Category: Ethics & Compliance
Manipulation of DOL Schedule D costs 401k Investors Billions of Dollars
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)
Summary of Allegations: This report details fraudulent financial activities allegedly conducted by Principal Financial Group between 2006 and 2012. These actions, supported by statistical analysis, demonstrate systemic misrepresentation of financial data, falsification of reports filed with the U.S. Department of Labor (DOL), and improper concealment of billions of dollars in plan sponsor assets.
Background Information: In 2006, IT Director Mike Vaughan, employed by Principal, developed a formula designed to generate a randomized sorting function. While Vaughan likely created this formula as part of his assigned IT duties, it later played a critical role in obscuring financial misconduct related to pension and retirement plan filings. His sister, Terri Vaughan, former Iowa Insurance Commissioner, also had longstanding connections with Principal Financial Group as well.
Alleged Fraudulent Practices:
- Manipulation of Reports & Concealment of Fraud:
- Between 2007 and 2012, Principal allegedly misappropriated between $3 billion and $5 billion from PUSPSA plan funds.
- The company falsified Schedule D records filed with the DOL to conceal the diversion of funds.
- A deliberate restriction of access to plan sponsor data further complicated public oversight and independent auditing.
- Evasion of Regulatory Oversight:
- The Employee Benefits Security Administration (EBSA) was established to prevent fraud through its EFAST reporting system.
- Principal played a significant role in the design and funding of this system, raising concerns of insider collusion.
- Key fraudulent financial disclosures between 2006 and 2008 were missing from public DOL records.
- Specific Misrepresentations:
- Principal omitted nearly 4,000 plans from Schedule D filings in 2006 and 2007.
- In 2008, the company falsely reported $800 million in investor withdrawals, which were never executed.
- To conceal fraud, Principal reported nonexistent plans, balancing fraudulent asset transfers.
Call for Investigation: The evidence presented in this disclosure indicates intentional financial misrepresentation, document falsification, and significant investor fraud by Principal Financial Group. Despite regulatory awareness, no substantive intervention has occurred. It is critical that the DOJ, SEC, and DOL launch an investigation with the intent to prosecute the responsible parties.
The fraudulent actions described have affected millions of retirees and investors. Immediate regulatory action is necessary to hold Principal Financial Group accountable and safeguard investor funds.
Supporting Documentation: Available upon request.
Conclusion: Principal Financial Group’s pattern of misrepresentation, financial manipulation, and document falsification demands urgent review. I respectfully urge the DOJ to take swift investigative action to protect investors from further harm.
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