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[jrs]

Hello,

I need some guidance. I began working for a company in November 2006. I received my first ESOP statement in 2008 for 12/31/2007. I had 40k in the account on the statement. For period ending 12/31/2008, I had 44k. I was let go in June 2012 due to layoffs. The company was not financially sound. They did not file for bankruptcy. They restructured internally. No loans assumed.

Since the 12/31/2008 statements were released, the ESOP has not released statements to any of the participants.

I have managed to locate the 5500 filed annually with the DOL and the ESOP does still exist. It is not abandoned. So I started emailing my previous employer asking for the 2009-2013 statements on a very regular basis. They finally mailed me 2010-2012 statements just this week.

Herein are the problems I have aside from ESOP participants still not getting information, annual statements, or plan summary descriptions following ERISA.

1.) They have not supplied me my 2009 statement.

2.) The 2010 statement shows I have a beginning balance of shares. The statement also shows the value of those shares is zero.

3.) The 2011 statement shows I have over 2000 shares still yet the value of those shares is zero.

4.) The 2012 statement shows I have over 2000 shares still yet the value of those shares is zero.

5.) The 2012 statement also shows my vesting percentage as zero which is not correct. The previous statements show my vesting percentage as 100% which is correct.

6.) I've also requested summary plan descriptions/annual reports for the years 2009-2013.

7.) What occurred during the year of 2009 where my account dropped from 44k to zero?

8.) I do recall when I worked for the company that one of the owners withdrew $1,000,000 out of the bank on 12/31. I suspect he may have drawn retained earnings down to zero so the company had no cash or equity.

I've spoken briefly with the DOL, they will investigate, I just have to give them a copy of my email threads requesting the docs and a copy of my statements. I've also spoken to one of the VP's (an old friend who is still there). He said I should nail their butts to the wall. He had over 100k in the ESOP. Given all the info above, my gut feeling is there may be criminal negligence here but I really have no idea. At a minimum fiduciary responsibilities appear to have been side stepped.

Do you folks have any suggestions other than to say I'm up a creek here without a paddle? What would cause my account value to drop 44k to zero within one years time?

[My 2 cents]

Claiming no expertise with respect to your situation or ESOP plans at all, if the ESOP was invested primarily in your employer's stock (it being my understanding of ESOPs that the assets are normally invested in the stock of the sponsoring employer), if the net worth of your employer went to zero, then (alas!) so would the value of your account.

Can an argument be made that the owner who withdrew $1 million had either embezzled the funds or defrauded the company's stockholders (which would include participants in the ESOP) and creditors by doing so?

[ESOP Guy]

Sorry for your situation but I think you have done all you can do at this point if the DOL is looking into it. The reality is while you are correct not giving out statements and other information is a violation if the company has no money there really is no one to fine.I would follow up now and then wtih the DOL. I doubt they can tell you much but at least you keep this company in front of them. I am normally not a go to the DOL first recommender but it sounds like you tried to work with the company and they aren't willing to work back at all.

At this point your only hope is if the DOL determines the person you call "owner" (not clear if the ESOP owned 100% of the company or just some) violated some fiduciary duty the DOL has been known to go to court and get such people to pay out of personal assets on behalf of the plan participants. But you know how slowly the courts move.

As for the value drop it sounds like the stock price hit zero. I know it sounds odd for the appraiser to say there was value to no value like that but I see often. It takes a while for appraiser to really come to believe the company has little to no chance to recover and appraisals tend to be the present value of future earnings. As long as there was a belief there would be meaningful future earnings at some point the appraisal would show value. Then it became real clear there would no longer be meaningful future earnings. So the stock price fell to zero as it must be the current liabilities exceed the assets.

You don't say what happened to the 401(k) assets in the ESOP. Hopefully they were invested in something other then company stock and you were able to get a distribution of those assets.