Veterans of scandal join team

Ex-Quackenbush consultants are hired by Schwarzenegger.

By Gary Delsohn -- Bee Capitol Bureau

Published 2:15 a.m. PDT Thursday, August 14, 2003

He's vowed to "clean up Sacramento," but Arnold Schwarzenegger has hired a handful of campaign consultants who were heavily involved in the scandal that drove disgraced state Insurance Commissioner Chuck Quackenbush from office.

One Quackenbush consultant hired by Schwarzenegger's gubernatorial campaign, Jeff Randle, co-wrote a memo outlining how Quackenbush could enhance his image with money from insurance firms that mishandled Northridge earthquake claims.



Another, Don Sipple, produced controversial TV ads featuring Quackenbush and paid for with insurance company money. A third consultant, Marty Wilson, used money from insurers to do political polling for Quackenbush designed to gauge his chances for higher office. A fourth, Quackenbush political consultant Joe Shumate -- who a legislative report said played a "central role" in the plan -- is discussing a position with the Schwarzenegger campaign.

On a day Schwarzenegger touted a prized recruit -- renowned investor Warren Buffett as a senior financial and economic adviser -- critics Wednesday slammed his hiring of the former Quackenbush consultants.

"I cannot believe he is going to squander his opportunity to establish himself as the outsider he says he is," said consumer activist Harvey Rosenfield, who supports the recall of Gov. Gray Davis.

"Nothing could be more inside the political structure that has so offended Californians than to hire Chuck Quackenbush's political consultants. This is a strategic blunder of monumental proportions. It makes me wonder whether he's up to the task."

Art Torres, head of the state Democratic Party, said Schwarzenegger's hiring the consultants represents either "incredible arrogance or incredible naivete."

"I don't think he gets it," Torres said of the Republican movie star making his first run for office. "I don't think he reads the newspaper except for the (entertainment) section. How can he not know about these guys and their baggage?"

Schwarzenegger, who gave million to his campaign on Tuesday, called Buffett "my mentor and my hero" at the same time that his aides scoffed at the criticism over the appointment of the former Quackenbush consultants.

"This is yet another sad and pathetic attempt by the Democrats to throw lawn chairs in front of the freight train that is the Schwarzenegger campaign," spokesman Sean Walsh said of the Quackenbush issue.

"The roles that will be played by some of the individuals the Democrats are mentioning are organizational ones, and the overall drive of the campaign is with Arnold and individuals like Warren Buffett."

Once considered a rising star in California's Republican Party, Quackenbush resigned in July 2000 rather than face impeachment proceedings after disclosures that he allowed insurance companies to funnel money into foundations promoting his political future instead of paying much higher fines for improperly handling Northridge earthquake claims.

As the program unraveled in a series of legislative hearings, it was disclosed that Shumate, Sipple, Randle and Wilson or their firms each received six-figure payments from the foundations -- money that typically would have gone to the state's general fund -- for their work on Quackenbush's behalf.

None of the men was ever charged with a crime, but a scathing report put out in August 2000 by the Assembly Insurance Committee left little doubt about the propriety of the strategy or the roles played by the consultants now working for Schwarzenegger.

"The (Department of Insurance), working with a group of longtime associates and consultants, then used the foundations to serve (Quackenbush's) political agenda and financially benefit personal friends of top department officials," the report said.

"In pursuit of these objectives, the needs of California consumers and representations made in agreements with insurers largely were ignored."

Former Assemblyman Fred Keeley, a Boulder Creek Democrat who was a key member of the investigating committee, said he was surprised to learn Schwarzenegger hired people so closely enmeshed in the Quackenbush scandal.

"The folks who advised Mr. Quackenbush to enter into a scheme that ultimately led to his resignation as a constitutional officer would not be the people that I would want to surround myself with if I was seeking a state constitutional office," said Keeley. "That would be especially true if I was trying to make the case I was going to be a new broom to sweep the capital clean."

Wilson, Sipple and Randle could not be reached for comment. Shumate said he has been talking with the campaign about coming to work as a consultant but that no agreement has been reached.

"They may hire me, but nothing's been resolved," he said.

All four had helped former Gov. Pete Wilson, Schwarzenegger's campaign co-chairman, with his political efforts. Shumate, Marty Wilson and Randle each served as a deputy chief of staff in the Pete Wilson administration.

Walsh said Sipple is working as a campaign advertising consultant, Wilson is helping run internal campaign operations and Randle will be working with various constituencies that support Schwarzenegger.

"They're quite good at designing campaigns and campaign strategies," said Keeley, who now heads the Planning and Conservation League, a statewide environmental group. "The problem with Quackenbush was not that they designed a strategy but that they designed a strategy that was wholly unethical."

Campaign spokesman Walsh said the consultants who worked for Quackenbush are not setting policy but only trying to get the candidate elected. Although he has not spelled out how he intends to do it, Schwarzenegger remains committed to reforming state government, Walsh said.

"When you bring in Warren Buffett, we're going to clean economic house in Sacramento," Walsh said. "The people in that town have never seen the type of force and personality these folks bring to bear. When the people we're bringing into the campaign come on board, you're going to see things jumping and you're going to see things changing."

But Rosenfield, the consumer activist whose group passed an initiative overhauling the Department of Insurance and making the commissioner's post an elected one, isn't buying it.

"Right now the entire state is up in arms looking for a cartoon hero to catapult into Sacramento and knock everyone's head together and clean the place up," he said.

"If Arnold becomes just another candidate surrounded by the Republican establishment just as Davis and (Lt. Gov. Cruz) Bustamante are by the Democratic establishment, people are going to say, 'My God, we had a recall and we've got the same old thing.' "

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About the Writer

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The Bee's Gary Delsohn can be reached at (916) 326-5545 or gdelsohn@sacbee.com.