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No day at the spa: Union-owned resort to close

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in Employee Benefits Program,Human Resources

The Konocti Harbor Resort and Spa, a Kelseyville resort owned by Plumbers and Pipefitters Local 38, will close. The announcement came two years after Local 38 agreed to sell the resort under a U.S. Department of Labor consent decree filed in the U.S. District Court for the Northern District of California to settle charges that the union diverted $36 million from pension plans to operate and renovate Konocti.

The consent decree came after the DOL sued the benefit fund trustees of Local 38 in 2004, alleging Employee Retirement Income Security Act (ERISA) violations for diverting assets from five employee benefit funds to the non-ERISA “convalescent trust fund.”

In a statement, the DOL’s Employee Benefits Security Administration said, “The independent fiduciary, WhiteStar Advisors LLC, was appointed to manage the property and make any decision regarding the disposition of the property, including its sale. The recent news about bankruptcy of Konocti Harbor does not affect the Labor Department’s 2007 settlement as the independent fiduciary continues to manage the property. The department is monitoring the case on an ongoing basis.”

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