The governor also announced about $700 million in cuts to the budget, which he said was necessary to keep the budget balanced and build a “prudent reserve.”

North Coast Sen. Patricia Wiggins (D-Santa Rosa) said the budget was fiscally responsible; includes no new taxes, fees or special programs; has a $3.4 billion reserve; pays debt early and lowers the operating deficit.

“This budget, while not a great one, is a decent one, and it was the best one we could accomplish in 2007,” she said.

Wiggins said the budget maintains a cost of living increase for Supplementary Security Income and State Supplementary Payment recipients.

The state budget shows that expenditures for the Supplemental Security Income/State Supplementary Payment Program are $3.7 billion for 2007-08, up $118.7 million from the revised 2006 budget. That's due in part to an estimated increase in the average monthly caseload by 1.3 million recipients, a 1.8-percent increase over the 2006-07 projected level.

Schwarzenegger's 42 pages of revisions and budget cuts will affect many programs. One of the hardest hit state departments is Health and Human Services, which will suffer hundreds of millions in fiscal decreases.

Among the reductions are $34.6 million for the county grants portion of the Children's Outreach initiative in Medi-Cal and the Healthy Families Program, and $54.9 million for the Integrated Services for Homeless Adults with Serious Mental Illness Program.

Regarding the program for homeless, mentally ill adults, Schwarzenegger suggests that the program “can be restructured to meet the needs of each county’s homeless population using other county funding sources,” including federal funds.

Said Wiggins, “It is unfortunate that the governor chose to veto funding for things like funding for Medi-Cal and housing for mentally ill homeless people, from a budget which includes a $45 million tax break for people who own yachts.”

One item preserved in the budget was the Williamson Act, which gives farmers and ranchers a tax break for keeping farmland in production, and reimburses counties for lost tax revenue.

Schwarzenegger's May budget revision had targeted the $39 million planned for supporting the program this year, but the California Farm Bureau and other agriculturalists around the state kept up the pressure. Assemblyman Mike Villines (R-Fresno), the Republican Assembly leader, helped hammer out an agreement with Schwarzenegger to leave the Williamson Act funding in tax.

The new budget also includes $1.6 billion for In-Home Supportive Services, an amount that is up $97.1 million from last year. The budget summary explains that the average monthly caseload in this program is estimated to increase to 389,100 recipients, a 5.1-percent increase over the 2006-07 projected level.

The documents also state that, effective July 1, state participation in IHSS provider wages and health benefits increased from $11.10 per hour to $12.10 per hour, based on the projected growth of General Fund revenues.

The state's Military Department will receive $1.8 million and 22 positions to meet the increased demand for military funeral honors ceremonies around the state.

The increased funds will provide an additional 300 funeral honors per month which would include California National Guard members folding the United States flag and presenting it to the next of kin during the funeral ceremony. The California National Guard is required by federal law to serve as the primary provider of those services to veterans and their families who request funeral services with military honors, according to the budget summary.

The newly signed budget also includes $11.4 million General Fund and 26.4 positions to assist in implementing a statewide Veterans Home Information System, according to the budget report. That system will be based on the federal veterans health care information, and will be used to improve health care tracking and the care provided to veterans.

Wiggins said she is looking forward to getting started on next year's budget as soon as possible. She said she supports Senate Leader Don Perata’s call for a bipartisan budget revision panel to develop a multiyear plan in order to get budgets back on time.

“I agree with Sen. Perata that the state’s budget is ‘fatally broken’ because it is controlled by conflicting ballot-box mandates, dedicated funding streams and other constraints that limit what lawmakers can do,” Wiggins said.

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Det. Mike Curran of the Lake County Sheriff's Office reported on the investigation Tuesday, which resulted in the arrest of Albert Wilbur Charboneau, 63, a former Clearlake resident, on sex registration violations.

Curran also is an agent of the Sexual Assault Felony Enforcement (SAFE) Task Force, a multi-county effort that is focused on reducing the number of sex offenders who fail to comply with legal registration requirements.

SAFE's investigation began July 23 during a south county operation that included the city of Clearlake, Curran reported.

Charboneau, who reportedly worked as a carpenter, was found to have moved several months ago from the address listed on registration documents. Curran then began a search investigation to determine Charboneau's whereabouts.

Curran gathered information that indicated that Charboneau had possibly relocated to an unknown location in Lucerne, according to Curran's report.

During a subsequent interview with Curran, Charboneau took responsibility for his failure to notify law enforcement of his relocation and then to re-register.

"He knows he made a mistake and that there are potential consequences as a result,” Curran said.

Charboneau was arrested and booked into the Hill Road Correctional Facility on Aug. 16 after his arrest on active traffic warrants and alleged sex registrant violations, Curran reported. Charboneau had gone to the Hill Road Correctional Facility to register, knowing that he could be arrested.

Jail records indicate that Charboneau remains in custody with bail set at $38,500.

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BARTLETT SPRINGS – A collision involving a motorcycle and a pickup truck on the way to Bartlett Springs sent a Clearlake teen to the hospital Sunday night with major injuries.

The California Highway Patrol incident logs reported that the crash occurred six to seven miles up Bartlett Springs Road at 6:20 p.m.

Battalion Chief Ken Petz of Northshore Fire Protection District's Upper Lake station reported Sunday that Northshore firefighters were the first on the scene at the crash.

The CHP logs reported that the motorcyclist was a 15-year-old male from Clearlake.

Petz said the teen suffered a compound fracture and was transported by REACH helicopter to Santa Rosa Memorial Hospital for treatment.

No information was available on the pickup driver.

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A report from the Mendocino County Sheriff's Sgt. Derek Scott Thursday reported that deputies had arrested Jeremy R. Jeffers, 19, of Lakeport, in Ukiah on Monday night.

At 8:30 p.m. Monday, Scott reported that deputies were dispatched to Jeffers Pool and Spa at 123 Lake Mendocino Drive for a welfare check on Jeffers, who was reported to possibly be in possession of a firearm.

Deputy Andrew Whiteaker arrived at the scene, where he observed Jeffers' right arm inside the bed of a truck and an unidentified male relative standing to the rear of the truck, Scott reported. When Whiteaker asked about the firearm the relative told him that Jeffers had it in his hand.

Scott's report said Whiteaker then pulled out his firearm and immediately ordered Jeffers to put the gun down. Jeffers reportedly told Whiteaker to shoot him as he was going to jail.

Whiteaker then took out a Taser and used it to try to subdue Jeffers, but failed, Scott's eport stated.

Shortly afterward Sgt. Scott arrived at the scene and helped take Jeffers to the ground, where he was arrested.

Once Jeffers was subdued, his relative told Whiteaker that Jeffers had held him at gunpoint for about an hour prior to the authorities arriving, according to Scott's report.

While Jeffers had allegedly held the other man at gunpoint, he allegedly made criminal threats to the relative, causing him to believe that he would be killed if he tried to leave the scene.

Authorities transported Jeffers to the Mendocino County Jail on charges of robbery, terrorist threats, false imprisonment, resisting an officer and carrying a loaded firearm in a public place.

Lt. Rusty Noe of the Mendocino County Sheriff's Office told Lake County News that Jeffers was in possession of an unspecified type of handgun. Noe had no information about previous contacts between Jeffers and law enforcement.

A Mendocino County Jail official confirmed that Jeffers remains in jail on $125,000 bail.

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Pultizer-Prize winning author Alice Walker, who lives in Anderson Valley in Mendocino County, takes questions from the audience. Photo by Terre Logsdon.

HOPLAND – At an event that could only happen in Northern California – but should happen everywhere – farmers, hippies, city dwellers and country folk alike all got their groove on to learn about sustainable ways of living and doing business this past weekend.

The event in question was Hopland's 12^th annual SolfFest.

After morning yoga on Sunday, the Alternative Fuels Smackdown took center stage with advocates for ethanol, biodiesel and electric defending and explaining the benefits and differences between these alternative fuels.

After all was said and done – it was declared a tie.

David Blume, author of “Alcohol Can Be A Gas,” engaged the audience many times as he explained how alcohol could be made from almost any crop – including cattails and kelp grown on nets in the ocean – and wouldn’t take away from crops for human or animal consumption.

Pulitzer Prize-winning author Alice Walker, who penned “The Color Purple,” inspired the audience on Sunday, reassuring everyone that we have the faithfulness of sun rising everyday – and that events like SolFest keep people informed and energized.

“The goal of life is not to stuff a trunk full of money,” Walker told the audience, but to be happy whenever we can.

“It is our birthright to be joyful,” Walker told a cheering audience.

Reading from her newest book for children, “Why war is never a good idea,” Walker explained that during this time of war, everyone should have a spiritual practice.

“This is a time that you really have to have a practice,” Walker said. “A practice that can sustain you through this time.”

On a more technological footing, Ernesto Montenero of Sustainable Technologies from Alameda spoke about converting methane gas from manure to usable energy.

According to Montenero, there are 110 methane “digesters” in California that utilize cow manure to produce methane gas which is then used to generate electricity – or is used to fuel cooking stoves on a smaller scale – and the United States Department of Agriculture has applications for 85 more.

But methane digesters, alternative fuels and solar energy are just a few topics that SolFest, which is hosted at the Solar Living Institute in Hopland, just over the hill from us in Lake County, have available every day.

If you didn’t make it to SolFest this year, don’t worry – just stop by the Solar Living Institute and the Real Goods store the next time you’re passing through Hopland. You will probably learn a thing or two which will inspire you.

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Ernesto Montenero of Sustainable Technologies shows workshop participants how a methane digester works. Photo by Terre Logsdon.

See the Solar Carousel:

{playerflv}SolarCarousel.flv|300|225|#000000|false{/playerflv}

ANDERSON SPRINGS – A 3.1 magnitude earthquake occurred in the Anderson Springs area Sunday morning.

The quake occurred at approximately 9 a.m. Sunday, according to the US Geological Survey.

The epicenter was located three miles west of Anderson Springs, four miles east southeast of The Geysers and five miles south southwest of Cobb. The US Geological Survey was recorded at the depth of 1 mile.

Within a minute that quake was followed by a smaller, 1.6-magnitude quake within roughly the same area, according to US Geological Survey reports.

Three other smaller quakes also took place during the morning near Cobb and The Geysers, the US Geological Survey reported.

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Candidates have filed to run for seats on nearly two dozen boards and districts throughout Lake County.

The November ballot will feature only those districts where candidates outnumber vacancies, according to Registrar of Voters Diane Fridley's office.

Below is a list of candidates for the various education boards and special districts.

EDUCATION

Kelseyville Unified School District Board (three vacancies):

– Don Boyd, appointed incumbent, educator.

– John R. DeChaine, criminal prosecutor for the Lake County District Attorney's Office, parent.

– Andy Dobusch, incumbent.

– Chris Irwin, sales manager.

– Philip Murphy pear and walnut grower.

– Gary Olson, real estate broker.

– Valerie A. Ramirez, incumbent.

– Mireya Gehring Turner, county supervisors' assistant.

Lakeport Unified School District Board (three vacancies):

– Craig Kinser, incumbent.

– Philip T. Kirby, school administrator.

– Robyn K. Stevenson, incumbent.

– Patricia Jonas Voulgaris, retail business owner.

– Bob Weiss, incumbent.

Lucerne Elementary School District Board (one vacancy):

– Kay Hancock, retired teacher.

– Bruce Higgins, incumbent.

Upper Lake Union Elementary School District (two vacancies):

– Walt Christensen, incumbent.

– Valerie Petz, appointed incumbent.

Upper Lake Union High School District Board (two vacancies):

– Colleen Alexander, incumbent, Nice.

– Annie Barnes, administrator, grant writer, Upper Lake.

– Dawn R. Binns, business owner, Upper Lake.

– Howard Chavez, deputy director of education, Lucerne.

– Gary L. Lewis, sales/marketing director, Upper Lake.

Lake County Board of Education, Trustee Area 1 (one vacancy):

– George H. Rider, incumbent, Lower Lake.

Lake County Board of Education, Trustee Area 2 (one vacancy):

– Mark A. Cooper, incumbent, Clearlake.

Lake County Board of Education, Trustee Area 4 (one vacancy):

– David Browning, appointed incumbent, Lakeport.

– Larry A. Juchert, retired business owner, Lakeport.

Mendocino-Lake Community College District, Trustee Area 1 (one vacancy):

– Paul B. Ubelhart, incumbent, Willits.

Mendocino-Lake Community College District, Trustee Area 3 (one vacancy):

– Joan M. Eriksen, incumbent, Ukiah.

– Larry MacLeitch, retired professor and trustee, Ukiah.

Mendocino-Lake Community College District, Trustee Area 4 (one vacancy):

– Wade Koeninger, incumbent, Hopland.

Mendocino-Lake Community College District, Trustee Area 7 (one vacancy):

– Jerry DeChaine, professor of chemistry, Kelseyville.

– Gary Taylor, incumbent, Kelseyville.

SPECIAL DISTRICTS

Anderson Springs Community Services District (two vacancies):

– Penelope D. Falduto, appointed incumbent.

– Beatrice A. Moulton, retired law professor.

– Daniel L. Wood, custodian.

Anderson Springs Community Services District (one vacancy for an unexpired term):

– John Engels, appointed incumbent.

Butler-Keys Community Services District (three vacancies):

– James Evans, incumbent.

– Frank Gillespie, incumbent.

– Jeanne Renli Schiele, incumbent.

Hidden Valley Lake Community Services District (three vacancies):

– Robert W. Barton, incumbent.

– Frances Bunce, appointed incumbent.

– Lyle W. LaFaver, incumbent.

Kelseyville Fire Protection District (two vacancies):

– Donald R. Carter, incumbent.

– William H. H. Wolfe, appointed incumbent.

Lake County Fire Protection District (three vacancies):

– William W. Llewellyn, incumbent, Lower Lake.

– Rozie Cheek, incumbent, Clearlake Park.

– Thomas W. Walker, incumbent, Clearlake.

South Lake County Fire Protection District (three vacancies):

– Rob Bostock, appointed incumbent, Cobb.

– Madelyn Martinelli, incumbent, Middletown.

– Danny L. McCabe, incumbent, Cobb.

Adams Springs Water District (two vacancies):

– Kathy DeMartini, appointed incumbent.

– Evan Robert Willig, incumbent.

Adams Springs Water District (one vacancy for an unexpired term):

– Gloria Poulsen, appointed incumbent.

Buckingham Park Water District (two vacancies):

– George Hawley, incumbent.

– James Horne, appointed incumbent.

– Michael B. Meese, appointed incumbent.

Callayomi County Water District (two vacancies):

– Linda Olhiser, retired controller.

Clearlake Oaks County Water District (three vacancies):

– Mike Anisman, retired law enforcement.

– June A. Greene, incumbent.

– Helen G. Locke, retired telecom manager.

– Glenn R. Rowe, incumbent.

– Frank Toney, highway maintenance worker.

– Bob White, incumbent.

Cobb Area County Water District (two vacancies):

– Renada Breeden, incumbent.

– Kees Winkelman, appointed incumbent.

Cobb Area County Water District (one vacancy for an unexpired term):

– Robert Paul Trautwein, appointed incumbent.

Konocti County Water District (two vacancies):

– Donnie Bachman, appointed incumbent.

– Darin M. McCosker, incumbent.

Scotts Valley Water Conservation District, Division 1 (one vacancy):

No candidates filed.

Scotts Valley Water Conservation District, Division 2 (one vacancy):

No candidates filed.

Upper Lake County Water District (three vacancies):

– Wilda C. Beavers, incumbent.

– Henry Ward Beecher, incumbent.

– Allen E. Merriman, incumbent.

Villa Blue Estates Water District (two vacancies):

– Mark Fetzer, satellite technician.

– Dennis John Knudsen, incumbent.

– Clara Summerfield, incumbent.

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As Lake County News reported over the weekend, Lakeport Police and the Lake County Sheriff's Office were involved in making the arrests, which took place along Ackley Road in Lakeport.

A report from Lake County Sheriff's Lt. Cecil Brown Monday explained that at 3:41 p.m. Saturday Lake County Sheriff’s deputies responded to a reported fight in front of a residence in Kelseyville. Personnel from the Kelseyville Fire Protection District also responded.

The deputies found several excited people in front of the home, according to Brown, who told the deputies that “Jose” started a fight, and then left in a gray Isuzu utility vehicle. Witnesses told fire department personnel that a woman in the Isuzu had a small handgun concealed in her brazier.

As deputies searched for the Isuzu, Lakeport Police Officer Jason Ferguson located the vehicle on Ackley Road near Lakeport, according to Brown's report.

Lt. Brad Rasmussen of Lakeport Police told Lake County News Monday that Ferguson spotted the vehicle on Highway 29 and followed it to Ackley Road, where he initiated a felony stop and waited for sheriff's deputies.

Brown said Deputy Gavin Wells, Deputy Darren Daskam, Sgt. Jim Beland and Sgt. Brian Martin responded to the Ackley Road location. There they detained Jose Luis Valadez, 29, of Lakeport; Teresa Yepez Garcia, 48, of Lakeport; and another woman and removed them from the vehicle.

A search of the vehicle yielded a .380 caliber handgun, according to Brown's report.

Interviews were conducted at the residence in Kelseyville, at the location of the high-risk stop and at Sutter Lakeside Hospital, Brown reported. Witnesses confirmed that an altercation had occurred at the residence.

However, Brown reported that none of the involved parties wished to cooperate in the prosecution of any other party.

The interviews also revealed that Valadez and Yepez Garcia had both been in possession of the .380 caliber handgun.

Both were arrested for carrying a concealable firearm in a vehicle (12025(a)(1)PC) and carrying a loaded firearm in a vehicle (12031(a)(1)PC), and booked into the Lake County Jail.

Since Saturday, Yepez Garcia and Valadez have both posted, in the amount of $20,000 each, and been released from jail, according to jail records.

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Lakeport Police and Lake County Sheriff's deputies chased the suspects to Ackley Road Saturday. Photo by Harold LaBonte.

UPDATE: This story has been corrected to reflect that no high-speed chase occurred and that the original report did not involve two women beating up a male subject. The caliber of the weapon found also has been corrected; a .380 not a .38 was found, and one subject's age has been corrected. Lake County News regrets the errors. A followup story also has been posted: "Followup: Deputies make arrests for firearm violations."

LAKEPORT – Two people were arrested Saturday afternoon near Lakeport on weapons charges.

About 3:30 p.m. authorities responded to a call about a fight that involved a gray Isuzu.

By the time authorities arrived on scene, the vehicle was gone, but shortly thereafter the vehicle was spotted traveling down Highway 29.

Lakeport Police and Lake County Sheriff's deputies followed the Isuzu to the 3400 block of Ackley road in Lakeport, about three-quarters of a mile south of Highway 175/Hopland Grade. Six law enforcement vehicles from both Lakeport Police and LCSO were on scene, with two female subjects handcuffed and placed in separate vehicles.

The male subject was placed in another car, also handcuffed. He had sustained a head injury that required medical attention, and local medics from Lakeport Fire Protection District responded to the scene to attend to him, placing a large bandage around his head.

Sgt. Jim Beland of LCSO said they had not yet determined how the man had been injured, or exactly what kind of injury he received.

Deputies and Lakeport Police searched the suspects' vehicle, removing several items including ammunition, a metal box and an aluminum baseball bat. They found at least one .380 caliber semiautomatic in the vehicle.

The sheriff's office arrest logs showed Saturday that the male subject, Jose Luis Valadez, 29, of Lakeport was arrested on felony charges of carrying a concealed weapon in a vehicle with a prior felony conviction and carrying a loaded firearm in public. He remained in jail Saturday night on $20,000 bail.

Arrested on the same charges as Valadez was Teresa Yepez Garcia, 48, of Lakeport, who also remained in the Lake County Jail on $20,000 bail Saturday night.

It was not clear Saturday if a third suspect had been arrested in the case.

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Police and deputies searched the suspects' car for weapons. Photo by Harold LaBonte.

A deputy takes Jose Valadez from the scene. Photo by Harold LaBonte.

The Senate voted 27-12 Tuesday afternoon to accept the $145 billion budget, which includes $103 billion in general fund spending, according to David Miller, spokesman for North Coast Sen. Patricia Wiggins.

In a statement after the vote, Wiggins noted that the Senate's version of the budget was very similar to that passed July 20 by the Assembly and to a budget the Senate almost approved three weeks ago. Wiggins said the Senate should have arrived at a final budget “much, much earlier.”

“But I am glad that we are putting this impasse behind us, because it will allow us to resume payments to child care facilities, to nursing homes, to health clinics and other providers who receive reimbursements through Medi-Cal, to those who offer care and services to the developmentally disabled, and to anyone else who has been negatively affected by the delay,” said Wiggins.

This budget fully funds education and law enforcement, allows the state to pay off $2.5 billion of its overall bind debt earlier than scheduled and keeps a record $3.4 billion in reserve – all without raising taxes, Wiggins reported.

“It is my hope that we can move quickly now on other major outstanding issues, especially health care reform, and that we can reach early agreement on the next round of budget talks in 2008,” said Wiggins.

There was one part of the budget package Wiggins didn't agree with, according to her office. Senate Republicans demanded the elimination of an existing requirement that all state-owned buildings be “green,” which Senate Democrats agreed to honor. Wiggins, however, voted against the change.

Assemblywoman Patty Berg's office offered no comment on the budget's passing. However, in July, when the Assembly passed a $103 billion budget version, Berg said it would protect children, the elderly and the poor.

As chair of the Assembly's Budget Subcommittee on Health and Human Services, she worked to add $12 million to the state’s Adult Protective Services program in order to give every county in the state at least one watchdog to protect seniors from elder abuse.

The Assembly budget also preserved the Williamson Act, increased funding for the California Methamphetamine Initiative, prevented a wage freeze for In-Home Supportive Services workers, maintained Rural law enforcement grant program, kept intact the homeless program for mentally ill, fully funded K-12 education and created a $3.4 billion reserve.

However, just how close the two budgets are in their specifics wasn't clear Tuesday evening, although it's reported that they are very similar.

Gov. Arnold Schwarzenegger issued a statement Tuesday afternoon that lauded the Senate's responsible budget,” which he said protects the state's priorities and keeps its economy strong.

“It was a challenging process but in the end our legislative leaders came together to deliver a spending plan that does not raise taxes, creates the largest reserve in history, and reduces our operating deficit after the spending vetoes that I have promised,” Schwarzenegger said in the statement.

Schwarzenegger said the budget also limits spending growth to less than one percent, pays down $2.5 billion in debt, fully funds education and public safety, and allows the state to move forward with the infrastructure bond measures that voters approved last year.

“We now will move forward together on the issues we've been elected to address such as health care, a comprehensive water plan, and redistricting reform,” Schwarzenegger said.

The budget comes none too soon.

Late last month, State Controller John Chiang reported that the budget impasse forced him to withhold $1.1 billion in state payments to hospitals, nursing homes, child care centers, community colleges and other programs. Chiang estimated at that time that he would not be able to pay another $2.1 billion in state payments in August.

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UPPER LAKE – Officials still haven't settled on the cause of a fire that broke out near Highways 20 and 29 Saturday morning.

The fire, which was reported at about 10 a.m., was located in farmland in a flat area near the junction of the two highways, according to Battalion Chief Ken Petz of Northshore Fire Protection District's Upper Lake station.

Upper Lake's station sent two attack units and one engine responded from Lakeport, along with responders from the US Forest Services and Cal Fire, said Petz.

Cal Fire Battalion Chief Redhawk Palleson said Cal Fire sent five engines, a helicopter, an air attack, a dozer and two air tankers to the scene, Pallesen said.

Firefighters contained the fire between 1 and 2 p.m., Petz said.

One home was threatened, he said, but firefighters were able to protect it and avert damage.

Petz said there were no injuries.

The fire's cause still has not been determined, said Petz.

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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.

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