Let the Gaming Begin

Has a labor boss in trouble with the feds joined a high-powered Democratic lobbyist to merge Konocti Harbor Resort with Indian gambling?

Democratic members of Congress say they'll forgo 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 staunch 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 attorneys from pursuing allegations that San Francisco politico Larry Mazzola Sr. may have helped improperly divert some $36 million from employee benefit trust funds 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 old-time rock acts such as Linda Ronstadt and Huey Lewis. Mazzola used up one-third of all of the union's retirement pension money, or more than $36 million over time, as the resort operated consistently in the red, according to IRS filings on behalf of union trusts and the Labor Department's complaint.

The government's lawsuit 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.

The lawsuit is currently in a discovery phase. Resolving the suit with a gambling-deal-enabled settlement could prevent a trial in which details about the union's financial dealings are made public as evidence.

The deal could theoretically even play a role in heading off an alleged criminal probe of Mazzola.

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 phone and e-mail messages requesting comment on Konocti. Anderson has also not responded to requests for an interview.)

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, he's 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 labor leader's situation might be improved with a little bit of political and financial legerdemain. This could involve creating the appearance that union trust accounts hadn't really been diverted into a money-losing proposition by making it seem that Konocti Harbor Resort was a sound investment. Such an accomplishment might undermine the lawsuit's claim that officials managing employee benefit trust funds "mismanaged the benefits and placed the benefits of thousands of workers at risk," as U.S. Secretary of Labor Elaine Chow said in 2004, when the suit was filed.

One way to counter the "mismanagement" charge might be to sell the resort at a high enough price to repay the union benefit trust funds the $36 million allegedly used to finance the resort.

And a way to fetch such a price 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.

If the land under the resort were somehow declared Indian land ripe for casino development, the value of Local 38's Lake County real estate might suddenly explode. The Mazzola-controlled trust fund could sell Konocti Harbor Resort to the gambling consortium. Such a sale might allow Konocti Harbor Resort to reimburse the union trust funds that had financed its renovation operation, thus satisfying the Labor Department's demand that the employee benefit funds be repaid. All might be well again in the San Francisco Democratic Party.


It appears that Anderson is attempting to accomplish just such a feat. He may have assembled a casino pact that would involve a Las Vegas casino firm, and any of five Northern California landless tribes.

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