SACRAMENTO: Following a Los Angeles Times article that raised questions about insurance fraud in the wake of the 1994 earthquake that devastated Southern California, public affairs giant Stoorza, Ziegaus & Metzger has found itself under fire for allegedly having misspent 450,000 dollars in fees.
Much of the controversy centers around the conduct of state insurance commissioner Chuck Quackenbush, who is accused of allowing questionable deals that let insurance companies off the hook for damage caused by the earthquake. The state is also investigating whether Quackenbush mishandled the 11.5 million dollars California Research and Assistance Fund he created with earthquake settlement funds from two insurance companies.
The commissioner reportedly agreed to pay Stoorza 50,000 dollars to help set up the California Insurance Education Project (CIEP) charitable foundation and recruit an unpaid board of directors, which then gave the agency a two-year, 25,000 dollars-per-month contract to handle foundation activities.
The problem, Stoorza's critics say, is that little of the money has been spent on the minority outreach and earthquake-related projects for which it was intended.
Stoorza CEO Dave De Pinto flatly denied the allegations: 'The organization (the CIEP) is effectively meeting its charter, and we are honorably discharging the duties we were retained to perform.'
Among other things, Stoorza organized and coordinated an industry summit last September that brought consumer affairs organizations together with insurance company representatives. The agency also worked with the governor's Office of Emergency Services to distribute earthquake-preparedness information and materials to every classroom in the state - 'an unprecedented activity in California,' De Pinto said.
To keep employees up-to-date on the situation, De Pinto issued a memo summarizing the firm's work for the CIEP.