Santa Rosa, Calif., investment firm, officers ordered to restore nearly $602,018 to 13 employee benefit plans

Date of Action: April 5, 2013

Type of Action: Consent judgment and order

Name(s) of Defendant: Rick Lane Tasker, Martel Jed Cooper, Michael Gregory Smith, individually and as fiduciaries and service providers; and Zenith Capital LLC, an investment advisory firm located in Santa Rosa, Calif.

Allegations: The defendants breached their fiduciary duties and engaged in prohibited transactions when they placed 13 employee benefit plans into Global Money Management (GMM), a hedge fund which collapsed and went bankrupt.  The complaint alleged that Zenith Capital and the individual defendants placed the plans in the high-risk hedge fund despite the fact that the plans were not qualified, accredited investors, and failed to conduct prudent due diligence on GMM or its suitability as an investment for the plans.  They also failed to disclose GMM’s ownership interest in Zenith Capital and their receipt of incentive fees from GMM for the plans that it placed into GMM.  The general partners of GMM were convicted of mail and wire fraud in connection with GMM. 

Resolution: The department obtained approval of four consent judgments by the U.S. District Court for the Northern District of California, resolving its allegations against the defendants.  Zenith Capital was ordered to pay $602,018 in restitution for plan losses and restoration of the improper incentive fees, plus lost opportunity costs and penalties payable to the department.  The three individual defendants were ordered to restore $503,385 in plan losses, incentive fees and penalties.  In addition, Tasker, Smith and Cooper are permanently barred from serving or acting as discretionary fiduciaries, investment managers, or trustees or administrators to an ERISA-covered plan.  The consent orders require the defendants to meet certain disclosure and training requirements in order to serve as consultants or investment advisors to ERISA-covered plans.

Court: United States District Court for the Northern District of California

Docket Number: 3:08-cv-04854-EMC

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.