401(k) Embezzlement Tied to Escort Service

The Boston Business Journal reports that the U.S. Attorney’s office in Boston said late Thursday that Mark J. Harrington, 52, was charged in federal court with embezzling roughly $368,000 from the 401(k) plan of his former employer, Anchor Capital Advisors in Boston.

Harrington was a vice president and controller at Anchor Capital, which managed more than $7 billion in client assets, according to the report.   Harrington was fired from Anchor Capital in January after being confronted about the alleged scam by firm president Bill Rice, according to the report.

In an  affidavit filed in support of the criminal complaint, special agent Christina A. Rosen detailed a plan orchestrated by Harrington over a six-month span that allegedly saw him siphon unvested funds within Anchor Capital’s 401(k) plan into bank accounts with Danversbank and Citizens Bank, according to the Business Journal.   The report cites the affidavit in noting that Carmine P. Arenella, who also had access to those funds, was involved with Harrington in an adult escort business that was detailed in multiple e-mails uncovered in the investigation.

According to the report, the alleged scam started roughly two years after Anchor Capital was acquired by Boston Private Financial Holdings in June 2006. At that time, Anchor Capital’s employees were encouraged to use Boston Private’s existing 401(k) plan going forward, according to Rosen’s written affidavit.

At that point, Harrington was given the responsibility of winding down Anchor Capital's own retirement plan, which was managed in-house and used State Street and Fidelity Investments as fund custodians.   Rosen claims that the alleged embezzlement focused on forfeited accounts left by former Anchor Capital employees. After being questioned about the embezzlement, Harrington allegedly admitted to targeting those funds because they are lightly audited, Rosen said.

The alleged theft came to light in December, when Harrington was caught on surveillance tape trying unsuccessfully to cash a $9,788 check at several Danversbank's north of Boston.

Rice and Anchor Capital assistant controller Kyle Gorman later identified Harrington on the surveillance tapes, according to the court filing.   If convicted on these charges, Harrington faces up to 5 years imprisonment, to be followed by 3 years of supervised release and a $ 250,000 fine.

The case was investigated by the U.S. Department of Labor and the Employee Benefits Security Administration in Boston.