Subway Builder’s Link to Union Questioned : Labor: Members of carpenters group seek federal investigation of Ronald N. Tutor’s role in pension fund investment in concrete company. He says he has done nothing to benefit himself.

In an unusual alliance, Los Angeles’ leading subway builder and a major union pension fund have engaged in business transactions involving a professional boxing venture and a Texas company that supplies most of the concrete for the giant Metro Rail project.

While serving as co-chairman of the regional carpenters pension fund, contractor Ronald N. Tutor and his partners in a boxing operation staged televised bouts at a Palm Springs hotel owned by the fund, The Times has learned.

With Tutor’s encouragement, the union pension fund also made a controversial $40-million investment in Southdown Inc. of Houston--the company that supplies nearly all the concrete for Tutor and other Los Angeles subway contractors.

Now some union members are pressing for a federal investigation to examine whether Tutor’s role in the Southdown investment violated federal labor laws designed to prevent conflicts of interest.

Tutor said he believes he has complied with the law and said he has done nothing to benefit himself. Both transactions, he said, occurred with the full knowledge of the carpenters pension fund trustees and lawyers.

“We want it cleaner and squeakier than a wheel,” Tutor said. “Everything has been aboveboard.”

However, some union members are upset at the pension fund’s investment in Southdown--in part because the value of the holding has declined by 31%, a loss of $12.5 million.

“It’s our money that’s being squandered, and we want to know what’s going on,” said Walter J. Sprenger, former financial secretary of Local 944 in San Bernardino. Last week, Sprenger and seven other union carpenters urged the U.S. Department of Labor to investigate.

Citing policy, federal officials declined to say whether an investigation has been opened and would not comment directly on the transactions involving Tutor. But they said that dealings between pension fund trustees and businesses owned by that pension fund generally are frowned upon by the Labor Department. If found illegal, such dealings could result in substantial civil penalties.

Tutor said he would welcome a review. “The government can come out and investigate anything they like,” he said. “We’ve got legal advice on everything we do.”

John T. De Carlo, a lawyer whose firm advises the pension trust, said he believes that the transactions were proper.

Tutor, 52, is president and chief executive officer of Tutor-Saliba Corp., based in Sylmar. The construction firm has won more than $400 million of Metro Rail subway contracts over the past six years. Much of the work has been performed by members of the carpenters union.

Since the late 1980s, Tutor has served as co-chairman of the Carpenters Pension Trust of Southern California, a $1.3-billion retirement pool funded by union members and their employers. The pension board has an equal number of contractors and union members.

Tutor has developed a close working relationship with Douglas J. McCarron, the top carpenters union official in Southern California and co-chairman with Tutor of the pension trust.

Although Tutor is a Republican and McCarron is a Democrat, they supported and raised hundreds of thousands of dollars in campaign contributions for some of the same politicians, including U.S. Sen. Dianne Feinstein, state Treasurer Kathleen Brown and former Dist. Atty. Ira Reiner. They raised nearly $100,000 recently for unsuccessful Los Angeles mayoral candidate Richard Katz, chairman of the state Assembly Transportation Committee.

As a trustee, Tutor is prohibited by federal law from engaging in any business transactions that amount to self-dealing or that may conflict with the interests of the pension fund.

“Generally, if (a trustee) is getting anything out of it personally . . . it could be a prohibited transaction,” said David C. Ganz, the Labor Department’s director of pension and welfare benefits in Los Angeles.

Two years ago, Tutor and the pension fund joined forces in the world of professional boxing.

California Athletic Commission records show that Tutor is the No. 2 shareholder in Ten Goose Boxing, which promotes bouts and manages fighters. The Van Nuys-based venture has grown over the last decade to assume a national presence in boxing.

For one of its biggest promotions, Ten Goose, with Tutor’s assistance, did business with the Carpenters Pension Trust of Southern California.

Ten Goose and promoter Dan Duva staged the event on June 1, 1991, at the Palm Springs Radisson--a $36-million hotel-resort complex owned by the pension fund. The matches were televised nationally by the Home Box Office network and featured defending middleweight champion Terry Norris.

Tutor told The Times that he helped arrange the boxing event at the hotel, now called the Palm Springs Riviera Resort & Racquet Club. “Ten Goose came to us (the carpenters pension fund) with a proposal,” he said. “I put it together with” the firm hired to manage day-to-day operations of the hotel.

The event generated $2.5 million in broadcast fees for the promoters, according to athletic commission records. Ten Goose received $1 million of the broadcast fees, plus $316,625 in gate receipts. The hotel provided the promoters and their entourages with free rooms and food.

Duva said that a hotel typically receives 10% to 15% of the gate receipts for playing host to a major boxing event, plus reimbursement for expenses.

Dan Goossen, the president and top shareholder of Ten Goose, said he believes the hotel covered its expenses but did not make money on the event. “I got them back their hard-cash investment, and that was about it,” Goossen said. “They thought it would do better. . . . Their upside (was) only the publicity.”

Records show Tutor holds 15% of Ten Goose’s shares and “has the right to receive 15% of any and all gross sums of money” paid to Goossen for managing boxers.

Tutor said that, in practice, his agreement with Goossen grants him 15% of Ten Goose’s overall profits. He said Ten Goose has not been profitable.

“I haven’t received anything,” Tutor said. “It’s probably the world’s worst investment. . . . Everything goes into Ten Goose and we barely pay all our bills.”

Tutor said he has put more than $100,000 into Ten Goose--more as a part of his lifelong friendship with the Goossen family than as a serious investment.

Federal officials would not comment directly on whether use of the pension fund’s hotel by Tutor’s boxing venture violated the law. However, they said the law generally prohibits business transactions between pension funds and their trustees.

“It is an extremely expansive prohibition,” said Alan Lebowitz, a Labor Department lawyer and deputy assistant secretary in Washington.

Tutor said he believed the boxing promotion was proper and posed no conflict of interest.

“Absolutely not,” he said. “The carpenters pension trust and its lawyers were made aware of it. It really benefited Ten Goose and the hotel. . . . We made money at the hotel. The hotel comes out like a charm.”

Union leader McCarron also is a friend of Ten Goose Boxing.

The carpenters union over the past few years has paid thousands of dollars to be a “sponsor” of Ten Goose Boxing. The sponsorship permits the union to display banners at fights and get ringside seats.

Goossen said he conferred with McCarron to arrange the June, 1991, fights at the pension fund’s hotel in Palm Springs. “I spoke to Doug on it. He wanted it out there,” Goossen said.

McCarron did not return calls seeking his comment.

Union attorney De Carlo noted that labor law aimed at preventing conflicts of interest is complex and difficult to interpret. He said that although he does not recall rendering advice on the boxing promotion, he was aware of it and believes that Tutor’s role did not pose any conflict of interest.

Questions also attend the pension fund’s $40-million investment in the cement company that has supplied virtually all of the concrete used on the Los Angeles subway.

During a three-month period in 1991, the pension fund became the biggest stockholder in Southdown Inc. of Houston, acquiring 14.7% of the company’s outstanding shares. Tax returns show that the stock investment dwarfs all others in the union’s stock portfolio.

Tutor, acting as co-chairman of the pension trust, won a seat last year on Southdown’s board of directors.

Southdown remains a loser for the pension fund. The value of the investment has dropped from $40 million to about $27.5 million.

For Tutor, the investment has turned controversial. Some union members are questioning the prudence of the investment and the appearance created by Tutor’s triple role as a Southdown board member, a pension trustee and a major purchaser of concrete from the company. He also encouraged the pension fund’s rapid acquisition of Southdown stock.

“I do not think they’re using our money appropriately,” said Sprenger, one of the union members seeking a federal probe.

Tutor said his role with Southdown has been entirely proper. As a director, he is now entitled to 2,500 shares of Southdown stock but he has said he would not convert the stock to his personal use.

He said he accepts no compensation and that he “volunteered” for the board position “to protect the carpenters’ interest.”

“I supported it (the Southdown investment), I encouraged it,” Tutor said. “I didn’t force ‘em to buy the stock. . . Right now, I wish we never got in it. Long term, though, I still think it will be a good investment.” Tutor said he could not recall whose idea it was to invest in Southdown.

Feinstein’s husband, Richard C. Blum, and his company were paid about $1 million in 1991 to advise the pension fund on its stock investments. An aide to Blum, N. Colin Lind, said the investment in Southdown was made with a belief that the company’s stock was undervalued--and that the firm was positioned to rebound.

Tutor and McCarron were instrumental in hiring the Blum firm, whose compensation in 1991 was by far the highest paid to any adviser by the pension fund, tax records show. Tutor and Blum have clashed with Southdown’s management over the company’s performance.

The motivations for the pension fund’s Southdown investment are important. Tutor, as a consumer of Southdown’s concrete, would be prohibited from influencing an investment decision if he did so out of concern for its impact on his personal business interest.

“If someone uses their position as a fiduciary of a (pension) plan to influence that plan to invest in a way that supports his outside business activities, then that would be a violation of the law,” said Lebowitz, the Labor Department official. “That would be self-dealing.”

Transit officials who oversee the Los Angeles subway project said they do not audit what Tutor and other contractors pay for concrete.

Tutor said the Southdown investment has yielded him no competitive advantage in his concrete purchases. “How could I get a benefit?” Tutor asked. “They (Southdown officials) hate me. I’m sure the orders are going out the other way--to charge me more.”