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In the end, it wasn’t revelations about misused settlement money from Northridge, Calif., earthquake insurers that brought about California Insurance Commissioner Chuck Quackenbush’s resignation Wednesday. It was, instead, the testimony by staff lawyers at the Department of Insurance who were increasingly dismayed over the linkage of settlement amounts to multimillion-dollar media buys designed to bolster Quackenbush’s political fortunes. The lawyers’ testimony before the Assembly committee investigating Quackenbush left the embattled insurance commissioner with just three options: reappear before the committee later this week and plead the Fifth; testify and contradict his previous sworn testimony on the settlements; or resign. The choices crystallized when DOI’s chief counsel, Brian Soublet, agreed Tuesday to provide firsthand testimony to the Assembly Insurance Committee that Quackenbush had linked $4 million for a media buy with the amount to be wrung out of title insurance companies in a March 2000 settlement, according to a committee member, Assemblyman Fred Keeley, D-Boulder Creek. That revelation slipped out almost casually in testimony by DOI senior attorney Robert Hagedorn on Monday. He provided the committee the proverbial smoking gun when he recounted that Soublet told him Quackenbush “needed to settle the title company cases to get $4 million for ‘outreach’” — which had become a DOI code word for large media buys. Another DOI official, Norris Clark, a deputy commissioner in the Los Angeles financial surveillance branch, was also prepared to present firsthand corroboration of Hagedorn’s account, according to Keeley. After the resignation was announced, Assembly leaders told reporters they had given Quackenbush no immunity from future prosecution but simply excused him and other top DOI officials from subpoenas requiring their presence Thursday. “I take no joy in the ruin of a man,” said Insurance Committee chair Assemblyman Jack Scott, D-Pasadena, announcing that the committee had suspended its own inquiry and dubbing “the story of Quackenbush a cautionary tale for us all.” Attorney General Bill Lockyer said he will continue his ongoing investigation into possible criminal or civil prosecution of Quackenbush, other DOI staffers and foundation board members. Lockyer reiterated the Assembly leader’s statement that no deal has or will be offered to Quackenbush. Lockyer has already won a preliminary injunction freezing the remaining $6 million to be disbursed in restitution to Northridge earthquake claims victims and barring the current foundation board from oversight. Quackenbush also faces a taxpayer lawsuit that would hold him directly liable for repayment of the $13 million Northridge insurers contributed to the foundation in lieu of fines. One key effort by the Assembly investigatory committee has been to work closely with Lockyer so as not to compromise future criminal or civil prosecution, said Keeley. Scott suggested that evidence of checks forged in the names of foundation directors indicated criminal activity by someone at DOI. The governor will appoint a replacement, perhaps as soon as July 7, when the Legislature takes a week’s recess. Lawmakers then have 90 days to vote their approval, with either house having veto rights. Scott called for a new commissioner with impeccable integrity and vowed to pass legislation limiting the authority of any future insurance commissioner. Other pending legislation would bar the commissioner from taking insurance industry contributions and follow the practice of other states by making public the market conduct exams that first revealed widespread claims violations among Northridge insurers. Republicans voiced strong approval for the Quackenbush resignation, criticizing him for sullying his office. The committee’s investigation was non-partisan and had as its goal a wide-scale reform of the Department of Insurance, said Assemblyman Tom McClintock, a conservative Republican from Granada Hills, Calif., who had been one of the commissioner’s toughest critics. Republican leadership has pressed Quackenbush to resign, rather than face summer-long impeachment proceedings showcasing the Republican officeholder’s alleged wrongdoing just before the November elections. Longtime Republican consultant Joe Shumate may face collateral damage as well. He masterminded much of the political polling, media ads and other questionable expenditures of settlement money on Quackenbush’s behalf, then testified that he forgot most of the details. On Monday, his assistant Courtney Sakai took the Fifth rather than testify about her role.

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