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Pension advisor sues retiree for $20 million

Financier husband of Sen. Feinstein says he was defamed online

LOS ANGELES -- Richard Blum, the wealthy financier and husband of U.S. Sen. Dianne Feinstein, wants $20 million in damages from a retired carpenter who accused him on an Internet Web site of looting a union pension fund.

In an unusual claim filed in U.S. District Court, Blum contended he had been defamed by Horacio Grana, a disabled retiree who draws a $570-per-month union pension.

Grana has enraged Blum by using the Internet to pillory him and officials of the $2 billion Carpenters Pension Trust for Southern California for alleged mismanagement and cronyism.

Blum, who is the fund's investment advisor, has repeatedly denied Grana's allegations of impropriety, which are also contained in a lawsuit filed here by Grana and two other dissident carpenters earlier this year.

But the financier has become so irritated by Grana's "UnionPlainfacts" Web site that in July he asked a federal judge to make the retiree pay him a stunning $20 million in punitive damages -- hundreds of times more than Grana's entire worth.

Blum's plea, like Grana's lawsuit, hasn't been set for trial. Grana's lawyer, Pamela Mozer, complains that Blum's $20 million demand is way over the top.

"My client is a poor, innocent carpenter who believes that his pension fund and the pension fund of his fellow carpenters has absolutely been misused," she said. "He's merely seeking to find the truth."

Grana says Blum wants to crush him financially to shut him up.

"He wants to cut out my tongue," he said. "He doesn't want me to speak. He wants to abuse my freedom of speech. I think the man is out of control to do this, but I am not scared."

 

Turned against senator

 

Nevertheless, the legal dustup has changed Grana's view of a politician who once was one of his favorites -- Democrat Feinstein, Blum's wife, who is favored over Republican challenger Tom Campbell in her bid for re-election.

Grana was a big booster of Feinstein, and at a Labor Day picnic in 1992 he was photographed as she autographed his "Union First" sweatshirt.

"I supported her once. No more," he said.

Spokesman Owen Blicksilver said Blum went to court because Grana has been told time and again that his charges are false, but he persists in making them anyway.

The retired carpenter "has made no effort to correct allegations he knows to be untrue," the spokesman said.

If Blum collects damages from Grana, he would use the money to fund scholarships for children of carpenters, Blicksilver said.

"This isn't about money," he said.

Blum also wants the judge to order Grana to post a retraction on the Internet, and never to repeat his allegations again, court records show.

 

Started with pension dispute

 

Grana, 63, of suburban Thousand Oaks, was born in Argentina but spent his working life as a union carpenter in Southern California. In 1990, he says he was named "Journeyman of the Year" in part for his work on behalf of the union's "Dollars Against Diabetes" drive.

After that, Grana was hired as maintenance manager for the local's Southern California headquarters. There, he says, he got into a dispute with union executives, and it escalated when he sought to retire in 1994 with a heart condition and a bad hip.

By his account, the union disputed that he was eligible to retire, and it took more than four years of wrangling and a lawsuit in small claims court before he got his pension paid.

By then, Grana had become a bitter critic of the pension fund's financial performance and the conduct of its trustees.

In January, he and fellow retirees Phillip R. Helsius and Walter J. Sprenger sued the pension fund, Blum and fund trustee Ronald Tutor, who is head of the giant Tutor-Saliba construction firm, alleging multiple violations of the U.S. Employee Retirement Income Security Act (ERISA).

 

Blum's big fees

 

Among other things, the suit accused the fund's managers of paying Blum excessive fees: $8 million in 1997, and a whopping $33 million in 1998, according to federal records.

And it claimed that in 1997 Blum and Tutor had improperly pumped $27 million in union pension funds into the near-bankrupt Perini Corp., a financially troubled Massachusetts construction firm that Tutor later took over.

The investment allegedly was made via a Blum investment partnership called RB Capital Partners. The pension fund's investment was lost as Perini's stock plunged, the lawsuit says, but the investment allowed Blum, as a major shareholder, to name Tutor to Perini's board of directors. Tutor took over the firm last year by buying $40 million in stock, according to a Perini press release.

The suit said that the alleged transactions violated ERISA rules against self-dealing and conflict of interest. It asked the court to replace Tutor and national carpenters union President Douglas McCarron as fund trustees, and to fire Blum as investment advisor.

The allegations in the suit, Grana said, are based in part on records he obtained via the U.S. Freedom of Information Act, and on tips and documents slipped to him by dissident carpenters who know him because of the Web site.

 

Responses of Blum and Tutor

 

When the suit was filed, Tutor dismissed it as "idiotic," and Blum said he was innocent of wrongdoing.

His fees are based on performance of the investments he makes for the pension fund, Blum has said in court, and overall the returns have been excellent. He also contends that it is utterly untrue that any carpenter's pension funds were invested in Perini.

Earlier this year, the pension fund's lawyers asked U.S. District Judge George King to throw the Perini allegations out of court and sanction Grana's lawyers for raising what they called "frivolous" and untrue allegations.

But the judge declined, saying that although Blum and the trustees have insisted that no pension fund money went into Perini, they have refused to open the books to Grana to prove it.

He urged the disputants to meet informally to settle that part of the suit. Blum filed his defamation claim after that.

According to the claim, Blum is especially irked because Grana's Web site contains a 1999 article from the trade publication Engineering News-Record that flatly states that carpenters' pension funds were invested in Perini Corp. The article is wrong, the claim says, and Grana made it worse by adding a headline referring to "corrupt dealings" by Blum and Tutor.

Blum also objected to Grana's posting of a 1999 story from the thrice-weekly San Francisco Independent that he also says is false. That story quoted an unnamed union member as charging that Blum's fees for managing the pension fund were hidden campaign donations to his wife. Blum contends that the unnamed union member making the allegedly false charge was Grana himself.

After Blum complained, Grana offered to remove the word "corrupt" from the headline, and give Blum space on the Web site for rebuttal, according to letters they exchanged. The financier went to court instead.

http://www.sfgate.com/cgi-bin/article.cgi?file=/examiner/hotnews/
stories/10/blum.dtl

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Horacio Grana was a retired member of the Carpenters Local Union 1506 in Los Angeles.
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Union Plain Facts
PO Box 1780
Thousand Oaks, CA 91358
or E-Mail him at:
h7939@earthlink.net
for more information

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