San Diego Assemblyman Juan Vargas shills for insurance interests who donate heavily to him

What you do to get ahead

Juan Vargas at San Diego's Golden Hall, November 5, 2002
  • Juan Vargas at San Diego's Golden Hall, November 5, 2002
  • Image by Joe Klein

Last June, San Diego assemblyman Juan Vargas received a brief, if dubious, burst of fame for his role in the failure of Senate Bill 1, a financial privacy measure sponsored by Democratic senate member Jackie Speier. The San Francisco Chronicle discovered that nine assemblymen who had either voted against the bill or abstained from voting in committee had collected a total of $667,000 in campaign funds from banking and insurance interests opposed to the bill. The measure would have allowed consumers to protect the privacy of such personal information as spending habits, bank balances, loan amounts, and payment histories from banks and other financial service companies.

Juan Vargas collected a total of $667,000 in campaign funds from banking and insurance interests.

Juan Vargas collected a total of $667,000 in campaign funds from banking and insurance interests.

"One of the five nonvoters, Juan Vargas, a San Diego Democrat who took in $135,000 in such donations, refused to be interviewed for Monday's news story about the role of money in stopping a measure that enjoys overwhelming public support," the newspaper reported.

"Vargas suggested the Chronicle has 'stepped over the line on this issue.'"

Top 14 single-check recipients of funds in 2003, from Juan Vargas assembly campaign finance committee, California Secretary of State

Top 14 single-check recipients of funds in 2003, from Juan Vargas assembly campaign finance committee, California Secretary of State

After a watered-down version of the privacy law was finally passed in late August, the San Jose Mercury News editorialized that "SB 1 passed only after lobbyists for the financial services industry allowed it to pass. It wasn't until they gave the go-ahead that scores of lawmakers found the 'courage' to vote for a bill that had the support of nine in 10 California voters. On Monday, just four days after the financial lobby withdrew its opposition, Vargas was part of the 76-1 majority that rushed SB 1 through. To be sure, the threat of a popular ballot initiative played a role in the about-face by lawmakers -- but only after the lobbyists let them off the leash."

Larry Remer. Remer's daughter, Alexa Lawson-Remer, got $3840 for "campaign workers salary."

Larry Remer. Remer's daughter, Alexa Lawson-Remer, got $3840 for "campaign workers salary."

In fact, the Mercury News also reported, Vargas had not even bothered to show up for the earlier 10-0 vote in the assembly banking and finance committee to pass the bill to the floor. That wasn't the only controversy involving the 79th District assemblyman and his campaign fundraising activities last year. As chairman of the assembly insurance committee, Vargas is a key player in the long-running fight over workers' compensation insurance reform, as well as other manner of insurance regulation, from homeowners to car insurance.

In July, Vargas and other insurance committee members came under scrutiny during a battle over a controversial car-insurance bill favored by Los Angeles-based Mercury General Corp. The measure allowed car insurers to levy a surcharge on the auto policies of customers whose policies had previously expired. Consumer groups maintained that the bill would discriminate against poorer drivers, discouraging many from getting car insurance at all. Mercury maintained the measure would lower costs for more faithful policy owners.

The bill was opposed by Consumers Union and the Santa Monica-based Foundation for Taxpayer and Consumer Rights, which argued that the measure by Democratic senator Don Perata would result in a 38 percent jump in premiums for low-income drivers who might have only briefly allowed their insurance to lapse. The bill's chief supporter was Mercury, and during the insurance committee hearing, consumer lobbyist Doug Heller held up a fake $10,000 bill during his testimony to illustrate, he said, the almost $2 million in campaign contributions that Mercury had given to 12 of the 19 committee members since 2000, including Vargas.

That drew a stern admonition from the committee chairman. "Obviously you're playing to the media here," Vargas said. "This is not a circus. This is a committee room." Heller later told reporters that the "real circuses are the endless circus of fundraisers that get us to the point where the contributions of one insurance company are more important than the voices of consumers, low-income representatives, and the insurance commissioner." Vargas voted with the 14-3 committee majority to send the bill to the floor. It was signed into law last August by then-governor Gray Davis but ruled illegal last month by a Los Angeles Superior Court judge, who held that it violated Prop 103's prohibition of discrimination against uninsured motorists trying to buy insurance. The state said it would probably appeal the ruling.

In a phone interview last week, Heller, who works for the Foundation for Taxpayer and Consumer Rights, said he could find no ready explanation for Vargas's vehemence in pushing the bill, other than the considerable influence of Mercury's hefty campaign contributions. "I was surprised, yes. It seemed unusual," he said, adding that the sizable contributions from so many insurance interests to members of the committee "raise a whole series of very serious legal and ethical questions" for the legislators who accepted the money. And he pointed to new allegations of possible conflict-of-interest involving Mercury revealed last week by the San Francisco Chronicle.

That story involves a large contribution Mercury made last spring to an Oakland-based political committee with links to Democratic state senator Don Perata, the author of Senate Bill 841, the companion to the assembly version of the Mercury-favored bill approved by Vargas and his assembly insurance committee in July. The political committee Community Leaders for Neighborhood Preservation, run by consultant Timothy Staples, a friend of Perata's, collected $135,000; $75,000 of that came from Mercury.

The committee in turn paid Staples $61,740. During the same period, the Chronicle discovered, Staples had paid Perata $100,000 in consulting fees. The pair denied there was any connection between funds paid to Staples by the political committee and the money Staples paid to Perata for "business consulting." But by last Friday, Perata had announced he was ending his business relationship with Staples. "No one is going to be put in this position ever again because it's too embarrassing for too many people," he told the Chronicle on Friday. Heller's group has called for a Senate ethics investigation. Mercury declined comment.

Through all the controversy, Vargas has continually hit up industry lobbyists for campaign cash, although he runs virtually unopposed in a safe Democratic district. State disclosure records show Vargas has transferred much of the money he has raised to the campaigns of fellow assembly Democrats; he has also used campaign fundraising proceeds to pay for donations to charities he favors and to make payments to longtime aides and associates.

And until last month, when it was disbanded, the assemblyman also continued to accept contributions for a campaign finance committee left over from his unsuccessful 1996 Democratic primary challenge to South Bay congressman Bob Filner. Late last year, federal records show, Vargas used a large portion of those funds to repay himself thousands of dollars in personal loans he had made to his campaign committee during his congressional bid.

Much of the remaining cash was used to pay salaries and consulting fees of longtime associates, several of whom have been on and off of Vargas's campaign and assembly payrolls and that of his protégé and former aide, San Diego Eighth District city councilman Ralph Inzunza, who is under indictment in the Cheetahs strip club bribery case.

According to a December 12, 2003, report filed with the Federal Elections Commission, the Vargas congressional committee collected a total of $36,290 during 2003, $28,790 from individuals and $7500 from political action committees. The majority of the PAC funds came from the finance and insurance industries, including $2000 from the American International Group Employee Political Action Committee on November 18 and $2500 from the Washington Mutual Political Action Committee on April 25.

Of the 29 individual Vargas contributors in 2003, 4 were attorneys, 11 were physicians, and more than 20 listed their employer as an insurance company, the majority either State Farm or Farmers. Some of them gave the maximum $2000. Most of the donations were made in early June 2003, as SB 1, the financial privacy bill opposed by the insurance companies, was making its way through the senate and assembly.

Farmers Insurance agent Frank Silva of San Diego and David and Kathryn Kupfer of Rancho Santa Fe resided in San Diego County. Kupfer's occupation was listed as a physician, his wife's as a registered nurse. Many of the remainder of the donors listed their residences as parts of Los Angeles County (including Rolling Hills, Beverly Hills, and Manhattan Beach) or Northern California.

About a third of the proceeds collected by the committee last year were used to pay Vargas and his wife Adrienne back for personal loans they had made to the committee more than seven years earlier, in March and April of 1996, to finance his congressional campaign against Filner. On July 17, 2003, the reports show, the couple received $10,000 from the committee.

Then, on December 4, 2003, Vargas collected an additional $2225, which was said to represent the balance due of a $4100 personal loan he had made to his congressional campaign committee in April 1997. On December 3, 2003, the day before Vargas received that payment, the filing shows that the American International Group, Inc., of New York contributed $2000 to the committee. Neither Vargas nor his staff responded to telephone calls requesting comment.

Whether coincidental or not, American International is a major player in the workers' compensation insurance business in California. Two weeks ago, after assembly insurance committee chairman Vargas agreed with ranking Republican committee member Abel Maldonado to postpone a vote on a workers' compensation reform bill so that the Schwarzenegger administration could negotiate for changes favored by the insurance lobby, American International lobbyist Kevin Sloat told reporters he was encouraged by the development. "They've started to agree on a process, and then they'll move into the details," Sloat told the Los Angeles Times. "The next step is critical."

Many with ties to Vargas have benefited from payments from his congressional campaign committee funded by last year's insurance industry contributions. On April 15 of last year, for instance, Colin Rice, who had worked as Vargas's chief of staff, received $2000 for what was noted on the campaign committee filing as "debt repay" for back salary.

Others listed as receiving payments from the Vargas congressional campaign committee included Javier Angulo of Chula Vista ($1000), George Balgos of San Diego ($1500), Andrew Lee of San Diego ($3000), Dan Maruccia of San Diego ($500), Willie Manley of San Diego ($3000), Richard D'Ascoli of San Diego ($3000), Lee Biddle of San Diego ($3500), and Bill Trammell of San Diego ($2000).

Manley is pastor of the Greater Life Baptist Church in Vargas's assembly district. In a telephone interview this week, Manley said that the payment from the committee, coming as it did so many years after the end of Vargas's unsuccessful congressional bid, caught him by surprise.

"They just said, here's a bonus and thank you very much.... He just volunteered and gave me a fee." Manley said that his efforts on behalf of the congressional campaign involved dealing with ministers and building support for Vargas in the district. "I got paid for doing some publicity for him, for letting some pastors know about the campaign. I do quite a lot of that type of thing." He added that he donated the entire payment to Building Better Lives, a nonprofit organization he runs.

The occupation of D'Ascoli, who gave $250 to Inzunza's 2006 city council reelection committee on August 11, 2003, is listed on that disclosure as a "project manager" for Pacific Bell. A year earlier, city financial disclosure records show, D'Ascoli was paid $1000 by the 2002 Inzunza campaign for "consulting" activities.

Angulo gave $250 to the Inzunza fund on November 3, 2003, and is listed on that disclosure as a San Diego schoolteacher.

Balgos has long worked for Vargas, first as a city council aide and currently as a field representative. In June 2002, Inzunza named him a candidate for the city task force attempting to deal with the Chargers and their controversial Qualcomm Stadium lease. Inzunza also proposed appointing Vargas's chief of staff Colin Rice, whose wife Jaime Fox Rice is an Inzunza deputy, to the panel. Last summer, she was called to testify before the federal grand jury that ultimately indicted her boss.

Maruccia, a graduate of University of San Diego law school, is a deputy legislative counsel to the California Office of Legislative Counsel in Sacramento, which he joined in 2001, according to the organization's website. The Legislative Counsel drafts bills and renders various legal opinions regarding pending legislation and provides legal services to the governor's office and the assembly and senate.

In 2002, San Diego Superior Court records show, Maruccia was sued by USD for failing to make payments on the $15,000 balance of a law school tuition loan that the school had made to him in August 1991. A declaration filed in September 2002 by USD attorney William Zeutzius alleged that Maruccia and his family had dodged attempts by plaintiffs to serve him with legal papers in Sacramento and San Diego. "At both locations, defendant's mother in San Diego refused to identify herself and the defendant's girlfriend or wife in Sacramento refused to identify herself," the declaration charged.

"This behavior is indicative of Mr. Maruccia and his 'family' members assisting him in avoiding to repay his law school obligations," Zeutzius's statement continued. "Mr. Maruccia will not even make voluntary payments. This behavior is unethical and not becoming a member of the California State Bar."

In response, Vargas chief of staff Colin Rice filed a declaration in October 2002, maintaining that he had been Maruccia's Sacramento housemate and that no woman had ever lived at their residence, as the university's process server had alleged. The case was settled in June of last year with a stipulated judgment of $15,743.99.

Two other creditors have also sued Maruccia in San Diego Superior Court for bad debts. In May 2002, a judgment against him for $16,101.85 was entered in favor of the Educational Resources Institute, a tuition lender. In June 2001, a judgment in the amount of $4490.05 was entered in favor of First Select Corporation, which was attempting to collect a debt run up on a credit card account it had acquired from Wells Fargo Bank. At the time the suit was filed, according to case records, Maruccia was employed by the Fish Merchant on Navajo Road. He did not respond to messages left at his office.

Trammell is listed on state records as a principal with another onetime Vargas aide and ally, Lawrence D. Cohen, in two business entities: a partnership called CC&R Enterprises and a limited liability company called San Diego Vending, LLC, formed in January 2003. Another principal in that venture is listed as Michael Ciaramitaro.

Cohen is a former Vargas city hall staffer and ex-chief of staff for Ralph Inzunza, who himself served as chief of staff for Vargas when the assemblyman was a member of the city council. Inzunza, now 33, began his political career in 1991 as chief of staff to then-city councilman Vargas and served six years there before moving over to Sempra Energy, otherwise known as San Diego Gas & Electric, as a public relations man and lobbyist.

In November 2000, Vargas was elected to the state assembly from the 79th District, which includes Barrio Logan. For more than a year before that, Inzunza had been raising a stash of campaign money to run for his former boss's council seat. Inzunza bested a large field of less-connected opponents and was elected to fill the vacant city council seat in a 2001 special election. Campaign filings for Vargas -- who is expected to make a bid for Congress in the district now represented by Democrat Bob Filner -- and Inzunza and his brother Nick, the mayor of National City, show that they share many of the same contributors.

Last September, the Union-Tribune reported that city telephone records obtained under the California public records act showed that on May 14, 2001, a call was placed from Cohen's desk in Inzunza's city council office to Lance Malone, the Las Vegas-based lobbyist for the Cheetahs strip club. The paper reported that a total of 46 calls were made from various phone lines in Inzunza's office to Malone. Campaign records show that in June 2001, Inzunza collected $5250 for his city council campaign from Galardi and associates.

Malone has since been indicted in the Cheetahs bribery case that also resulted in the indictment of Inzunza. Both men have pled innocent and are awaiting trial. Malone's boss, Cheetahs club owner and Las Vegas resident Michael Galardi, and John D'Intino, a longtime San Diego restaurant manager and a Galardi employee, have both entered guilty pleas to bribery-related charges and are awaiting sentencing. They are expected to testify against Malone, Inzunza, and the two other defendants in the case, San Diego city councilmembers Charles Lewis and Michael Zucchet, who have also entered not-guilty pleas in federal court to allegations that they and Inzunza accepted bribes to weaken the city's nude-dancing regulations.

According to state campaign finance filings, last year Vargas's assembly reelection committee paid Cohen a total of $23,354. The bulk of that, $20,761, was paid on July 3. The purpose of the payments was listed as "Fundraising Events." That same day, Vargas chief of staff Colin Rice was listed as being paid $10,381 for the same purpose.

Cohen not only received money from Vargas last year, he also showed up as a donor to Inzunza. On June 25, according to financial disclosure statements, he and his wife Laura gave $250 each to Inzunza's 2006 city council reelection committee. Most of the $112,063 contributed to that committee through December of last year has been used by Inzunza to defray the more than $100,000 in legal expenses he has incurred defending himself in the Cheetahs case.

Inzunza's 2003 campaign disclosure statement lists Cohen's occupation as district manager of "Scherring [sic] Labs." After leaving Vargas's city council staff and before joining Inzunza's staff in 2001, according to news reports, Cohen had been an account manager at Schering-Plough, a pharmaceutical company. He did not respond to calls.

Besides Cohen and Rice, the largest payee among Vargas campaign vendors has been his longtime advisor and strategist, San Diego political consultant Larry Remer, and his two companies, the Primacy Group and PG Printing and Graphics. During 2003, according to state campaign finance disclosure records, PG Printing was paid $24,297 for "literature and campaign paraphernalia." The Primacy Group received $32,206 as "campaign consultants." Remer's daughter, Alexa Lawson-Remer, got $3840 for "campaign workers salary."

State records show that since 2000, the Primacy Group has been paid a total of $215,752 by state campaigns, $110,225 of that from Vargas's campaign fund. During the same period, PG Printing grossed about $1.7 million from state campaigns, approximately $110,000 from Vargas, and much of the rest from the Yes on 40 campaign of 2002, a $2.6 billion general obligation bond earmarked for environmental causes, and Prop 51, a controversial measure that would have earmarked gas-tax money for highway projects backed by the measure's financial supporters. Both the state League of Women Voters and the California Tax Reform Association opposed it, and it went down to solid defeat.

Remer is a close confidante and political advisor to San Diego city councilman Inzunza, as well as his brother Nick. From June through December of last year, the Primacy Group and PG Graphics were paid a total of $6680 by Inzunza's 2006 city council reelection committee. Most of the rest of the $110,000 raised was paid to Inzunza defense attorney Michael Pancer. During the first two months of 2002, the Remer companies received a total of $16,200 from the Inzunza city council campaign, city filings show.

Besides Vargas and Inzunza, other Remer clients have included San Diego city councilman Charles Lewis, also under indictment in the Cheetahs case; ex-councilman George Stevens, who testified before the federal grand jury that indicted the Cheetahs Three; the current mayoral campaign of San Diego County supervisor Ron Roberts; and the reelection bid of city councilman Jim Madaffer.

Last week the Union-Tribune reported that Remer has been served a federal grand jury subpoena seeking records in connection with an ongoing investigation, apparently into whether Serafin Zasueta, then-superintendent of Southwestern College, had acted with Remer to improperly steer $5890 from the school's theater department to pay for a TV spot on behalf of an $89 million bond measure in 2000. Remer told the paper he was not a target of the probe and federal officials declined comment.

Share / Tools

  • Facebook
  • Twitter
  • Google+
  • AddThis
  • Email

More from SDReader


Log in to comment

Skip Ad