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As Lake County News first reported in May, the suit reached a tentative settlement May 15.
Court documents from that May settlement conference also indicated that the sale of Konocti Harbor to Page Mill Properties of Palo Alto is under way.
Judge Phyllis J. Hamilton of the US District Court of the Northern District of California signed the final 27-page consent order in the case on Friday, which the Department of Labor filed against Local 38 of the United Association of Plumbers, Pipefitters and Journeymen, whose Convalescent Trust Fund, Lakeside Haven, has owned Konocti Harbor since 1959.
“Workers’ retirement dreams, health and other benefits were jeopardized by the gross mismanagement of their benefit plans,” said Secretary of Labor Elaine L. Chao. “This legal action puts the benefit plans under new, independent management and restores at least $3.5 million to the pension plan.”
A call to attorney James P. Baker, who represented Local 38 in the suit, was not returned Friday afternoon.
Citing the need to protect union workers, Chao filed the suit in November 2004 against Local 38.
The suit alleged that Local 38's current and former trustees violated the Employee Retirement Income Security Act (ERISA) in managing retirement, health, scholarship, apprenticeship, and vacation and holiday funds that cover more than 2,000 people who are employed throughout Northern California, the Department of Labor reported.
The Department of Labor Local 38's trustees of diverting more than $36 million from the funds to renovate and operate Konocti Harbor.
A statement issued Friday by Chao's office specifically named trustees Lawrence J. Mazzola Sr., Local 38's business manager and financial secretary-treasurer; his son, Lawrence Mazzola Jr.; William B. Fazande; Larry Lee; James R. Shugrue; Vohon J. Kazarian; Tom Irvine; Robert E. Buckley; Robert Buckley Jr.; Art Rud; Ron Fahy; Robert Nurisso; former plan administrator Frank Sullivan; and Local 38.
Chao's Friday statement alleged that the suit's defendants “maintained inadequate financial controls, violated plan documents, engaged in self-dealing, and imprudently spent millions to build and maintain facilities at Konocti despite the resort’s continuing financial losses.”
In addition, Chao said that those dealings caused Local 38 to profit from the interest on a $6 million loan.
The settlement appoints independent fiduciaries to manage the pension funds, replaces all but two trustees – Mazzola Jr. and Buckley Jr., who are required to attend training on ERISA fiduciary responsibilities – and permanently bars the replaced trustees and the former plan administrator from serving as fiduciaries or service providers for pension plans.
Hamilton's order includes the provisions that professional investment managers will now oversee Local 38's pension funds, and that an investment monitor will be responsible for supervising all pension plan assets.
The court also appoints WhiteStar Advisors LLC as a second fiduciary to oversee the management and operation of Konocti Harbor, as well as its sale to Page Mill Properties, which now is under way.
In a previous interview with Lake County News, Baker said he could not comment on the specifics of the sales because it is protected by a confidentiality agreement.
Court documents say Konocti Harbor's sale is estimated to fetch $25 million.
The court has ordered that the first $4 million in sale proceeds go to Local 38 to repay a loan it made to the Convalescent Trust Fund in 2000; the next $6 million will go to Local 38's Pension Trust Fund; Local 28 and the Pension Trust Fund will share equally any additional sale proceeds.
In addition, Local 38's fiduciary liability insurer must pay the Local 38 Pension Trust Fund more than $2.9 million, and pay the union's civil penalty of $583,333 to the United States Treasury.
The San Francisco Regional Office of the Labor Department’s Employee Benefits Security Administration investigated the case, the Department of Labor reported.
E-mail Elizabeth Larson at
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California Highway Patrol Officer Josh Dye said the day started off when a delivery truck driver traveling southbound on Highway 29 north of Highway 53 went off the road and collided with a Pacific Gas & Electric pole at 6:20 a.m.
Dye said the driver was flown to Santa Rosa Memorial Hospital. The CHP incident log noted the driver had major injuries.
The delivery truck, still at the scene mid-morning, was sheered almost in half lengthwise.
The collision knocked down the power lines, said Dye. PG&E spent the morning repairing the lines and installing a new pole, which made it necessary to close the northbound lane for four hours.
Traffic at 10:30 a.m. was backed up for several miles while Caltrans and CHP helped direct traffic to move around the repair area.
Another accident involving a pear truck and a car occurred at 11:18 a.m., said Dye,which blocked both lanes of Highway 29 and Highway 281 at Kit's Corner.
Dye said the collision involved David Williams, 45, of Sacramento who was driving a Peterbilt pear truck southbound on Highway 29 and Sabina Gotuacd, 46, of Daly City, driving a Toyota Corolla.
Gotuacd was stopped at Highway 281 to turn southbound onto Highway 29. Dye said she pulled out directly in front of the truck driven by Williams, who veered to avoid hitting her but couldn't avoid a collision.
The right front passenger in Gotuacd's car, a female juvenile, was flown to Santa Rosa Memorial Hospital as a precautionary measure, said Dye.
He added that officers at the scene said Williams' quick thinking prevented the collision from being much worse.
Another collision was reported on Elk Mountain Road in Upper Lake at 1:03 p.m., but Dye said all the parties involved had left the scene by the time CHP officers arrived.
From there officers responded at 1:26 p.m. to a two-vehicle collision on Highway 20 west of Clearlake Oaks, said Dye.
On the way to that crash, CHP Officer Carl Thompson was involved in a three-car collision, said Dye.
Jack Barnes, 53, of Windsor was driving a 2006 BMW westbound and saw Thompson approaching, so he yielded onto the right shoulder, said Dye.
Jodi Gorden, 21, of Red Bluff was driving behind Barnes in a 1994 Ford Escort, and didn't immediately see Barnes yield, said Dye. Gorden locked up her brakes and swerved to the left to avoid the BMW, but collided with left rear of Barnes' car and glanced off further to the left.
Thompson, who was preparing to pass the vehicles at the time, saw the crash and came to a near stop before the left side of his patrol vehicle was hit by Gorden at a low speed, according to Dye's report.
No one was injured and the vehicles were moved off to the right road shoulder to keep traffic moving, Dye added.
Officer Craig Van Housen, who also was headed to the Clearlake Oaks collision, continued on as Thompson dealt with his crash, said Dye.
Arriving at the accident scene, Van Housen found two vehicles blocking the road lanes with no injuries, Dye reported. Involved were Mary Johnson, 65, of Sacramento who was driving a 1998 Dodge Van and Timothy Rice, 20, of Marysville driving a 1997 Honda Civic.
Dye said the collision was minor and no one was transported to the hospital.
Then, just after 5 p.m., another collision occurred on eastbound Highway 20 at Pyle Road in Nice.
The CHP reported no injuries in that crash, which involved a gray truck versus a light blue sedan. Officials were still cleaning up at the scene after 6 p.m.
Just after 7 p.m., a vehicle was reported on fire on westbound Highway 20 at Walker Ridge Road near the Lake/Colusa County lines. The CHP reported the driver was trying to extinguish the fire, which started under the car and worked up to under the hood.
After 10 p.m. there were two other reports of collisions without injuries, one involving a single vehicle on Point Lakeview near Jago Bay, and another in an unspecified area of Lake County. No additional information was available on either incident.
E-mail Elizabeth Larson at
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