Calif. Judge Orders Quake Insurance Foundation Shut

June 22, 2000

A California judge has frozen the assets of the California Research and Assistance Fund until lawsuits on its disposition are resolved.

Affirming an earlier tentative ruling, Sacramento Superior Judge John Lewis granted state Attorney General Bill Lockyer’s request to freeze the remaining $6 million in the fund, which has been at the center of a political scandal surrounding Insurance Commissioner Chuck Quackenbush.

On Tuesday, Lewis found that the foundation’s directors misspent assets, allowed wasteful distributions of charitable assets and improperly ceded control to former top Quackenbush aide George Grays, who resigned in April.

Two legislative committees as well as the attorney general are investigating Quackenbush and his office over deals struck last year allowing insurers to avoid paying $3.3 billion in fines stemming from alleged mishandled claims after the 1994 Northridge earthquake.

The insurers instead contributed roughly $12 million to the nonprofit research foundation, which many view as a slush fund to bolster Quackenbush’s political aspirations.

Recent legislative testimony suggests that, instead of going to earthquake victims as intended, foundation money was given to a football camp attended by the commissioner’s sons and was also spent for political polls including questions on the commissioner’s performance and potential rivals for office.

The case has led to mounting public and political pressure for the two-term Republican to resign. Quackenbush has refused to step down, however, saying he is the victim of a political witch hunt.

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