CALIFORNIA ELECTIONS / INSURANCE COMMISSIONER : GOP Candidate Urged to Return Funds

The state Democratic Party chairman Wednesday called on Assemblyman Charles W. Quackenbush, the Republican candidate for insurance commissioner, to return nearly $500,000 in campaign contributions from the insurance industry.

“He wants to become the fox guarding the henhouse,” said Bill Press. “I believe it is improper--not illegal but unethical--to accept money from the industry that you intend to regulate. It sets up a conflict from day one.”

But Quackenbush, of Cupertino, said he will not cease taking such contributions or give them back.

“People are going to contribute money to people who share their philosophy,” he said Wednesday. “I’m a free-enterprise, free-market Republican and I believe strongly in the private sector and I’ve traditionally received contributions from many interests, but that has never stopped me from doing the right thing.”

Quackenbush noted that he had taken contributions from the National Rifle Assn., but nonetheless in 1989 became one of only two Assembly Republicans to vote for an assault weapon ban.

Where the campaign money is coming from is likely to be a central issue in the developing insurance commissioner’s race between Quackenbush and Democratic Sen. Art Torres of Los Angeles.

Torres, who took a pledge two years ago not to take any contributions from insurance companies, agents or brokers, recently prevailed in a Sacramento court when the state Republican Party sued to invalidate a ballot statement he had prepared that read: “I’m the only major candidate who doesn’t accept any money from insurance companies.”

Superior Court Judge James T. Ford, an appointee of former Democratic Gov. Edmund G. (Jerry) Brown Jr., said from what he could see the statement was true, and the ballot statement should stand.

“I feel if you’re going to effectively regulate an industry, you ought not to take their dough,” Torres said Wednesday. “Quackenbush, apparently, will take money from anybody, the tobacco, the insurance industry, anybody who wants to give him money he’ll take it from.”

Quackenbush and campaign aide Greg Butler charged that Torres is being hypocritical. Torres may not be taking money directly from the insurers, but he is soliciting it from defense lawyers who represent the insurers, not to mention trial lawyers with a different but heavy stake in the system, they said.

Torres, Butler said, “has taken money from the insurance industry throughout his career, and he’s continued to take it as a candidate for insurance commissioner. Last month, he held a fund-raiser at the Illinois Insurance Exchange, hosted by an insurance defense law firm.

“He also held a fund-raiser hosted by the credit insurance folks. So for him to say, ‘I’m an angel,’ it’s hypocritical.”

Partial state campaign finance reports, for the first six months of the year, show Quackenbush with by far the most insurance money, at least $359,000 by July 1, including a $200,000 loan from one source, Pacific Loan Administrators, an affiliate of McGraw Insurance Services of Menlo Park.

Quackenbush on Wednesday called John McGraw, the person behind the loan, “a friend of mine who is not on the same wavelength with me politically,” in that he is further to the right ideologically. “He has contributed to me in the past and will in the future,” he said.

Press and a spokesman for the outgoing insurance commissioner, Democrat John Garamendi, tried to draw a distinction between the contributions that Quackenbush and Torres are taking.

Garamendi, the spokesman said, has had the policy “not to accept money from those he regulates, insurance companies, agents and brokers. He does not regulate doctors and lawyers and so he has accepted money from those parties.”

This, Quackenbush said, is a distinction without a difference. The question should not be where the money comes from, but whether the candidate has the character to conduct himself independently of his financial backers, he said.