A man who held himself out to be an “independent fiduciary” was just sentenced to 17 years in prison for stealing $5 million in assets from multiple employer plans he was running in a bid to buy a ski resort and make a name for himself as some sort of savior in Idaho.
I won’t mention that fellow’s name because I knew him and I bought into his “expertise” in the field, that we all know now was invented and inflated by himself.
I bought into his talk and his “prestige” that he invented. Unlike some of the plan participants he decided to steal from, I got off lucky. Being associated with him anyway is certainly the low point of my career.
Is it irony that someone who talked so much about fiduciary duty stole from the plans where he was a fiduciary?
Stealing from a plan that you are a fiduciary is far worse than donning a ski mask and robbing the local bank because unlike the bank depositors, the participants in a retirement plan entrusted you with their money. Betraying that trust is far worse than stealing the money from someone we don’t know.
The point is that a plan sponsor must always be vigilant in who they select as a financial advisor and a third party administrator and make sure they have no excuses as to where the money is. While this fellow was a flash in the pan who came into this business like a bolt of lightning, Bernie Madoff was around for a long time and he ran one of the biggest Ponzi schemes in history. So plan sponsors shouldn’t assume that someone in this business for a long time isn’t likely to be a crook.
It’s very hard to keep your eye on the ball, but plan sponsors that don’t, breach their fiduciary duty. It isn’t easy because I know.