Labor Department Sues Irvine Firm to Protect Employees’ 401(k) Funds

Archived News Release — Caution: Information may be out of date.

San Francisco, California - The U.S. Department of Labor has sued three former senior executives of Irvine-based Esynch Corporation for failing to collect delinquent employer contributions and failing to forward employee contributions to the company’s 401(k) plan. The business currently operates under the name of Mergence Corporation, also headquartered in Irvine.

The suit, filed in U.S District Court in Los Angeles, seeks $48,335 in employee and employer contributions and an estimated $6,775 in interest for 14 former employees who were plan participants. The defendants allegedly used employees’ contributions to pay business expenses.

The defendants named in the suit are Thomas Hemingway of Anaheim Hills, former chairman and chief executive officer of the company; Richard Hutt of Orange, former vice president, secretary, and treasurer; and Robert Way of Irvine, former vice president.

The department’s suit also seeks to permanently bar the three defendants from serving as fiduciaries or service providers of employee benefit plans covered by the Employee Retirement Income Security Act . In addition, the lawsuit seeks the appointment of an independent fiduciary to administer the plan, distribute its assets to plan participants and beneficiaries, and oversee the plan’s termination.

Esynch, a suspended corporation, developed and marketed media rights and management solutions, including video software for business and internet-based products.

“The department is committed to protecting the benefits of America’s workers and retirees,” said Billy Beaver, regional director of the Labor Department’s Employee Benefits Security Administration (EBSA) in Los Angeles, which investigated the case. “This is money that was deducted from employees’ paychecks that belongs to the workers. The department will not hesitate to seek recovery from plan sponsors and fiduciaries.”

The department’s suit resulted from an investigation conducted by EBSA’s Los Angeles regional office. In fiscal year 2005, EBSA achieved monetary results of $1.7 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Employers and workers with questions or concerns regarding their private-sector pension and health plans can contact the EBSA regional office in Los Angeles at 626.229.1000 or EBSA’s toll free number, 1.866.444.EBSA (3272). Information is also available from the agency’s Web site at ww.dol.gov/ebsa.

(Chao v. Esynch Corporation 401(k) Retirement Plan)
Civil Action No. CV 06-1180-DSF(Ex), United States District Court for the Central District of California.

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Archived News Release — Caution: Information may be out of date.

Contact Name: Roger Gayman
Phone Number: 415.975.4742