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

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.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.