Gruber Systems Inc. and CEO John Hoskinson to pay $1.1M
Gruber Systems Inc. has agreed to pay $1.1 million to its employee stock ownership plan to settle a suit brought by the U.S. Department of Labor after it was alleged that the plan purchased company stock for more than its fair market value. Gruber makes equipment used to manufacture bathtub and counter molds for residential construction.
The Valencia-based company was accused of steering money into stock purchases to fund the financially strapped company, instead of funding the retirement accounts of the company’s retirees.
The consent judgment also bars CEO and co-defendant, John Hoskinson, from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan. Gruber and Hoskinson also agreed to pay $220,000 in civil penalties.
The company had been losing money on an investment in China and faced further revenue problems with a declining housing market. Because of their situation, the company and Hoskinson transferred more than $2 million from an employee stock plan to the company in exchange for company stock that had been assessed at values much higher than its fair market value. The plan participants lost money on this investment, and the Department of Labor brought suit in May 2015.
Call a Los Angeles Stock Fraud Attorney Today
If you were employed at Gruber Systems Inc. and lost the money in your retirement account, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles stock fraud attorney for a consultation today.