Exposing Corporate Fraud
“Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their consciences.”
C. S. Lewis
Exposing Corporate Fraud when regulators and law enforcement refuse to do their job is risky business. Stealing retirement funds from investors is a fraudulent act, and when the evidence of a crime is overwhelming, the offenders should be prosecuted and punished. But in today’s world, few criminals are prosecuted. There may be a fine and a written assurance called a Non-Prosecution Agreement, one of many agreement options offered the perpetrator, stating that they will never commit this crime again. Occasionally, the wrongdoer may lose his or her job, but in the end the stolen money is never repaid to the victims. And the criminals? They continue their thievery against millions more of hard working American workers.
Before the financial crisis of 2008, Principal Life Insurance Company waged a crime spree against hundreds of thousands of investors. In 2006 and 2007, required Form 5500 reports were filed with the Department of Labor, understating thousands of 401k plans that were in force at that time. Principal was able to convert unreported contributions from hundreds of thousands of investors to their own use, pocketing billions of dollars. This money was invested in real estate ventures with other developers, either through loans or partnerships involving commercial properties nationwide. Meanwhile, the under-reported Principal U.S. Property Separate Account (PUSPSA) was the most heavily invested separate account offered by Principal in 2006 and 2007. Their own employees contributed almost a billion dollars into the account, and were also heavy losers with others after the account was frozen on September 26, 2008.
This video entitled The Untouchables was produced by Martin Smith for Frontline on PBS in 2013 and discusses the financial fraud issue that occurred during the alleged financial crisis, and how the Justice Department failed to deal with the corrupt corporations. Frontline also investigates why Wall Street’s leaders have escaped prosecution for the financial crisis and the sale of bad mortgages.
In another report released in 2014 by an internal watchdog at the Department of Justice, they called into question the agency’s stated commitment to holding people accountable for misconduct that precipitated the financial crisis. The FBI considered mortgage fraud “as the lowest ranked criminal threat in its lowest crime category,” between 2009 and 2011, the report concluded. Although the bureau received $196 million over that span to investigate mortgage fraud, the inspector general determined that by 2011, the number of agents investigating cases had fallen, as did the number of pending cases. The report states…”The Department of Justice (DOJ) and its components, particularly the FBI, United States Attorneys’ Offices (USAO), Criminal Division, and Civil Division, along with the DOJ-led interagency Financial Fraud Enforcement Task Force (FFETF), play an important role in combating mortgage fraud through civil litigation and criminal investigation and prosecution. The objective of this audit was to assess DOJ’s approach and enforcement efforts in addressing mortgage fraud generally between fiscal years (FY) 2009 and 2011.”
Many advisors are upset with my website and it’s portrayal of Principal Financial Services, Inc as a fraudster, and that’s ok. Beginning in March, 2017, every broker or advisor doing business with Principal Financial Services, Inc., or any of their affiliates, will have to disclose Principal’s fraudulent activities to any prospective client before recommending a Principal product. A 401k, an IRA, mutual funds, or anything else that Principal sells will require a disclosure.