For Direct Online Link To This Story Featured June 19th
In The Redding Record Searchlight, Click On Link Above.
Typical of a quick change artist, they want to have their
hands in as many tills, at the same time, as possible.
Dagg's home and office searched by law enforcement
By David Benda (Contact), Ryan Sabalow (Contact)
Friday, June 19, 2009
State investigators served a search warrant Friday at the Shasta Builders' Exchange headquarters in Redding and the home of Kent Dagg, amid possible allegations of misconduct by the Exchange's CEO.
Erica Derryck, a spokeswoman for the San Francisco County District Attorney's Office, said her office, the California Highway Patrol, the California Department of Insurance and the State Franchise Tax Board are investigating allegations of misconduct involving former employees of the State Compensation Insurance Fund.
Derryck refused to say more.
Dagg was appointed to the State Compensation Insurance Fund board of directors by Gov. Arnold Schwarzenegger in 2004. He resigned in 2006 amid conflict of interest allegations. The State Fund is based in San Francisco.
Dagg arrived at the Innsbruck Drive office around 11:15 a.m. Asked to comment, Dagg said: "I'm not allowed to talk to anybody," before walking into the building.
Dagg's Sacramento attorney Malcolm Segal said the searches came as a complete surprise to his client, who thought his past troubles with the State Fund were long over.
"I can't imagine all these resources that were spent into looking for records so long after the events in issue, when a phone call would have done the trick," Segal said. "We haven't heard a word from them - not an e-mail, a phone call, not even a Hallmark card."
The Los Angeles Times reported on its Web site Friday that as many as seven other search warrants have been served to people in Northern and Southern California.
The paper cited a state official who said she was briefed on the probe, but was not authorized to release the information.
In addition to Dagg, other search-warrant recipients were likely to include former board member Frank DelRe of Long Beach, former fund President James Tudor and Vice President Renee Koren, the Times reported.
Four CHP officers posted outside the Builders' Exchange said they would not say why the building had been closed. They referred questions to the San Francisco District Attorney's Office.
A woman who answered the phone at the Builders' Exchange on Friday afternoon said the office would reopen Monday.
The California Department of Insurance and the State Franchise Tax Board directed questions to the San Francisco District Attorney's Office.
A phone message left at the State Compensation Insurance Fund's headquarters in San Francisco wasn't immediately returned.
Builders' Exchange board members Sue Harbert of Harbert Roofing Inc. and Chad Thompson of Redding Countertops Inc. declined to comment.
Phone messages left for other board members weren't returned.
Dagg was implicated in conflict-of-interest allegations after it was learned the fund paid more than $125 million to building organizations with ties to the Exchange.
A $100 million class-action lawsuit filed in 2007 against Dagg and other former State Fund officers was dismissed in August 2008.
Dagg and others were accused of diverting at least $25 million in surplus premium proceeds to their organizations over four years, money that should have gone back to policyholders as dividends, according to the complaint filed by ACRO Constructors Inc. of Burbank.
"I am not surprised it was thrown out. I am pleased it was thrown out, but really not that surprised. We have never done anything wrong," Dagg told the Record Searchlight after the lawsuit was dismissed. "We run a very good organization. I think this was just another attempt at a frivolous lawsuit."
State Fund serves as California's worker's compensation insurance carrier of last resort.
The quasi-governmental organization has offices across the state, including a branch in Redding near Shasta View Drive and Highway 44 that employs some 200 claims adjusters, fraud investigators and others.
In August 2007, State Fund renewed its contract with the Shasta Builders' Exchange after suspending it in March 2007 pending an external review of all group discount programs.
California Insurance Commissioner Steve Poizner ordered an audit, and in December 2007, he issued a scathing report, which found that the insurer spent more than half a billion dollars over the previous decade for marketing help that often provided "minimal services," according to the L.A. Times.
Jay Gibson, who owns Gibson Heating & Air Conditioning in Redding and is Dagg's close friend, said Friday's raid caught him by surprise.
"We're all speculating and wondering and thinking," Gibson said.
Gibson saw Dagg several times this week and spoke with him on the phone. Nothing they talked about suggested Dagg knew about the investigation or that a search warrant was about to be served, Gibson said.
"I'm sure it was an absolute blindside to him," Gibson said.
Redding land planner Eihnard Diaz also is a friend of Dagg's. Diaz, too, was shocked when he heard about Friday's events.
"I am as surprised as anybody else. I thought this whole thing was put to bed - unbelievable," Diaz said. "Kent Dagg has been beyond reproach as far as ethics. I can't envision him doing anything illegal or whatever the hell is going on."
Dagg, as the construction industry's top lobbyist, is widely considered one of the most influential people in Redding and Shasta County politics.
He's a frequent speaker at many functions, including local State of the City and County addresses.
The campaign contributions doled out by the Builders' Exchange and other pro-development groups became a source of debate and contention in the 2006 race for three open City Council seats. Dagg backed the candidates he deemed pro-development.
The same year, Dagg lobbied unsuccessfully to have a Builders' Exchange presence on a committee that was to pick a new city manager after then-City Manager Mike Warren retired.
Dagg was a frequent critic of Warren, after the city manager campaigned to use city funds for beautification projects and to create more parks and open space, rather than focusing on development opportunities.
At the height of the construction boom, the building industry accounted for more than 5,000 jobs in the Redding area. The active labor force has since dwindled to well below 3,000 employees.
Ever since the 2006 election, Dagg has been much less vocal.
The pro-development forces have largely taken a more subtle approach, appointing pro-development, low-tax advocate Mary Machado of Shasta Voices to campaign for the construction trade.
Dagg also nearly died in May 2008 during an ATV accident in Nevada's Black Rock Desert. Dagg was in a coma for weeks after colliding with another ATV rider. He reportedly flew 142 feet from the point of impact and bounced several times.
Reporter David Benda can be reached at 225-8219 or at dbenda@redding.com. Reporter Ryan Sabalow can be reached at 225-8344 or at rsabalow@redding.com.
Comments
Posted by runman49 on June 20, 2009 at 12:08 a.m.
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Katie....call off the wedding! Okay, maybe you should at least move it!
Posted by Gnosis on June 20, 2009 at 8:09 a.m.
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Sneaky investigators; they didn't give a courtesy call before doing their job. Maybe the "good ole boys" aren't as privileged with state officials as they are here. Maybe there will be some justice after all.
Posted by EHS85 on June 20, 2009 at 8:31 a.m.
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Dang Dagg.
I am sure the paper shredder would have been working overtime if you would have got a prior call. Those sneaky investigators will get you every time.
Posted by RussellHUNT4thepeople on June 20, 2009 at 9:14 a.m.
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Another of the social elites bites the dust. Who will fund the campaigns of such fake Republicans as Dickerson and Murray ? Just watch as his buddies fly out of the way. Reminds me of the convicted felon Nancy Buffum , formly of the Redding City Council. This will be great fun as many of the political players in Redding take a bath.
Posted by Patrecia_Barrett on June 20, 2009 at 9:32 a.m.
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in response to RussellHUNT4thepeople
"Dagg was implicated in conflict-of-interest allegations after it was learned the fund paid more than $125 million to building organizations with ties to the Shasta Builder's Exchange". Sound pretty unequivocal to me.
It could be that a few other local gods besides Dagg will get pulled down through this investigation.
Funny thing - an item in yesterday's "North state marketplace" said that State Fund was hosting a series of seminars "to help employers prepare for surprise workplace inspections by regulatory agencies". In the interest of justice, let's hope former State Fund CEO Kent Dagg wasn't all that well prepared for this particular "surprise".
Posted by not2bright on June 20, 2009 at 9:59 a.m.
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another "trial by comment section"...charges are one thing, guilt is another...a week from now, we'll file it under "who cares"
Posted by RacerX on June 20, 2009 at 10:18 a.m.
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Without speaking to the guilt or innocence of anyone I find it fascinating that the CHP is involved in this. Proves the point that this bloated bureaucracy is at heart nothing more than a revenue agency.
Posted by steveoutwest on June 20, 2009 at 10:45 a.m.
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in response to RacerX
What is suprising about the State of California using it's law officers in a State investigation? The CHP is a sworn State law agency and has more responsibilities than just giving idiot drivers tickets on State roads and highways. The are tied to the State Attorney General's Office as well as the Govenor's Office.
Posted by anotherjeff on June 20, 2009 at 10:56 a.m.
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in response to RacerX
The CHP are the State Police, and as such, they conduct criminal investigations. Nothing unusual here.
The CHP may, or may not, be a bloated revenue generating agency. (Apparently, not enough revenue, though.)
Posted by justthoughts on June 20, 2009 at 11:03 a.m.
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The RS should really do an article connecting the dots as most don't understand how all this worked and what they those "conflict of interest allegations" really entail. Methinks most would be very, very surprised especially the policyholders from SCIF who subsidized this ludicrous behavior in the name of "safety groups". Why didn't all the health care providers come together and form a safety group and get a discounted premium? Or perhaps the hairdressers, nail techs etc.? Or the restaurants? I'm sure we all would have loved the WC premium discount Dagg afforded the SBE members all the while finding a way to funnel $$ and pay himself......
Posted by runman49 on June 20, 2009 at 11:12 a.m.
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in response to not2bright
Okay, so you don't want anybody to comment until he is found guilty?
Posted by whynotbelieve on June 20, 2009 at 11:24 a.m.
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in response to not2bright
I suspect the same thing. As seen on many other occasions in decisions made by local entities etc... This is probably a trial balloon put out there by someone with interest in this case. My problem is how the RS get's involved. Since the downturn I suspect that many other discrepancies will make themselves known, because we all know that this economy has never been able to support the opulence blatantly thrust upon the masses over the past few years. If the cities and counties would have acted like we were a poor logging economy all along and put this vast amount of monies aside, thrown at it over the last decade, we'd be settin' pretty right now. Many more names will come of this before it is said and done.
Posted by whynotbelieve on June 20, 2009 at 11:27 a.m.
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It truly is crazy, what people will do, due to the mesmerizing trance and greed that accompanies money.
Posted by deceptionabounds on June 20, 2009 at 11:29 a.m.
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in response to not2bright
Human nature, it hard to help one's self. But, your point is valid.
Posted by sjb4jc on June 20, 2009 at 11:32 a.m.
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in response to RacerX
It makes sense the CHP would be involved as they are the law enforcement arm of the state and would therefore investigate criminal activity at State Fund. Frankly, I am glad they are out there investigating people who are stealing our taxpayer dollars! Money well spent...
Posted by not2bright on June 20, 2009 at 11:41 a.m.
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in response to runman49
comments are what we're here for. some have axes to grind and use this section as a vindictive tool. i don't know mr. dagg. some have him guilty by who he is or represents. i paid into state fund in the past, and received a dividend rebate every year. i would not be happy to see it go to other organizations either. but, if it's allowed, is he personally at fault? i don't know...i'm not too bright.
Posted by anotherjeff on June 20, 2009 at 11:51 a.m.
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Ah! Kent Dagg! The man who wants to oversee the distribution of Federal Stimulus Funds in Shasta County.
http://www.redding.com/news/2009/may/31/jim-zauher-group-ready-to-handle-stimulus-funds/
Posted by anotherjeff on June 20, 2009 at 12:23 p.m.
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in response to not2bright
I'm sure Mr. Dagg would like to file it under, "who cares".
Read the audit: http://www.insurancejournal.com/news/west/2007/12/11/85570.htm
Posted by iluvredding on June 20, 2009 at 12:35 p.m.
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in response to anotherjeff
Not that I want to get my head bitten off here, it seems as though you have a personal interest in this story.
If so, you’re biased and that’s not necessarily a bad thing, just ease up a bit.
You wouldn't want people to turn a deaf ear on your posts like so many have on others who post on here.
If you want to rant, do it on Craigslist.
Posted by Patrecia_Barrett on June 20, 2009 at 12:48 p.m.
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What's not being addressed in this article is what Dagg is actually guilty of.
According to the Sacramento Bee and other sources, State Fund was ordered to pay nearly $20 million in fines by the State for dragging out or denying legitimate worker's comp claims.
Thousands of workers suffered as a result, and Kent Dagg and Frank Deire were at the very heart of this. Between the two of them, they funneled $500 million into the pockets of their friends and business associates. leaving injured workers with no means of support.
Posted by rusure on June 20, 2009 at 12:58 p.m.
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There are still a lot more people and company that is still being watch.
Posted by redrider on June 20, 2009 at 1:45 p.m.
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This is a black eye for the construction community, and Kent Dagg needs to step down as CEO of this vital organization.
Posted by weneedchange on June 20, 2009 at 2:16 p.m.
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in response to Patrecia_Barrett
Anything that State Fund is involved in, other than doing their job taking care of injured workers, which is a joke, is most likely illegal. State Fund is pulling in more profits than ever, and we can all praise Arnold for this, his Workers Comp reform is what started it all.
Posted by RLF777 on June 20, 2009 at 2:32 p.m.
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in response to RacerX
Without speaking to the guilt or innocence of anyone I find it fascinating that the CHP is involved in this. Proves the point that this bloated bureaucracy is at heart nothing more than a revenue agency.
I too find it fascinating that the CHP is involved in this also.
Speaks volumes about "our local bloated law enforcement bureaucracy good ole boyEEE system.
Posted by RLF777 on June 20, 2009 at 2:58 p.m.
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in response to Patrecia_Barrett
"Dagg was implicated in conflict-of-interest allegations after it was learned the fund paid more than $125 million to building organizations with ties to the Shasta Builder's Exchange". Sound pretty unequivocal to me.
Like the "Business partners" who own the old State Fund building and the K.M.S. building ? Are they bankrupt ? Dale Construction ?
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