After DOJ Criminal Sentence, DOL Sues Profit-Sharing Plan of Pennsylvania Mushroom Farmer

The Department of Labor sued a Pennsylvania mushroom farm, alleging plan fiduciaries breached their duties to Joseph Silvestri & Son, Inc. Profit Sharing Plan participants.

Although the company shuttered in 2019, Joseph Silvestri & Son, Inc.; Donna Fecondo—president and owner of the company—and the Joseph Silvestri Son, Inc. Profit Sharing Plan—failed to fulfill their responsibilities under the Employee Retirement Income Security Act to terminate the retirement plan. The parties also allegedly failed to meet their obligations to ensure distribution of the plan’s assets to the participants and beneficiaries or alternatively retain a fiduciary to manage the plan and oversee the distribution of assets, the complaint alleged.  

Further, the DOL claims the company, Fecondo and the retirement plan have failed to file required annual Form 5500 reports to the regulator.

“The plan currently exists without oversight or control by responsible fiduciaries with the authority to operate and manage the plan,” the DOL’s attorneys argue in the complaint. “Thus, the plan is ’abandoned,’ in violation of ERISA.”

The DOL seeks a court order, directing the parties to enter the executed agreement—a consent judgment and order—promptly after the complaint filing, according to the DOL’s complaint, filed April 4, in U.S. District Court for the Eastern District of Pennsylvania. The case is Julie A. Su, acting Secretary of Labor, United States Department of Labor v. Joseph Silvestri & Son, Inc. et al.

The company was located in Garnet Valley, Pennsylvania and established the plan in 1984.

The Joseph Silvestri & Son, Inc. Profit Sharing Plan held $355,001 in retirement assets for 68 participants, as of the last DOL Form 5500 filing, in 2014.

The current custodian of plan assets is Morgan Stanley Smith Barney, LLC.

The plan’s trust held $597,351.42 in retirement assets for 70 participants, including Fecondo, Morgan Stanley’s records as of July 31, 2022, show, according to the complaint.  

Targeting fiduciary violations at retirement profit sharing plans, the DOL sued a New York tree service, earlier this month; two Maryland profit-sharing retirement plans earlier this year; and at least six profit-sharing plans in 2023. 

Fecondo was indicted on January 13, 2022, and charged with multiple counts of failure to collect and pay employer taxes and failure to file tax returns, shows the DOL civil complaint.  

“Fecondo subsequently entered a guilty plea and was sentenced to… 46 months of incarceration and ordered to pay $599,159.94 in restitution,” DOL attorneys write in the civil complaint. Fecondo was sentenced on March 4, according to the Department of Justice.

Per the DOL consent judgment, the DOL; Silvestri & Son, Inc; and Fecondo and Silvestri & Son, Inc Profit Sharing Plan  agree to cooperate in the filing of the civil lawsuit and to seek a court order for removal of Fecondo and the company as plan fiduciaries and a permanent injunction to prevent either from serving as a trustee, fiduciary, adviser, or administrator to any employee benefit plan subject to ERISA. They also want AMI Benefit Plan Administrators, Inc. appointed as the independent fiduciary for the plan.   

Part of the judgment includes, “Fecondo’s agreement to forfeit her individual plan account to satisfy restitution due in United States v. Donna Fecondo,” DOL states in the civil complaint.

In multiple years, Fecondo failed to file tax returns and also failed to pay taxes relating to the company and its employees, write DOL attorneys.  

Representatives of the DOL did not return a request for comment. Representatives of Joseph Silvestri & Son, Inc. could not be reached for comment.