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Emergi-Lite moves ahead with relocation despite loss of 401(k) fund >BY

March 1, 2003
Still reeling from the shock that came to light last November, Emergi-Lite, Inc., loaded trailers in Westbrook, Conn., last month and headed for a new

Still reeling from the shock that came to light last November, Emergi-Lite, Inc., loaded trailers in Westbrook, Conn., last month and headed for a new headquarters in St. Matthews, S.C.

The company had told its 100 employees last September about the plan to move. Although Emergi-Lite offered to relocate some personnel to the new headquarters, most of the employees decided to stay in Connecticut. Nobody knew at the time that the decision to move, and the sudden departure of so many employees, would reveal a $2 million shortfall in the company's 401(k) plan and lead to the disappearance of the investment manager who oversaw the fund.

In November, with no warning, Emergi-Lite's president and chief executive officer received a letter from Gary Moore of Moore Benefit Systems, Granby, Conn., trustee of the company's 401(k) plan. In the letter, Moore described how he had lost the company's money in 1991/1992 and had not invested any money since that time.

According to Emergi-Lite's attorney Alan Scheer, Emergi-Lite had contracted with Moore many years ago to handle its 401(k) plan. The company faithfully put the employees' contributions into the 401(k) plan as required by law, he said. During the years, Moore issued quarterly reports and filled out annual returns with the government. If employees retired or left the company or if they took out a loan, they would get their checks immediately. There were no signs the fund was mismanaged.

Moore managed to hide the problem by paying out withdraws from employees' contributions, said Scheer and the attorney for the employees, Thomas Moukawsher. The announcement of the move may have forced the trustee to admit his wrongdoing.

Once Emergi-Lite officials learned about the incident, they notified the U.S. Department of Labor Pension and Welfare Registration about the alleged wrongdoing, said Scheer.

Moukawsher said he filed an "administrative demand" with the company for restitution. However, if the matter isn't resolved in 90 days, a suit will be filed in federal court, he said.

The employees are also pursuing criminal liability against the trustee, who is under investigation by the FBI.

About the Author

Doug Chandler | Senior Staff Writer

Doug has been reporting and writing on the electrical industry for Electrical Wholesaling and Electrical Marketing since 1992 and still finds the industry’s evolution and the characters who inhabit its companies endlessly fascinating. That was true even before e-commerce, LED lighting and distributed generation began to disrupt so many of the electrical industry’s traditional practices.

Doug earned a BA in English Literature from the University of Kansas after spending a few years in KU’s William Allen White School of Journalism, then deciding he absolutely did not want to be a journalist. In the company of his wife, two kids, two dogs and two cats, he spends a lot of time in the garden and the kitchen – growing food, cooking, brewing beer – and helping to run the family coffee shop.

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