Final Whistleblowers Complaint to the SEC & DOJ

 ADDENDUM 2.1 Investigation Abstract  Principal Group of Companies  

This memo is intended as a supplement to ADDENDUM 2.0, a continuation of the discussion relating to the missing plans where Principal filed false Form 5500 reports to the Department of Labor(DOL) in 2006, 2007, and 2008.  I submitted as evidence THE PUSPSA 5500 Sch D filings for 2006, 2007, and 2008, attached to the Addendum 2.0 document.

These documents provide the investigator a complete list of all plan sponsor names that were included in the three years of Schedule D filing. The 2006 Schedule D will have 1220 pages attached with 8 plan sponsors listed per page. The numerical 1220 will appear on the lower far right edge of the page border in a very small font size.  Multiply that page number times 8 (per page), and you will have approximately 9760 plans on the list for the year 2006.

Repeat this process for 2007 and 2008, and they will show 1,174 pages in 2007 and 2,127 pages in 2008.  Since both years have 8 plan names listed per page, for 2007 there were 9392 plan names listed, and in 2008 there were 17,016 plan names listed in the Schedule D report for each respective year.  At issue is the fact that there were almost twice the number of plans listed in 2008 than were listed in either 2006 or 2007.  The fact denies logic that in 2008, when the plan was restricted, twice the number of plans would have been invested in the PUSPSA.  The fact is that the numbers were fraudulently inflated in 2008, and deflated in 2006 and 2007 , in order to conceal the numbers of plans that really existed.

To make it virtually impossible to identify whose plans were listed in 2006, 2007, AND 2008, Principal’s IT Manager, Mike Vaughan,  created an SQL Code that scrambled the list with no logical order.  Vaughan was, coincidentally, the brother Of  Terri Vaughan, then Iowa State Insurance Commissioner.   Later, Terri Vaughan would retire from the State position to become a member of Principal’s Audit Committee.

You will want to identify which plans belong where, and to do so Principal will have to provide that information.  I suspect under threat of a charge of Fraud, Principal will cooperate.  To make it more convincing,  I have attached the Code that Mike Vaughan wrote on June 29th, 2006, at 2:40 PM Des Moines time (EXHIBIT 16) to this Addendum.  I do know that the plans in 2008 were over-stated by approximately 9,000 plans, and under-stated in 2006 and 2007 by approximately 7000 plans each.  I have spreadsheets to support that evidence as well.  I can also create line charts if it  would help to illustrate the crime timeline.  My best approximation is Principal stole at least a billion dollars per year for the three years in question.

A spreadsheet  (EXHIBIT 17), also attached, shows a recap of Schedule H Report filings by Principal from 2007 through 2014,  When you review the numbers inserted for the years involved, it can be a real head shaker… for example, in 2006 and 2007 Principal reported $750,000,000 in assets were transferred into the plan each year, with an average number of plans at 9,300 for each year.  That statistic would average $81,645 per plan.  In 2008, with a reported 17,000 plans reported, and $32 million in assets transferred in, the average was only $1882.00 per plan, only a small fraction of the prior years and with thousands of supposed new plan participants.

There is no question that Principal has defrauded thousands of 401k plans out of retirement dollars.  I expect that with a few weeks, Principal will contact your office directly to self-report, trying to convince your office they were simply using plan assets they already own.  Under common law, they will argue they have no fiduciary duty, and under Federal laws, separate accounts covered under a group variable annuity are considered “risk-free” investments and plan recordkeepers have no responsibility to protect the assets.  My response would then be to the Principal the question “why.”  Why did you shuffle the name list, why did you fraudulently falsify the form 5500 records filed with the DOL, and why did you submit false accounting numbers in your reports.  I could continue to file more documents, but for now I plan to wait until December 1st to see if Principal self-reports before I start submitting more information.  Knowing the harsh penalties if they fail to self report, and knowing most of the perps involved have quit or retired, by not self reporting, those individuals will be placed in jeopardy.

Thank You,

Dennis Myhre, AIC

Cell #:  417-593-9177

 

 

 

 

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Author: Dennis Myhre

Mr. Myhre can be contacted at..... dmyhre@fiduciaryfactor.com