The recent news about RiversEdge, the Third-Party Administrator (TPA) accused of stealing plan assets is alarming, but not new. People and providers with access to plan assets can easily steal. The problem is that it’s one of the dumbest crimes available.
Stealing is wrong, but I think criminals have a better chance of robbing a bank with a pantyhose on their head, than a plan provider stealing assets. A pantyhose might give a bank robber anonymity, but a plan provider stealing plan assets will have the theft documented by a reputable plan custodian. Stealing plan assets from multiple plans creates a shell game because plans will eventually have to pay out participants, as indicated in the Department of Labor’s (DOL) allegations. A plan sponsor I met who used defined benefit plan assets to fund his home renovation was caught up by the DOL investigators over complaints by former participants.
In Star Trek VI: The Undiscovered Country, Captain Kirk, and the Enterprise were being attacked by a Klingon Bird of Prey which could fire when cloaked. When Commander Uhura suggested that the Bird of Prey must have a tailpipe, Spock and Dr. McCoy created a torpedo that could track the Prey’s emissions and attack it. Stealing from plan assets is like having a tailpipe or fingerprints that will catch you if you steal from a plan.
