They only steal from the Plan when no one is looking

I don’t know what’s going on in the south shore of Long Island over the past few years and it wasn’t just Hurricane Sandy.

A few years back, the treasurer of my local school’s PTA stole more than $5,700 for her own personal use including thrown her daughter a party at the American Girls store. She got probation because her husband died drowning when his car went into the harbor while trying to escape from his attempted bank robbery. Her theft was small potatoes.

A financial advisor who was under investigation for stealing $400,000 from two clients, stole $1.6 million from the special needs camp that his child attended.

As the Department of Labor’s Phyllis Borzi once noted that multiple employer plans are suspect because one promoter of it stole $3 million from participant accounts (thanks Matt), I guess she might have issues about a PTA fund and a special needs camp fund because there were thefts there too. Of course, Phyllis, I’m kidding.

A simple second signature requirement on a PTA or special needs camp disbursement probably would have nipped those thefts in the bud or some sort of extra oversight.

Whether it’s a multiple employer plan or a single employer plan or  a hot dog stand, people will steal when there is no one looking. Is it easier to rob the local corner store or the Federal Reserve Bank in New York? Most thefts are usually involving small single employers plan where the employer is using employer money to float a failing business. A small plan with a  bundled provider is more likely to have a theft than a plan that requires an audit and has multiple plan providers. Bernie Madoff was only able to perpetuate his ponzi scheme because he was the advisor and the custodian, so he could claim where the assets where even though they weren’t there.

A multiple employer plan or a single employer plan are not vehicles for theft by themselves, they can be if  everyone is looking the other way.

As plan sponsors, it’s nearly impossible to make your plan theft proof, but you can make it more difficult by seeking enough independent providers that act as a check and a balance on the other providers and the plan sponsor.

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