Grants Seen as Political Boost for Quackenbush

Checks ranging from $10,000 to more than $200,000 flowed to a Latin American rite-of-passage party in Los Angeles, a black film festival in Oakland and a youth football camp in Sacramento.

Other recipients included a Latino police organization and a program that teaches kids to dial 911 in an emergency. Many were known causes. Others were more obscure.

A major question in the unfolding saga of Insurance Commissioner Chuck Quackenbush is: Why?

Why was so much money extracted by Quackenbush from insurance companies after the Northridge earthquake spent on so many causes that had nothing to do with insurance or earthquakes, as Quackenbush announced in early news releases?

In defense of the expenditures, made from foundations the commissioner created with $12.8 million in Northridge insurance penalties, Quackenbush said it was all part of his mission to reach “underserved minority communities.”

But the program also held potential political payoffs for Quackenbush, a Republican who had hopes of running for governor or U.S. senator, and Quackenbush’s wife, Chris Quackenbush, who has been a candidate for public office. Most of the controversial “community outreach” money was spent in the couple’s Northern California political base.

The large grants from the California Research and Assistance Fund served to bolster the Quackenbush image among minorities, an area where Republican candidates are traditionally weak.

“The trick in this business is to move to the middle,” said Darry Sragow, a Democratic political consultant and former deputy insurance commissioner.

Beyond the political implications, legislators say there are also questions of legality.

One recipient of $18,000 is Community Connections, an entity owned by Ron Weekley, a member of the board of directors of the research and assistance fund. Weekley also has a job coordinating women’s and minority contracting at the Sacramento Municipal Utility District.

According to Quackenbush, the fund gave “a contribution of approximately $18,000 to Community Connections, an organization devoted to providing assistance in minority communities.”

Weekley could not be reached for comment. But he disclosed the payment on a conflict of interest statement he was required by law to file last year with the Sacramento utility. In a notation, he wrote that he “facilitated workshops between the insurance industry and community stakeholders in California.”

State Sen. Jackie Speier (D-Daly City), a lawyer and chairwoman of the Senate Insurance Committee, called the $18,000 grant “potentially a violation of the law.” Foundation board members, she noted, must recuse themselves from decisions that may benefit them.

“This foundation is rife with conflicts and cronyism, unfortunately,” said Speier, who is preparing for a hearing into the affair later this month. “It is very disturbing.”

Donations to Non-Insurance Groups

Altogether, Quackenbush’s foundations gave at least $1.4 million to 12 registered nonprofit groups whose stated aim is to help minorities, and to Community Connections. None of the recipients had any connection to the insurance industry or the Northridge quake. Many of the grants came with no strings attached.

The biggest single grant, of $500,000, went to the Urban League of Greater Sacramento. It was announced last July at a board meeting--the first with Quackenbush as a board member.

“Being on the board of the Urban League was an extraordinarily useful credential for a Republican,” Sragow said. “When a Republican provides help to the less affluent, that stands out. It is playing against type.”

Quackenbush created two foundations in the wake of the Department of Insurance’s investigation into the treatment Northridge earthquake victims received. His top deputies threatened the companies with fines that could have reached into the billions of dollars. The companies opted to contribute a collective $12.8 million to the foundations. The research and assistance fund was by far the larger of the two, endowed with $11.6 million.

The fund was established in April 1999 with a broad charter. Its articles of incorporation take up less than two pages and say simply that the fund is a nonprofit corporation that can engage in any legal activity.

The fund had a board of directors and was supposed to be independent of Quackenbush and his appointees. However, interviews with several recipients of the fund’s money said their main contact was Deputy Insurance Commissioner George Grays.

Grays quit two weeks ago amid investigations by the state attorney general’s office and the Legislature. He has hired a lawyer and refuses interviews. Quackenbush spokesmen also refused to comment for this article, as did board members of the research and assistance fund.

“Based on what I know, there was nothing wrong with what Mr. Grays did,” said Grays’ lawyer, Ed Swanson of San Francisco, “and I think the investigation will show that he didn’t do anything improper.”

Quackenbush had entrusted Grays with managing his 1998 reelection, overseen by Quackenbush’s longtime political consultant, Joe Shumate. After emerging from the election as one of only two Republicans to retain a statewide office, Quackenbush appointed Grays as a deputy insurance commissioner, a $93,500-a-year post, overseeing public affairs.

Working through a group of friends, most of whom were members of a loose-knit Republican political organization known as the New Urban Agenda Collaborative, Grays helped arrange grants from the research and assistance fund.

In some instances, Grays personally dropped off checks, including $10,000 to the Northern California Reinvestment Consortium, which offers loans to small businesses in Sacramento.

A San Francisco attorney who knows Grays through their efforts in the New Urban Agenda said he solicited money from Grays on behalf of the National Latino Peace Officers Assn. The association, which is courted by politicians, received $12,000, no strings attached.

Among the few Los Angeles-area recipients was the 2nd District Education and Policy Foundation, set up by Los Angeles County Supervisor Yvonne Brathwaite Burke and Assemblyman Herb Wesson (D-Culver City) to provide scholarships to students in Burke’s district.

Research and assistance fund board member Weekley, also a part of the New Urban Agenda, came to Burke’s group with an offer of $10,000 for a quinceanera, a coming of age celebration, that the supervisor organized for foster children last year.

“I knew it was the Department of Insurance,” Burke said. “It seemed strange to me that [the] Insurance Department would have an interest in a quinceanera.”

An Urban Agenda for the GOP

Along with other African Americans, including at least two who were board members of the research and assistance fund, Grays pushed for creation of a political action committee to help elect African American Republicans.

One of Grays’ Republican associates is Shannon Reeves, 32, president of the Oakland chapter of the National Assn. for the Advancement of Colored People and one who has run afoul of some national NAACP executives over his activities in the GOP.

In an interview, Reeves said he and Grays worked to devise an “urban agenda” proposal that included a resolution approved by the state Republican Party last year to declare urban reinvestment a priority.

The research and assistance fund gave $100,000 to Freedom Fund, a small nonprofit organization in Oakland established by Reeves to generate urban renewal projects and provide job training. The group operates two gas stations in East Oakland.

Reeves said directors of the research and assistance fund never requested a project wish list from him or an itemization of how he was using the money.

Reeves said the $100,000 grant was used “for operating expenses, to meet payroll and pay monthly bills.” The money also was used to reimburse him and partner Mark Anthony Jones for travel in their attempt to interest retailers in a mall they want Freedom Fund to build next to one of the stations.

Quackenbush has placed Reeves on an anti-redlining task force. And when Quackenbush produced reports decrying the lack of insurance coverage in poor parts of the state, the commissioner’s office issued a news release quoting Reeves as saying he was “delighted at Commissioner Quackenbush’s commitment and persistence in illuminating the conditions of insurance presence in California’s underserved communities.”

Jones, Reeves’ partner at Freedom Fund, is vice president of 100 Black Men of the Bay Area, another group that received Quackenbush money--$200,000. The grant, Quackenbush said in a letter, was given “to assist that organization’s efforts in providing services to minority communities.”

Quackenbush attended its Christmas-Kwanzaa fund-raiser last year, said Terrence Johnson, a board member of 100 Black Men.

Johnson is president of another grant recipient, the Black Filmmakers Hall of Fame in Oakland. It received $10,000 from the research and assistance fund. The money helped underwrite an independent film festival and a premiere of an HBO movie, “A Lesson Before Dying,” about a young black man in rural Louisiana accused of a crime he did not commit, Johnson said.

Although Quackenbush is an elected statewide official, his wife has more local ambitions. She lost a 1998 bid for a state Senate seat in Sacramento but is often mentioned as a potential candidate for the Assembly or Sacramento County supervisor.

At least five of the recipients of research and assistance fund money were in the Sacramento area--a region not even in a major earthquake zone--including the Skillz Athletic Foundation, which runs a football camp attended by two of Quackenbush’s children and got $263,000.

To apply for the grant, founder Brian “B.T.” Thompson registered the foundation as a nonprofit organization with the state in September. In an interview Thompson said that he is the group’s only full-time employee and that the program runs mostly with help from volunteers and a few part-time workers.

Thompson said he met Grays, Quackenbush and foundation board member Weekley at a function last year put on by Athletes and Entertainers for Kids. Thompson said the money has allowed him to dramatically expand the number of “at-risk kids” his program serves.

He says that there are 300 children enrolled now and that 60% are on “sponsorships,” meaning they are not charged a $285 enrollment fee. The other 40%, including the two Quackenbush boys, pay the fee.

In past years, Thompson said, he was able to give sponsorships to no more than 25 children; those were financed by private companies and donations he said he scraped up by “cold calling, going door to door.”

Participants attend 25 Sunday football camps between January and July. They work on skills and receive lectures, guidance and support from Thompson and his helpers, he said. Those on sponsorships receive ongoing mentoring, including tutoring, rides to job interviews, and help landing college football scholarships, he said.

“We’re the big brother, the father they don’t have around, someone who can point them in the right direction,” Thompson said in an interview.

The biggest single grant from the research and assistance fund, the one to the Sacramento Urban League, was used to help the organization finance a headquarters building.

Michael Moore, hired by the league to raise money for the building, recalled that Sacramento league President James Shelby took a direct role in soliciting the money.

“ ‘I’ll deal with Quackenbush,’ ” Moore recalled Shelby saying last year. “ ‘He’s going to be a new board member.’ ”

Shortly afterward, Moore received a call from someone in Grays’ office at the Department of Insurance asking that he drop off five packets of fund-raising material that would be shown to proposed donors. He did so.

Last July, Moore said, he received a call from an Urban League official who told him: “Quackenbush is delivering.”

Moore had expected five gifts of $100,000 each from donors recruited by Quackenbush. Instead, the money came in the form of a single gift of $500,000 from the research and assistance fund.

Quackenbush joined the Urban League board last July. At the July meeting, Shelby announced receipt of the $500,000 grant, and referred to Quackenbush’s efforts to obtain it.

While Quackenbush recently denied knowing of the donation in advance, he made no attempt at the July meeting to discourage the perception that he helped to land the gift, recalled Frank Washington, former chairman of the Sacramento Urban League’s building fund campaign.

“He certainly did not deny it when it was indicated that he had been helpful,” Washington said.

*

Times staff writer David Wharton contributed to this story.

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Foundation Spending

The California Research and Assistance Fund was one of three foundations created by state Insurance Commissioner Chuck Quackenbush with money from insurance companies, in lieu of penalties for their handling of claims related to the Northridge earthquake. According to Quackenbush, the fund gave 13 grants totaling about $1.4 million. Additional money went to other Quackenbush-approved endeavors, and an estimated $6 million remains unspent. Here’s a look at the 13 grants.

* Sacramento Urban League: $500,000

* Skillz Athletic Foundation (football camp): $263,000

* 100 Black Men of the Bay Area organization: $200,000

* Athletes & Entertainers for Kids: $190,000*

* Freedom Fund for community development: $100,000

* 9-1-1 for Kids: $45,000

* Mentoring Center: $40,000

* Meadowview Community Assn., Sacramento: $25,000

* Community Connections: $18,000**

* National Latino Peace Officers Assn.: $12,000

* Black Filmmakers Hall of Fame: $10,000

* 2nd District Education & Policy Foundation (L.A.): $10,000

* Northern California Reinvestment Consortium: $10,000

*

Quackenbush says the California Research and Assistance Fund gave only $70,000 to Athletes & Entertainers. However, the attorney for the organization said the fund gave a second grant of $120,000.

** This entity is controlled by California Research and Assistance Fund board member Ron Weekley.