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NEWS RELEASE
May 10, 2000

Orange County Register To Get Letter From Lawyers

NEWS MEDIA UPDATE

To: News Media
From: Harvey Rosenfield
Re: Orange County Register Article
Date: May 10, 2000

You may be aware of an article published last week by the Orange County Register concerning a new, non-profit watchdog organization created as part of a settlement of lawsuits brought by the Foundation for Taxpayer and Consumer Rights (FTCR) and Northridge policyholders.

The article contains demonstrably false and defamatory statements, against which we are taking action today.

1. The article equates the settlement of lawsuits brought by FTCR and policyholders against Allstate Insurance Company to Mr. Quackenbush's handling of insurance companies in the aftermath of Northridge. That suggestion is demonstrably false. Mr. Quackenbush absolved major insurance companies of $3.7 billion in fines and restitution to their policyholders, in exchange for $12 million in payments to a foundation he created. By contrast, to settle our lawsuit, Allstate agreed to a process, supervised by judicial authorities, to reinvestigate the quake claims of its policyholders and pay any additional monies owed, as well as their costs and legal expenses. It is estimated the company will pay between $50 and $150 million under this settlement. (Mr. Quackenbush's own staff recommended Allstate be required to pay $74 million to policyholders, but he ignored that). Moreover, Allstate agreed to hire an outside consultant to review and improve its claims practices. Finally, Allstate agreed to pay $5 million to establish a new consumer watchdog organization.

2. The article suggests that the operation of the new organization, the Consumer Education Foundation, is comparable to the misconduct now alleged against Mr. Quackenbush, and for which, if true, he may ultimately face civil or even criminal liability. This too is completely false. The new organization has been operated in full compliance with the law and is being extremely careful in the process of determining how best to spend its resources as required by its charter.

3. The article asserts that I appoint the board of directors of the CEF and have guaranteed myself a lifetime job and salary. This is completely false. Like most non-profit organizations, the CEF Board of Directors elects its members. And under state law, non-profit compensation issues must be handled by an independent majority of the board, as was done in this case.

We are strong supporters of the First Amendment. An unfettered news media is essential to making democracy work -- as has been demonstrated during the last five weeks. However, the First Amendment does not protect falsehoods, and the Register's article is not "fair comment." Rather, in its content and the timing of its publication, it is aimed at discrediting my work as a consumer advocate.

For these reasons, we have retained a law firm to represent us in resolving this matter. The first step is to notify the Register and give it the opportunity to make the appropriate correction and apology. A copy of that demand, which was issued today, is available in "pdf" format on our web site, as is a fact sheet and a commentary on the matter. Also on the website is an informational fact sheet about the Allstate settlement and the Consumer Education Foundation (CEF).

You may also contact me by phone or email to obtain this material.

Phone: 310-392-0522 x 303.
Email: harvey@consumerwatchdog.org.


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