401k Loan Sent To Wrong Bank Account - Who’s At Fault?

(REPOST APPROVED BY MODS)

I recently took out a roughly $10,000 loan against my 401(k) for home improvements. The loan was issued by a third-party company associated with my employer’s retirement plan.

Unfortunately, the funds were deposited into someone else’s bank account, and it has now been three months without my receiving a single dollar.
The bank has frozen the remaining funds in the recipient’s account, but some of the money has already been spent. The bank won’t disclose how much remains, and I’ve been caught in a frustrating cycle of finger-pointing: the lender says the bank is responsible, while the bank says the lender must submit the proper paperwork to recover the funds. Even then, I’ve been told that only the remaining balance would be returned—not the full $10,000.
Meanwhile, the lender continues deducting the agreed-upon loan payments from every paycheck, despite my never receiving the money.

There’s one complication: I’m not sure whether the lender used incorrect account information or whether I may have entered an incorrect account number when I was hired ten years ago. Either way, the funds were sent to the wrong person, and I’m struggling to get a clear explanation of what happened or how it will be resolved.

My last conversation with the lender was over three weeks ago, and I’m running out of options.
For those familiar with U.S. banking, retirement plans, or consumer protection law: Where should I start, who may be legally responsible for the missing funds, and what legal action or regulatory complaints would you recommend?

EDIT\*\*\* : Location: IN, USA

Also, I can confirm that the lender did ask me if I wanted to use the account/routing number they had on file, I agreed, assuming that since this is technically through my employer and I receive regular paychecks to the correct account, that the information they had was accurate and mine. There was never an explicit confirmation of bank info, just a suggestion to use whatever information that had.