Retirement hope fades for ex-Creative Memories employee
Ducks paddled past a narrow strip of land -- a little more than an acre -- that
Hesse keeps old photos but doesn't do much scrapbooking, even though she knows plenty about it. She started working for Webway in 1986 and stayed with the company for more than 18 years, through its transition to Creative Memories under its parent,
Read more: Communicator feels responsible to peers in Antioch case
At 50, Hesse chose early retirement because her shares under the Antioch employee stock option plan provided the nest-egg to do so. She was to receive five payments of about
That was in
It was that summer when she received notice that her last two payments -- worth about
In 2009, as part of
Five years ago this month, the primary case was filed in federal court in
But Hesse is nowhere closer to recovering her money. And now circumstances have dictated that she could use it more than ever. She's 60, had a couple of serious medical issues and lost her 41-year-old son to thyroid cancer last September. Extra expenses from those events are increasingly affecting her way of living.
"This property, I wanted it my whole life," she said, standing in her backyard -- gazing into the sun at the retirement home she built 10 years ago. "I was able to buy it and build a house on it. I spoke to financial planners and, even before I gave my notice, had everything figured out -- what I could and couldn't do, what I could live on. Everything was based on getting the full amount."
Retirement disappearing?
Hesse communicates with some former employees and knows a lot of other people have it tougher. After all, she got more than
It's got a white brick exterior, two bedrooms and an unfinished basement. She chose the location because her 87-year-old mother lives next door and draws income from a small trailer park at the water's edge. Hesse's father died in 2011.
Hesse's house is at the end of a short drive and is bordered by land that is designated for wildlife. She shared the place with her adult son, Troy, who she said had a learning disability and behavior issues.
"It used to be us against the world," Hesse said. "Now he left me four dogs."
The home and property cost about
Since leaving Creative Memories, she worked occasionally for
"I really should sell my house so I can get something cheaper," Hesse said. "The house payments aren't cheap (
After paying for her son's funeral, she hasn't bought a headstone yet. She struggles with depression and needs to find a reason to be around other people.
"I should get a full-time job and quit using my retirement money until I turn 65, but I'm so far gone now when it comes to the IT stuff that I couldn't do that," Hesse said. "I know there are a lot of people out there a hell of a lot worse off than I am. But we all made plans based on what we thought we had. With living expenses and medical bills and the stock market drop, what I really got was worth about
At her current rate, she expects she'll be living on
Fate in
About 800 miles southeast of Hesse's home in
Story continues below.
While the federal appellate court in
"Unfortunately, the wheels of justice do not move as quickly as we would want them to," Andrew said. "In addition to a very large volume of documentary evidence, there was approximately 40 depositions that were taken all around the country. There were a lot of defendants, so there's a lot of defense counsel. Scheduling those took a long time. Defendants have filed a ton of motions and that takes time for the response and the court to rule. It's not unusual that it would take this long to get to where we are, but it is frustrating."
The original complaint against the Antioch leaders said they made the ESOP decision with a conflict of interest and to avoid taxes while maintaining control of the company. The decisions, along with financial incentives for employees to cash in their stock, eventually led to bankruptcy, according to the original complaint.
When the company went 100 percent ESOP, it had 1,200 employees and 90,000 sales consultants worldwide. But it also had more than
Andrew said the defendants have accrued more than
But
"They've taken the position that they're as much a victim as anyone else," Andrew said. "Unfortunately, the district court judge ruled for them and we've appealed."
Lawyers for the trust are working on contingency. They argue the Morgans should recover after the ESOP note holders. The trust also seeks to have the
That's why there is a separate complaint against
"We've also brought a claim against the lawyers saying 'You committed malpractice by not advising the company to bring those claims before they were too late,' " Andrew said. "It's one or the other. Either we can sue the directors for that harm or the lawyers."
A view from the other side
Around the corner and down the block from Andrew's office is a tall, modern glass and steel building with "KMK Law" on top. This is where
Scheier spent portions of 2011 and 2013 in St. Cloud, taking depositions.
Scheier said his clients, who could not be reached for this story, were innocent of any wrongdoing between 2003 and the 2008 bankruptcy.
Scheier also said there's no evidence
"The market changed," Scheier said. "The economy went into the gutter in 2007-08. And (Creative Memories) followed the regular life cycle of a business. That's what happened."
"You can understand people who lost money like that are angry and looking for someone to blame," Scheier said. "But I'm saying there are twice as many people whose Antioch ESOP retirement accounts are today providing them with a very comfortable lifestyle. My clients fought very hard going into 2009 to preserve equity for the ESOP participants and pull together a deal. But deals weren't happening then."
Asked what the former employees could have done to protect themselves, Scheier said he didn't know.
"Investments are always a risk," he said. "Just like employees of
Another decision to come
Andrew said there's a possibility whichever side doesn't prevail will appeal to the
Meanwhile, Creative Memories again filed for bankruptcy in 2013, emerged in 2014 under the name Ahni & Zoe by Creative Memories, and last August closed its North American business. It relaunched under new ownership in November with about 20 employees in a much smaller location than the 316,000-square-foot former Creative Memories building that remains for lease near
If Hesse drives by on
"I can't afford car payments if something should happen to that," she said.
The only vacation she's taken since retiring was last fall when she took her mother's car and drove through
While there are about 150 former employees in on the lawsuit, few others will speak about their situations publicly.
"I'm not comfortable talking about it, but I feel like I've got nothing to lose now. A lot of this is in the public record. If people want to find out what's happening for me they can," Hesse said.
What's happening on a recent weekday is Hesse was tending to her late son's dogs. Three were in the backyard while another lounged with Hesse in the living room. Nearby was a small mountain of paperwork related to the court proceedings.
She sighed, brushing tufts of dog hair off her couch and onto the floor.
"We keep fighting, but I'm coming to grips with the fact that this may never be resolved."
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Expert: What ESOP participants should know
"In the context of company officials and professionals working on a plan, there's no reason why an employee owner shouldn't be taking some basic steps to ensure the plan is being handled properly, in their best interest and ultimately providing them a retirement benefit," Weise said.
Here is Weise's checklist for ESOP participants:
--It's your ESOP, so know your plan. Understand the basic rules: How do you get in, how do you get a contribution and how do you get shares? What are the rules that govern distribution? You can find answers in the summary plan description. The SPD, generally 20 pages or fewer, is required by law to be written from a lay person's perspective.
--New plan documents are required to be given out every five years or whenever there is a change in the plan. Make sure you maintain and understand the latest materials.
--On the last couple of pages of the plan, there should be a list of people to contact at the company with questions. If you don't feel you're getting the right assistance from the company, contact the plan trustee.
--As your ESOP benefits grow, know who's handling the plan for you and the company. Who is the professional you can go to for more information?
--Questions to your plan trustee professional should be taken in confidence. If you're worried about something happening at the company, you shouldn't have to worry about your inquiry back to your boss.
--Maintain your regular statements at least annually to track your account balance, contributions and shares. If a company doesn't offer it, ESOP participants should request an annual meeting with an expert supervising the plan.
--At age 55, and with 10 years in the plan, you can take out 25 percent of your ESOP and invest it in something else. At age 60, you can take out up to half . Consider taking advantage of this as you near retirement.
--If you're not getting answers to your questions or concerns, write a formal letter or email to the primary plan contacts and save a copy so you have a record of your request.
"An ESOP is an investment and it's subject to ups and downs," Weise said. "It's a targeted, concentrated investment in yourself and the company you work for. That's why it's also good to be diversified with other plans like an IRA or 401k or 403b."
For more, Weise recommends you visit websites for the
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