Ex-Company Executives of Irvine Firm to Pay Back 401(k) Funds

Archived News Release — Caution: Information may be out of date.

San Francisco, California - The U.S. Department of Labor (DOL) has reached an agreement with three executives of now-defunct Irvine, California-based Esynch Corporation providing for them to pay more than $23,500 owed to11 former employees and a civil monetary penalty to the federal government of more than $4,700. The agreement resolves a lawsuit alleging the company failed to forward employee contributions to its 401(k) retirement savings plan.

“The department is committed to protecting the benefits of America’s workers and retirees,” said Billy Beaver, regional director of DOL’s Employee Benefits Security Administration (EBSA) in Los Angeles, which investigated the case. “We continue to vigorously enforce the Employment Retirement Security Act (ERISA), which requires that employee contributions be forwarded to 401(k) plans in a timely manner.”

Thomas Hemingway of Anaheim Hills, Richard Hutt of Orange, and Robert Way of Irvine violated ERISA by failing to ensure that employee contributions withheld from participants’ paychecks were transferred to the 401(k) plan. The defendants have agreed to pay an independent fiduciary to distribute the funds to the former Esynch employees. The defendants and their spouses have forfeited interests they held in the 401(k) plan.

The agreement also permanently bars Hutt from future service as a fiduciary of any ERISA-covered employee benefit plan. Way has been barred from such a position for 10 years. Esynch developed and marketed media rights and management solutions. It currently conducts business as Mergence, Inc.

The department’s suit resulted from an investigation conducted by EBSA’s Los Angeles regional office which discovered that between January 2000 and February 2002, the defendants failed to transfer money deducted from employee paychecks to the Esynch Corporation 401(k) Retirement Savings Plan. The company had used the funds to cover general business expenses. When the company persisted in not repaying the funds, the department filed a lawsuit in February with the U.S. District Court for the Central District of California.

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 www.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