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From the Winter issue of the $100+ Club News

In the Plumbers and Pipefitters Union
UA President Martin Maddaloni and Sec'y-Treasurer Thomas Patchell Ousted After Disastrous Pension Investments in Florida Hotel
by Jim McNamara

The U.S. Labor Department set the stage for the exit of Martin Maddaloni and Thomas Patchell last August by issuing an order that removed them as trustees of seven ERISA-covered funds after their reckless investment of national pension assets in the Diplomat Resort and Country Club in Hollywood, Florida.

On November 30, the two ousted trustees cut a deal with the UA Executive Board to vacate their union posts and become ex-president Maddaloni and ex-sec'y-treasurer Patchell. To soften the blow the Executive Board will pay the discredited duo their full salaries and benefits plus free use of cars and other perks through the end of 2006.

The Executive Board then moved William P. Hite into the president's empty chair. The newly anointed president now recommends to the Executive Board who takes over as sec'y- treasurer and who gets his previous job as assistant general president.

Maddaloni was paid $354,853 according to the most recent LM-2 report filed with the USDOL: $264,177 in salary and the remainder for "allowances" and "disbursements for official business." Patchell reported $308,675: $228,244 in salary and $80,431 in allowances (Bureau of National Affairs Construction Labor Report 11/24/04).

USDOL Collects $10.98 Million From Fund Trustees

Maddaloni, Patchell and two employer trustees are required to pay $10.98 million in restitution to the seven ERISA funds they mismanaged to build the 1,000 room Diplomat Hotel. It is unclear whether the almost $11 million payback, which includes civil penalties, actually comes from the trustees' deep pockets or is covered by trustee insurance paid by the UA funds.

Data on additional funds may yet be uncovered by an independent fiduciary appointed in 2000 by the USDOL. Further claims against sub-contractors and service providers are being pursued. The hotel opening was delayed by faulty work by a plumbing contractor.

DOL Gave the Green Light But Did Not Monitor

The USDOL originally approved investment of the UA pension funds' assets in the hotel, but with tight limits. The government then neglected to monitor the project and belatedly woke up to loud whistle-blowing by dissidents, notably Tom Preuett, and by newspaper exposes.

Battle Opens Up for New Top Leaders

Delegates to the next convention, in 2006, will elect the top leaders to replace the ousted president and sec'y-treasurer. The Executive Board that rubber-stamped the leadership's disastrous recommendation faces challenge.

The battle for control of the 325,000 member international is gaining momentum with Tommy Preuett a declared and the leading candidate for president. Preuett made a strong showing for the presidency when he challenged Maddaloni at the Miami UA convention in 2001. Running alone, the outspoken Preuett received 1,233 delegate votes to 2,002 for the incumbent Maddaloni.

Websites have become an effective tool for dissidents to spread the word. Frank Natalie, a delegate form Local 7, Schenectady, New York maintains the website Pipe Trades for a Democratic Union was formed at AUD's Construction Trades Conference in November 2002.

Other articles on the UA:
UA's Maddaloni and Patchell ousted after disastrous pension investments in Florida hotel
Interview with UA reformer Frank Natalie
New voices at AUD construction trades conference
Court orders Plumbers and Fitters to remove anti-democratic rule
Pipefitters win points in battle for democracy.
Links to UA member sites.

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