Doctor Liable for Investment Manager 401(k) Plan Theft

A Fairfield, Connecticut, podiatrist has been ordered to restore assets to his firm’s 401(k) plan that were stolen by an investment management firm and to pay a civil penalty to the Department of Labor (DoL).

The Norwalk Advocate reports that the DoL filed a lawsuit last September alleging that Anthony Iorio, owner of Fairfield Podiatry Associates, failed to fulfill his fiduciary responsibilities with respect to the plan from September 2004 to February 2007 by not adequately monitoring the investment manager’s activities and not securing a bond to protect the plan’s assets, as required by the Employee Retirement Income Security Act (ERISA). Lafferty & Partners LLC, a Red Bank, New Jersey-based investment and financial management services firm hired by Iorio to oversee the plan’s assets, and its owner, Jeffrey Lafferty, stole thousands of dollars from the plan’s fund, the suit says, according to the news report.

A consent order requires Iorio to restore to the plan $32,263.51 and to pay a $6,452.70 civil penalty. Iorio must ensure that the repayment amount, which represents principal and interest, is properly allocated to participants’ accounts and provide proof of payment to the DoL, the news report said.

Lafferty and Vincella Ross, co-founders of Lafferty & Partners, which specialized in offering financial services to podiatrists, were arrested in September 2007 for first-degree money laundering and conspiracy to commit money laundering. New Jersey’s Attorney General alleged they stole a total of more than $500,000 from clients, including Iorio.

“Employers who sponsor employee benefit plans are responsible for keeping close watch over how the funds in those plans are administered,” said Jean Ackerman, regional director of the Labor Department’s Employee Benefits Security Administration in Boston, in the news report.