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Custodian Matrix sued for alleged involvement in theft of 403(b) plan assets

A custodian is being sued in a class-action lawsuit for its alleged involvement in the theft of 403(b) plan assets, said documents filed in U.S. District Court in Colorado.

Matrix Trust Co. was engaged by Dallas-based third-party administrator Vantage Benefits Administrators to manage and invest the assets of retirement funds that it administered. Plaintiffs Dave Youngblood and Don Steinbach allege that custodian Matrix "fraudulently transferred at least $3 million" from at least five 403(b) plans into a private business account maintained by Vantage or its agents, "resulting in the substantial diminution of the 403(b) plan accounts," according to the suit. Both plaintiffs are participants in one of the plans.

Vantage allegedly directed that the transfers be made into an account run by Vantage. Matrix allegedly completed these transfers without the knowledge or authorization of the plan account holders, thereby violating its fiduciary duty, the lawsuit claims.

The FBI raided Vantage's office in October 2017 following allegations of missing retirement funds.

Matrix and Vantage are currently engaged in similar class actions filed by other defendants alleging missing retirement assets from non-403(b) plans, administered by Vantage and managed by Matrix, from which Matrix is accused of illicitly transferring a total of about $11 million into a Vantage account in breach of its fiduciary duty to those plans and account holders.

"This lawsuit is completely without merit," Matrix spokesman Gregg Rosenberg said. "Matrix Trust Co. did not manage these investment accounts or serve as a trustee or fiduciary for them. This lawsuit involves accounts that were opened and managed by Vantage Benefits Administrators. Matrix's actions were consistent with its custodial agreements and intends to vigorously defend itself against these baseless claims."

A spokesman for Vantage could not be immediately reached for comment. Attorneys for the plaintiffs declined to comment further.

The plaintiffs are looking to compel Matrix to return the improperly transferred funds and reimburse class members for the lost earnings suffered due to these transfers, among other recoverable damages.