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A financial planner agreed to pay $20 million to 17 retirement plans it manages to resolve a lawsuit from the U.S. Department of Labor accusing it of improperly shuffling money between accounts and embezzling at least $5 million in plan assets, a filing in Pennsylvania federal court said.

In a motion filed Monday, the DOL asked the court to greenlight the settlement it reached with RiversEdge Advanced Retirement Solutions LLC and its owner, Paul Palguta, to end its Employee Retirement Income Security Act lawsuit. The DOL said RiversEdge, which acts as a third-party administrator of about 240 retirement plans, moved at least $5.5 million in retirement plan assets from 17 plans by transferring funds from retirement plan trusts into its own corporate accounts.

Financial Co $20M Resolve : Settlement Details and Restrictions

As part of the agreement, RiversEdge will shell out about $20.4 million to distribute among the impacted plans. Additionally, the company and Palguta are barred from managing retirement plans in the future.

"The RiversEdge defendants are permanently enjoined from serving as fiduciaries, agents, service providers, administrators, and any other position or role involving the plans, and from exercising any authority or control with respect to the plans or their assets, whether or not those plans are covered by ERISA," the filing said.

Denials and Legal Proceedings

RiversEdge and Palguta have continued to deny the allegations. The DOL's Employee Benefits Security Administration filed suit against RiversEdge in January, alleging the company ran afoul of federal benefits law by mishandling assets in accounts covered by the law, along with some plans that are exempt from the law. The funds RiversEdge handled were in the custody of either Charles Schwab Trust Bank or Mid Atlantic Trust Co., according to the suit.

Financial Co $20M Resolve : The Allegations

The DOL said Palguta would transfer money from the plans the company managed into an account intended to temporarily hold cash awaiting disbursement, known as the #RERREBTE — pronounced "rebate" — account but then transfer that money into other plan accounts or into a RiversEdge corporate PNC Bank account.

Through its investigation, the DOL found a total of 17 retirement, benefit and profit-sharing plans were found to be affected, including a deferred-compensation plan for Beaver County employees and the profit-sharing plan for law firm Leech Tishman Fuscaldo & Lampl.

From October 2022 to January 2024, about $23.6 million was transferred from plans RiversEdge managed into the #RERREBTE account, and $18.8 million went from there to different retirement plans, according to the suit. Another $5.5 million in plan assets was transferred from the #RERREBTE account to PNC Bank, the suit said.

Additional Findings

The DOL said some transactions were deliberately kept at less than $25,000 each to avoid the banks' scrutiny, and some were listed as authorized by Palguta's wife even though she had not been a RiversEdge employee for years.

In February, U.S. District Judge Marilyn Horan signed off on a temporary restraining order that forbade RiversEdge from any further involvement in trust assets and barred the company and Palguta from withdrawing any funds from their two corporate accounts into which they had transferred plan assets.

The DOL declined to comment. Representatives of Palguta and RiversEdge did not immediately respond to requests for comment Tuesday.

The DOL is represented in-house by Andrea C. Luby. Palguta and RiversEdge are represented by Michael A. Comber, Devin M. Misour and Tina Miller of Comber Miller LLC.