Consumer Watchdog asks state Attorney General’s Office, local prosecutors to examine political contributions

By Jeff McDonald, THE SAN DIEGO UNION-TRIBUNE

September 19, 2019

https://www.sandiegouniontribune.com/news/watchdog/story/2019-09-19/adv…

The Los Angeles advocacy group responsible for making the state insurance commissioner an elected office is calling on the California Attorney General and regional district attorneys to open a criminal investigation into sitting commissioner Ricardo Lara.

The request was issued Thursday by Consumer Watchdog hours after The San Diego Union-Tribune and the Sacramento Bee each reported new details concerning Lara’s private meetings with insurance executives who had business pending before his department.

“The attorney general or a district attorney needs to launch a criminal investigation into money laundering and bribery because Commissioner Lara clearly has withheld key records and information,” said Jamie Court, the Consumer Watchdog president.

Lara’s office issued a statement saying it complied with requests to release the documents.

“The insinuations in Consumer Watchdog’s latest press release cannot hide the fact that the Department of Insurance has released the commissioner’s calendar and public records that clearly show all these meetings and their purpose,” the statement said.

The call for an investigation followed news reports Thursday involving hundreds of pages of emails and calendars newly released by the Department of Insurance. The documents detail a series of meetings between Lara and insurance executives and their political lobbyist.

According to Court, the records leave several questions unanswered, including why was Lara’s fundraiser involved discussions of official state policies, why some political meetings were included on Lara’s public calendars when others were excluded and why taxpayers were billed for trips during which Lara met with donors.

“There’s such a cloud over this department no one can do their job until the attorney general or a district attorney clears the commissioner or decides to proceed with a settlement or prosecution,” Court said.

The state Attorney General’s Office declined to respond to the request.

“To protect its integrity, we can’t comment on, even to confirm or deny, a potential or ongoing investigation,” the office said in a statement.

Campaign disclosures filed by Lara show he accepted tens of thousands of dollars from donors related to Applied Underwriters, a workers’ compensation insurer seeking state approval to sell one of its subsidiaries.

Lara called the contributions an oversight and returned $83,000 to donors in July, after the Union-Tribune disclosed tens of thousands of dollars in donations from Applied Underwriters executives and their spouses.

The commissioner said at the time that he was unaware of the source of the donations. Two weeks ago, in response to continuing revelations about his political contributions, Lara issued a public apology, fired his political consultant and suspended fundraising for his 2022 reelection.

“Even though no laws or rules were broken — and these interactions did not affect or influence my official actions in any way — I must hold myself to a higher standard,” he wrote.

The calendars and emails, which were withheld for months prior being released after the public apology, show Lara repeatedly met with insurers and donors who have business pending before his department.

At least four of the meetings were attended by a lobbyist working to broker the Applied Underwriters transaction, and Lara met with the company’s chief executive at least twice, the records showed.

Also the documents showed that several of the meetings identified as political were set up by Lara’s state-paid staff which, experts say, is allowable so aides can properly balance an official’s schedule.

But Court said there are indications in the records that Lara discussed policy and fundraising at the same meetings — which is not allowed.

“There is strong circumstantial evidence that money was offered for political purposes in the same conversations as official decisions were made,” Court said.

The Consumer Watchdog request for an investigation came in a six-page news release that included numerous photographs and links to emails, a meeting agenda and text messages to and from a state employee.

It also linked Sen. Lena Gonzalez, D-Long Beach, to the fundraising by pointing out that Lara’s successor in the state Senate similarly accepted tens of thousands of dollars in political contributions from people associated with Applied Underwriters.

The release cites state campaign disclosures showing Gonzalez reported $25,000 in donations earlier this year, then paid $24,000 to political consultant Dan Weitzman — the same consultant Lara fired earlier this month.

“Were the contributions intended to influence Lara’s approval of the pending sale, actions that would constitute a bribe under state law?” the press release asked.

Gonzalez, a former Long Beach City Council member who was seated in the Senate in June, said in a statement that she has never met or communicated with anyone from Applied Underwriters and merely paid a consultant for fundraising services.

“The contributions in question were legally received, fully disclosed and among hundreds of contributions received during my special election,” she wrote.

Consumer Watchdog was founded in 1985. In 1988, the nonprofit qualified an initiative for the ballot that reduced insurance rates and created an elected state insurance commissioner. Voters adopted the measure.

For years, California insurance commissioners have pledged not to accept campaign funds from insurers to avoid the appearance of conflicts of interest. Lara made the same promise before he won the seat last November.