Calif. Nonprofit Sues for Embezzled Pension Funds

According to the lawsuit filed in the U.S. District Court for the Central District of California, the Chime Institute entered an agreement with Life Insurance Company of the Southwest (LSW) to offer a retirement plan for Chime’s employees for which Peggy Berensen, an employee of Chime, was trustee. Chimes board of directors retained Benefits Administrators & Consultants (BAC) and its president Emily Strunk as third-party administrator for the trust.

At no time was Strunk or BAC authorized to have custody or control over the retirement plan funds. However, sometime in 2009 Strunk and BAC started communicating directly with LSW regarding the trust without including Chime or Berensen in the communication. In 2011, a Chime school administrator noticed more than $628,000 from the retirement plan account was missing or unallocated.

Chime learned from LSW that there had been lump sum withdrawals made from the retirement plan, not related to any participant, that were held in BAC account Chime was unaware existed. Chime was advised that this was being done for “liquidity requirement” for the LSW annuity per the Pension Protection Act of 2006.

Chime requested copies of any Chime board approval for this separate BAC account, but no such document was ever provided. In addition, neither Strunk nor BAC has ever provided an accounting for the separate funds.

However, after several requests, Strunk provided resolutions and trust agreements that had  been created or altered by Strunk to contain her signature and identify her as trustee of the plan trust, giving her power to withdraw money from the trust for her own purposes.

In 2012, Strunk returned $358,196.87 to the trust; however, more than $264,000 is still missing.

The lawsuit seeks $264,000 plus punitive damages for breach of contract, fraud, conversion, unjust enrichment and RICO fraud.