Judge Trauger recuses herself from 1Point lawsuits as a second one is filed

Another company has sued employee benefits and retirement fund advisor 1Point Solutions and founder Barry Stokes -- after learning of prior lawsuits through NashvillePost.com

Email | Print By Richard Lawson

Barry Stokes

U.S. District Judge Aleta A. Trauger has recused herself from hearing lawsuits involving employee benefits and retirement fund advisor 1Point Solutions and its founder Barry Stokes, a day after a third lawsuit was filed against them.

The cases have been turned over to Senior Judge John T. Nixon. Orders making the change were entered today after Reliance Worldwide Corp., which does business as Cash Acme, filed suit claiming Dickson-based 1Point and Stokes has mishandled its 401K funds. Reliance filed its lawsuit, a copy of which is available at this link, after learning what allegedly happened with Beck/Arnley Worldparts Corp. over the weekend through NashvillePost.com and doing its own investigation. NashvillePost.com's story from last Friday is an exhibit to Reliance's lawsuit.

Providence, R.I.-based Reliance is seeking a temporary restraining order to prevent 1Point or Stokes from handling the assets. Beck/Arnley has already obtained such an order. Last week, Beck/Arnley filed suit against 1Point and Stokes claiming they misappropriated the company's $7 million in 401K funds to the point that all of the money has disappeared. Reliance's lawsuit didn't disclose the amount of Cash Acme's 401(k) assets that had been placed with 1Point when it was hired in May. Woody Woodruff, an attorney with Waller Lansden Dortch & Davis representing Reliance, wouldn't comment.

Trauger said she couldn't disclose why she recused herself. "We just don't release that," she said. "It's not a matter of public record."

But it appears that the her recusal is to avoid any possible conflicts of interest involving her husband Byron Trauger's law firm. Byron Trauger told NashvillePost.com his law partner Bob Tuke has represented Stokes on a family law matter. The firm has never represented Stokes on any business matter, Trauger said.

In the latest lawsuit, Reliance, which makes water control valves at its Cash Acme plant in Cullman, Ala., said it began investigating its 401(k) account with 1Point after seeing Friday's story on the lawsuit. On Monday, company officials tried contacting 1Point, but no one answered the phone, according to an affidavit by C. Ross Yearwood, Reliance's financial controller. A 1Point representative called back yesterday but apparently wasn't able to provide more information and didn't have access to the bank statements or records.

Yearwood said he called Fifth Third Bank on Monday to inquire about the balance in Reliance's 401(k) plan account. "I was informed that there was no account in the name of or for the benefit of Reliance and/or Cash Acme," Yearwood said in his affidavit. "Instead, there was only an account for 1Point Solutions, with its taxpayer identification number. Fifth Third would provide no more information due to privacy concerns."

When 1Point was hired, Reliance transferred assets and records from Fidelity Management Trust Co. to 1Point. Some 72 past and current employees are enrolled in the plan.

In wording identical to that of the Beck/Arnley lawsuit, Reliance claims "1Point and Stokes engaged in a deliberate course of misconduct to misappropriate plan assets for their own use and purpose." And the company claims 1Point and Stokes sought to hide their actions, again the same claim as in the Beck/Arnley case.

In addition to having companies as customers, 1Point provides its services to governments. Metro Nashville Public Schools, Knox and Hamilton County Schools, the University of Memphis, the University of Nevada at Reno, the Texas Municipal League, and the state of Louisiana are among its clients.

This summer, Metro Finance Director David Manning lit into 1Point officials during a Metro Benefits Board meeting over customer service. The vacationing Manning said today that the company handles a health savings account for Metro.

"They weren't doing a very good job of answering questions … that day or in general," Manning said. "They were not meeting our expectations on customer service."