Indictment charges Aurora man with defrauding pension plans
An Aurora man has been indicted and charged with defrauding employee pension plans and group life insurance programs for public housing authorities across the country of more than $8.6 million.
Richard P. Zachman, 60, was charged with 12 counts of wire fraud in an indictment returned Wednesday by a federal grand jury.
He will be arraigned at a later date in U.S. District Court.
Zachman was vice president of Life Associates Inc. and between 2001 and 2008 controlled operations of the business, which he and his wife owned, according to the federal indictment.
Life Associates, which had offices in Sandwich and later in Sugar Grove, administered employee pension plans and group life insurance programs for more than 100 public housing authorities in 21 states, with thousands of employee beneficiaries.
Chicago-area clients included the public housing agencies in DuPage County, Elgin, North Chicago and East Chicago, Ind.
Prosecutors contend that between 2002 and January 2009, Zachman did not disclose to, and concealed from, the housing authorities and the beneficiaries that their pension plans and group life insurance programs had received valuable proceeds when the financial company that serviced the plans converted from a mutual holding company, owned by its policyholders, to a publicly traded company through a process known as “demutualization.”
According to the indictment, Zachman allegedly converted roughly $8.6 million in demutualization proceeds to his and his wife’s personal benefit, to the benefit of Life Associates, and to the benefit of other non-related businesses that Zachman at least partially owned.
The charges allege that Zachman knew that these proceeds were to be used solely for the benefit of the housing authority benefit plans and their beneficiaries.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater.