The Associated Press reports that the books show Stokes sent at least $100,000 to his father-in-law’s trust fund and another smaller amount to a Tokyo art dealer. The trustee said his findings have made it clear that the estimated 40,000 people with retirement or other types of benefits managed by 1Point will not receive checks for what they are owed any time soon.
According to court documents filed by the trustee, employee 401(k) money and other funds coming to 1Point from about 40 of its clients were at times co-mingled into a single “1Point 401K” account at Fifth Third Bank, the AP said. The funds were then used to pay Stokes’ business and personal expenses and to settle a lawsuit filed this spring demanding the return of retirement funds.
As one example the trustee said, in the period between May 19 and June 19, Cash Acme Worldwide, a Birmingham, Alabama.-based thermostatic device manufacturer, transferred about $650,000 to 1Point for investment in the selected investment funds of individual employees. The money went to the account at Fifth Third Bank and never reached the investments intended by the employees.
The trustee claimed Stokes began paying bills and making purchases when the Cash Acme funds came in. Aside from the transfer to his father-in-law’s trust fund and the art dealer, wire payouts made by Stokes during this time included $30,000 to his personal account, $344,209.61 to settle the lawsuit filed in New York by the Jewish Fund for Justice, and $90,000 to 1Point’s general account.
The total amount of client funds transferred could have been more than $5.6 million, according to the trustee’s testimony, and he said there may be other undiscovered accounts that Stokes can still access.
More Actions Against CEO
On the same day of the trustee's court filing, two affiliated Georgia companies filed the fifth lawsuit against Stokes and 1Point, claiming $1.3 million in employee 401(k) funds transferred to 1Point are missing, according to the AP. The fourth lawsuit against the firm was filed in September (See Suits Pile Up Against Nashville Benefits Firm). The AP revealed that a criminal investigation by the FBI, the criminal division of the Internal Revenue Service and the US attorney's office also appears to be under way.
A 1Point creditor has asked that the CEO be put in jail, saying he is a danger for fleeing and spending even more of clients' money, according to the AP. The trustee also said in a court filing that Stokes has tried to come up with cash quickly by selling as much as $1 million of Japanese block prints from his prized art collection in recent weeks and that he found a 200-page manual on how to change a person's identity on a computer at Stokes' office.
In related news, the Chattanoogan reports that the Tennessee Republican Caucus said it is returning to 1Point a campaign contribution from the benefits firm the Caucus discovered it received from Stokes in January of 2003. "Because of the very real possibility that the Tennessee Republican Caucus may have received money stolen from these pension funds, Republican Leadership has placed that political contribution money in escrow to be returned to its rightful owners subject to the determination of Federal Court. Our Caucuses want no part in receiving stolen pension funds - or any other stolen money or goods for that matter," the group said in a statement, according to the news report.