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Andrew Tobias

Everything You Never Wanted to Know About Andrew Tobias
Like his peers in our investigation of phony consumer advocates and "astroturf" front groups, business consultant and writer Andrew Tobias often claims he is a "consumer advocate." But Tobias has fronted for insurance companies, utilities, oil and gas companies, Wall Street schemers and credit card companies in their campaigns to strip consumers of their legal protections against fraud and other rip-offs.

Remarkably, newspapers and magazines, apparently unaware of Tobias's actions, continue to publish his columns offering ostensibly trustworthy and objective advice to consumers.

Tobias was one of the key leaders and main spokespeople in a $19 million campaign funded by Wall Street, Silicon Valley, insurance, oil, gas and other business interests to pass three anti-consumer ballot measures on the California state ballot in March, 1996. It was during that unsuccessful campaign that California voters were first exposed to Tobias and his often bizarre antics.

Despite the overwhelming defeat of the three measures, Tobias has continued to advocate anti-consumer proposals, offering inaccurate, misleading and often patently false information to support his positions in industry-hyped and sponsored events throughout the United States.

The following report, prepared by FTCR, exposes Tobias's role as a phony consumer advocate in a decade-long campaign by insurance and other business interests to undermine state and federal consumer protection laws.

Tobias Doesn't Want You to Know This
Ironically, while Tobias's outbursts --both verbal and written --are typically awash in vitriolic and misanthropic statements directed at his opponents, he has proven unable to handle public scrutiny.

After versions of the following report began circulating widely on the Internet, Tobias told a friend that he had hired computer consultants in an attempt to remove this information and its references to him from internet search engines. Later, the man who has constantly vilified plaintiff's lawyers, frivolous lawsuits and championed restrictions on the right to sue, threatened to sue the Foundation for publishing this information.

Perhaps Tobias is concerned that his anti-consumer past may come back to haunt him, now that he has secured a prestigious title in the Democratic National Committee.

Contents of this Special Report:
1. A Brief History of Andrew Tobias
2. Tobias Promotes "Pay at the Pump" Auto Insurance
3. State Farm Enlists Tobias in Hawaii Insurance Battle
4. "Consumer Advocate" Tobias and The Terrible 200s
5. …Tobias on a Rampage
6. Tobias Update

1. A Brief History of Andrew Tobias

Andrew Tobias is a prolific financial writer and business consultant who has long championed anti-consumer proposals to restrict civil rights, featuring campaigns to impose a "no fault" system for victims of negligence.

There was little reference to the legal system in Tobias's early work, The Invisible Bankers: Everything The Insurance Industry Never Wanted You To Know. That book won generally favorable as a readable discussion of the practices of the insurance industry.

But by 1986, Tobias had become a partisan of the industry and its position on the then-contentious issue of insurance reform. The so-called "insurance crisis" of the 1980s -- led by skyrocketing premiums for auto, home, business, medical malpractice and other forms of liability insurance -- rocked the U.S. economy. As prices soared, so did the industry's profits. Consumer advocates called for opening the books of the insurance companies, more competition among companies and limits on excessive profits. The insurance industry responded by placing the blame for higher rates on lawyers, judges and juries. Only limits on lawsuits and compensation of victims would reduce premiums, the insurers claimed. (Click for a full discussion of the "insurance crisis.")

In 1986, in the midst of the debate over insurance premiums, Tobias was hired as a consultant to study the rising price of premiums doctors and hospitals paid for medical malpractice insurance. In his Background Paper for the task force,1 Tobias parroted the insurance industry line: he argued that the legal system, not unregulated insurance company rates and practices, was responsible for the "malpractice crisis." This argument, along with similar contentions by the industry, were subsequently debunked by a plethora of independent studies.2

Meanwhile, Tobias was making his fortune not on consulting or writing, but on the sale of software that carried his name: "Managing Your Money," a home checkbook accounting program. It is estimated that Tobias made millions from his computer software program, "though neither Mr. Tobias nor MECA [Micro Education Corp. of American, his software distributor] officials will disclose the exact terms of their agreement," the Wall Street Journal stated. The Journal estimated Tobias made between $4 and $8 in royalty on every software program sold, giving him a "seven figure net worth and annual income well into six figures."3

Another event earlier in Tobias's life prefigured his involvement in his later proposals to restrict the right of investors to go to court when swindled. In 1970, Tobias was an executive at the high-flying National Student Marketing Corp., which went bust, according to a Boston Globe (September 20, 1980) profile of Tobias, "when items such as 'unbilled receivables' began showing up in accounting statements and corporate overhead got out of hand...The president was thrown in jail and the accounting and law firms were hauled into courts."4

2. Tobias Promotes "Pay at the Pump" Auto Insurance
In 1993, Tobias proposed a "pay at the pump no fault" system, in which motorists would purchase insurance through a gas tax; insurers would simply service claims. Click here for more details on no fault. Click here for details on Tobias's plan.

Tobias, a Miami resident, hired a political consultant to lobby "pay at the pump" legislation in the California Legislature; the proposal garnered much publicity for Tobias and politicians who had endorsed it. However, the plan ran into considerable opposition, largely because the insurance industry strongly opposed the "pay at the pump" aspect of the plan, which would have virtually eliminated insurance agents, marketing and other portions of the lucrative auto insurance system controlled by the insurance companies.

Tobias once again joined up with the insurance lobby. He accepted amendments by the insurance companies which eliminated the "pay at the pump" part of the legislation -- the core of his proposal. That left only a "no fault" plan, similar to legislation unsuccessfully sponsored by insurance companies in California since 1988, when California voters passed Proposition 103 and rejected by an overwhelming margin an industry-sponsored no fault law.

With its limitations on lawsuits and caps on compensation to injured victims of auto accident, no fault had become the insurance industry's national response to Proposition 103-style reforms. Because California voters had already rejected "no fault" at the ballot box, the "no fault" proposal sponsored by the insurance companies and promoted by Tobias was defeated in a committee hearing.

Tobias then proposed a similar no fault initiative for the November, 1994 ballot, under the banner of "Common Sense Legal Reform," but later withdrew it after failing to obtain insurance industry funding.

University of San Diego Law School Professor Bob Fellmeth has written of Tobias's decision to work with insurers rather than consumers on the legislation: "We backed this model [the pay at the pump legislation] when it was introduced in California. But it ran into heavy special interest opposition. Rather than courageously taking on the wrong-headed, Mr. Tobias has chosen to join one of several profit-stake interests in the mix -- the insurance industry. That industry unsurprisingly tends to favor high premiums and low claim pay-outs." 5

3. State Farm Enlists Tobias in Hawaii Insurance Battle
Hawaii has one of the worst no fault systems in the nation; Hawaii's average auto liability insurance premium was either the highest or second highest of any state in the nation between 1992 and 1997, according to a report by the National Association of Insurance Commissioners. In 1992, Hawaii's beleaguered motorists began to demand a repeal of its no fault law and imposition of reforms modeled on California's Proposition 103. Consumer advocates Ralph Nader and Harvey Rosenfield visited the island to testify before the state legislature on the topic of insurance reform.

Fearful that the lucrative no fault law might be repealed, State Farm began to promote a draconian no fault plan that would have stripped injured motorists of all of their legal rights. State Farm recognized that it needed a front for its efforts.

Enter Andy Tobias. Tobias teamed with State Farm in a media campaign promoting the Hawaiian no fault legislation, appearing himself in a full page June 1995 advertisement in the Honolulu Advertiser. In the ad, Tobias identified himself as a "Financial Writer, Software author, and Consumer Advocate." (Copy of Ad). Tobias has insisted he was not paid to appear in the ad, but has refused to divulge his personal tax returns which would prove his contention.

But reporters in Hawaii were able to ascertain that it was State Farm's interest that Tobias was representing, not consumers, as this transcript of a Honolulu talk-radio show illustrates:
    TOBIAS: I paid for this trip all by myself - 60,000 frequent flyer miles and I'm paying for the hotel and I'm about three hundred thousand dollars into this project - uh- paying, not getting- uh - in California where we're trying hard to fix the auto insurance system....
    CALLER: If he wants to see the United States do away with no-fault as a rule, then-then he certainly will be working along the same lines as State Farm....
    TALK SHOW HOST: Our guest is Mr. Andrew Tobias...I should tell you in the interest of full disclosure that he was invited to Hawaii by Milton Holt [pro-insurer Hawaiian legislator] ...that he was steered in our direction-uh-by the p.r. company that handles-uh-that State Farm Insurance Company. So it's, it's never simple.
    TOBIAS: There's always some complexity to it. 6
4. "Consumer Advocate" Tobias and The Terrible 200s
Hawaii was merely a dress rehearsal for Tobias's role as spokesperson on behalf of a conglomeration of insurance, utility, pharmaceutical, oil and gas, and Wall Street and Silicon Valley firms sponsoring a troika of initiatives on the March, 1996, ballot in California.

Propositions 200, 201 and 202 became known as the "Terrible Twos." Briefly, Proposition 200 called for a costly and complicated no Fault auto insurance scheme that would raise rates, lower benefits and double the paperwork. Proposition 201 would have forced small investors who have been swindled out of their savings, pensions or IRAs to post a bond to cover the thieves' legal fees before filing a lawsuit against them. Prop. 202 would have cut the amount of money an injured plaintiff could pay a lawyer to represent them in a suit against a negligent business or individual.

Like all such corporate-backed "tort reform" proposals, the three initiatives would have closed the court house doors to average citizens.

With every legitimate citizen group in California opposed to Propositions 200, 201, and 202, its backers and their political consultants recognized that the campaign would need a disguise: it had to appear "grassroots" based.

Thus, Tobias the corporate shill became Tobias the "consumer advocate."

His credentials for the title were non-existent, of course. Throughout the campaign, Tobias would justify his self-description of "consumer advocate" by noting that he was a "Media Service Award Winner of the Consumer Federation of America." (The Consumer Federation of America's California affiliate, Consumer Federation of California, opposed Tobias's propositions).

While posing as a consumer advocate himself, Tobias spent much of the campaign personally attacking and threatening the legitimate consumer advocates who opposed the initiatives. For example, Tobias signed a full page advertisement in the University of San Diego student newspaper attacking long-time public interest lawyer and children's advocate Bob Fellmeth, a Professor of Law at the school, as "anti-child" for opposing Proposition 200.

Fellmeth's response: "I have declined to support his initiative, joining Ralph Nader and most consumer groups which have studied it, including the largest: Consumers Union of the United States. Nor do other child advocates generally support it. His approach has been to threaten to attack me personally if I did not issue a public statement supporting his position and disavowing various criticisms of him. And he vowed to issue his attack through paid ads in my hometown. Mr. Tobias has the spoiled personae of the rich kid who says: 'you better do as I say, or I'll tell your mother you hit me.' Such an approach is rarely persuasive over the age of ten."

Throughout the campaign, Tobias insisted he was acting as a "volunteer." However, official state campaign disclosure reports show that he was paid for his speaking services on behalf of the campaign by financial services firms supporting the initiatives. Tobias directed that the payments, totaling $22,500, be made to the initiative campaign. Read the campaign reports.

What was the stake of these financial firms in the outcome of Propositions 200, 201 and 202? Imposter Tobias has evaded that question. But Tobias clearly benefited through his association with the Wall Street and Silicon Valley executives funding the three 1996 initiatives in California. They held his future personal fortune -- an estimated millions of dollars in royalties from his computer software -- in their hands, along with any personal investment funds. Legislation eliminating all lawsuits against such companies, legitimate or not, was certainly a profitable investment for all involved, including Tobias.

As for his role in this sordid and cynical corporate effort -- which received a total of $960,352 from a campaign committee funded by insurance company, according to campaign disclosure reports filed after the election -- Tobias has insisted he retained no money. In fact, he has written he had "volunteered" "$700,000" of his own money for the 1996 initiative campaign.7 But this boast is not reflected in campaign spending reports which are required by California law to list all expenditures. Between December 1994 and December 1995, they show that Tobias donated and loaned only $87,500 to the Alliance campaign. If Tobias indeed gave more, he has failed to disclose it.

5. …Tobias on a Rampage
On Election Day, March 26, 1996, California voters made it clear that they had seen through Tobias's fraud. All three initiatives were decisively defeated by a highly conservative primary electorate.

Tobias himself seemed completely undone by his failure.

In several subsequent publications, including a book, Tobias attacked Ralph Nader and Harvey Rosenfield, FTCR's President, for their successful work to defeat the measures. Tobias's diatribes reveal a petulant, sometimes bizarre personality. Replete with falsehoods and innuendo, they frequently verge on the hysterical. The same can be send for a series of letters Tobias sent to FTCR's Advocacy Director Jamie Court.


A Group of Volunteers Realized Tobias Had Tricked Them.

Correspondence between Tobias and FTCR.

Rosenfield's lengthy rebuttal to Tobias's article, "Ralph Nader is a Big Fat Idiot."

6. Latest Tobias Update
Tobias continues to appear at insurance industry-sponsored conferences and at legislative hearings to promote no fault auto insurance. He continues to refuse to divulge his tax return or provide any proof that he has not received money from the big business interests whose proposals he shills for.

Often boasting of his connections to and financial support for the Democratic National Committee, Tobias was appointed Treasurer of the party organization in 1999.


1. Treating Malpractice: Report of the Twentieth Century Fund Task Force on Medical Malpractice Insurance, Priority Press Publications (1986).
2. Consumer Reports concluded, " The malpractice lawsuit crisis is the 'crisis' that isn't...a straw man" ("Malpractice: A Straw Man," Consumer Reports Vol.57 , No.7 July, 1992) Co-Author of the Harvard Medical Malpractice Study Paul Weiler said, " Our data makes clear, then, that the focus of legislative concern should be that he malpractice system is too inaccessible, rather than too accessible, to the victims of negligent medical treatment." Paul C. Weiler, et al., A measure of Malpractice: Medical Injury, Malpractice Litigation and Patient Compensation (Cambridge, Mass.: Harvard University Press, 1993) p. 76
3. Robert Rose, "Writer Andrew Tobias Gives Personal Finance A Very Personal Slant," Wall Street Journal, June 10, 1986.
4. Bruce Mohl, "Marketing Finances With Fun Author Andrew Tobias," Boston Globe, September 23, 1980, N Section, Economy.
5. Bob Fellmeth, Children's Advocacy Institute, Letter to Editor, University of San Diego Vista , February 9, 1996 Enclosed in Exhibit 9.
6."Inside Politics," KGU AM-76 , Honolulu, June 26, 1995.
7. Louise Witt, "Auto Pilot," Bloomberg Personal, January 1996.

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