Former California State Fund Employees Being Investigated

Law enforcement officials on June 19 served multiple search warrants to former employees and director of the California State Compensation Insurance Fund.

Erica Derryck, spokeswoman for the San Francisco District Attorney’s office, said her office, the California Highway Patrol, the California Department of Insurance and the State of California Francise Tax Board are conducting an investigation involving allegations of misconduct involving former employees of the State Compensation Insurance Fund, which is headquartered in San Francisco. “Law enforcement actions are underway. We are unable to comment beyond that,” she said.

Jennifer Vargen, SCIF spokeswoman who confirmed the multiple search warrants, said State Fund’s Board of Directors turned over the results of its own internal investigation to the California Highway Patrol in May 2007. The CHP, San Francisco District Attorney and California Department of Insurance formed a joint task force that has been running an independent investigation. “We have cooperated fully, but do not have any details regarding the investigation,” she said.

CHP spokeswoman Fran Clader said her office is “not discussing” the investigation and is directing all inquiries to the San Francsico DA’s office.

The Los Angeles Times reported that the investigation likely involves the mishandling of dividends or other funds destined for employer members of State Fund safety groups managed by former SCIF director Kent Dagg while he was a board member.

Back in 2007, an internal investigation at SCIF led to the firings of then president James Tudor and Renee Koren, vice president in charge of group programs. Because those were personnel matters, details of the investigation were not revealed, according to Nanci Clarence of the San Francisco law firm of Clarence & Dyer LLP that oversaw the internal investigation.