1412 Broadway, New York City, NY

Whistleblower Report to the U.S. Department of Justice (DOJ)

Subject: Allegations of Investor Fraud and Corporate Misconduct by Principal Life Insurance Company and Former CEO Larry Zimpleman.  Financial Misrepresentation by Principal Life Insurance Company (2008-2013)

1. Introduction

I am submitting this whistleblower report regarding fraudulent financial practices conducted by Principal Life Insurance Company, specifically involving its Principal U.S. Property Separate Account (PUSPSA). This report details evidence of misconduct, financial misrepresentation, and investor fraud related to the acquisition and sale of 1412 Broadway, New York City, between 2004 and 2009.

2. Summary of Allegations

This complaint outlines fraudulent financial transactions in the commercial real estate market that resulted in significant financial losses for 401(k) investors, particularly through the PUSPSA. Former COO/CEO Larry Zimpleman is implicated in overseeing transactions that appear designed to defraud investors. The misconduct includes:

• Inflated asset valuation: 1412 Broadway was purchased for $178.4 million in 2006—double the $98 million value recorded two years earlier.
• Conflict of interest: Principal Life owned the mortgage while selling the property to its separate account, violating standard ethical investment practices under ERISA.
• Fabricated sales transactions: The property was reportedly sold in 2009 for $109.4 million, reflecting a $70 million loss for investors. However, internal documents suggest the actual buyout price was $6 million, contradicting official reports.
• Mezzanine loan default: Principal took out a $20 million mezzanine loan that subsequently defaulted, further impacting investor losses.

These actions resulted in cumulative investor losses exceeding $250 million, affecting retirement accounts nationwide, including those managed by TIAA-CREF.

3. Evidence Supporting Claims

The fraudulent transactions are supported by official records, including:

• Real estate transfer deeds and mortgage assignments filed in New York County between 2004 and 2006.
• 2009 PUSPSA Annual Report detailing the alleged sale of 1412 Broadway.
• Statements from Norman Sturner, Principal’s investment partner, confirming a separate recapitalization process contradicting reported financial losses.
• SEC filings and financial disclosures reflecting irregularities in commercial real estate investments managed by Principal.

4. Impact on Investors and Retirement Accounts

The fraudulent transactions had widespread consequences:

• Significant loss of retirement savings for thousands of investors relying on Principal-managed 401(k) accounts.
• Potential ERISA violations due to Principal’s dual role as both lender and investor without fiduciary oversight.
• Compromised financial integrity within commercial real estate investments, impacting other financial institutions linked to the transaction (e.g., Bank of America, Murray Hill Properties, and TIAA-CREF).

5. Legal Basis for Investigation

These actions may constitute violations of federal securities laws, including:

• Securities Fraud (18 U.S.C. § 1348): Misrepresentation of financial transactions in real estate investments.
• Wire Fraud (18 U.S.C. § 1343): Potential fraudulent communications regarding the transaction.
• False Statements (18 U.S.C. § 1001): Misrepresentation in official reports.
• ERISA Violations (29 U.S.C. § 1104 & § 1106): Failure to act in the best interest of plan participants.

Given the scale and severity of these violations, I urge the DOJ, SEC, and other regulatory bodies to investigate and hold accountable those responsible.

6. Requested Action

I respectfully request that the DOJ:

• Initiate a formal investigation into Principal Life’s investment practices and management of the PUSPSA.
• Conduct forensic audits of real estate transactions tied to Principal Life between 2004–2009.
• Prosecute individuals involved in fraudulent practices, including former CEO Larry Zimpleman.
• Implement investor restitution measures to recover lost funds.