US Labor Department files complaint seeking restoration of pension funds to the Bar-K 401(k) Plan in Lafayette, California

Date of Action:  December 19, 2014

Type of Action: Complaint

Names of Defendants: Bar-K Inc.; Walter Ng; Bruce Horwitz; and Bar-K 401(k) Plan

Allegations: Based on an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration, the Secretary of Labor filed a complaint alleging the following:

Prior to 2011, Ng, Horwitz and Bar-K Inc., as fiduciaries to the plan, engaged in transactions and activities that violated the Employee Retirement Income Security Act of 1974. The complaint alleges that defendants imprudently invested the Plan assets in two mortgage pools or received fees paid to them as a result of those investments. The two pools collected the investors’ funds and loaned the funds to homebuyers and developers. In return, the investors received a dividend or interest from the loan proceeds. However, from 2008 through 2010, many of the borrowers were unable to repay the loans and as a result, the pools became unable to repay their investors such as the Bar-K 401(k) plan. Mortgage Fund 08 LLC and RE Loans LLC filed for bankruptcy protection in 2011.

Resolution:  The department is asking the court to order defendants to restore all losses plus interest to the plan resulting from the fiduciary breaches caused by them, correct any prohibited transactions, and permanently enjoin Ng and Horwitz from serving as fiduciaries or service providers to any plan covered by the Employee Retirement Income Security. The lawsuit also seeks the appointment of an independent fiduciary with the plenary authority to administer the plan as necessary to conclude any plan-related matters.

Court: United States District Court, Northern District of California, Oakland Division

Docket Number: 4:14-cv-5549