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Benefits Plan Manager Pleads Guilty to $1 Million Fraud

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New Haven, CTAn employee savings plan under the provisions and protections of the Employee Retirement Income Security Act (ERISA) is valued in that employees of such an employee stock plan or employee 401K attempting to put funds away for retirement have recourse in the event of unnecessary risk, mismanagement or misappropriation by those in a position of control over the Plan.

These protections were tested last month when the US Attorney's Office for the District of Connecticut issued a statement detailing the misconduct of the owner and manager of Nutmeg Benefit Group LLC and the Nutmeg Welfare Benefit Plan and Trust. Michael L. Millman, 63 of Fairfield, Connecticut was implicated in the theft of more than $1 million in funds belonging to employees enrolled in employee benefit plans.

It was revealed in court that Millman acquired $655,893.55 by failing to forward insurance premiums to the appropriate insurance carrier related to the Nutmeg Welfare Benefit Plan and Trust. Together with Nutmeg Benefit Group LLC, the collective served as a vehicle through which companies could provide their employees with life insurance and disability benefits.

Between June 2005 and December 2009, Millman misdirected the insurance premiums and took loans from the value of the participants polices and diverting proceeds from policies that a plan participant had directed him to surrender and transfer to another insurance carrier. It was also found that Millman defrauded Essex Savings Bank, which formerly served as the trustee of the Plan and Trust, a total of $344,516.40.

The benefit plan manager pleaded guilty in April before Senior US District Judge Peter C. Dorsey in New Haven to one count of bank fraud, two counts of wire fraud, and one count of embezzlement and theft from an employee pension or welfare benefit plan.

"In order to avoid detection of his theft," the statement says, "Millman created fraudulent policy statements for several of the plan participants, which purported to show that the premiums paid by participants had been forwarded in full to the insurance companies, and that no loans had been taken on the policies."

The case was investigated by the US Department of Labor, officials in both the Office of the Inspector General and the Employee Benefits Security Administration in Boston.

The US Department of Labor, through the Employee Benefits Security Administration, is responsible for the administration and enforcement of the provisions of Title 1, ERISA.

Millman is scheduled for sentencing on September 3 and could face fines of up to $2 million and a maximum imprisonment of 75 years.


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