We just found out this happened to us, today. Employer has taken money out for 2 solid years and did not invest or match the money. I have been all over the web and can not find anything! I spoke to the 401k company and they said it is my responsibility to get my money back, plus interest. Not sure how I am going to do that. They also said they are sending someone to the office to ask some questions and that an audit may be done. Fine with me. I want my money. I am also curious if there are any consequences for my employer. Let me know how it goes for you or if you find anything criminal about this. Confronted by another employee, the employer fast talked and said what he did was not illegal.

That's an ERISA violation. You can file a complaint with the Department of Labor (which takes a very long time to get anywhere). Unless your employer voluntarily makes good on your contributions, the Dept of Labor has very little pull. They'll then suggest that you file a law suit on your own. I'm in the middle of the same thing right now and have had to file a lawsuit in small claims court.