SACRAMENTO, Calif. — Insurance Commissioner Chuck Quackenbush resigned and eluded legislative pursuers, but he faces new peril from another quarter — the state's top prosecutor.
The commissioner is accused of using millions of dollars from insurance settlements to further his own political career. Quackenbush lawyer Donald Heller, a former federal prosecutor, said he is negotiating with Attorney General Bill Lockyer over the commissioner's legal fate.
"No deal was offered by my office to Mr. Quackenbush and none is contemplated," Lockyer said.
Quackenbush — facing the threat of impeachment and under four separate investigations — resigned Wednesday, a day before he was to testify under oath before the Assembly Insurance Committee probing his regulatory and political activities. The resignation takes effect July 10.
The scandal centers on money paid by several insurance companies that had been accused of mishandling claims filed after the 1994 Northridge quake in Los Angeles.
According to testimony, the insurance companies were threatened with billions of dollars in fines by the department but were let off the hook if they paid far less into a nonprofit fund established by Quackenbush's office.
Money from the fund was supposed to go toward victim assistance and earthquake research. Instead, it was spent on TV ads featuring Quackenbush and went to causes such as a sports program attended by the commissioner's children.
The scandal is one of the state's largest political controversies in years. Along with Secretary of State Bill Jones, Quackenbush is one of only two Republicans holding statewide office in California.
"He's a crook," said 84-year-old Peter Grant, a Northridge resident. "He couldn't have done a better thing for his constituents" by resigning.
"He should be punished," added Northridge real estate agent Marlene Solem. "He should have to pay and he should lose his retirement."
With the resignation, the committee will cancel the hearing and publish a report on its findings, said the chairman, Assemblyman Jack Scott, a Democrat.
"Perhaps this may have come too late to help all the people who suffered as a result of the Northridge earthquake," Scott said, but lawmakers "can take steps to make sure this sort of abuse does not occur again in the Department of Insurance."
Quackenbush's resignation followed what sources said were days of negotiations with lawmakers in an attempt to limit any civil and criminal liability. The Insurance Committee made no deal with Quackenbush, his lawyer said.
Quackenbush's wife, Chris, said earlier Wednesday that she was hoping he wouldn't resign. She said he was being targeted by powerful enemies.
"When you are elected by 5.5 million people, you don't get unelected by the newspapers. He's been convicted in the court of public opinion and that's a mistake in a democracy," she said.
Quackenbush was re-elected to a second four-year term in 1998. He is one of only two Republicans holding statewide office in California. The other is Secretary of State Bill Jones.
Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, said: "There's a sort of 'ding-dong the witch is dead' feeling around here. He took an office that was born out of voter frustration with the insurance companies and betrayed the public."
On the Net: State Senate Insurance Committee: www.insurancecomplaint.com
California Insurance Code: WWW.LEGINFO.CA.GOV/.html/ins_table_of_contents.html
Foundation for Taxpayer and Consumer Rights: www.consumerwatchdog.org