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home / insurance / in the media

Sacramento Bee
Jun 16, 2000

by Amy Chance and Patrick Hoge

Lockyer: Quake-aid plan badly flawed -- Court filing alleges foundation problems

Legal documents filed Thursday by state Attorney General Bill Lockyer argue that a foundation set up by state Insurance Commissioner Chuck Quackenbush planned a "seriously flawed" and potentially "wasteful" effort to assist earthquake victims.

The program, designed to spend $6 million in settlement money from insurance companies accused of mishandling Northridge earthquake claims, does not meet "generally accepted standards and protocols for organized philanthropy or for disaster assistance," according to a series of declarations filed in Sacramento Superior Court in connection with the attorney general's efforts to seize the money.

"For example, the proposed application form, the most vital part of any disaster relief program, failed to pose even the most standard of inquiries found in disaster assistance applications used by governmental and nonprofit organizations," Lockyer states in the filing. "In fact, the proposed application does not ask the applicant if (they) suffered damage in the Northridge earthquake. ..."

The foundation, which spent money on advertising campaigns featuring the commissioner and a variety of charitable contributions unrelated to earthquakes, has yet to provide any assistance to earthquake victims.

While Quackenbush has acknowledged the foundation made poor spending decisions, he repeatedly has insisted that the $6 million intended for victims of the 1994 Northridge quake was in good hands until a judge froze the money last month. Lawyers for the foundation could not be reached for comment late Thursday.

But Nancy Berglass, a consultant to nonprofit organizations retained by the attorney general to evaluate the foundation's earthquake assistance plan, concluded that it "lacks attention to even the most vague of details regarding how due diligence will be achieved."

"At this point based on the proposal outlined ... there would be no way for the CRAF board to be fully informed as to which applications are the most deserving ... (or) fraudulent," she said in her declaration.

Other documents filed Thursday argue that the foundation also issued at least one forged check and overspent on advertising:

Kimberly Brockman, the former president of the earthquake foundation, said she received a call in March from board member Ronald Weekley, who told her that he had not signed all of the foundation checks bearing his signature. She suggested to a legislative committee last week that her own signature had been forged on several checks.

Public relations executive Howard Bragman, retained by the attorney general to review advertising work done for the earthquake foundation, said that Quackenbush's political team charged the foundation the standard retail commission of 15 percent to develop and place the ads featuring the commissioner.

He noted, however, that the foundation made no attempt to seek competitive bids or negotiate lower than standard commissions in connection with the work.

"It is probably that CRAF could have secured lower commissions than it paid for the work performed by Target Enterprises had it attempted to negotiate lower commissions or seek competitive offers from other firms to perform the same work," he said.

Bragman also said the ads dealt with subject matter that he believes would have qualified for free public service announcement air time, reducing costs.

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