TPA Faces Another Lawsuit for Stealing Retirement Plan Assets

MBA Engineering, Inc., as sponsor and administrator of the MBA Engineering, Inc. Employees 401(k) Plan and the MBA Engineering, Inc. Cash Balance Plan, and the plans’ trustee have filed a lawsuit against Vantage Benefits Administrators, Inc., Jeffrey A. Richie, Wendy K. Richie and Matrix Trust Company for breach of Employee Retirement Income Security Act (ERISA) fiduciary duty, as well as other charges. Vantage benefits serviced as third-party administrator (TPA) and recordkeeper for the plans.

According to the complaint, the Vantage defendants stole approximately $2,269,653.43 in retirement assets from the participants of the plans. The Vantage defendants misappropriated the plans’ assets through 35 fraudulent transfers made by Matrix to Vantage Benefits over the course of 12 months. Matrix made these transfers of plan assets directly to Vantage Benefits without any direction or authorization of any kind from MBA or the plans’ trustee.

The lawsuit says that prior to making the fraudulent transfers to Vantage Benefits, Matrix took possession and control of millions of dollars of assets of the plans without there being any written, or even oral, agreement between Matrix and the plaintiffs or the plans. The plaintiffs allege that by holding the assets of the plans without any authorization from the plaintiffs and by making the transfers of assets of the plans to Vantage Benefits without any authorization or direction by plaintiffs, Matrix exercised authority and control over the assets of the plans and held fiduciary status as to the plans under ERISA.

The complaint states that Matrix knew that all of the 35 fraudulent transfers were made to the same business bank account held in the name of Vantage Benefits itself, and not in the name of the plans, and that the transfers depleted nearly the entire multi-million dollar account balance held in the names of the plans at Matrix. Many of the transfers used fake participant names and Social Security numbers, and the nature of the transfers violated the terms of the plans.

In addition, the lawsuit claims, “Upon information and belief, Matrix made similar transfers to Vantage Benefits of assets totaling more than $11 million from the accounts of approximately 20 other retirement plans.”

Matrix never informed the plaintiffs that the transfers were being made, never provided the plaintiffs with the monthly trust account statements it produced for the plans and never communicated at all with the plaintiffs either orally or in writing. There was never any agreement between the plaintiffs and the Vantage defendants that authorized the Vantage defendants to instruct or direct Matrix to make the transfers from the plan to Vantage Benefits. In addition, the Vantage defendants disguised their fraud from plaintiffs and the plans’ participants for nearly a year by falsifying plan participant account statements and participant-accessible website information to make it appear that participant account balances were whole and accurate.

The lawsuit is seeking repayment of the assets stolen by the Vantage defendants and “in light of the depravity of the Vantage Defendants’ fraudulent scheme, Plaintiffs seeks exemplary damages against the Vantage Defendants based on their outright fraud.”

Notably, in a previous lawsuit against Vantage Benefits brought by Caldwell and Partners, Inc., as sponsor of and on behalf of the Caldwell and Partners, Inc. 401(k) Plan, a U.S. District Court entered a default judgment and ordered Vantage Benefits and Jeffrey A. Richie to restore $10,170,452.00 for actual damages, plus interest to the Caldwell and Partners plan, and ordered them to pay $297,836.75 for attorneys’ fees and costs.