State Farm Insurance Guilty of Racketeering
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State Farm Insurance Guilty of Racketeering

Monday, September 17, 2018By Richard Alexander and Nina Fulcher

The Associated Press recently reported on the $250 million preliminary settlement reached by State Farm in a federal class-action lawsuit regarding RICO and conspiracy allegations, namely that State Farm engaged in acts consistent with Racketeer Influences and Corrupt Organizations (RICO) crimes by funneling money into the campaign of an Illinois Supreme Court candidate.

State Farm RICO Lawsuit

State Farm used non-profit organizations to secretly fund the campaign and election of Illinois Supreme Court Justice Lloyd Karmeier. State Farm reportedly orchestrated as much as $4 million of the $4.8 million in campaign contributions to Karmeier through an organization called the Illinois Civil Justice League. That organization was created by a State Farm lawyer.

Karmeier Overturned $1 Billion Verdict Against State Farm

Most disturbingly about this case, is that Karmeir later went on to vote to overturn a $1 billion verdict against the insurance company. Karmeier was the deciding vote in the 2005 case of Avery v. State Farm. This case involved a $1.6 billion judgment against State Farm for using aftermarket car parts for repairs. With information of potentially illegal campaign contributions coming to light, the class-action lawsuit sought close to $10 billion from State Farm. The plaintiffs alleged that State Farm secretly supported Karmeier’s campaign in order to secure his win to reverse the Avery decision.

State Farm Settles for $250 Million

With the prospect of an oncoming trial, State Farm agreed to settle with the plaintiffs for $250 million. Even with the settlement, State Farm representatives are still denying any liability in the matter. According to the Associated Press, the Karmeier-Maag race was the most expensive judicial race in American history, at the time. The lawsuit alleged that millions of dollars were funneled into Karmeier’s campaign through donations to the U.S. Chamber of Commerce, which then sent the funds to a political action committee and the Illinois Republican Party to be used directly for Karmeier’s 2004 run.

Karmeier refused to dissociate himself from the case in Supreme Court, and the appeal was decided in favor of State Farm Insurance by a majority of 4-2, with Karmeier in the majority. $600 million of punitive damages as well as the award of $457 million against State Farm were reversed.

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