Mobster Son's Brewery Stake Challenged by Feds

Friends of ours: Jackie Cerone

The federal agency that took over bankrupt Pittsburgh Brewing Co.'s pension plan has challenged the status of the brewery's second-largest investor as the sole creditor with rights to trademark beers Iron City and IC Light.

The Pension Benefit Guaranty Corp. wants to alter a March agreement that makes Jack P. Cerone, a Chicago attorney who owns a minority share in the Lawrenceville brewery, the only creditor of Keystone Brewers Holding Co., which owns the trademark rights. A hearing is scheduled for today in Bankruptcy Court in Pittsburgh.

The pension agency claims it too is a creditor because it assumed $11.8 million pension liabilities from bankrupt Pittsburgh Brewing in May. Cerone is owed about $6 million, according to a financial statement filed in April.

The pension insurer also wants the court to eliminate a provision in the March agreement that preserves Cerone's rights even if the brewery is forced into liquidation. Pittsburgh Brewing filed a Chapter 11 bankrutpcy in December and faces an Oct. 15 deadline to file a reorganization plan. The pension insurer declined to comment further, spokesman Gary Pastorius said.

The agreement between Cerone and a committee of unsecured creditors was approved March 9 without the agency's knowledge, the pension insurer said. Neither Cerone nor his Pittsburgh attorney, Donald Calaiaro, could be reached for comment.

Under the deal, Cerone gets weekly payments of $9,105 on two loans to Pittsburgh Brewing. He purchased the loans in 2003 for $1.5 million. Cerone also agreed to postpone payments of $2,200 a week on an August 2005 loan he made to the brewery. Joseph R. Piccirilli, Pittsburgh Brewing's president, has said he agreed to make the payments to Cerone because of his ownership of the loans.

Cerone acquired his minority stake in the brewery -- 10 percent of the brewery's stock, plus warrants that allow him to buy an additional 10 percent -- when he purchased a loan from Provident Bank of Cincinnati, Piccirilli said.

Cerone's father, the late Jackie Cerone, was "a notorious mobster in the 'Chicago Outfit,'" said Dan Moldea, author of "The Hoffa Wars" and an expert on the Teamsters union. Cerone had links to both labor unions and management, Moldea said.

Cerone's insurance firm, Marble Insurance Agency of Addison, Ill., was barred from doing business with Teamsters Local 727 of Chicago and other Teamster-related clients in 1993 because of his father's alleged ties to organized crime, according to a 2004 report prepared for the International Brotherhood of Teamsters.

Separately, the union representing bottlers and brewers at Pittsburgh Brewing says it may take the company's latest contract offer to its membership for a vote. A decision will be made early next month. "I think we may be done negotiating," said George Sharkey, a business agent for the International Union of Electrical Workers-Communications Workers of America Local 144B, which represents the brewery's bottlers.

Two bargaining sessions last week failed to produce a tentative agreement, and the brewery's demands are similar to those made in July, Sharkey said. Pittsburgh Brewing wanted a 10 percent wage cut, but workers would get wage increases stipulated in the current contract, which took effect in May 2005, Sharkey said.

If the union does not approve the company's offer, Sharkey said he the brewery may renew its efforts to seek permission in Bankruptcy Court to terminate its labor contract. Pittsburgh Brewing asked the court for such permission, but postponed a hearing on the matter last month because negotiations had resumed.

Piccirilli declined to comment yesterday, but has said a cost-cutting labor contract is a key element of a successful reorganization.

Thanks to Joe Napsha