A former Brigantine Mayor / NJ Assemblyman has been accused of stealing employee pension funds. Lawsuit says Ed Kline and members of Kline Construction defrauded 14 union employees.
From NewJerseyGlobe.com: Kline, a Brigantine Republican, was elected to the NJ Assembly in 1983 and served until losing re-election in 1989. Kline also served as mayor of Brigantine but resigned in 1989 after voters changed the form of city government in what was viewed as a referendum on his leadership.
Fourteen former employees of Kline Construction filed a federal lawsuit alleging that their retirement accounts were mishandled, or were never set up in the first place.
Notable: As the mayor of Brigantine, Kline took heat for spending $1.5 million of municipal funds to buy land from his friend, former Brigantine Mayor John Rogge. According to reports, Rogge tried to sell his land to private developers, for far less than $1.5 million.
According to lawsuit against Kline Construction, they purposefully created “misleading and confusing pay statements” regarding retirement contributions. Losses to the employees could total “hundreds of thousands of dollars.”
Did former Brigantine Mayor, Ed Kline, raid his construction company retirement fund?
Named in the lawsuit are the following defendants:
- Kline Construction Company Inc.; the company 401(K) Plan
- Katherine Kline-Penate, VO, CFO, plan administrator and trustee
- J. Edward Kline, President and a plan trustee
- Robert Miller, President and a plan trustee
- Kline-Penate used 401K plan money to buy her husband a Corvette and to pay him $100,000 in salary, even though Ed Kline allegedly was not a company employee
- Kline-Penate purchased hundreds of thousands of dollars in parts for her recreational vehicle and boat. Parts were delivered to Kline Construction
- Kline Construction claimed to, but actually never did, open 401(k) accounts for some employees. Money was deducted from affected employees’ paychecks
- Not putting deductions into retirement accounts
- Illegally using deductions that were remitted for other purposes
- Kline company threatened workers if they were to attempt to withdraw funds or to seek legal advice
Attorney for plaintiffs said:”Kline defendants made a concerted effort to steal from their employees’ futures to fund the company’s and at least one executive’s present”.
When Plaintiffs would speak to Kline management or Human Resources regarding errors in their paystubs, defendants would either provide false information, such as: ‘company changed to a new payroll program’, or simply dismiss plaintiffs’ inquiries all together.
Did members of Kline Construction keep employees in the dark about what was really happening to their retirement savings?
Kline Construction was founded in Brigantine, back in 1945. The company currently has more than 300 employees.
As fiduciary, sponsor and administrator of the 401 (k) Plan, Kline has retained full control over the Plaintiffs’ contributions.
Kline declined to even open a 401(k) account for some, despite representing that an account was open and being funded with the employees’ wage withholding.
For some plaintiffs who had an active 401(k) account, they were unable to access their money without Kline’s permission.
When Plaintiffs would call John Hancock (retirement fund management) for account information, a representative would advise them that they couldn’t disclose any information about the employee’s account without the permission of the 401(k) plan administrator – -individual defendant Kline-Penate.
Kline threatened some employees by stating that if they ever attempted to withdraw the funds in their 401(k) account, they would no longer have a job at Kline.Kline-Construction
After Plaintiffs learned that their 401 (k) accounts either did not exist or were never funded by Kline, they made numerous inquiries with Kline personnel regarding the missing funds. Kline would respond with false and misleading information such as “we are working on it” or “the money was never yours to begin with.”