A Union Made in Political Heaven

A labor boss in trouble with the feds joins a high-powered Democratic lobbyist to merge Konocti Resort with Indian gaming

Democratic members of Congress say they'll forgo the gifts from lobbyists such as skybox parties and rides in comfy corporate jets, and golden-parachute lobbying jobs, all in the name of proving their ethical resolve.

Nancy Pelosi recently led the House in passing just such a self-denial exercise, with a version up for consideration in the Senate, where Barbara Boxer sits as acting ethics chair.

Even if the Senate bill passes, however, these politicos' moral mettle will remain unproven until they answer the following questions:

Can they withstand the temptation to sabotage federal civil and possible criminal inquiries into the activities of a top San Francisco Democratic Party kingpin?

Can they abstain from granting lucrative political favors to cronies and kin?

In other words, can they resist the temptation — apparently becoming stronger with time — to help force a cozy all-in-the-Democratic-Party-family gambling casino deal down the throats of the people of Lake County, two hours north of here?

For the past few months Democratic lobbyist Darius Anderson has apparently been floating the idea of turning a rock-concert venue in Lake County into an Indian gambling casino.

This gambling deal is of acute importance to top Bay Area Democrats because it promises to solve a serious problem: how to stop federal investigators from prying into how San Francisco political kingpin Larry Mazzola Sr. may have helped divert some $36 million out of the retirement accounts of the United Association of Plumbers, Pipefitters and Journeymen Local 38.

According to a U.S. Department of Labor 2004 lawsuit, Mazzola improperly shifted money intended for union health care, scholarships, apprenticeships, vacations, and holidays for 2,000 union members into a special trust fund that owns and operates Konocti Harbor Resort, known for hosting rock acts such as Linda Rondstadt and Huey Lewis. Over time, Mazzola used up one-third of all of the union's retirement pension money, or more than $36 million, as the resort operated consistently in the red. The Labor Department suit seeks to restore the money to the pension plans, force union trustees to enact stricter controls over union retirement money, and bar officials overseeing the fund diversion from handling union retirement money in the future.

According to a recent filing by Mazzola's attorney, his legal counsel have received Labor Department e-mails leading them to believe the government has begun at least one criminal investigation into the alleged funds diversion. (Mazzola hasn't responded to a request for comment.)

A Labor Department spokeswoman stated the agency's policy of neither confirming nor denying the existence of criminal probes.

The theoretical prospect of a civil court order limiting Mazzola's control of the union his family has controlled since the 1950s, or of seeing him investigated criminally, represents a true quandary for the leaders of the Northern California Democratic Party.

Mazzola, after all, isn't merely the business manager of Local 38. He was on Gavin Newsom's transition team, is president of the election-tipping San Francisco Building & Construction Trades Council, is president of the S.F. Airport Commission, and, in the words of Nancy Pelosi during a 2001 congressional proclamation, an "outstanding leader for San Francisco."

It turns out that the kingpin's troubles could theoretically be solved with a little bit of political and financial legerdemain. It requires creating the illusion that the pension money hadn't really been diverted into a money-losing proposition after all, by showing that Konocti Harbor Resort was a sound investment all along.

One way to do that might involve declaring Konocti Harbor Resort an Indian reservation, cutting a deal with Las Vegas gambling interests, getting a token Indian tribe to front the deal, then presenting the results to Labor Department attorneys.

The land's value might suddenly explode. The Mazzola-controlled trust fund would sell Konocti Resort to the gambling consortium. And the $36 million the Labor Department says Mazzola improperly flushed into a money-losing concert venue could theoretically be described as deft investing.

It appears that Anderson is attempting to accomplish just such a feat.

Such magic can be performed only with the help of very powerful politicians. That's because in 2005 Gov. Arnold Schwarzenegger stated he would oppose casino deals proposed for sites where there was no pre-existing federal land trust, or reservation — and only then in cases where local residents and elected officials support a casino plan. The idea of a Konocti Harbor Resort Indian casino — involving no existing reservation, and no community support, is precisely the type of proposal Schwarzenegger's statement meant to thwart.

It could "require a congressional act to put a casino at that location," said Cheryl Schmit, director of Stand Up California, a group that lobbies against the proliferation of Indian casinos. She said such a scheme "would circumvent the state process. You do that when you know there is not going to be local support."

Schmit said the Labor Department hired HVS International, a consulting firm specializing in real estate valuation, to assess how a Konocti gaming proposal would affect the Labor Department's lawsuit against Mazzola.

HVS gambling property specialist Suzanne Mellen told me she could not speak about the Konocti proposal. But Schmit said Mellen discussed with her the specifics of a casino proposal the Labor Department had received from Mazzola's attorneys, that involved a group of small, landless tribes and a Las Vegas casino operating firm.

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