A Los Angeles businessman who attempted to rescue California Life Insurance Co. from insolvency filed a lawsuit Tuesday in federal court alleging that state officials drove the company into ruin and liquidated its assets long before it became insolvent.
Backed by a coalition of minority rights organizations, including the National Assn. for the Advancement of Colored People and the Southern Christian Leadership Conference, entrepreneur Donald J. Bohana said state Department of Insurance officials deliberately wasted the company’s assets and harassed its management because Bohana is black.
“I was the first black person to buy a company listed on the Pacific Stock Exchange, and they can’t think about a black man owning a major insurance company,” Bohana said in an interview after a Los Angeles news conference announcing the civil rights suit.
The lawsuit, which names state Insurance Commissioner Roxani Gillespie, Deputy Commissioners Joe A. Morton and Ronald G. Rosen, and five other state insurance officials, seeks damages and attorney fees that Bohana and his lawyers said could total $20 million.
A spokeswoman for the Insurance Department declined comment, saying state officials had not yet been served with the lawsuit.
The suit alleges that state insurance officials placed California Life in conservatorship and shortly thereafter into liquidation based on false claims that the company was insolvent and despite Bohana’s offer to inject $6 million in new cash into the corporation.
State officials then allowed the company to slip further into financial ruin, according to the suit, in what Bohana claims was a “willful, malicious and calculated” attempt to deprive him of his civil and property rights.
‘Still Not Paying’
Bohana’s attorney, John E. Sweeney, said the company under Bohana’s stewardship had been paying claims in full and had the ability to do so indefinitely before state officials stepped in.
“They’re still not paying,” Sweeney said. “They’ve written letters to claimants saying it’ll be years before we pay, and then you’ll only get a percentage of your claim, if any of it.”
Sweeney said he also plans to file a separate action in state court seeking an injunction barring the Department of Insurance from any further liquidation of California Life assets.