Feds Join Investigation of Calif. Insurance Department

July 12, 2000

Federal authorities have joined California state officials in their investigation of corruption in the state’s department of insurance. The Los Angeles Times reports that the federal involvement gives prosecutors “more latitude in filing criminal charges” arising from potential violations of U.S. interstate commerce laws.

“It is sometimes the case that federal laws are more well-suited to the prosecution of public corruption [than state laws],” an unnamed government lawyer was reported as telling the Times. “It broadens the range of options for prosecutors.” The move will also make FBI experience and resources available to state officials during the investigation. And it will allow the use of the federal Hobbs Act, which defines extortion as the receipt of money or other property for the specific performance of an official duty.

The expanding investigation follows closely the July 10 departure of Commissioner Chuck Quackenbush, who was forced to resign his position for fear of impeachment and civil and criminal charges stemming from a May 1999 agreement between Quackenbush and an insurer not to investigate its payment of Northridge earthquake claims. The day after the agreement, the company, the Fireman’s Fund, made a $500,000 payment to a foundation established by Quackenbush’s office. A day later, Fireman’s made a $20,000 contribution to Quackenbush’s campaign fund.

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