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Former VP Sues Melchiori Construction Co. Over Borrowed 401(k) Money

Jean Mollenkopf alleges breach of contract after withdrawing $50,000 from her retirement account to help the company make payroll

The former vice president of Melchiori Construction has filed a lawsuit against the troubled company, saying she hasn’t been paid back $50,000 she withdrew from her 401(k) account to help the firm make payroll.

Jean Mollenkopf filed a lawsuit Oct. 16 in Santa Barbara County Superior Court, alleging breach of contract against Melchiori Construction Co. and its president, Mark Melchiori.

Melchiori filed for Chapter 7 bankruptcy last week, leaving dozens of creditors in the lurch.

Contacted by Noozhawk on Tuesday, Mollenkopf said she was among five employees who were asked by Mark Melchiori to loan him and the company money after the Chapala One verdict to help meet payrolls. 

That downtown luxury condominium project was one that Melchiori Construction oversaw, but had been underfunded during construction, and a jury eventually required owner Don Hughes to pay $5.8 million to Melchiori last year.

Mollenkopf’s court file includes a copy of a promissory note, dated May 27, 2011, that details her loaning Melchiori $50,000 “for use funding Melchiori Construction Company’s operational expenses.”

That money came out of Mollenkopf’s company 401(k) account, and the complaint also contains a letter from Mollenkopf to Melchiori, dated Sept. 17, 2012, in which she declared a default on the note and said Melchiori had five days to make good.

“We were to be paid when payments came in on the Chapala One case,” Mollenkopf said, adding that the payments came in but the loans to their 401(k) accounts were not paid off.

In addition to Mollenkopf, she said two other employees — former project managers Stuart Kendall and Scott Miners — are still owed their 401(k) money.

“The most dedicated and hardworking employees have been seemingly robbed of their retirement money,” Mollenkopf said. 

Mark Melchiori did not respond to a request for comment on Tuesday.

Earlier this year, a lawsuit was filed by Melchiori’s stepmother, who alleged that his divorce earlier this year was a scheme to hide assets from creditors his company owes.

Mollenkopf said she and the other employees were told that they would be paid no later than mid-October.

“We now know that was so the divorce could be finalized — personal assets transferred to Heather J. Melchiori — and bankruptcy filed, leaving us unpaid,” she said. “We worked long and hard to help make Melchiori Construction Company a success. We do not deserve to lose our retirement funds.”

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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