According to a press release from the Department of Justice, the indictment alleges that from about January 1, 2002, until approximately October 13, 2006, Barry Stokes devised a scheme to steal more than $15 million in employee pension benefits from more than 1,092 participants. Instead of investing the 401(k) assets, he used the money for personal uses by pooling the plan assets in several accounts that he controlled.
The superseding indictment charges Stokes with 29 counts of embezzlement of Employee Retirement Income Security Act (ERISA) funds, 21 counts of mail fraud, 11 counts of wire fraud, 11 counts of money laundering, four counts of criminal contempt and two counts of bankruptcy fraud.
More specifically, the indictment alleges that the stolen funds were used for the purchase of an extensive collection of Japanese art, real estate purchases, the payment of operating expenses for 1Point, and an allowance for the payment of Stokes’ personal credit cards, etc. The indictment also states that Stokes prompted employees of 1Point Solutions to prepare and distribute false quarterly 401(k) account statements to employers and participants.
The former CEO was accused in September 2006 of stealing $7 million in retirement plan assets from Beck/Arnley Worldparts Corp., an auto parts company. The initial investigation into 1Point was sparked by plan participants’ complaints that their investment returns were not as high as the returns of family members who made similar investments (See Suit Claims Plan Administrator Stole $7M of Retirement Assets ).
Nashville-based Mastrapasqua Asset Management also filed suit against 1Point the same month – the fourth lawsuit at the time – alleging that about $800,000 of employee money was missing and that 1Point had failed to make the investments it reported for Mastrapasqua 401(k) plan participants. Additionally, Knox County Schools in Tennessee and state government employees in Louisiana began reporting difficulties using debit cards associated with their 1Point-managed flexible spending accounts. (See Suits Pile Up Against Nashville Benefits Firm ).
A fifth suit against Stokes a 1Point was filed in September, claiming that $1.3 million in employee 401(k) funds transferred to 1Point were missing (See 1Point CEO Misspent Client Money ).