The accusations against U-Me Enterprises Inc. and four of its officers are contained in a lawsuit filed this week in District Court.
The former workers said in the lawsuit that the wrongdoing resulted in losses of at least $435,000 from the retirement plan.
About $260,000 was improperly used by Tetsuya Goto, a U-Me officer and director, and his wife, Masumi Goto, to purchase a luxury Waialae Iki home, the lawsuit alleges.
The money was borrowed from the plan even though the plan was underfunded and the company wasn't keeping up with its contributions, the former workers allege.
Goto, reached at his office, said he would comment once his attorney was with him.
U-Me, which in its heyday had about 150 workers, closed its doors in July 1995, partly the victim of a slumping tourism market.
The lawsuit is only the latest action related to alleged pension misuse at the company.
U-Me also is the subject of a federal investigation, according to Catherine Suttora, pension investigator for the U.S. Department of Labor.
She said the department is investigating a number of other Hawaii companies as well, though Suttora declined to name them.
The investigations are part of a national crackdown on pension abuses.
The abuse typically occurs when companies get into financial trouble and use the pension funds to help bail them out, Suttora said.
Harold Kon, one of three former U-Me workers named as plaintiffs in the lawsuit, said Goto told him the company tapped the funds to pay for operations at a time when business was hurting.
Kon worked as a part-time U-Me bus driver for eight years. He said he had about $10,000 in the plan.
Attorney Chuck Hurd, who is representing the former workers, said they are asking the court to appoint a receiver to protect the company's remaining assets.
The lawsuit also seeks class-action status, which would make it on behalf of all the retirement fund's participants.