Cohen Milstein Sellers & Toll PLLC is investigating Choate Construction for its ESOP’s initial purchase of the company’s stock from the shareholders for an inflated value, causing a multi-million-dollar loss to the ESOP.
This investigation focuses on losses to the ESOP (meaning losses to your retirement savings) of approximately $133 million from the sale of Choate Company stock to the ESOP for greater than fair market value. According to records filed with the Department of Labor, the executives/owners of the Company (the “Selling Shareholders”) created the ESOP in 2016 in order to sell their ownership interest in the Company to the ESOP/employees for $24.75 a share. The sale of stock in the Company to the ESOP for $24.75 per share occurred on December 13, 2016, which resulted in a total cost of $198 million for the ESOP. However, because the ESOP did not have $198 million to pay for the Selling Shareholders for the Company, the ESOP borrowed $198 million and currently the assets of the ESOP are negative $124 million.
Two weeks after the sale of the Company to the ESOP/employees, the 8 million shares of stock were valued at $8.10 per share. This means that the stock lost two thirds of its value in just two weeks, for a total loss to the ESOP of $133 million. According to the publicly filed records, Choate Construction Co. has not yet begun to pay back the principal of the $198 million loan and has only paid interest.
If you are interested in learning more about this investigation or about how you may be affected, please take a moment to fill out the questionnaire below and we will contact you within two to three business days to schedule a phone call with one of our attorneys.
The attorneys investigating this matter are Michelle Yau (admitted in Massachusetts, Illinois and D.C.), Marty Geer (admitted in New York and North Carolina), and Jamie Bowers (admitted in Florida and D.C.)
Tamara Haynes, Paralegal – firstname.lastname@example.org
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W.
Suite 500, West Tower
Washington, D.C. 20005
Tel: (888) 240-0775 or (202) 408-4600
Fax: (202) 408-4699