Plumber's Union Pension Fund Trustees Forced To Resign

By Kelly Faloon

UA's Maddaloni and Patchell among trustees ordered to pay nearly $11 million; DOL found fund mismanagement at Diplomat Resort

The Department of Labor removed four board trustees from the Plumbers and Pipefitters National Pension Fund and ordered them to pay $10.98 million in restitution and civil penalties stemming from the improper management of the fund's investment in the Westin Diplomat Resort and Spa in Hollywood, Fla.

The settlement of the nearly 2-year-old lawsuit, which must still be approved by the federal district court in Ft. Lauderdale, Fla., calls for the resignation from the fund's board of Martin J. Maddaloni, president of the United Association of Journeymen and Apprentices of the Plumbing, Pipefitting, Sprinkler Fitting Industry of the United States and Canada; Thomas Patchell, general secretary-treasurer of the plumbers' union; Charles H. Carlson, former chairman of Industrial Piping Co.; and James A. House, part owner of bankrupt refrigerant company J.A. House Inc.

"The plumbers' trustees mismanaged the investment and placed the retirement benefits of thousands of union workers at risk," said Labor Secretary Elaine L. Chao.

Lawyers representing Maddaloni and Patchell stated, "We find it inappropriate and regrettable that the U.S. Department of Labor would issue a misleading press release regarding a matter which is before a court for consideration," but did not elaborate on which aspects were misleading, according to the Engineering News-Record.

The UA pension fund bought the original dilapidated Diplomat Hotel in September 1997 for $40 million with plans to restore it, said the South Florida Sun Sentinel. The 39-story, 998-room resort was scheduled to open January 2000. It opened 18 months late at a cost of $800 million, twice the original budget of $400 million.

Many union members were concerned about their retirement benefits once word of the many delays and increased costs came out.

In September 2002, the DOL sued the trustees for "imprudent management," violation of the Employee Retirement Income Security Act, failure to control construction costs and payment of excessive fees to service providers.

Maddaloni and Patchell also have resigned their positions with six other ERISA-covered plans where they served as fiduciaries.

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Kelly Faloon was a former editor of Plumbing & Mechanical as well as the BNP Media Plumbing Group’s Integrated Content Development Specialist. She also was a former editor of the Radiant Comfort Guide the Radiant & Hydronics Report — both official publications of the Radiant Professionals Alliance — and twice-monthly Radiant & Hydronics eNews, an enewsletter for anyone interested in the world of heating with hot water.

Her editorial specialties included women in plumbing, recruiting for the trades, green construction techniques, water conservation, water treatment, hydronic heating, radiant heating and cooling, snow melt, solar thermal and geothermal.

After a 3½-year stint at sister publication Supply House Times, Faloon joined the PM staff in December 2001 as senior editor. She was named PM’s managing editor in 2006 and editor in 2013.

Previously, she spent nearly 10 years at CCH, a publishing firm specializing in business and tax law, where she wore many hats — proofreader, writer/editor for a daily tax publication, and Internal Revenue Code editor.

A native of Michigan’s northern Lower Peninsula, Faloon is a 1986 journalism graduate of Michigan State University.