Carson City Administrator John Dangleis steered city insurance business worth $300,000 a year to an insurance company with which he is affiliated without telling City Council members of the connection, according to several council members, other officials and employees.
"There is nothing wrong with it," Dangleis said in a brief interview. However, council members said they should have been told of his business relationship and friendship with the agent who sold the life insurance policies.
They also said they were troubled because Dangleis did not seek bids from other life insurance companies. Dangleis said he was not legally required to do so--a point confirmed by the Carson city attorney who said that many cities seek bids anyway.
The Los Angeles County district attorney's office, queried about the propriety of the arrangements, is reviewing the situation as a possible conflict of interest, according to Deputy Dist. Atty. Candace Beason.
The insurance, which was offered to city employees in 1986, was provided by Pacific Standard Life Insurance Co. through the Peter H. Cobo Insurance Agency in Covina. Dangleis is a registered agent for Pacific Standard and lists the Cobo agency as his office address on state records.
Cobo, the broker listed on city records, said in an interview that he is a longtime friend and business associate of Dangleis. In a March 20 memo to the council that was triggered by The Times' investigation, Dangleis also acknowledged that he used to work "as an independent agent through (Cobo's) agency on a part-time basis."
But Dangleis asserted in his memo that he took only a minimal role in the decision to award the business to Cobo's agency and that he no longer is active as an insurance agent. He added that rumors circulating in City Hall that he received a commission from Pacific Standard for the city's business are "ludicrous." He did not say whether he continues to receive any other commissions from the company.
Cobo also denied any wrongdoing.
But several council members said they should have been told of Dangleis' connections to Cobo and Pacific Standard.
"It stinks. We have been had," said Mayor Kay Calas. "Oh, this stinks. Three hundred thousand dollars!"
Listed as Agent
Dangleis' memo was apparently his first notification to council members of his connection with Cobo. Although a Pacific Standard representative said Dangleis is considered inactive, he is still listed on company and state records as an agent for the company. Dangleis declined to comment further.
All members of the council at the time--Calas, Sylvia Muise, Vera Robles DeWitt, Tom Mills and Walter J. (Jake) Egan--said in recent interviews that Dangleis had not informed them of his connection with either Cobo or Pacific Standard when the council chose Pacific Standard in two votes in January and February, 1986.
"I didn't understand what was going on," said DeWitt. "I really feel like a jerk for letting that go past without questioning it."
Dangleis' relationship with Cobo and Pacific Standard goes back to his 11-year tenure as city administrator for Azusa. Cobo was the insurance broker and agent for Pacific Standard, which sold life insurance for Azusa city employees, according to Dangleis' memo.
After Dangleis was ousted by a newly elected majority on the Azusa City Council in January, 1983, "Mr. Cobo suggested that I would be good in the insurance industry," Dangleis said in the memo.
"As a result of this, I went to school, obtained a state license to sell life insurance and went to work as an independent agent through his agency on a part-time basis."
State records show that Pacific Standard sponsored Dangleis for his insurance license, which he obtained in June, 1983.
"I continued selling insurance into 1984," Dangleis said. "I have not written a policy application in over three years, and certainly not while employed by the city of Carson."
Came to Carson in 1984
Dangleis came to Carson as acting city administrator in November, 1984, and was named to the post on a permanent basis in February, 1985.
John McDonough, corporate counsel for Pacific Standard, said in a recent interview that Dangleis remains listed as an agent with the company "although he has not written any business for us for some time. We would call him an inactive agent."
Pacific Standard has sold insurance to a handful of Carson city employees since 1969, Cobo said. But the company's sales were small. The monthly premiums to Pacific Standard were about $330 in 1985. In February of this year, they were about $27,000.
Cobo called Dangleis in late 1985 to see about improving the policies and "asked about the possibility of contacting other employees regarding this program," Dangleis' memo said.
Referred to Specialist
"I indicated to him it would be inappropriate for me to be involved and referred him to Mike Bell, risk management specialist."