DOL Targets New Jersey 401(k) Plan for Concrete Companies

New Jersey concrete manufacturer Di Ferraro Inc. failed to properly transfer employee withholdings for loan repayments and employer matching contributions to its retirement plan repeatedly over several years, the Department of Labor alleged in a July 7 lawsuit brought against the plan’s fiduciaries in U.S. District Court for the District of New Jersey.

The DOL, in the name of Acting Secretary of Labor Julie Su, alleged the defendants—concrete manufacturer Di Ferraro Inc.; company president Mario Ferraro Jr.; and the Crews-Farrell-Mead 401(k) Savings and Retirement Plan—committed six counts of fiduciary breach under the Employee Retirement Income Security Act for violating the fiduciary duties of exclusive purpose, prudence, loyalty, entering into prohibited transactions and engaging in self-dealing.

“Although Di Ferraro and Ferraro [Jr.] took weekly Plan contributions from employees’ paychecks, they failed to remit all the employees’ contributions to the Plan,” the complaint states. “From January 1, 2015, to December 31, 2021, loan repayments were withheld from some employee paychecks and not properly remitted to the Plan. Additionally, on multiple occasions from January 1, 2015, through December 31, 2021, Defendants failed to send the Plan the required amount of employer matching contributions each year.”

Wayne, New Jersey-based Di Ferraro Inc. manufactures concrete products from a combination of cement and aggregate. Requests for comment to Di Ferraro were not returned.

Employees who contributed to the plan via weekly payroll deductions were promised, by Di Ferraro, that their contributions would be 100% matched up to $1,040 per year, the complaint shows.

“On multiple occasions from January 1, 2015, through December 31, 2021, Defendants failed to send the Plan the required amount of employer matching contributions each year,” the DOL explains.

The sixth claim brought by the DOL alleged co-fiduciary liability against Di Ferraro Inc. and Ferraro Jr., son of one of the company’s owners, Mario Ferraro Sr.

“As fiduciaries to the Plans, Di Ferraro and Ferraro [Jr.] are subject to liability for each of other’s breaches that they knew of but failed to remedy,” the complaint states. “Di Ferraro and Ferraro, in their position of having custody or control over the Plans and their assets, knew of and had the opportunity to prevent or remedy the conduct of each other that caused losses to the Plans.”

Di Ferraro Inc and the Hall Wilbert Company LLC are collectively owned by Ferraro and his parents, Ferraro Sr. and Ann Ferraro, the complaint shows. Ferraro Sr. and Ann Ferraro are not defendants but are parties in interest to the plan under ERISA, according to the complaint.

Di Ferraro and Hall Wilbert are affiliated concrete product manufacturing companies headquartered at the same address in Wayne, New Jersey, the complaint shows. The Crews-Farrell-Mead 401(k) Savings and Retirement Plan provides retirement plan benefit coverage for participating employees from Di Ferraro and Hall Wilbert, according to the complaint.

Although the affiliated companies are connected concrete manufacturers, Hall Wilbert is not a named defendant in the lawsuit, as the company is a party in interest to the lawsuit as an employer of participants in the plan, the DOL explains in the complaint.

In the case, Su v. Ferraro et al., the DOL is requesting that the court order Di Ferraro and Ferraro be removed as fiduciaries; appoint an independent fiduciary for the plan with plenary authority and control over the plan, including but not limited to the authority to calculate the total amount of untimely, unremitted contributions, outstanding loan repayments, missing match contributions and interest lost and/or lost opportunity earnings incurred by the plans because of their violations of ERISA; and Di Ferraro and Ferraro be ordered to restore any and all missing contributions and losses, as calculated by the independent fiduciary.