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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

Wednesday, Jan 10 2007
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.

In researching the proposal Mellen also contacted Chuck Doty, until recently executive director of the Lake County Business Outreach and Response team.

"Is this a real deal, or a make-believe scheme to make the Department of Labor believe there is a value to this property that doesn't exist?" asked Schmit, in reference to her conversation with Mellen. "Mr. Anderson is clearly well connected. So it's not to say he couldn't make some of this happen, because obviously some of this is really political. But there are process issues that are real stumbling blocks."

Anderson representative Jay Wallace has been meeting with Lake County officials about possibly rezoning the Local 38 property, said Rob Brown, a Lake County supervisor.

"The threat of a casino coming in, that concerns us," said Brown, adding that he may circulate a petition opposing the casino idea.

Such stumbling blocks could clear if the right politician ran interference, however.

Jay Wallace, who managed Nancy Pelosi's first campaign for the House of Representatives in 1987, is on the mastheads of Anderson's investment and lobbying firms. Lately Wallace has been in Lake County schmoozing local officials. A call to Anderson and Wallace's firm wasn't returned by press time.

Doug Boxer, son of Sen. Barbara Boxer, worked for Anderson's Kenwood Investments during the early 2000s, when his mother wrote legislation restoring federal recognition to the Coast Miwok and the Southern Sonoma County Pomo tribes, thus enabling a Kenwood-backed, Vegas-style casino in Sonoma County.

Anderson himself is a true A-list political insider. He's been the on-the-ground man for billionaire Democratic Party backer and Bill Clinton pal Ron Burkle. He reportedly takes vacations with Susan Kennedy, Arnold Schwarzenegger's chief of staff. He counts Dianne Feinstein as his mentor. If anyone could be counted on to tempt the newly enthroned Democratic Party congressional leaders to veer from their newfound ethical path, it would be Darius Anderson.

For their sake, and for the sake of the federal sleuths probing why Larry Mazzola flushed away $36 million of his union members' pensions, I hope Anderson fails.

About The Author

Matt Smith


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