A four-year joint investigation into alleged criminal misconduct at State Compensation Insurance Fund (SCIF), including alleged conflicts of interest and misuse of funds by board members and former executives of California's largest workers' comp carrier, is ending with a whimper.  No charges will be filed and key investigators issued nary a public word on the end of the investigation.

The criminal investigation began after a series of articles by the Workers' Comp Executive that lead to the fall of 2006 “resignations” of two board members and the March 2007 dismissal of former president Jim C. Tudor and former vice president of group programs Renee Koren.  The dismissals came after a two-month probe and after board members Frank Del Re and Kent Dagg, who operated State Fund safety groups, were forced to resign by the governor's office due to conflict of interest allegations brought to light by this publication.

"We have been informed by the Joint Task Force, which is comprised of the California Highway Patrol (CHP), the California Department of Insurance (CDI) and San Francisco District Attorney’s Office, that it has completed its investigation of former State Fund employees and directors," State Fund President Tom Rowe says in an internal memo to employees. "The San Francisco District Attorney’s office will not be filing any criminal charges."

Articles published during the fall of 2006 in Workers' Comp Executive revealed that the board voted to increase commissions on its group business, which did directly benefit Del Re and Dagg. State Fund paid fees based on premium to group administrators.  State Fund is now in the process of dismantling its safety group program. (For past coverage see  SCIF Plans … and  Tudor Shown … )

The ensuing articles by Workers’ Comp Executive over several years revealed a continuing culture of corruption and the scandals resulting there from prompted numerous changes in the operations at State Fund, including the expansion of its management team and board of directors.  The articles contributed to the passage of SB 1145 requiring state Fund to be subject to the State Auditor, and AB 1874 also require its board to meet in public and the quasi-governmental agency to comply with limited public records requests.

A call to the San Francisco DA's office for comment was not immediately returned. Click here for a copy of the internal memo announcing the end of the investigation.

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Filed by Brad Cain in San Francisco