LOS ANGELES -- Three retired beneficiaries of The Carpenters Pension Trust for Southern California have sued San Francisco financier Richard Blum and Ronald N. Tutor for allegedly directing the pension plan to invest in a business in which the two men have direct and substantial financial interests, violating their duties under ERISA.
Mr. Blum is an investment adviser to the $2 billion pension fund. Mr. Tutor, president of Tutor-Saliba Corp., a Los-Angeles construction firm, is a trustee.
According to the lawsuit, filed last month in U.S. District Court in Los Angeles, Mr. Blum and Mr. Tutor invested $30 million of the pension fund's money in Perini Corp., a Framingham, Mass., construction firm in which Mr. Tutor held a 5% stake. The investment was made through Mr. Blum's firm, BLUM Capital Partners LP, San Francisco.
The pension fund lost its investment when Perini's stock plunged, the lawsuit said.
A critical question raised by the defendants is if the California pension trust ever was invested in Perini.
Owen Blicksilver, spokesman for Mr. Blum's firm, said the plaintiffs, in seeking proof of the California fund's investment in Perini, asked for documents that are privileged. Because of the sensitive nature of the documents regarding investment partnerships, it would have been inappropriate to release them to the plaintiffs, Mr. Blicksilver said.
"Instead we called their attention to regulatory documents that Mr. Blum filed with the Securities and Exchange Commission Jan. 6, showing the Southern California pension fund has never invested in Perini. "This is a totally bogus complaint and they know it," said Mr. Blicksilver.
The suit also names Douglas McCarron, president of the United Brotherhood of Carpenters and Joiners of America, Washington, and 12 other trustees of the California pension fund.
The UBC pension fund, which is cited in the suit as an involved party, is an investor in Perini stock. Mr. Blum also invests for the UBC fund, but Mr. Tutor is not a trustee of that pension fund. Neither Mr. McCarron nor Mr. Tutor returned phone calls seeking comment.
The suit states that UBC is an investor in PB Capital Partners LP, the vehicle through which Mr. Blum's company acquired the Perini stock.
The retirees are seeking the removal of all of the fund trustees and Mr. Blum, who is the husband of U.S. Sen. Diane Feinstein (D-Calif.). They argue in the suit that he was paid excessive fees by the pension fund, amounting to $8 million in 1997 alone. They also want the money that was lost through the investment in Perini restored to the pension fund.
Mr. Blicksilver responded that Mr. Blum's fees were standard and said that from July 1, 1994, to June 30, 1998, the Blum investments achieved an annual return of 35% for the Southern California pension fund.
Robert Band, Perini Corp.'s chief executive officer, also said the California carpenters never invested in his company.
"We have asked for backup documents, and if they prove that we're wrong about the Perini investment we would drop the suit," said a spokeswoman for the retirees. "But so far we don't believe the information on the regulatory filing is sufficient, which is why we're suing."
Mr. Blicksilver said: "They have all the facts. The call for more information is little more than a ploy to perpetuate what they know to be a frivolous lawsuit."