Labor department secures restraining order in Sewickley embezzlement lawsuit
The U.S. Department of Labor has secured a temporary court-ordered freeze on accounts tied to a Sewickley retirement plan administrator’s alleged misappropriation of trust assets.
A temporary emergency restraining order issued by the U.S. District Court for the Western District of Pennsylvania removes Sewickley-based third-party retirement plan administrator RiversEdge Advanced Retirement Solutions and owner Paul Palguta from overseeing retirement and profit-sharing plans amid embezzlement accusations.
Accounts enmeshed in the investigation are frozen pending third-party audit, including Beaver County’s voluntary deferred compensation retirement plan enrolling more than 100 current and former county employees.
The labor department requested an injunction to “protect employees’ retirement assets” in late January after filing a complaint accusing RiversEdge and Palguta of mishandling at least $5.5 million in assets in more than a dozen retirement plans from October 2022 through January 2024 and transferring funds to a corporate bank account.
RiversEdge manages at least 240 retirement plans that hold millions in assets.
Following an Employee Benefits Security Administration probe, federal officials said the defendants violated the Employee Retirement Income Security Act and attempted to conceal the missing funds by issuing fraudulent account statements overstating trust assets. When retirement funds lacked sufficient assets to process transactions, the labor department said Palguta shifted funds from other trusts to cover the difference.
The complaint said Palguta made multiple transfers from retirement and profit-sharing accounts to RiversEdge bank accounts starting January 2017.
Then, in late October 2023, Palguta placed an order to buy shares for the Beaver County Deferred Compensation Plan, but did not have sufficient cash to complete the order.
Asset custodian American Trust Custody, which handles electronic transfers, contacted Palguta about the insufficient funds and Palguta said he’d correct the problem. About two weeks later, Palguta notified American Trust he had handled the issue and the transaction was completed once $1.7 million was deposited into the plan account.
The transfer prompted American Trust to review RiversEdge’s accounts. The audit, according to the lawsuit, revealed RiversEdge was transferring cash from one trust account to another. It also found 13 federally qualified Employment Retirement Income Security Act plans and four non-ERISA plans had experienced suspicious transactions, including RiversEdge’s own profit-sharing plan.
Federal investigators said Palguta took that $1.7 million from six unrelated client plans throughout Pennsylvania and the United States.
Palguta is also accused of transferring more than $1.8 million to a RiversEdge bank account from October 2023 to January through dozens of transactions under $25,000 “seemingly structured” to evade detection, according to the labor department.
The temporary restraining order bars the defendants from further involvement with trust assets and requires an independent fiduciary to oversee an accounting of the 17 allegedly mismanaged plans.
The labor department is seeking a permanent injunction and order requiring RiversEdge to restore the missing funds and barring the defendants from serving as fiduciaries to any plan in the future.
This article originally appeared on Beaver County Times: Labor department secures restraining order in Sewickley embezzlement lawsuit
