Regulator Investigates Insurance Companies Funneling $122,500 To Lara Campaign After Complaint Filed Over Failure To Disclose Source, says Consumer Watchdog

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May 31, 2022, 14:20 ET

LOS ANGELES, May 31, 2022 /PRNewswire/ -- Seven insurance companies have contributed $122,500 to the LGBTQ Caucus, which in turn spent the money on an independent expenditure campaign to re-elect Ricardo Lara as insurance commissioner without disclosing the source of the donations.

The nonprofit Consumer Watchdog has filed a complaint with the Fair Political Practices Commission (FPPC) alleging the contributions violated state prohibitions against money laundering and disclosure of earmarked contributions. The FPCC has responded that it has opened an investigation into the allegations.

"Lara and his coordinated IE committees are violating one of the most serious provisions of the Political Reform Act ("Act") by laundering campaign funds without disclosing the true source of the contributors," the complaint filed by Consumer Watchdog executive director Carmen Balber stated.

Read the complaint here.
Read the letter from the FPCC here.
The investigation was first reported by the San Diego Union Tribune.

Lara pledged not to accept insurance industry contributions and these insurance company contributions appear laundered through the LGBTQ Caucus to hide their true source, Consumer Watchdog said.

Lara, as former Vice-Chair of the Legislative LGBTQ Caucus and current Ex Officio Member, was in position to influence the contributions. The complaints noted that almost no insurance contributions flowed to the LGBTQ Caucus prior to Lara's run for insurance commissioner in 2018.

"As you are aware, FPPC Regulations list common agents and consultants as triggering a presumption that coordination is occurring (FPPC Regulation 18225.7). Here, Lara continues to serve on the LGBTQ Caucus Board, and the Board's PAC is the entity funneling the insurance industry contributions to the Lara IE Committee," the complaint stated.

"Ricardo Lara has a well-documented history of seeking and accepting campaign donations from the industry he regulates, including contributions made in the names of relatives of industry executives apparently to disguise their true source," the complaint continued. "After Lara was forced to return these contributions due to media scrutiny, his insurance industry supporters are now laundering these contributions through the Legislative LGBTQ Caucus. These illegal contributions are funding direct campaign communications to the public in support of Lara's candidacy for re-election without disclosing the insurance industry as the source of the contributions."

Consumer Watchdog has consistently worked to expose and discourage insurance company campaign contributions to candidates for insurance commissioner because of the conflicts of interest they create. The group created a Quack-O-Meter to chart how insurance commissioner candidates' insurer donations compared to the millions received by disgraced former Commissioner Chuck Quackenbush.

"These contributions were made to the Ricardo Lara IE on the same day and in virtually the exact same total amount as the total insurance industry contributions to the LGBTQ Caucus committee," said the complaint. "Immediately after receiving these funds from Lara's LGBTQ Caucus, the Lara IE then spent $199,866 on campaign communication advertisements and $40,000 on polling in support of Lara's re-election. These expenditures were made on May 12, 2022, just 6 days after receiving the funds from the LGBTQ Caucus."

"The short timeframe and similar dollar amounts raise the specter of the LGBTQ Caucus, or Lara, coordinating with the IE committee regarding these communications."

"The State's Insurance Commissioner benefiting from laundered campaign funds from the industry he regulates on the heels of a public scandal where he was publicly shamed from taking such contributions is a very serious violation of the State's campaign ethics rules. The public is entitled to accurate information about the true source of these contributions."

Statutes and Regulations Violated

Government Code Section 84301 – Campaign Money Laundering – Ricardo Lara or the LGBTQ Caucus committee coordinated the contributions of insurance companies to the LGBTQ Caucus committee, then to the Lara IE committee, which failed to disclose the true source of the contributions.

Government Code Section 83116.5 – Aiding and Abetting a Violation of the Political Reform Act – Lara or the LGBTQ Caucus committee aided and abetted the campaign money laundering scheme by facilitating the movement of the campaign funds from the insurance industry contributors without disclosing the true source of the contributions.

Government Code Section 84203 and 84203.3 – Ricardo Lara and Ricardo Lara for Insurance Commissioner 2022 - Failure to Report Contributions – If Lara behested the contributions from the LGBTQ Caucus committee to the Lara IE committee, the May 12, 2022 committee expenditures were, in fact, in-kind contributions to his candidate-controlled committee, Ricardo Lara for Insurance Commissioner 2022. In that case, Ricardo Lara and his campaign committee, Ricardo Lara for Insurance Commissioner 2022, failed to report contributions to his campaign committee from the insurance industry. Lara's committee did not report these contributions within 24-hours as required.

SOURCE Consumer Watchdog