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Alleged Travel Improprieties Further Taint Ex-commissioner
By John Millrany - February 22, 2001

Chuck Quackenbush, the departed California Insurance Commissioner who is living/vacationing/holed up (take your pick) in Hawaii, may have escaped impeachment, but is far from out of the woods. The latest bit of naughty news concerning his dubious reign, which ended last summer, have tongues wagging about putative travel shenanigans.

According to the Los Angeles Times, Commissioner Quackenbush took trips to Amsterdam, London and Beijing that were sponsored by insurance companies that had millions of dollars in business pending before him. A trip last February to Amsterdam, for example, was paid for by three Dutch insurers, Aegon USA Inc., ING America Insurance and Holdings Co. and Fortis Inc. The Times report stated that the companies were awaiting a go-ahead from Quackenbush before they made a $4.2 million payment to set up a humanitarian fund relating to Holocaust survivors.

And there’s much more. So much more of potential scandal, in fact, that current Insurance Commissioner Harry Low—as one of his first administrative acts after being appointed by Gov. Gray Davis—was to craft a type of hands-off policy pertaining to junkets. The code of effects essentially states, "We don’t take trips, we don’t take dinners, we don’t take entertainment from those we regulate." In an interview with Times reporter Virginia Ellis, Lows said, "This is my policy. We don’t take anything from regulated companies. If it has an appearance of impropriety, we don’t do it."

Quakenbush’s peripatetic ways also crossed paths with other insurance colossi, such as Lloyd’s of London. More on that later.

Meanwhile, the former commissioner’s aide George Grays, who has pleaded guilty to a kickback scheme involving foundations created by Quackenbush, adds a little stench to the smell because he went with his boss on one of the trips. According to Grays’ attorney Bill Portanova, the commissioner and his retinue "were treated to anything they asked for. It was first-class luxury all the way around."

(Grays, who on Jan. 16 made his plea pertaining to conspiracy and money laundering, faces sentencing April 12 and could be looking at a 30-year jail term and more than $1 million in fines.)

James Woods, a San Francisco Lawyer whose insurance industry clients picked up Quackenbush tabs, accompanied the commissioner on several trips that featured luxury hotels, sightseeing and entertainment. Managing partner of LeBoeuf, Lamb, Greene & MacRae’s San Francisco office, which specialized in representing insurance companies, Woods described his association with Quackenbush as "professional."

California law requires only that recipients report insurance company gifts and trips under certain circumstances. According to officials of the Fair Political Practices Commission, it remains unclear whether Quackenbush disclosed everything the law requires; this is an issue that now falls under the current investigation of Quackenbush by state and federal authorities, including the FBI. (Prosecutors said Grays has become a witness for the government.)

Woods, who is in charge of his law firm’s recently opened Beijing office, was quoted by the Times as saying he took great care to make sure that "things were properly reported and paid for…I think we handled things appropriately, or at least from my standpoint, they were."

Woods and Quackenbush have a history dating to 1994, when Woods promoted campaign funds for Quackenbush’s campaign for commissioner, which he successfully fulfilled, becoming the second California czar of insurance. Woods was rewarded by being named to head up the commissioner’s transition team.

Reporter Ellis said Quackenbush’s trips with Woods began shortly before a scandal surfaced over the foundation. Woods was representing several clients in "sensitive matters" pending before Quackenbush’s department. Woods was a counsel, at the time of the Beijing trip, for Fidelity Title Insurance, which was seeking a merger with Chicago Title, which would make it the nation’s largest title insurance company.

Meanwhile, LeBoeuf was one of the major law firms representing companies before the Department of Insurance and had clients including American Banker, Liberty Mutual Insurance, Fidelity National, Chubb Insurance, AXA Global Risks Ltd and Lloyd’s. Contemporaneously, the Department of Insurance was giving LeBoeuf state business.

LeBoeuf was retained to advise Quackenbush on the conversion of Pacific Mutual Life from a mutual insurer to a publicly traded company (and the law firm also served as tax advisor for the California Earthquake Authority, insurer of homeowners against earthquake damages).

Woods said the aforementioned Dutch insurance companies had invited Quackenbush to Amsterdam to demonstrate the efforts they were making to find Holocaust survivors who might be entitled to benefits under California law. While a spokesman for the Dutch insurers said the California commissioner’s visit was not unusual and many other U.S. regulators have accepted the companies’ invitation to visit the Netherlands, officials from other states who sent representatives did not allow outside travel expense donations.

One former California lawmaker, Wally Knox (D-Los Angeles), who advocated legislation to help Holocaust survivors recover insurance benefits, said, "For (Quackenbush) to be flown anywhere for any reason by anyone in the insurance industry stinks to high heaven."

In a Feb. 21 Times editorial, the newspaper praised Quackenbush’s successor Low for having "the good sense to administratively ban the acceptance of gifts and trips. But the Legislature needs to protect the public by writing this prohibition into state law. At the same time, the investigation by the state attorney general and the FBI should be pursued with vigor. Quackenbush should be California’s poster boy for full disclosure by the government."


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