Against a backdrop of a possible criminal investigation into State Compensation Insurance Fund, the State Senate is about to hold hearings to look into the continuing scandal. An investigative hearing has been called for Wednesday by Sen. Michael Machado (D-Linden) at the request of Senate President Pro Tem Don Perata (D-Oakland). In addition, Perata replaced his appointee to State Fund's Board.

The hearing may be abridged somewhat because if, in fact, there is going to be a criminal investigation the Legislature could potentially interfere with the Attorney General's investigation. It is known that the Attorney General's Office is meeting with legislative representatives prior to the hearing. This means, according to sources inside the building, that the hearing may focus more on the future than the past.

In addition, interim president Larry Mulryan has been meeting with officials from several agencies including the Department of Insurance.

The hearing agenda is still being pulled together according to sources in the building.

A criminal investigation, if pursued, is expected to target a limited number of State Fund employees and others outside the company.

Perata has named Don Moulds, a top aide and Senate Office research director, to State Fund's board of directors as a nonvoting member. Moulds replaces union official Bobby Alverado of the Northern California Carpenters Regional Council, according to sources.

Currently the State Fund board consists of five members appointed by the governor, plus three non-voting members –the director of the Department of Industrial Relations and two ex-officio members, one each appointed by the Senate president pro tem and the speaker of the Assembly.

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