Author: Dennis Myhre

Mark Allen Hanrahan was involved in several controversial real estate transactions while serving as Managing Director at Principal Real Estate Investors, one of which was 333 Market Street in San Francisco, owned at the time by Wells Fargo Bank.

In 2006, Principal acquired 333 Market Street for $370 million, a significant markup from the $150 million Wells Fargo had paid just months earlier. The deal was arranged through Wells Fargo subsidiary Eastdil Secured, raising concerns about potential asset inflation or internal collusion.  At the time of it’s purchase, the entire 33 story structure was undergoing a major remodeling, the cost of which was likely paid for by the PUSPSA as well.  Later, in 2010, Principal sold the property to a South Korean investment group, Hana Asset Management. Public reports listed the sale price as $333 million, but other sources suggested it was $516 million, leading to a $183 million discrepancy in transaction records. Additionally, inconsistencies in ownership documents indicated that the mailing address of the Korean-held private LLC matched the prior Principal-affiliated LLC, raising transparency concerns.

In 2015, Hanrahan was arrested on kidnapping charges related to drug-related criminal activity. He later pleaded guilty to carrying weapons while intoxicated and solicitation to commit a felony. As part of his sentence, he received two years of probation and a $1,375 civil penalty.  Additionally, Hanrahan was issued a two-year no-contact order against the victim. His legal troubles raised concerns about his integrity during his tenure at Principal Real Estate Investors, where he had been involved in financial transactions that were later scrutinized for potential misrepresentation and fiduciary breaches.

Hanrahan’s criminal activity was widely published in Iowa based newspapers, and his executive position was promptly terminated by Principal.  The controlling role he played in the management of billions of dollars of 401k investors was intentionally ignored by Principal and the press.  But the glaring fact is that Hanrahan was involved in financial misrepresentation and fiduciary breaches during his tenure at Principal Real Estate Investors. Between 2008 and 2013, Principal engaged in questionable investment transactions, including acquiring 97.5% of PUSPSA’s commercial properties through off-market deals, private transactions, and repeat sellers.  Additionally, Principal engaged in off-balance sheet transactions, obscuring financial risks to investors. The Principal U.S. Property Separate Account (PUSPSA) was reclassified as a fixed-income account in 2008, imposing withdrawal restrictions on 401(k) investors, effectively trapping funds within an underperforming asset pool. These methods raised concerns about fair market value assessments and fiduciary compliance.

These actions potentially violated multiple federal statutes, including:

• Employee Retirement Income Security Act (ERISA) violations related to mismanagement of retirement funds.
• Securities fraud due to fraudulent misrepresentation and non-disclosure of material financial risks.
• Corporate governance failures, particularly under Hanrahan’s supervision.

This spreadsheet further describes activities which took place during the five years in which the PUSPSA owned the property, as well as five years after ownership was passed on…333 MARKET STREET SPREADSHEET

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Securities & Mortgage Fraud in Commercial Real Estate by Principal Life Insurance Company (2007-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

The Principal Group of Companies has engaged in Commercial Mortgage fraud multiple times involving the Principal U.S. Property Separate Account.  These activities usually involved a property developer and a banking institution as collaborators.  This report simply discusses one of possibly dozens of other locations as well.

104 West 40th Street was reported in the 2007 PUSPSA Annual Report as a purchase.  The Annual Report does not disclose other parties to the transaction, and often the actual property location is mis-stated to hide the actual location.

A recorded document at the NYC City Register provides the DOJ investigator all the information needed to prosecute Principal on a charge of Securities & Mortgage Fraud.  This 16 page document is literally a book of knowledge as it relates to Mortgage Assignments, Spreader Agreements, and Mortgage Modifications and Severance Agreements, dating back to 1991.  Even mortgages not attached to the subject commercial property were re-assigned to 104 West 40th Street, and eventually was “sold” to the Principal U.S. Property Separate Account on July 12, 2007.  Existing unpaid debt on the date of acquisition appears to be $34,911,545.95.  At the date of purchase, it also appears that Commercial Pass-Through Certificates also existed for the property involved.  The property was listed as sold for $62.2 million in the 2010 PUSPSA annual report.

MORTGAGE ASSIGNMENT, 7-11-2007

2009 ANNUAL REPORT, PG

---

Mortgage Loan History:

This section outlines the entire financial history of the mortgage(s) attached to 104 West 40th Street in New York City, including past assignments, consolidations, and modifications. The mortgage has changed hands multiple times—originally held by Landesbank Hessen-Thüringen Girozentrale, then Bank of America, then LaSalle Bank, and now ING USA Annuity and Life Insurance Company.  The loan was originally $36,500,000, but the remaining balance at the time of assignment was $34,911,545.95. Why is this section important?  It confirms that the mortgage is still active and its financial obligations remain intact.  It shows how the mortgage was restructured and consolidated over time.

Mortgage Schedule & Consolidations:

The final section outlines all previous mortgages that were combined to form the existing mortgage.  Multiple transactions modified, assigned, or spread the mortgage lien across different properties.  The mortgage was consolidated into one single debt of $36,500,000 before the assignment to ING.

What This Means for the Mortgage:
The rights to the mortgage have officially transferred to ING USA Annuity and Life Insurance Company.  The mortgage remains active, and payments must continue under the original terms.  ING now holds all legal claims related to this mortgage.  LaSalle Bank has no future liability—they’ve simply handed over ownership.

Which mortgages are still active?
Based on the document, the mortgage that remains active is the consolidated mortgage transferred to ING USA Annuity and Life Insurance Company. The document states that as of the assignment date (July 11, 2007), the remaining balance of the loan secured by this mortgage was $34,911,545.95.

Key Active Mortgage Details:

Mortgage Loan History…  This section lists the entire financial history of the mortgage, including past assignments, consolidations, and modifications.  The mortgage has changed hands multiple times—originally held by Landesbank Hessen-Thüringen Girozentrale, then Bank of America, then LaSalle Bank, and now ING USA Annuity and Life Insurance Company.  The loan was originally $36,500,000, but the remaining balance at the time of assignment was $34,911,545.95.  These facts confirm the mortgage is still active and its financial obligations remain intact.  It shows how the mortgage was restructured and consolidated over time.

Mortgage Schedule & Consolidations:

The final section outlines all previous mortgages that were combined to form the existing mortgage.  Multiple transactions modified, assigned, or spread the mortgage lien across different properties.  The mortgage was consolidated into one single debt of $36,500,000 before the assignment to ING.  What This Means for the Mortgage?  The rights to the mortgage have officially transferred to ING USA Annuity and Life Insurance Company.  The mortgage also remains active, and payments must continue under the original terms.  ING now holds all legal claims related to this mortgage.  LaSalle Bank has no future liability—they’ve simply handed over ownership.  Which mortgages are still active?
Based on the document, the mortgage that remains active is the consolidated mortgage transferred to ING USA Annuity and Life Insurance Company. The document states that as of the assignment date (July 11, 2007), the remaining balance of the loan secured by this mortgage was $34,911,545.95.

Mortgage Loan Details:

Original Amount: $36,500,000.

Remaining Balance at Assignment: $34,911,545.95

Property Secured: 104 West 40th Street, Manhattan (Block 815, Lot 21)

Current Mortgage Holder: ING USA Annuity and Life Insurance Company

Loan Origin: Consolidation of multiple mortgages, including prior ones from Bank of America, LaSalle Bank, and Landesbank Hessen-Thüringen Girozentrale.  The borrower (property owner) must continue making payments under this mortgage.  ING USA now holds all financial and legal claims related to this debt.  The document does not indicate that the mortgage was satisfied or released, meaning it was still active as of the assignment date.  This document traces multiple transactions, consolidations, and assignments over the years before ending up with ING USA Annuity and Life Insurance Company. Here’s how the mortgage evolved:

Original Mortgage Creation (1994-1996)
Mortgage Origin:  The mortgage was first issued by Landesbank Hessen-Thüringen Girozentrale (German bank) to various real estate entities.

The first major mortgage recorded was $9,000,000 on July 13, 1994.  Additional mortgages followed, leading to a consolidation totaling $20,000,000 by July 31, 1996.

Expansion & Spreader Agreements (1996-1999)
Additional mortgages were added, modifying the loan balance.  A Mortgage Spreader Agreement linked multiple properties, increasing the value to $24,600,000 in June 1999.

Bank of America Takes Over (2004)
On February 11, 2004, Bank of America, N.A. acquired the mortgage from Landesbank Hessen-Thüringen Girozentrale.  The mortgage was consolidated again into a single first lien worth $36,500,000.  It was officially recorded on April 1, 2004 under CRFN 2004000194880.  4. LaSalle Bank Assumes the Loan (2005)
LaSalle Bank National Association became the mortgage holder on January 31, 2005 via assignment from Bank of America.  The mortgage was modified and assumed through a Loan Assumption Agreement on November 1, 2005.  ING USA Becomes the Final Holder (2007).

Current Assignment:

On July 11, 2007, LaSalle Bank assigned the mortgage to ING USA Annuity and Life Insurance Company.  At the time of assignment, the remaining balance was $34,911,545.95.  Several transactions modified or released portions of the mortgage:

1996: Partial release from Bronx premises (Block 3733 Lot 9).

1999: Mortgage spread to additional properties at 400 Park Avenue.

1999: Property at 830 Third Avenue was released from the lien.

1999: Mortgage balance was reduced to $23,500,000.

2004: Loan was reconsolidated to $36,500,000.

2005: Loan assumption and modification agreements adjusted terms.

Final Outcome:  The mortgage transferred multiple times, but its final balance before ING assumed it was $34,911,545.95.  The assignment document does not indicate a satisfaction or final payment, meaning the loan was still active after ING USA acquired it.

Other Factors:

1. Spreader Agreements – Expanding the Mortgage Across Properties.  Note:  A spreader agreement allows a lender to apply an existing mortgage to additional properties, increasing its collateral value.

Impact on This Mortgage
In 1999, a Mortgage Spreader Agreement spread the lien to multiple properties, including 400 Park Avenue.

This helped consolidate several previous loans into one unified debt.  The total mortgage after the spread was $24,600,000, covering multiple buildings instead of just 104 West 40th Street.

Later Modifications to the Spread:  In August 1999, 830 Third Avenue was removed from the lien.  Later, in October 1999, 400 Park Avenue was released, leaving the lien focused solely on 104 West 40th Street.  The mortgage balance was adjusted down to $23,500,000 after these releases.

1. Mortgage Consolidations – Combining Loans Into One Debt
   Consolidation agreements merge multiple smaller mortgages into one large loan, simplifying repayment terms.

Key Consolidations in This Document
1996 Consolidation: Combined two separate mortgages into a $20,000,000 loan.

1999 Consolidation: Merged all outstanding loans into a single first lien worth $24,600,000.

2004 Consolidation: Further modified the loan, increasing the total balance to $36,500,000.

Impact on the Loan Balance
Consolidations increased the principal amount over time.

They streamlined repayment, making it easier for the lender to manage.

The mortgage kept growing, but by the time ING USA acquired it in 2007, the balance had been reduced to $34,911,545.95.

1. Ownership Changes – Transfers Between Lenders
   Mortgage rights changed hands multiple times. Each transfer shifted control over who collected payments and managed the loan.

Mortgage Ownership Timeline
Originally Held By: Landesbank Hessen-Thüringen Girozentrale (1994).

Transferred To: Bank of America (2004).

Assigned To: LaSalle Bank (2005).

Final Transfer To: ING USA Annuity and Life Insurance Company (2007).

Impact of These Transfers
The borrower (property owner) did not need to refinance, but their loan was now managed by different lenders over time.

ING USA, as the final holder, gained the right to collect payments and enforce the mortgage.

LaSalle Bank no longer had liability once the mortgage was assigned away.

Final Status
The mortgage was still active after ING USA acquired it in 2007.

It had undergone several releases, consolidations, and ownership changes.

The final balance was $34,911,545.95, secured by 104 West 40th Street alone.

Why Does This Matter?
The borrower (property owner) must continue making payments under this mortgage.

ING USA now holds all financial and legal claims related to this debt.

The document does not indicate that the mortgage was satisfied or released, meaning it was still active as of the assignment date.

Mortgage History Timeline
This document traces multiple transactions, consolidations, and assignments over the years before ending up with ING USA Annuity and Life Insurance Company. Here’s how the mortgage evolved:

1. Original Mortgage Creation (1994-1996)
   Mortgage Origin:

The mortgage was first issued by Landesbank Hessen-Thüringen Girozentrale (German bank) to various real estate entities.

The first major mortgage recorded was $9,000,000 on July 13, 1994.

Additional mortgages followed, leading to a consolidation totaling $20,000,000 by July 31, 1996.

1. Expansion & Spreader Agreements (1996-1999)
   Key Changes:

Additional mortgages were added, modifying the loan balance.

A Mortgage Spreader Agreement linked multiple properties, increasing the value to $24,600,000 in June 1999.

1. Bank of America Takes Over (2004)
   Big Transfer:

On February 11, 2004, Bank of America, N.A. acquired the mortgage from Landesbank Hessen-Thüringen Girozentrale.

The mortgage was consolidated again into a single first lien worth $36,500,000.

It was officially recorded on April 1, 2004 under CRFN 2004000194880.

1. LaSalle Bank Assumes the Loan (2005)
   Next Transfer:

LaSalle Bank National Association became the mortgage holder on January 31, 2005 via assignment from Bank of America.

The mortgage was modified and assumed through a Loan Assumption Agreement on November 1, 2005.

1. ING USA Becomes the Final Holder (2007)
   Current Assignment:

On July 11, 2007, LaSalle Bank assigned the mortgage to ING USA Annuity and Life Insurance Company.

At the time of assignment, the remaining balance was $34,911,545.95.

1996: Partial release from Bronx premises (Block 3733 Lot 9).

1999: Mortgage spread to additional properties at 400 Park Avenue.

1999: Property at 830 Third Avenue was released from the lien.

1999: Mortgage balance was reduced to $23,500,000.

2004: Loan was reconsolidated to $36,500,000.

2005: Loan assumption and modification agreements adjusted terms.

Final Outcome
The mortgage transferred multiple times, but its final balance before ING assumed it was $34,911,545.95.  The assignment document does not indicate a satisfaction or final payment, meaning the loan was still active after ING USA acquired it.

1. Spreader Agreements – Expanding the Mortgage Across Properties.  A spreader agreement allows a lender to apply an existing mortgage to additional properties, increasing its collateral value.

Impact on This Mortgage
In 1999, a Mortgage Spreader Agreement spread the lien to multiple properties, including 400 Park Avenue.  This helped consolidate several previous loans into one unified debt.

The total mortgage after the spread was $24,600,000, covering multiple buildings instead of just 104 West 40th Street.  Later

Modifications to the Spread
In August 1999, 830 Third Avenue was removed from the lien.  Later, in October 1999, 400 Park Avenue was released, leaving the lien focused solely on 104 West 40th Street. The mortgage balance was adjusted down to $23,500,000 after these releases.

1. Mortgage Consolidations – Combining Loans Into One Debt
   Consolidation agreements merge multiple smaller mortgages into one large loan, simplifying repayment terms.

Key Consolidations in This Document
1996 Consolidation: Combined two separate mortgages into a $20,000,000 loan.

1999 Consolidation: Merged all outstanding loans into a single first lien worth $24,600,000.

2004 Consolidation: Further modified the loan, increasing the total balance to $36,500,000.

Impact on the Loan Balance
Consolidations increased the principal amount over time.  They streamlined repayment, making it easier for the lender to manage.  The mortgage kept growing, but by the time ING USA acquired it in 2007, the balance had been reduced to $34,911,545.95.

1. Ownership Changes –                                                                 Transfers Between Lenders.  Mortgage rights changed hands multiple times. Each transfer shifted control over who collected payments and managed the loan.

2. Mortgage Ownership Timeline –
   Originally Held By: Landesbank Hessen-Thüringen Girozentrale (1994).  Transferred To: Bank of America (2004).  Assigned To: LaSalle Bank (2005).  Final Transfer To: ING USA Annuity and Life Insurance Company (2007).

3. Impact of These Transfer –                                                                 The borrower (property owner) did not need to refinance, but their loan was now managed by different lenders over time.  ING USA, as the final holder, gained the right to collect payments and enforce the mortgage.  LaSalle Bank no longer had liability once the mortgage was assigned away.

4. Final Status-
   The mortgage was still active after ING USA acquired it in 2007.  It had undergone several releases, consolidations, and ownership changes.  The final balance was $34,911,545.95, secured by 104 West 40th Street alone.

 

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Subject: Whistleblower Report—Securities and Mortgage Fraud at 104 West 40th Street, New York City

Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

To Whom It May Concern:

I am submitting this whistleblower report to bring attention to potential securities and mortgage fraud involving the commercial property located at 104 West 40th Street, New York City.

In 2007, the property was acquired by Principal Real Estate Investors on behalf of the Principal U.S. Property Separate Account (PUSPSA) through a joint venture for an acquisition price of $141,400,000. At the time of the purchase, the outstanding mortgage balance on the property was $34,911,545.95, suggesting that the cash investment by PUSPSA totaled approximately $106,488,455, assuming the debt was included in the purchase price.

Two years later, in 2009, Principal reported the Gross Asset Value (GAV) of the property to be $55,000,000, a significant decrease from the original acquisition price. In 2010, the property was re-sold for $62,200,000, again substantially lower than the initial purchase price, despite market conditions that did not justify such depreciation. The remaining mortgage debt at the time should have been a portion of the reported value as well.

This pattern—where Principal Real Estate Investors sell PUSPSA-owned properties at deeply discounted prices shortly after acquisition—raises concerns about valuation accuracy, fiduciary responsibility, and potential fraudulent activities. The transactions involved a substantial discrepancy between purchase and resale values, with no reasonable financial justification provided.

Given these irregularities, I urge the Department of Justice to investigate these transactions for potential violations related to securities fraud, mortgage fraud, and misrepresentation of asset values. I am prepared to provide any supporting documentation necessary to assist in this investigation.

Please advise on the next steps regarding this report and any further information needed.

Sincerely,

Dennis Myhre, AIC

 

 

 

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Cooperation Agreement between Principal and Elliott Investment may violate ERISA rules
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

1. Introduction

This report highlights deceptive investment practices within 401(k) plans involving hedge fund exposure, proprietary pricing schemes, and potential conflicts of interest. Insurance companies and financial service providers exploit ERISA regulations to embed hedge fund investments without proper disclosure, leading to excessive fees and investor losses.

https://contracts.justia.com/companies/principal-financial-group-1073/contract/156185/#:~:text=Cooperation%20Agreement%2C%20dated%20as%20of%20February%2021%2C%202021%2C%20by%20and%20among%20Principal%20Financial%20Group%2C%20Inc.%2C%20Elliott%20Investment%20Management%20L.P.%2C%20a%20Delaware%20limited%20partnership%2C%20Elliott%20Associates%2C%20L.P.%2C%20a%20Delaware%20limited%20partnership%2C%20and%20Elliott%20International%2C%20L.P.%2C%20a%20Cayman%20Islands%20limited%20partnership

2. Summary of Allegations

• Undisclosed Hedge Fund Exposure: Certain insurance providers structure hedge fund investments within 401(k) separate accounts without explicitly identifying them as hedge funds.
• Private Placement Transactions: ERISA regulations allow insurers to allocate up to 25% of 401(k) plans into hedge funds via private placements, bypassing public scrutiny. These funds are not subject to standard fiduciary oversight.
• Conflict of Interest & Self-Dealing: Insurance companies, including Principal Life Insurance, sell proprietary hedge funds at arbitrarily determined prices, maximizing corporate profits at the expense of investors.
• Corporate Influence Over Investment Structures: Elliott Investment Management has gained significant influence over Principal Financial Group, potentially impacting asset allocations and investor returns.
• Historical Evidence of Investor Losses: During the 2008 financial crisis, Principal Financial allegedly froze 401(k) accounts to stabilize its own troubled asset holdings, resulting in investor losses.

3. Supporting Evidence

• Regulatory Filings & Disclosures: SEC cooperation agreements and financial disclosures document hedge fund investments hidden within 401(k) separate accounts.
• Legal Precedents: Similar cases involving excessive fees, misrepresentation, and investor harm have led to regulatory actions in the past.
• Market Data & Financial Analysis: Evidence of manipulated valuations, high-fee proprietary funds, and hedge fund exposure within employer-sponsored plans.

4. Impact on Investors & Public Interest

These deceptive practices undermine retirement savings, exposing investors to unnecessary risk while generating excessive profits for insurance providers and hedge funds. The lack of fiduciary oversight allows service providers to engage in self-dealing with minimal regulatory repercussions.

5. Legal & Regulatory Considerations

Relevant regulations include:

• ERISA (Employee Retirement Income Security Act) – Governs 401(k) plan protections, though loopholes exist for hedge fund investments.
• SEC & DOL Oversight – Limits financial entities’ self-dealing and investor protections, but hedge fund structures evade direct regulation.
• Investment Company Act of 1940 – Excludes hedge funds from registration requirements, allowing for private placement transactions.

6. Conclusion & Recommended Action

• Regulatory Review: Urgent SEC and Department of Labor investigations into undisclosed hedge fund exposure within 401(k) plans.
• Policy Reform: Strengthened disclosure requirements and enhanced fiduciary oversight over proprietary investment products within ERISA plans.
• Investor Education & Awareness: Public disclosure of high-risk investments hidden in employer-sponsored retirement funds.

 

 

 

 

 

 

 

 

 

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Financial Misrepresentation by Principal Life Insurance Company (2008-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

1. Introduction

This complaint is submitted to report financial misconduct and fraudulent practices involving Principal Financial Group, particularly concerning the Principal U.S. Property Separate Account (PUSPSA). The evidence demonstrates systemic mismanagement, deception in financial reporting, and misuse of investment funds, negatively impacting thousands of retirement plan participants.

2. Whistleblower Information

The complainant has conducted extensive investigations into Principal Financial Group for over a decade, uncovering significant evidence of fraudulent activities that have harmed 401(k) investors. Due to advanced age and deteriorating health, this submission serves as an urgent effort to ensure accountability.

3. Respondent Information

• Entity: Principal Financial Group
• Relevant Executives & Decision-Makers: Former CEO Larry Zimpleman, Former President & CEO Dan Houston, mid-management executives involved in financial misrepresentation.
• Managing Director of Real Estate Investments: Involvement in high-risk, mismanaged investment transactions.

4. Summary of Allegations

Principal Financial Group has engaged in fraudulent financial activities, including:

• Misrepresentation of investment performance in retirement accounts, particularly variable annuities.
• Falsification of financial reporting related to retirement fund transactions, including misleading asset valuations.
• Unauthorized freezing of investor accounts, restricting access to retirement funds under vague legal pretexts.
• Questionable real estate investments, including excessive spending on luxury properties funded by retirement account assets.
• Financial mismanagement by key executives, leading to loss of investor funds.

5. Supporting Evidence

• Financial reports and investment statements showing discrepancies in asset valuations.
• Form 5500 filings and Schedule D reports demonstrating inconsistencies in reported plan participation.
• Records of unauthorized account freezes affecting thousands of investors.
• Case examples of mismanaged property investments, including the acquisition and extravagant renovations of a San Francisco building.
• Legal records and financial investigations regarding executive misconduct.

6. Legal Violations

These fraudulent activities likely violate:

• Employee Retirement Income Security Act (ERISA)
• Securities Exchange Act of 1934
• Federal fraud and misrepresentation statutes
• Investment accountability regulations under U.S. financial law

7. Request for Action

This complaint urges the DOJ to:

1. Conduct a formal investigation into Principal Financial Group’s financial practices.
2. Compel Principal to disclose accurate financial records related to retirement accounts.
3. Seek restitution for affected retirement plan participants.
4. Hold Principal executives accountable for financial misconduct.

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Financial Misrepresentation by Principal Life Insurance Company (2008-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

I. Introduction

This report outlines substantial evidence of fraudulent financial activities involving Principal Real Estate Investors (PREI) and Trammell Crow Company (TCC), particularly in connection with the Principal U.S. Property Separate Account (PUSPSA), a 401(k) investment fund. Evidence suggests systematic misrepresentation of assets, unlawful securities transactions, and mortgage origination fraud, resulting in financial losses for investors and violations of federal securities laws.

II. Summary of Allegations

PREI and TCC engaged in non-arm’s length transactions that defrauded investors by using their funds to finance highly leveraged real estate developments, while withholding profits and misrepresenting asset ownership and valuations. Specific allegations include:

1. Misuse of Investor Funds:
   • Investors contributed financial resources but were misled about their ownership stakes in the properties.
   • Profits generated from the properties were retained by PREI and TCC rather than being allocated to investors.
2. Unregistered Securities Sales:
   • PREI marketed unregistered securities to investors, violating SEC regulations on private placements under Regulation D.
3. Loan Purchase Agreements (LPAs) as Fraudulent Instruments:
   • PREI signed LPAs with banks for defaulted loans related to real estate developments, effectively laundering money through loan acquisitions.
   • Investors unknowingly covered costs of defaulted loans, including accrued interest and penalties.
4. Mortgage Origination Fraud:
   • PREI utilized investor funds to purchase defaulted loans with no intention of repayment.
   • Properties developed under these financial arrangements were later sold, generating millions in illicit profits for PREI and TCC while investor accounts suffered significant losses.
5. Withdrawal Restrictions to Conceal Fraud:
   • Amid the 2008 financial crisis, PREI imposed withdrawal restrictions on investors while continuing profit-generating transactions, further devaluing the fund by approximately 50%.
6. Money Laundering via Subordinate Loans:
   • PREI granted “subordinate loans” to sellers for approximately 10% of property sale prices, which were repaid with investor funds, effectively laundering money within the PUSPSA.

III. Evidence of Wrongdoing

Documents and reports substantiate these allegations, including:

• Annual Reports from the PUSPSA (2007-2011), showing inconsistencies in acquisitions, ownership claims, and financial transactions.
• SEC filings and Real Estate Agreements, demonstrating non-arm’s length transactions.
• Records of Loan Purchase Agreements and Defaulted Loan Transactions, revealing structured financial fraud.

IV. Legal Violations

The actions described above constitute clear violations of multiple federal statutes, including but not limited to:

• Securities Act of 1933 & Exchange Act of 1934 – Sale of unregistered securities.
• Investment Advisers Act of 1940 – Breach of fiduciary duties.
• Federal Money Laundering Statutes (18 U.S.C. § 1956 & 1957) – Structured financial transactions to conceal fraud.

V. Potential Impact

These fraudulent practices have had severe repercussions on retirement investors, many of whom suffered significant financial losses. Furthermore, failure to hold PREI and TCC accountable could set a precedent for financial misconduct within institutional investment firms.

VI. Request for Action

This whistleblower submission calls for:

1. A formal investigation by DOJ, SEC, and relevant federal agencies into the fraudulent activities outlined.
2. Immediate audit of PUSPSA financial records to assess the full extent of investor losses.
3. Legal action against PREI and TCC executives involved in facilitating these unlawful transactions.
4. Policy reforms to prevent institutional investment firms from engaging in similar fraudulent practices.

VII. Conclusion

The evidence provided in this report demonstrates a coordinated effort by PREI and TCC to defraud retirement investors through misleading transactions and fraudulent financial practices. This matter warrants urgent federal investigation to protect investor rights and uphold financial integrity.

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Financial Misrepresentation by Principal Life Insurance Company (2008-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

To Whom It May Concern,

I am submitting this disclosure under whistleblower protection protocols concerning potential fraudulent financial practices involving Principal Life Insurance Company and Wells Fargo Bank. These concerns primarily relate to the management of employer-sponsored 401(k) plans and a series of questionable real estate transactions involving the property at 333 Market Street, San Francisco, CA.

Background & Allegations

1. 401(k) Asset Mismanagement
   • Principal Life Insurance Company is a major service provider for employer-sponsored 401(k) plans.
   • In a 2012 letter from CFO Lillis to federal financial regulatory agencies, Principal reported that approximately 45% of their $152.1 billion in total assets were “non-guaranteed,” meaning employer-sponsored 401(k) funds were exposed to market risks without institutional protections.
   • The letter stated that Principal retains no liability risk for these funds, raising concerns about whether 401(k) contributions are being mismanaged or diverted.
2. 333 Market Street Transactions & Potential Mortgage Origination Fraud
   • In 2006, Principal Real Estate Investors, under the direction of Managing Director Mark Hanrahan, acquired 333 Market Street for $370 million, a significant markup from the reported $150 million purchase price paid by Wells Fargo just months earlier.
   • The transaction was arranged through Wells Fargo subsidiary Eastdil Secured, suggesting potential internal collusion or asset inflation.
   • In mid-2010, Principal sold 333 Market Street to a South Korean investment group led by Hana Asset Management.
   • Public reports indicated a purchase price of $333 million, but additional sources suggested it was $516 million, leading to a $183 million discrepancy in the transaction records.
   • Further inconsistencies in ownership documents indicate that the mailing address of the Korean-held private LLC (Hd333, LLC) matched the prior Principal-affiliated LLC (333 Market St LLC), an unusual administrative arrangement raising concerns about transparency in property ownership.

Request for Investigation

I respectfully request that the DOJ and appropriate federal agencies investigate the following:

• Whether Principal Life Insurance Company engaged in deceptive practices regarding the management and investment of 401(k) assets.
• The role of Wells Fargo Bank and Eastdil Secured in potential artificial asset inflation and questionable real estate transactions.
• The nature of the financial discrepancies in the sale of 333 Market Street, including any undisclosed profits or misappropriated funds.
• Any concealed agreements or fraudulent mortgage origination activities linked to Wells Fargo and Principal Real Estate Investors.

I am prepared to provide additional supporting documentation and cooperate with any investigative inquiries.

Thank you for your attention to this matter.

Sincerely,

Dennis Myhre, AIC

 

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Financial Misrepresentation by Principal Life Insurance Company (2008-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

I. Summary of Allegations:
Principal Life Insurance Company, through its subsidiary Principal Real Estate Investors, engaged in financial misrepresentation and fiduciary breaches affecting 401(k) plan investors in the Principal U.S. Property Separate Account (PUSPSA).

A significant portion of PUSPSA’s assets—totaling approximately $10 billion—were managed under the supervision of Mark Allen Hanrahan, Principal’s Managing Director of Acquisitions and Dispositions. Hanrahan, despite holding a high-level fiduciary position, was arrested in 2015 for kidnapping charges involving drug-related criminal activity, raising serious concerns about his integrity during his tenure at Principal.

II. Key Financial Misconduct & Regulatory Concerns:
Between 2008 and 2013, Principal engaged in the following fraudulent activities:

Misrepresentation of Investment Transactions:

Principal Real Estate Investors acquired 97.5% of PUSPSA’s commercial properties through off-market deals, private transactions, and repeat sellers. These opaque methods raise concerns about fair market value assessments and fiduciary compliance.

A notable example is the $370 million acquisition of 333 Market Street in San Francisco (2006), facilitated through Eastdil Secured (Wells Fargo subsidiary). Principal claimed this was a prime investment, yet questions remain regarding inflated valuation and undisclosed conflicts of interest.

Shadow Banking & Off-Balance Sheet Accounting:

Principal engaged in off-balance sheet transactions that obscured the actual financial risks to investors.

PUSPSA was reclassified as a fixed-income account, imposing withdrawal restrictions on 401(k) investors, trapping funds within an underperforming asset pool.

III. Violations of Law & Fiduciary Duty:
Principal’s actions potentially violate multiple federal statutes and fiduciary obligations, including:

Employee Retirement Income Security Act (ERISA) Violations: Mismanagement of retirement funds contrary to investor best interests.

Securities Fraud (15 U.S.C. § 78j & SEC Regulations): Fraudulent misrepresentation and non-disclosure of material financial risks.

Corporate Governance Failures: Lack of due diligence in fiduciary decision-making, especially under Hanrahan’s supervision.

IV. Supporting Documentation & Request for DOJ Action:
I urge the DOJ to investigate these financial misrepresentations and fiduciary breaches by Principal Life Insurance Company, including forensic accounting review of PUSPSA transactions and investment deals. Supporting documentation, including financial statements, investment disclosures, and regulatory findings, can be provided upon request.

 

Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Financial Misrepresentation by Principal Life Insurance Company (2008-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

1. Summary of Allegations This report details concerns regarding Principal Real Estate Investors’ acquisition practices and fiduciary misconduct. Specifically, the 2006 acquisition of 333 Market Street in San Francisco—arranged through Eastdil Secured, a Wells Fargo subsidiary—raises serious conflicts of interest and potential violations of fiduciary duties.

2. Key Findings & Evidence

• In 2007, 97.5% of Principal U.S. Property Separate Account’s real estate transactions were conducted off-market through private deals, repeat sellers, or lender-involved transactions.
• Principal allegedly engaged in off-balance sheet accounting and shadow banking, raising concerns over transparency.
• Principal Financial Services allegedly failed to act in the best interest of investors, violating fiduciary responsibilities.

3. Legal Violations & Fiduciary Concerns

• ERISA (Employee Retirement Income Security Act) Violations: Potential mismanagement of 401(k) investments.
• Securities Fraud: Possible misleading statements to investors regarding asset valuations and acquisition practices.
• Conflict of Interest: Transactions involving Wells Fargo raise concerns over self-dealing and preferential treatment.

4. Recommended Actions

• Investigation into Principal Financial Services’ real estate acquisitions and accounting practices.
• Audit of fiduciary disclosures and investment agreements related to 401(k) services.
• Legal review of transactions involving Wells Fargo and Eastdil Secured to identify regulatory violations.

 

 

Date: October 5, 2024 (Original Submission)

Tracking Number: 20241005-0002
Subject: Allegations of Financial Misrepresentation by Principal Life Insurance Company (2008-2013)

Submitted By: Dennis R. Myhre, AIC

Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)

1. Introduction

Under federal fiduciary laws, financial institutions managing retirement accounts are obligated to act in the best interests of their clients and adhere to ethical and legal standards. Misuse of investor funds for non-financial objectives or excessive expenditures unrelated to sound investment strategy may constitute fiduciary misconduct, exposing responsible parties to legal liabilities, including financial penalties and litigation.

Relevant legal references:

Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C. § 1104) – Establishes fiduciary responsibilities for retirement plan administrators, requiring prudence, loyalty, and adherence to plan documents.
Securities Exchange Act of 1934 (15 U.S.C. § 78j) – Governs fraudulent investment practices, including misrepresentation and securities fraud.
Investment Advisers Act of 1940 (15 U.S.C. § 80b-6) – Prohibits fraudulent investment advisory practices and conflicts of interest.

2. Summary of Allegations

This complaint details financial transactions executed by Principal Life Insurance Company, specifically through the Principal U.S. Property Separate Account (PUSPSA), that resulted in material financial losses for investors. Evidence suggests misrepresentation of financial assets, mismanagement of funds, and possible violations of fiduciary obligations.

Key concerns include:

• The purchase and management of 170 King Street (aka 170 Off Third) in San Francisco, acquired by Principal for the PUSPSA in 2003.
• Questionable capital expenditures related to building renovations, including privately commissioned artwork of significant cost.
• The role of former CEO Larry Zimpleman and Property Manager Mark Hanrahan in overseeing transactions that may not have aligned with investor interests.
• Potential breaches of fiduciary responsibility concerning the use of investor funds.

3. Request for Investigation

Given the financial implications for retirement investors and potential violations of fiduciary duty under federal law, I respectfully request a formal investigation by the appropriate regulatory and legal authorities. Relevant documentation, transaction records, and other supporting materials are available upon request.