DOL: Retirement Plan Administrator Embezzled $5.5M
What You Need to Know
A preliminary injunction bars the firm and owner from involvement with trust assets.
The firm, RiversEdge, is a third-party administrator of at least 240 retirement plans.
RiversEdge and Paul Palguta transferred assets from 17 retirement plans into their own corporate accounts, according to the department.
A federal judge this week issued a preliminary injunction against a Pennsylvania retirement plan administrator accused of embezzling at least $5.5 million in assets from multiple plans.
The action by the U.S. District Court for the Western District of Pennsylvania follows a complaint and motion filed by the U.S. Department of Labor in January and an emergency temporary restraining order issued earlier this month.
The order bars defendants RiversEdge Advanced Retirement Solutions LLC in Sewickley, Pennsylvania, and owner Paul Palguta from further involvement with trust assets and from serving as fiduciaries or service providers to any plans covered by the Employee Retirement Income Security Act of 1974, or ERISA.
The court order also forbids RiversEdge, a third-party administrator of at least 240 retirement plans, and Palguta from withdrawing any funds from two corporate accounts into which they are alleged to have illegally transferred plan assets, except for court-ordered payment of independent fiduciary fees.
It also requires them to preserve all relevant records for transfer to a court-appointed independent fiduciary, and requires the independent fiduciary to oversee an accounting of 17 allegedly mismanaged plans. Fourteen of the allegedly mismanaged plans are covered by ERISA, according to the preliminary injunction.
The allegedly mismanaged plans include the nonprofit Christian Aid Mission’s 403(b) plan, an LCBC Church 403(b) and the St. Barnabas Health System Retirement Savings Plan, according to the injuction order.
The plans that RiversEdge administered hold millions of dollars in assets, DOL said in a release. ERISA covers at least 229 of these retirement plans.
An investigation by the department’s Employee Benefits Security Administration determined RiversEdge and Palguta violated ERISA.