Financier Blum asks to drop his $20 million suit
San Francisco -- San Francisco financier Richard Blum says he wants to forget all about the $20 million libel suit he filed against a retired carpenter who accused him of looting a union pension fund.
But the retiree won't let Blum drop the case and is using it as a pretext to harass him, the financier has complained.
In an unusual plea set for hearing this month in U.S. District Court in Los Angeles, Blum, the husband of U.S. Sen. Dianne Feinstein and investment adviser for a $2 billion carpenters' union pension fund, asked a judge to put an end to his legal wrangle with union gadfly Horacio Grana, 62, of Thousand Oaks (Ventura County), a disabled carpenter who says he lives on a $577-per- month pension.
Grana had enraged Blum last year by filing a lawsuit accusing the financier and union officials of mismanagement and cronyism in their handling of investments for the Carpenters Pension Trust for Southern California, which pays the retiree's pension.
Blum denied the allegations. When Grana repeated them on his Web site, the financier responded with a libel suit asking for $20 million in damages -- hundreds of times more than Grana's entire net worth.
But rather than backing down from the alleged falsehoods, Grana seems to be getting a kick out of the libel action, Blum's lawyers told U.S. District Judge Ronald S.W. Lew.
They say the retiree refused to discuss settling the case and instead used it as a pretext to nose around in Blum's merchant banking business, demanding details on every client the financier has represented for the past 21 years.
Grana "has embarked on a widespread fishing expedition into aspects of (Blum's) business (in) an attempt to disrupt Blum's relationships with his clients," the financier's lawyers told the judge. He is using the libel suit as "a license to harass" Blum, the lawyers also said.
Blum has asked the judge to put a stop to the alleged harassment by allowing him to drop his libel action against Grana without prejudice, meaning that he would be free to refile it later.
But Pamela Mozer, Grana's lawyer, says Blum has only himself to blame for his troubles. In an interview, she contended that the financier filed the libel action -- with its enormous damage claim -- in an attempt to "scare the daylights" out of the retiree so he would drop the lawsuit he filed against the pension fund.
When Blum realized that Grana wouldn't back down -- and that the retiree's homeowner's insurance policy would pay his lawyers -- "Blum said, 'Whoops, maybe we shouldn't have done this,' " she said.
Grana himself says he's not trying to harass Blum. He said he is merely defending his right to free speech against a wealthy adversary who wants to shut him up.
"Blum has all the power, but he wants to act like a victim," he said. If the judge dismisses the libel action, the retiree says, he hopes to sue Blum again, this time for malicious prosecution.
Owen Blicksilver, a spokesman for Blum, said the financier decided to drop the suit because it had become too time-consuming and expensive.
"At the end of the day, our point will be made in our defense of the other lawsuit -- that (Grana) knowingly disseminated false information," he said.
The dispute between the retiree and the financier has its roots in 1994, when Grana attempted to retire with a heart condition and a bad hip and was declared ineligible for a carpenters union pension.
Grana won his pension after a fight in small claims court, court records show, but by the time it was over he had become a bitter critic of the fund's trustees.
Last year, he and two fellow retired carpenters sued the pension fund, Blum and pension fund trustee Ronald Tutor, who is head of the giant Tutor-Saliba construction firm, for alleged violations of the U.S. Employee Retirement Income Security Act.
Among other things, the suit accused the trustees of paying Blum excessive fees: $33 million in 1998, according to federal records. And it asserted that in 1997, Blum and Tutor had improperly pumped $27 million in pension funds into the near-bankrupt Perini Corp., a financially troubled Massachusetts construction firm that Tutor later took over.
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, and asked the court to replace the trustees and to fire Blum as investment adviser. The matter hasn't yet come to trial.
In court, Blum and the trustees have insisted that Grana has it all wrong. Blum's fees are justified by the high returns he has earned for the pensioners,
they said, and the assertion that they invested pension funds in Perini Corp. is completely false.
When Grana persisted in his accusations about the Perini investment and accused Blum and Tutor of "corrupt dealings" in a post on the "unionplainfacts" Web site (www.members.tripod.com/unionplainfacts/cq), Blum filed his $20 million libel suit.
Blum also was irked because Grana's Web site suggested -- falsely, Blum says -- that his fees for managing the pension fund were hidden campaign donations to his wife, Sen. Feinstein, court records show.
If Blum had won the libel action, he intended to use the proceeds to fund scholarships for children of carpenters, he told the court. But now, the suit says, he wants to drop the matter, saying that the truth will come out in the defense of the retiree's ERISA lawsuit.
E-mail Lance Williams at firstname.lastname@example.org.