A man who held himself out to be an \u201cindependent fiduciary\u201d 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.<\/p>\n
I won\u2019t mention that fellow\u2019s name because I knew him and I bought into his \u201cexpertise\u201d in the field, that we all know now was invented and inflated by himself.<\/p>\n
I bought into his talk and his \u201cprestige\u201d 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.<\/p>\n
Is it irony that someone who talked so much about fiduciary duty stole from the plans where he was a fiduciary?<\/p>\n
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\u2019t know.<\/p>\n
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\u2019t assume that someone in this business for a long time isn\u2019t likely to be a crook.<\/p>\n
It\u2019s very hard to keep your eye on the ball, but plan sponsors that don\u2019t, breach their fiduciary duty. It isn\u2019t easy because I know.<\/p>\n
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