Principal Fraud… A Saga of Crime
Lindenhurst Village Green was destined to become a thriving commercial development for OliverMcMillan, a private real estate development firm based in San Diego, California. Oliver-McMillan acquired the 64 acre land parcel, located in Lindenhurst, Illinois, in April, 2007, with the intentions of building up to 600,000 square feet of retail space. But when the economy collapsed in 2008, so did the San Diego-based developer’s hopes of completing the project, which would have been part of a 190-acre mixed-use development with as many as 1,000 housing units.
In a Crain’s Chicago Business news report dated October 22, 2009, A spokeswoman for Oliver-McMillan stated the company has not hired a broker and that an asking price has not been set. Theoretically, the sale price would have to at least cover what OliverMcMillan owes on the loan. According to property records, the deal was financed with a $19.7 million loan from Bank of America.
Meanwhile, Principal Life Insurance Company was already reporting to their 401(k) clients that Lindenhurst Village Green had been purchased on October 16, 2009, a week before the above story broke in Crain’s. The purchase price was $22.7 million, and the property was not the reported 64 acres, but rather 55 acres. Principal report the purchase as an investment in their “forward commitment” program, and was a land parcel acquired by the Principal U.S. Property Separate Account “at it’s loan maturity date.”
In the 2013 annual report, the notation below was included… the Lindenhurst property remained in the Principal U. S. Property Separate Account…. It’s fair value was listed at $800,000, a loss in value of almost $22 million. The original loan proceeds totaling $19.7 million has never been accounted for by Principal:
Everett Waterfront Landfill, Everett, Washington…. another fraud…
Oliver-McMillan (O.M.) purchased this riverfront property from the City of Everett, Washington, in 2008, at a cost of $8 million. The landfill had been reclaimed by the city of Everett, and was being marketed as a multi-use venture. Once again, Bank of America was the lender, Oliver-McMillan was the borrower, and the Principal U.S. Property Separate Account was the loan guarantor. Everett 41st Street Developers, LLC was a Delaware Limited Liability company, created as a shell company by Principal to take ownership of the property should O.M. default on the loan. OMH Transfer Agent, LLC, was another shell company that held ownership interest in the property.
In 2013, Oliver-McMillan sold the Riverfront property to Polygon Northwest of Bellevue, Washington, after a City Council majority endorsed the deal. No mention is made concerning Principal nor the PUSPSA, except in a subordinated Deed of Trust recorded on October 13, 2008….
The PUSPSA never owned this property, and Principal is showing a “price” of 18.2 million. One could assume that the account paid this money to someone… most likely Principal received the original loan proceeds as an equity partner, then laundered those funds, charging the account with the loan repayment and accrued expenses.
Principal Life and Miller Global Properties… the PUSPSA covers $200 million in cost over-runs…
Meanwhile, in Des Moines, Iowa, Principal Life is reporting to their 401k clients the following acquisition through an Annual Report. Principal partnered with Miller-Global in 2007, at a time when developing hotels and golf courses was a sure bet to lose money. By the end of 2007, most hotel developers were restructuring their debt to keep their heads above water. The negligent activities of the PUSPSA directors cost the account at least $100 million in an investment that had failed before it started… for one of those directors, Managing Director Mark Hanrahan, drugs controlled his life, as verified in this Des Moines news report…
Finally, in 2013, it was renamed Main Street Cupertino, and the account absorbed a $61.8 million loss to close the books. Again, the account never owned the property, simply paid off the mortgage and accrued charges in 2013 under a different name:
Principal successfully embezzled over $200 million from the Principal U.S. Property Separate Account in the above properties alone. The events described above would have never occurred had Principal been a fiduciary. Litigation then would have been a certainty, and the outcomes would have resulted in large judgments favoring the class of plaintiffs. Instead, Principal knew the courts would apply common law principles as precedents which would exonerate Principal from any wrongdoing, since under the variable annuity contract, the insurance company owns the plan assets, even though it is you, the investor, that provides the money.
These examples are but a small sampling of Principal’s greed during the mid-2000 years. Unchecked, that greed continues today, and will do so until investors stop throwing money into the feed trough. Investors must wake up…. if you simply read financial articles and watch YouTube videos, the warnings are there.
Variable annuities, proprietary funds, separate accounts, and alternative investments are all products that Principal and other insurance companies sell to the unwary investor. Don’t be an invisible investor, don’t be a victim of circumstances, because it IS you money, not theirs, and a lot of honest people in the market today are warning you, so be prudent and act with due diligence. If your employer refuses to listen to your pleas to change service providers, let him know there will be consequences, and refer him to the Department of Labor website.
The DOL and the SEC are both warning investors of risks involved purchasing variable annuity products from insurance companies… if you have Principal Life for a service provider, your risk level is greater because of the systemic nature of fraud that has existed within the company. It is not difficult to find hundreds of comments from previous experiences of investors when they have their accounts with Principal. Those comments are mostly negative and consistently describe experiences when they try to resolve issues with the company. The warnings are there… and they can’t be ignored if you are planning for a secure retirement.