defendants;

G. An order enjoining the Defendants from dissipating any of the proceeds they 

received from the 2015 Sale held in their actual or constructive possession until the 

ESOP participants’ rights can be adjudicated;

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 36 of 38 PageID #:36
37

H. An order enjoining the Defendants from transferring or disposing of any of the 

proceeds they received from the 2015 Sale to any person or entity, which would 

prejudice, frustrate, or impair the ESOP participants’ ability to recover the same;

I. Require Defendants to pay attorneys’ fees and costs pursuant to ERISA § 502(g), 

29 U.S.C. § 1132(g), and/or order payment of fees and expenses to Plaintiff’s 

counsel on the basis of the common benefit or common fund doctrine out of any 

money recovered for the Class;

J. Award pre-judgment interest and post-judgment interest; and

K. Award such other and further relief that the Court determines is appropriate

pursuant to ERISA § 502(a)(2) and/or § 502(a)(3), 29 U.S.C. § 1132(a)(2) and/or 

1132(a)(3), or pursuant to Rule 54(c) of the Federal Rules of Civil Procedure, or 

that is equitable and just.

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 37 of 38 PageID #:37
38

April 15, 2020 Respectfully submitted,

COHEN MILSTEIN SELLERS & TOLL 

PLLC

 /s/ Carol V. Gilden

Carol V. Gilden, Illinois Bar: 6185530

190 South LaSalle Street, Suite 1705

Chicago, IL 60603

Tel: (312) 357-0370 / Fax: (312) 357-0369

cgilden@cohenmilstein.com

Michelle C. Yau, pro hac vice forthcoming 

Mary J. Bortscheller, Illinois Bar: 6304457

Daniel R. Sutter, pro hac vice forthcoming 

1100 New York Ave. NW ● Fifth Floor

Washington, DC 20005

(202) 408-4600

myau@cohenmilstein.com

mbortscheller@cohenmilstein.com

dsutter@cohenmilstein.com

NICHOLS KASTER, PLLP

Kai H. Richter, pro hac vice forthcoming 

Paul Lukas admitted 

Grace Chanin, pro hac vice forthcoming 

4600 IDS Center, 80 S 8th Street

Minneapolis, MN 55402

Telephone: 612-256-3200

krichter@nka.com

lukas@nka.com

gchanin@nka.com

Attorneys for Plaintiffs

Case: 1:20-cv-02350 Document #: 1 Filed: 04/15/20 Page 38 of 38 PageID #:38