Stokes faces fifth lawsuit, bankruptcy trustee claims of misappropriation

Another company comes forward claiming the company misappropriated retirement funds of $1.3 million, while trustee outlines his use of client 401(k) money for company operations, Japanese art and more

Email | Print By Richard Lawson

10-11-2006 5:59 AM — A fifth lawsuit has been filed against Barry Stokes, founder of employee benefits company 1Point Solutions, claiming he misappropriated retirement funds. The legal action comes as the bankruptcy trustee overseeing 1Point has revealed Stokes' use of millions in client money for personal purposes and to fund his company.

The trustee filed to bring Stokes personally into the 1Point bankruptcy. That filing, available at this link, is perhaps the most damning revelation to date about Stokes' handling of other people's money.

It shows Stokes intricately linked with handling cash as it flowed through 1Point. According to the filing, Stokes co-mingled client 401(k) money in an account at Fifth Third Bank and transferred money from it into 1Point's general account at AmSouth Bank, as well as pulling money out for personal use. Bank records with the filing show that he transferred $5.6 million into the AmSouth account, but it isn't there now. "On information and belief, that total does constitute misappropriated transfer funds," trustee John McLemore said in the filing.

The trustee identified four tax identification numbers that were registered to Stokes, not 1Point. "Mr. Stokes was the person who could manipulate accounts to suit his purposes, either for the business or himself," the filing said. "There may be accounts that he can still manipulate."

Of the money that went for apparent personal use, $9,300 was transferred to a Tokyo art gallery. According to the filing, Stokes has an extensive collection of Japanese art that is believed to have been insured for $2.5 million. Stokes apparently has intended to sell the artwork despite a temporary restraining order barring him from selling anything, the filing said. At one time, he transferred $100,000 to a trust of Donald Rojas, who the trustee believes is Stokes' father-in-law. More money was transferred into Stokes' personal account.

Meanwhile, Atlanta-based E.F.S. Inc. and Norcross, Ga., affiliate Grassworx SE have sued Stokes individually, claiming he misappropriated retirement funds that totaled approximately $1.3 million. According to the lawsuit, filed for the plaintiffs by Robert Mendes and Tara Kraemer, both of MGLAW, EFS hired 1Point in 2002 to administer its retirement plan. Grassworx became affiliated with EFS in 2004 and a plan was established for it then with 1Point as the administrator.

In May, EFS sought to transfer the retirement accounts to another administrator, but 1Point and Stokes never transferred the money despite saying the transfer would occur, according to the lawsuit. After the company sought an explanation, the lawsuit said, in August Stokes set Oct. 4 as the transfer date. The companies deemed that transfer date as unacceptable and demanded transfer within five days. That didn't happen and repeated attempts to get the transfer done failed.

On Sept. 27, the companies saw the media coverage of the four other lawsuits against 1Point and Stokes, the lawsuit said. By then, 1Point had been shut down.