If lawsuits had not shut down his company, Barry Stokes believes, problems with the retirement funds that 1Point Solutions managed could have been figured out and resolved.
Instead, Stokes tells NashvillePost.com, legal maneuvering created a situation in which 46,000 participants in accounts that 1Point managed couldn’t pay for medical bills. It also meant that the 1Point's 80 employees were left without insurance.
“Stites & Harbison came in with all of the surgical precision of a sledgehammer,” he said of the law firm representing Beck/Arnley Worldparts, which filed the first of four recent lawsuits claiming Stokes and his company misappropriated millions in 401(k) funds.
A fifth legal action, filed in April by the Manhattan-based Jewish Fund for Justice, has been resolved. The fund had sued in New York when it didn't get back $337,000 related to a tax-deferred annuity retirement plan after 1Point resigned as the administrator. Steve Fahrer, the fund's chairman, said his organization received the money before the recent lawsuits were filed, although the court records do not yet show the case as closed.
Stokes did not speak to the press in the first weeks after NashvillePost.com broke the news of his company's troubles on September 15. He said he decided to break his silence after 1Point entered bankruptcy proceedings last week, explaining that he now wants to deal with what he calls “rumors, innuendo and false information” that have come out about the company and about what happened with the clients' 401(k) money.
Stokes said he couldn’t give specifics about the location of funds that the civil lawsuits have claimed he and his company have misappropriated. But he said he didn’t watch the accounts day-to-day, indicating that problems may have occurred with employees overseeing the accounts. He said a clerical employee was fired at one point because of issues involving the 401(k) accounts.
Several former employees dispute Stokes’ version, describing him as a micromanager who handled the flow of funds in the accounts himself. While there were a couple of employees who handled account statements, the ex-workers have said, the employees could only make updates with information given to them.
Lawyers and a bankruptcy court will figure out the paper trail and determine what actually happened to the money. It would have been easier, Stokes said, if the companies suing had just stuck with shutting down the 401(k) accounts. Those accounts represented about 3 to 5 percent of the company's business, he said.
Stokes said Beck/Arnley’s law firm, Stites & Harbison, however, chose to take “a lot of inflammatory statements” into court and obtained the emergency restraining order that froze everything, requiring him to lay off all 80 employees and close the business. “It was very unproductive,” he said.
He challenged assertions in the initial lawsuit that brought about his company’s demise, specifically the statement that the 401(k) funds were "gone and likely unrecoverable." He says an affidavit misquoted the attorney to whom the statement is attributed. Gail Holt, Beck/Arnley’s vice president for administration, said in the affidavit that Neal & Harwell's Tom Dundon made the statement, as well as a comment that money had been lost in bad business ventures.
Stokes described Dundon as an acquaintance with whom he’s done business but he was by no means representing the company at the time. “He wasn’t authorized to speak for the company,” he said.
Three other lawsuits followed, essentially making the same claims as Beck/Arnley's. Everything began to unravel with the rest of 1Point's business. When customers couldn't access their medical spending accounts, they began terminating contracts with 1Point to administer the accounts. Others have been in the dark on what to do.
Then came the bankruptcy filing. Stokes said it has been characterized as an act that the clients pushed for. In reality, he asserts, he and his attorneys pushed for the involuntary bankruptcy so that a trustee could sort through the accounts. "That's the most expedient way to do it," he said.
Meanwhile, Stokes said he has been trying to help get the participants of accounts his company managed with other administrators and help 1Point's former employees have a "soft landing." He said he has talked to five administrators but wouldn't say which ones, only that they are located in Austin, Texas; New Orleans, Nashua, N.H.; Los Angeles; and Raleigh, N.C.
"I've literally been working night and day to resolve these issues," he said. "I'm also confident that every single participant is going to get every penny due them."
- ALEX B FRUIN INHERITANCE TRUST; CANDACE F STEFANSIC INHERITANCE TRUST; CANDANCE F STEFANSIC INHERITANCE TRUST; FRUIN, ALEX B TRUSTEE; FRUIN ALEX B INHERITANCE TRUST; STEFANSIC, CANDACE F TRUSTEE; STEFANSIC CANDACE F INHERITANCE TRUST; STEFANSIC CANDANCE F INHERITANCE TRUST
- ROSS, BRIDGETT D
- COOKE, ETHEN LANYARD TRUSTEE; COOKE, ETHEN LEWIS ESTATE
- JACOBS, JESSICA ALEXANDRA; JACOBS, ERIKA BESS