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Video Appears to Contradict Quackenbush on Donation

Insurance: Commissioner calls the $500,000 an 'initiation fee' to get on the Urban League board. A source in the department says the phrasing was a joke.


SACRAMENTO — Insurance Commissioner Chuck Quackenbush appeared to take credit for a controversial $500,000 grant to the Sacramento Urban League in a speech accepting an appointment to the organization's board of directors last October, a videotape of the event shows.

"Chuck personally raised $500,000," Urban League President James Shelby told a dinner meeting, to loud applause.

A few minutes later, a beaming Quackenbush described the grant, which came from an $11.6-million foundation set up with Northridge earthquake penalties, as an "initiation fee to get on the board."

Quackenbush could not be reached for comment Thursday night. A source in the Department of Insurance characterized the comment as a "joke."

In dozens of interviews in recent weeks, Quackenbush has consistently denied having anything to do with the gift that went to help build a $5.1--million job training center in the capital city.

The Urban League grant surfaced as a controversial issue when records showed that most of the money collected as penalties from insurance companies for improper claims handling went to buy television spots featuring the commissioner and to minority community groups, mainly in Quackenbush's Northern California political base.

In announcing the creation of the California Research and Assistance Fund, a nonprofit foundation, Quackenbush had pledged that its monies would be used to pay for research and promotion of earthquake safety and preparedness.

A spokesman said Quackenbush still maintains that there was no connection between his selection to the board of directors and the $500,000 contribution from the foundation.

"The commissioner had no role in any of the decisions the foundation made," said Deputy Commissioner Dan Edwards. "He continues to support the goal of improving minority access to insurance products."

Sources in the Department of Insurance said the commissioner learned of the contribution to the Urban League a few days before the October meeting and meant his comment to be a joke.

"It was definitely a joke," the source said.

At the meeting, Shelby praised Quackenbush, a Republican, for aiding the League.

"When we needed help in the community to build our building, it was not our Democratic friends who stepped forward," Shelby said. ". . . Chuck personally raised $500,000."

The atmosphere in the Sacramento banquet hall was friendly and celebratory. Quackenbush received several rounds of applause after he was introduced by Shelby. When the commissioner talked of an "initiation fee," the remark was received with a mixture of applause and laughter.

Quackenbush, dressed in a dark suit and striking a serious tone, spoke of the importance of minority and low-income communities sharing in the prosperity of California, including insurance coverage.

At the end of his remarks, he introduced a table of Insurance Department staffers seated in the front of the hall, including Chief Deputy Commissioner Michael Kelley, then-Deputy Commissioner George Grays and Insurance Department chief counsel Brian Soublet. At Quackenbush's urging, the staffers stood up and were loudly applauded.

On Thursday, Shelby said he had not reviewed the videotape and didn't recall the details of the dinner. He described Quackenbush as "a person who has a sense of humor and he jokes a lot."

On the videotape, Quackenbush tells his audience, "Don't mess with Jim Shelby."

"He [Shelby] saw me coming [and] when I said I was going to the Urban League and help out," Quackenbush said, "[he] convinced me there was a $500,000 initiation fee to get on the board."

The foundation created by Quackenbush with monies from insurance company penalties is being investigated by state Atty. Gen. Bill Lockyer, who oversees charities in California.

Under California law, the use of funds from nonprofit foundations is restricted; they cannot be spent for personal or political gain.

Records and interviews show that many of contributions made by the research and assistance fund were routed through Grays, who resigned last month. One of the donations also went to an organization owned by Ron Weekley, one of the fund's two board members.

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