Federal officials sued a company run by the director of the Small Business Development Center at COC, alleging he cost his company’s retirement plan more than $2.5 million in losses.

John Hoskinson is accused of being part of an effort to steer company funds away from Gruber employee retirement accounts, and instead invested in the “financially distressed company,” according to the complaint filed by the U.S. Department of Labor Employee Benefits Security Administration.

Hoskinson said he had been advised not to comment when reached Thursday at the Economic Development Center, because the complaint involved pending litigation.

The lawsuit alleges that this money should have been set aside to fund the retirement accounts of Gruber retirees, but was steered into the stock purchase to fund the financially distressed company.

The lawsuit alleges the defendants caused the company’s employee stock ownership plan participants to lose money when the plan purchased additional company stock for significantly more than fair market value in two transactions totaling $2.6 million.

The company’s employee stock ownership plan reported 194 participants and more than $3.9 million in assets as of Dec. 31, 2009, the complaint states. Three years later, those figures were reportedly 189 participants and $601,705 in assets, consisting almost entirely of Gruber stock.

Based in Valencia, Gruber provides molds, automation equipment and supplies for the cast polymer and other composite-related industries, the release noted.

Hoskinson has been with the company since 1981, and he joined the Small Business Development Center in March.

Filed in the U.S. District Court in California, the suit seeks a reversal of the $2.6 million in prohibited stock transactions, the restoration of any related plan losses, including lost opportunity costs, and a court order requiring the defendants to account for and restore losses to plan participants.

The department is also seeking permanent enjoinment of Hoskinson from serving as a fiduciary or service provider to any plan covered by the Employee Retirement Income Security Act and his removal from any positions he holds as a plan fiduciary. The suit requests the appointment of an independent fiduciary to distribute the plan’s assets to participants and beneficiaries and to terminate the plan; an action for which Hoskinson and the company must pay.

The case was investigated by EBSA’s Los Angeles Regional Office and is being litigated by the department’s Regional Office of the Solicitor in San Francisco.