NJ Pension Fund Trustee Sentenced for Embezzling over $360K

The founder of a New Jersey-based vending machine company operating in New Jersey and New York was sentenced to two and a half years in federal prison for embezzling $368,783 from the company’s pension fund.

Howard Preschel admitted to the embezzlement last August. His operations spanned the course of eight years, whereby he extracted the money from the CMG Vending Inc. Pension Trust in a series of 52 withdrawals. Most withdrawals were just a few thousand dollars, but on May 5, 2015, he pulled $136,786.93 from the pension, according to court documents.

To cover up his theft, Preschel “did knowingly and willfully fail to file the annual report for the last fiscal year” for 2013, 2014, and 2015, the documents stated. He also allegedly did not inform employees that insufficient funds were being forwarded to the plan and failed to distribute the annual funding notice to plan participants.

As part of the illegal withdrawals, the pension lost an additional $93,267 in interest, according to the US Attorney’s Office website. He will be ordered to pay this back as well, creating a total of $462,050 owed, in addition to serving his 30-month sentence.

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“As part of the plea agreement, Preschel agreed to make restitution to the trust fund in the amount of $462,050,” the office’s website states. “Preschel also agreed to a debarment which prohibits him from acting as a fiduciary on behalf of any employee benefit plan for a period of 13 years.”

The complaint also alleged that when a beneficiary of CMG’s pension plan inquired about distributing an annual funding notice to other employers, Preschel instructed the employee not to do so.

The embezzlement charges each carry a maximum penalty of five years in prison and a fine of up to $250,000. Failing to file an annual report charges each carry a maximum penalty of 10 years in prison and a fine of up to $100,000.

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Tags: CMG Vending, Embezzlement, Fraud, indictment, Pension Funds, Pension Plans, Retirement System, Theft

The Canada Pension Plan Investment Board (CPPIB) posted a so-so 3.6% return net of costs during the third quarter of its fiscal 2020 to reach net assets of C$420.4 billion ($318.2 billion), up from C$409.5 billion at the end of the previous quarter.

The performance surpassed the previous quarter’s return of 2.3% net of costs, as well as the year-ago third quarter return of 1.1%.

The fund reported that the C$10.9 billion increase in assets for the quarter consisted of C$14.5 billion in net income after all costs, minus C$3.6 billion in net Canada Pension Plan (CPP) cash outflows. It also said that on an annual basis, contributions to the fund continue to exceed outflows.

“All of our investment departments contributed to a very solid quarter, advancing the fund,” Mark Machin, president and CEO of CPPIB, said in a statement. “Financial results and operational performance across CPP Investments’ global active programs remain strong, although the relative value of the Canadian dollar, against several foreign currencies, affected overall results.”

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The fund’s five-year and 10-year annualized net nominal returns were 10.4% each, while its five-year and 10-year and annualized net real returns were 8.4% and 8.5%, respectively.

The fund grew by C$28.4 billion for the nine-month fiscal year-to-date period, which consisted of C$27.9 billion in net income after all costs, plus C$500 million in net CPP cash inflows. It had a net return of 7.1% after all costs during the period.

The asset allocation for the fund as of the end of 2019 was 30.7% in public equities; 24.9% in private equities; 11.1% in credit investments; 11% in real estate; 10.5% in government bonds, cash, and absolute return strategies; 8.3% in infrastructure; and 3.5% in other real assets.

The Office of the Chief Actuary of Canada conducts an independent review of the sustainability of the fund every three years. In its most recent review, the office said that, as of the end of 2018, the fund continues to be sustainable over the 75-year projection period at the current legislated contribution rates. The Chief Actuary’s projections are based on the assumption that the base account will earn an average annual real rate of return of 3.95% above the rate of Canadian consumer price inflation, after all investment costs and operating expenses through the year 2093. The corresponding assumption is that the additional CPP account will earn an average annual real rate of return of 3.38%.