It would seem companies with “fiduciary” in their name or professional description have trouble understanding the word.
On the heels of the alleged fraud from Vantage Benefits Administrators, a Dallas-based “TPA, recordkeeper and professional fiduciary,” comes a Department of Labor settlement with U.S. Fiduciary Services.
The DOL announced on Feb. 9 that it has entered into a settlement agreement with the firm and three of its subsidiaries that provide for payment of more than $7 million to 42 retirement plans that suffered losses as a result of investments in fictitious loans made by Florida-based First Farmers Financial (FFF).
The agreement and anticipated future payments from a pending Receivership Estate case involving FFF are expected to compensate the retirement plans fully for approximately $16 million in losses.
FFF created the fictitious loans and forged documents stating that the loans were guaranteed by the U.S. Department of Agriculture. Forty-two retirement plans invested in a fund exposed to the fraudulent FFF loans through subsidiaries of U.S. Fiduciary Services.
EBSA’s Chicago and Atlanta regional offices conducted investigations of the subsidiaries—Salem Trust Company, Pennant Management Inc. and GreatBanc Trust Company—for potential violations of ERISA in connection with the plans’ investments in a fund exposed to the fictitious FFF loans.
After its investigations, the Department entered into the settlement agreement, resolving its claims of ERISA violations.
Representatives of the ERISA-covered retirement plans that are due to receive settlement proceeds were also parties to the settlement agreement.
The Department’s Office of the Solicitor assisted EBSA in the investigation and negotiated the settlement.
“Fiduciaries must work solely in the interest of participants and beneficiaries,” Jeffrey Monhart, EBSA Regional Director in Chicago, said in a statement. “The Department of Labor conducts investigations and undertakes enforcement actions to protect Americans’ hard-earned benefits. This settlement restores vital benefits that rightfully belong to employees.”
Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at http://www.dol.gov/ebsa.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
