Principal Life Insurance CompanyTracking 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.
