Lockyer Weighs Audit Requests on Quackenbush

Atty. Gen. Bill Lockyer on Monday confirmed that his office is reviewing requests for an audit to determine the propriety of expenditures by a nonprofit foundation created by Insurance Commissioner Chuck Quackenbush.

A spokeswoman for Lockyer said the attorney general, who is responsible for overseeing charities, had received a request for an audit several weeks ago from Senate Insurance Committee Chairwoman Jackie Speier (D-Daly City) and more recently from a consumer watchdog group.

“The matter is under review and we cannot comment any further,” said Sandra Michioku, Lockyer’s director of public affairs.

Several of the state’s biggest insurance companies have been ordered by Quackenbush to contribute millions of dollars to the California Research and Assistance Fund, a nonprofit foundation created to educate homeowners about earthquake safety and preparedness.

The fund was created after a series of confidential Department of Insurance reports concluded that three companies--State Farm, 20th Century and Allstate--mishandled hundreds of claims after the Jan. 17, 1994, Northridge earthquake.

Quackenbush’s legal staff proposed that the companies be assessed hundreds of millions of dollars in fines and that they be required to contribute to a remediation fund. Quackenbush rejected their advice and ordered instead that they contribute $11 million to his education foundation.

The only fine he levied was $100,000 against 20th Century, which has changed its name to 21st Century.

The foundation has since used some of the funds for public service announcements featuring the politically ambitious insurance commissioner.

Doug Heller, consumer advocate for the Foundation for Taxpayer and Consumer Rights, a watchdog organization, said his group is asking Lockyer not only to audit the foundation but also to conduct a criminal investigation to determine if any laws have been broken.

“Instead of paying enormous fines to the state, [these companies] paid a tax-deductible pittance to a Quackenbush-established foundation,” said Heller.

Quackenbush, whose term expires in 2002, has also been criticized recently for collecting contributions from insurance companies and using them to repay his wife, Chris Quackenbush, for personal loans she made to her unsuccessful 1998 state Senate campaign.