Blum plans to drop defamation suit http://www.insidevc.com/vcs/co_valley/article/0,1375,VCS_166_705184,00.html

Says he can be vindicated in lawsuit that goes to trial early next year

By Philippe Shepnick, Staff writer

 

Richard Blum, the financier husband of Sen. Dianne Feinstein, plans to drop a $20 million defamation lawsuit he filed against a retired Thousand Oaks carpenter who had accused him of looting a union pension fund.

Horacio Grana, 61, operates a Web site that has criticized Blum and officials of the Carpenters Pension Trust for Southern California.

In January 2000, Grana and two other union retirees filed a lawsuit against Blum and the pension trustees.

The retirees' suit alleges that Blum's investment firm, BLUM Capital, and the pension trustees violated the U.S. Employee Retirement Income Security Act by investing the nearly $2 billion pension fund in businesses where they already had financial interests.

Grana provided updates of the lawsuit on the Web site.

Blum filed his defamation lawsuit against Grana last July, claiming the statements on the Web site were damaging his business.

But on Monday, Grana's lawyers received a letter from Blum's lawyers saying Blum would drop the suit on July 16, when both parties are scheduled to appear before a federal judge in Los Angeles, Grana said.

The decision was a nice birthday present, said Grana, who turns 62 on July 9. But it was not a vindication, he said.

"I will be vindicated when I win the (pension investment) lawsuit and they are all removed (as trustees)," he said.

That lawsuit is scheduled to go to trial in February.

Grana also said he will file a "malicious prosecution" lawsuit against Blum to recover the money that Grana's homeowner insurance company spent on the defamation case.

Grana believes the defamation lawsuit is being dropped because Blum would have to turn over sensitive information related to the pension investments.

But Owen Blicksilver, a spokesman for BLUM Capital, said the defamation lawsuit became a distraction of time and money. The defamation case would not go to trial until at least July 2002, while Grana's pension investment lawsuit should go to trial early next year.

"We realized that the vindication we were seeking could be gotten through the defense of the original lawsuit," Blicksilver said.

Blicksilver said the decision was not related to any concerns about turning information over to Grana.

Blicksilver said there were no regrets about filing the defamation suit. "I think you make decisions based upon what was right at the time, and you adjust when they are not working out," he said.

 

-- Philippe Shepnick's e-mail address is pshepnick@insidevc.com.