U.S. Labor Secretary sues Phila. firm Harvey Pennington for ERISA violations

By Jon Campisi | Aug 27, 2012

U.S. Labor Secretary Hilda L. Solis and the Department of Labor have filed suit in federal

court in Philadelphia against the city law firm Harvey Pennington over allegations that the firm violated the Employee Retirement Income Security Act of 1974 when it mishandled employees’ 401(k) contributions.

The complaint, which was filed Aug. 22 at the U.S. District Court in Philadelphia by Solicitor of Labor M. Patricia Smith, says that for payroll periods from January 2005 through at least May of this year, the firm remitted certain employee retirement contributions late without interest, and failed to remit certain employee contributions to the 401(k) plan altogether.

The suit accuses the firm of failing to segregate the profit-sharing plan’s assets from the firm’s general assets.

Aside from the firm itself, the additional defendants named in the lawsuit are Ernest Bernabei and Frederick Walton, shareholders who are co-trustees of the retirement plan.

The profit-sharing 401(k) plan itself is also listed as a defendant in the complaint.

The suit accuses Bernabei and Walton of failing to ensure that the plan’s assets were collected by the plan.

The complaint further accuses the defendants of failing to ensure that all assets of the plan were held in trust by one or more trustees, failing to ensure that the assets of the plan did not inure to the benefit of the employer, failing to discharge their duties with respect to the plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan, and failing to discharge their duties with respect to the plan solely in the interest of the participants and beneficiaries and with the “care, skill, prudence, and diligence under the circumstances.”

The plaintiffs allege that Bernabei and Walton enabled the employer to commit breaches of fiduciary duty and are themselves liable for said breaches.

Solis is seeking to have a judge restore to the plan all losses, including interest or lost opportunity costs, which were caused by the defendants’ fiduciary misconduct; remove Harvey Pennington Ltd., Bernabei and Walton as fiduciaries of the plan; enjoin the defendants from acting directly or indirectly in any fiduciary capacity with respect to an employee benefit plan; and appoint, at the firm’s expense, an independent fiduciary for the plan.

The plaintiffs also seek the costs of the litigation and other equitable relief.


The federal case number is 2:12-cv-04813-MSG.

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