A San Jose mortgage broker firm and its Vietnamese-American owner are sued by the U.S. Department of Labor for allegedly misusing retirement plan assets for their own benefit, in violation of ERISA – the Employee Retirement Income Security Act, according to a DOL press release.
The suit, filed in the federal court for Northern California, alleges that Cuong Viet Do and his company Mili Group Inc. improperly authorized hundreds of thousands of dollars to be used for his own and the company’s benefits, including cash withdrawal of at least $297,040 and a purchase of a condo at a price of $247,900.
Mili Group is a mortgage brokering firm with independently owned agencies throughout Northern California.
This, however, is not Cuong Do and Mili Group’s first controversy. On a number of web bulletin boards, such as this one, current and former agents accused Do of fraud and Mili Group of being an illegal pyramid scheme.
In addition to the civil lawsuit, the DOL also filed an adversary proceeding in the bankruptcy case for Do and his wife, seeking to prevent the bankruptcy court from discharging the debt that Do owes to the retirement plan.
Both actions are based on investigations by the Northern California office of the Department of Labor’s Employee Benefits Security Administration (EBSA).
“Plan officials have a duty to manage and protect employees’ benefit plans and their assets,” said Jean Ackerman, EBSA’s regional director in San Francisco. “Our action today is designed to restore to the plan assets that were not properly preserved for the company’s workers.”
Specific allegations by EBSA (read the complaint here) include:
* In July 2007, Do is accused of authorizing $100,000 in loan from the workers’ retirement account, made to himself for $50,000 and another $50,000 to his wife, Minha T. Do.
* In a four-week period in February and March 2008, Do made 12 online withdrawals totalling $134,000 from the workers’ retirement account to the corporate account of Mili Group.
* Between 2006 and 2009, Do made additional transfers and withdrawals in the amount of at least $63,040 from the retirement account.
In addition, EBSA also alleges that Do bought a condominium in Florida for $247,900, then rented it out under the name of another of Do’s businesses. The condo generated rent for Do at an amount somewhere between $15,000 and $20,000, according to the complaint.
As relief, the department is seeking a court order to require that Do and the company restore money to the workers’ retirement plan.
Interesting side note: While busy allegedly building a pyramid scheme and allegedly raiding workers’ retirement funds, Do still found time to make political donations.