California Marketer Claims Plan Change Caused Recordkeeper to Retaliate

The retirement plan trustee for a Los Angeles marketing agency, NVE Experience Agency LLC, has sued retirement plan recordkeeper and third-party administrator to the plan—Pension Systems Corporation doing business as 401(k) Easy—alleging the firm took $56,934.50 in retirement assets directly from the plan, in a scheme to defraud the plan and block the plan’s new, incoming recordkeeper.  

Each year NVE had renewed 401(k) Easy’s recordkeeping and third-party administration services, until 2023, when it notified the company of the plan’s intention to change recordkeepers at the end of the calendar year.

The company claims its decision to cut business ties with 401(k) Easy prompted the recordkeeper firm to punish NVE with excessive fees and frustrating the plan’s move to the new recordkeeper, attorneys argue in the complaint brought by NVE’s retirement plan trustee Brett Hyman. The lawsuit was filed in the U.S. District Court for the Central District of California.

“In reaction, and in an apparent attempt to force NVE to pay excessive fees that 401(k) Easy had unilaterally and arbitrarily set, 401(k) Easy repeatedly blocked all access by plaintiffs and plan participants to the online administration and investment process of the plan which prevented NVE from depositing contributions to, and plan participants from making withdrawals from, the plan,” argued NVE attorneys, in the complaint. “Further, 401(k) Easy created a false paper trail, backdating documents, to cover up that 401(k) Easy had misappropriated assets of the trust for the plan without plaintiffs’ knowledge or consent.”

NVE is requesting the court order James Gilbert—founder and CEO of Pension Systems Corporation—to repay the assets misappropriated and unilaterally transferred from the plan, with lost earnings and interest.

Blocking participant’s access to the plan was done at Gilbert’s instruction, argues the complaint.   

“All of 401(k) Easy’s actions with respect to the plan were done at the direction of Defendant Gilbert, who actively participated in this fraud on the plan,” argue Hyman’s attorneys.

The complaint also seeks an injunction, barring the company and Gilbert from performing services to any Employee Retirement Income Security Act-covered employee benefit plans in the future; award of attorney’s fees and costs; and the award of damages. 

NVE hired 401(k) Easy to provide services to the plan in 2011.

The Night Vision Entertainment 401(k) P/S Plan held $2.873 million in retirement assets for 61 participants as of the firm’s most recent filing to the Department of Labor.

Representatives of the attorneys for neither 401(k) Easy nor the plaintiff responded to requests for comment. Representatives of NVE Experience Agency, LLC did not respond to a request for comment.

The case is NVE Experience Agency, LLC in its capacity as Plan Sponsor and Plan Administrator of the Night Vision Entertainment Inc 401(k) Plan et al. v Pension Systems Corporation (DBA) 401(k) Easy.