A few months ago, my FSA administrator company went bankrupt. My company covered my potential exposure — about $380 — so after reading some of the headlines, I forgot about it.
Today, I received a copy of the blog posting used as a vehicle for communicating to the broad group of people affected by this. The trustee, Mr. McLemore, posts clear explanations for what they’ve found so far. I especially like the candor in his synopsis:
“Having been involved daily in the unscrambling of this financial train wreck for almost three months, we are beginning to get a good grasp of the scope of the problems.”
As the news stories back in September suggested, 1Point Solutions was exercising artistic license with its financial doings. Funds were co-mingled and deposits were in accounts under 1Point’s name:
“1Point convinced many of its customers to turn over custody of the funds held in their 401(k) Plans [… ] None of these funds were invested as promised. […] All of the 401(k) funds have been spent.”
The company sounds like the Spawn of Enron using 401(k) deposits to fund FSA claims and, as McLemore notes towards at the end of his blog entry, furthering Barry Stokes’ (1Point’s CEO) Japanese Woodblock Prints.
“[T]he collection is so large [over 2,200 pieces] and the international market for Japanese woodblock prints so small, the Trustee was warned repeatedly not to offer the entire collection for sale in one auction.”
Because there’s no insurance-like equivalent to the Federal Deposit Insurance Corporation, the 401(k) customers, of which I was thankfully not, are screwed. The trustee has enlisted help to navigate through the ERISA regulations, purported to be “as complicated as the tax code or the Bankruptcy Code.”