Mazzola Is Slippery

The union boss has once more escaped punishment for funds diversion

According to the U.S. Department of Labor, beginning in the 1990s some $76 million was siphoned from union worker benefit funds under the influence of San Francisco labor boss Larry Mazzola. More than $50 million of that money was used to prop up Konocti Harbor Resort, a Lake County concert venue abutting and near more than 100 acres privately owned by Mazzola and his family.

Last year, Mazzola cut a deal with a real estate investment firm owned by Democratic Party lobbyist Darius Anderson in hopes of pulling political strings that might turn the resort into a much more valuable Indian gambling casino complex. While Mazzola, business manager of Plumbers union Local 38, and his agents were pursuing the gambling deal, Mazzola's personal attorney attempted to re-zone Mazzola's own land near the resort so that the entire area might become a condominium, housing, and commercial development with a gambling mecca at its core. Local opposition stalled the re-zoning and gambling plans. But had they succeeded, the escalation in property values could have personally enriched Mazzola by millions of dollars. And these schemes wouldn't have even been conceivable had Konocti Harbor Resort not been kept afloat with vast amounts of money that was docked from workers' pay.

By docking workers' hourly pay to finance an ambiguously named "convalescent trust fund," then causing $50 million to disappear into the worthless investment that was Konocti Harbor Resort, Mazzola and union officials under his control deprived workers of benefits money they paid for out of their own union dues. By attempting to leverage that "investment" in a way that would increase his own net worth, he was engaging in the sort of apparent attempted sweetheart dealing that gives union bosses a bad name.

"I knew I'd never see it, and I knew they were funneling it up there," said former union member Edward Birmingham, who unsuccessfully sued Mazzola during the early 1990s over the Konocti funds diversion, then worked with Department of Labor investigators as they prepared for the just-settled Labor Department suit. "The union members were just being used."

Yet, appallingly, regulators will not punish Mazzola in any meaningful way. Despite years of federal investigations and lawsuits pertaining to the funds diversion, Mazzola is poised to get off without so much as a slap on the wrist. (An assistant to Mazzola's attorney said the attorney would not be available for comment. Mazzola himself did not return a message on his voice mail requesting comment. A Labor Department spokeswoman would not confirm the existence of the impending settlement, which is detailed in court hearing transcripts.)

According to a new settlement agreement between Mazzola and the Labor Department described in court proceedings earlier this month, Mazzola emerges from a three-year legal ordeal stemming from the funds diversion allegations unscathed.

Mazzola won't be removed from his union leadership role. And he will continue to help overseeing some union benefit money. As a concession Mazzola will be required to step down as a member of a board of trustees overseeing worker benefit funds, perhaps by the end of the year. Mazzola will be allowed to remain for two years on a board overseeing a worker training fund. And Mazzola's son, Larry Jr., will be allowed to sit on the board of trustees overseeing the union local's various pension and other benefit funds.

As part of the settlement, Larry Mazzola Jr. will be required to take a course on the concept of fiduciary duty.

The union has also said it will attempt to sell the resort — but Mazzola is not required to sell it as part of the settlement. A deal is supposedly "in the offing" whereby a company called Whitestar Investments LLC would pay $25 million, possibly as part of an Indian gambling deal. Ulico Casualty, an insurance company specializing in fiduciary liability insurance for labor unions, will pay the Labor Department $3.5 million in fines.

Perhaps there were some facts — unannounced in the reams of court filings in Chao vs. Mazzola, the Labor Department lawsuit alleging funds diversion filed in 2004 — which explain why the settlement was so lenient. It's impossible to ascertain without knowing the minds of Labor Department officials. Yet the Department is not commenting on, or even acknowledging, the settlement that's spelled out in hearing transcripts.

It's possible, however, to view Larry Mazzola's continued approach to the Plumbers' union as a family business, just as his dad, Joe Mazzola did before him, and just as Larry Jr. is being groomed to do down the road, as an example of unprecedented popular indifference to the plight of the pension-holding working stiff.

With baby boomers nearing retirement age, and U.S. pension fund assets growing into the trillions of dollars, protecting this money from opportunist union bosses such as Mazzola is a worthy populist cause. A half-century ago Bobby Kennedy riveted America by grilling Jimmy Hoffa about looted pension funds. Surely it might be possible to again capture the public imagination by confronting union corruption now that there's so much more at stake. A good start might be for San Francisco candidates for mayor to promise they'll remove Mazzola from his current post as president of the San Francisco Airport Commission, and for our state and federal representatives to propose legislation requiring union leaders to disclose their personal assets, just like politicians now do.


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