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American Home Tries to Seize Employees' Retirement Funds

AP
Tuesday, 18 Sep 2007 | 7:37 AM ET

The bankrupt Melville-based American Home Mortgage is attempting to seize as much as $27 million that employees set aside from their paychecks as retirement savings.

If it is successful, the workers may never see the money again. Employees around the country say American Home wants to release retirement money from a trust fund which would put it in the hands of large creditors.

The attorney for a group of former employees alleged American Home or its trustee for the retirement plan "may have acted inappropriately with regard to withholding distributions or encouraging contributions."

The case in bankruptcy court in Delaware is being brought by 43 employees who had a total of $11.6 million in the retirement trust.

The deferred-compensation plan enabled employees making more than about $200,000 per year to save money tax-free until they retired.

American Home has more than 1,000 creditors, some of which already have priority claims on the firm's assets and many of which are not expected to recoup any money at all.