1Point plaintiff: Show me the money

Counsel for company suing 1Point Solutions and its founder Barry Stokes argues he can't take the Fifth on location of assets and what happened to 401K funds

Email | Print By Richard Lawson

Barry Stokes

By gosh, Beck/Arnley Worldparts Corp. absolutely wants to know the location of its employees' $7 million in 401K money that had been entrusted to Barry Stokes, founder of 1Point Solutions.

And the U.S. Constitution's Fifth Amendment shouldn't stop the company's attorneys from finding out, Beck/Arnley's attorney Dianna Baker Shew of Stites & Harbison argued on Friday in deposing Stokes. Beck/Arnley yesterday filed a motion to compel Stokes to answer the 95 questions that were asked or going to be asked in his deposition on Friday.

Smyrna-based Beck/Arnley was the first of four companies to sue Stokes and 1Point over lost 401K funds. In Beck/Arnley's case, the sum is $7 million of its employees' retirement money.

On advise of his Round Rock, Texas-based attorney Paul Buchanan, Stokes took the Fifth on every question regarding his own assets as well as his company's assets. He even invoked the self-incrimination amendment on questions of whether he had taken any drugs of any kind in the past 24 hours, according to a transcript of the deposition filed late yesterday. Shew asked, "Is there any reason that you cannot or will not give truthful testimony today?" Stokes answered, "On advice of counsel, I take the Fifth."

Buchanan's concern is that even though it’s a civil case, Stokes' answers regarding assets could lead to criminal charges. "If you want to know where our assets are, in the criminal area we could call those possibly fruits of the poisonous tree," he said. "That's why I think it is incriminating to possibly say … where is the stash of money hidden somewhere, or where is your asset here, or where is your asset there."

Whether or not Stokes could take the Fifth was the subject of discussion between Stokes attorneys and Beck/Arnley's counsel, with Magistrate Judge E. Clifton Knowles getting on the phone with the attorneys.

Buchanan seemed to take a broad conservative approach on how the questions should be answered and was willing to push the issue to Knowles. Shew's tactic was to get the questions on the record to the point that the judge had to be involved.

"Just so you know, my position is that these kinds of questions are simply not protected by the Fifth Amendment," Shew said. "I think it's pretty clear."

Buchanan responded, "If I thought I could let him answer them with a caveat, but boy, a lot of the case law just says once I make the stupid decision to open it up, you know, he's dead."

Later, when the judge was on the phone, Stokes' attorney tossed out an example of answer that would be incrimination. "What if his answer was: 'I stole it all and put it in my backyard?' I mean that would be highly, highly, highly incriminating, and it wouldn't require any further investigation," he said. "If there are things she wants to get in terms of records, she can send subpoenas out to the corporation."

But the issue of the Fifth even rolled over into deposing the company, particularly a representative of 1Point, which Shew said presumably is Stokes. "The corporation, of course, has no Fifth Amendment privilege," she noted. "We are entitled to a witness who is going to answer questions on behalf of the corporation and not invoke the privilege to protect himself and thereby not answer questions on behalf of the corporation. So unless they have another witness to offer who can answer those types of questions for the corporation, we have a real problem."

Buchanan noted that 1Point should provide someone other than Stokes to speak for the company. "I don't think he can waive his Fifth Amendment right to testifying for and on behalf of the corporation," the attorney said. "But we can serve her somebody else who can answer all of the questions I think she wants to know, which is tracing the money in and money out."

The problem is there is nobody else, according to Kevin Sharp of Nashville firm Drescher & Sharp, counsel for 1Point. "There are no other employees," he said. "There are no other owners."

Sharp said the temporary restraining order essentially shutdown the company and everyone was let go who worked at 1Point. Knowles asked if there would be people around who would have the information. Sharp said, "They may have the information, but you can't pull people off the street who don't have a connection with the corporation to be the corporate rep."

Knowles declined to rule on any Fifth Amendment issues and suggested the Beck/Arnley's attorneys file the motion to compel Stokes to answer along with the questions and why each should be answered. In the motion, Beck/Arnley's attorneys argued that Stokes should answer questions that pose no real or applicable threat of criminal prosecution.

This morning, meanwhile, Beck/Arnley filed a new motion seeking a preliminary injunction that would further restrict Stokes from taking actions that might conceal any past deeds or affect any funds he controls. Among the terms sought is a prohibition against traveling outside the continental U.S., a request Stokes and his counsel may have seen coming: On Friday, he surrendered his passport to Sharp.