Embezzlement of Pension Assets

[Guest Donaldson]

We would greatly appreciate comments on the following:

If an employee is discovered to have stolen pension assets, what reporting, disclosure and notification obligations does the plan sponsor have? Form 5500, Schedules G and H (covering prohibited transactions; requiring disclosure of a loss due to fraud or dishonesty) are relevant.

Would this constitute a "reportable event" and require the filing of PBGC Form 10?

Is anyone aware of any other obligations to the DOL, IRS, PBGC or any other government agency?

Does it matter if the plan if a single employer or multiemployer plan?

Could there be state law obligations?

Thank you very much for your comments.

Donald

[SoCalActuary]

This is legal work, and you need lawyers with ERISA experience and criminal law.

Remember to protect yourself as well. It is an alleged theft until proven in court.

You need to determine whether federal as well as state laws are involved, and that requires a district attorney. At the very minimum, you should be calling the DOL to talk with an investigator.

[david rigby]

..you should be calling the DOL to talk with an investigator.

Not me. I agree with the first part of SoCal's response. Let the attorney decide when/if/how to contact the DOL.

[Guest Donaldson]

Thank you for your comments.

Any thoughts on whether a multiemployer plan must disclose a "reportable event" on Form 5500 Schedule H. I know that Title IV of ERISA excludes multiemployer plans (but not multiple or single employer plans) from such a requirement, but I do not know if Title I also excludes.

Thanks

[david rigby]

I don't see embezzlement as a Reportable Event. http://www.pbgc.gov/plan_admin/REPEVENA.htm

Am I missing something?

[Guest Donaldson]

It is not on the PBGC Form 10, but I thought maybe the DOL could argue that it goes on Schedule H of the Form 5500 if it involves a single transaction that exceeds 5% of the plan's assets. Do you think this is stretching it?

[SoCalActuary]

My comment on the DOL investigator deserves a little more expansion.

My value system says thieves should be punished. This is reinforced by the fact we pay lots of tax dollars for gov't watchdogs to do their job, which they can do better than I.

Finally, I want to publicly be on the side of honesty, so I like showing tangible evidence that I did not suppress nor condone plan asset theft. I don't want someone to even hint at suing me for the funds, and pre-emptive action sometimes looks like my best defense.