By Brad Cain & Dale Debber, WORKERS COMP EXECUTIVE

September 20, 2019

https://www.wcexec.com/flash-report/ricardo-lara-was-it-money-launderin…

The public advocacy group Consumer Watchdog is calling for a criminal investigation of California Insurance Commissioner Ricardo Lara. Of interest are Lara’s interactions with Applied Underwriters CEO Steve Menzies and others linked to Applied Underwriters on potential money laundering and bribery charges.

The call comes with a new revelation of thousands of dollars in political contributions from board members of a Steve Menzies controlled company going to Lara’s handpicked successor in the state Senate – Lena Gonzalez – just days after a meeting between Lara and Menzies.

Consumer Watchdog (CW) says it has uncovered $25,000 in political contributions to Gonzalez from two board members of the Menzies’ controlled Constitution Insurance Company and from a third party who appears to be a relative of one contributing board member. The donations included $8,500 each from Constitution board members Xioyun A. Hu and Katy Van Horn, as well as an $8,000 from Pei H. Hu who CW surmises,  is a relative of the board member.

The donations came on March 22 – ten days after Lara met with Menzies, Applied’s legal counsel Jeff Silver, former New Mexico Insurance Superintendent come lobbyist Eric Serna and Jamie Sahara, chairman of United Insurance Company. Sahara and Menzies are in the process of acquiring Applied Underwriters from Berkshire Hathaway, and that deal is currently under review by Lara’s California Department of Insurance. Serna left the New Mexico Department under a cloud.

The advocacy group sent a letter to California Attorney General Xavier Becerra, as well as to the District Attorneys in Los Angeles, Sacramento and San Francisco requesting a formal investigation of potential bribery and money laundering allegations not only of Lara but also of Applied’s Menzies. Copies of Consumer Watchdog’s letter to the AG and district attorneys is available in our Resources section or by clicking here.

“This is a question for law enforcement to look into with the investigatory powers that only they possess,” says Jerry Flanagan, litigation director for Consumer Watchdog. “Did Steve Menzies, who is the interested party in the pending sale [of Applied Underwriters], did Steve Menzies or someone else related to him provide the money to the contributors?”

Flanagan says records indicate that the contributors had never before made political donations in a California election.

Payments Hidden?

Consumer Watchdog says the concern doesn’t end there. It notes that Gonzalez later paid $24,000 to Lara’s former fundraiser Dan Weitzman in two installments for campaign consulting. The first $12,000 was paid three days after she received the donations from the Constitution Insurance Company board members. The second payment came a month after Lara met with Applied’s Menzies for the second time.

The latest controversy comes against the backdrop of earlier contributions totaling $46,500 made to Lara’s 2022 reelection campaign from other donors also linked to Menzies. The group is also raising concerns about the apparent overlap of official department business and fundraising efforts for both Lara and Gonzalez involving Serna and others. The group also says that Serna’s firm, NTG Consultants, and his son contributed $23,000 to Lara in 2018.

More details will be forthcoming.