Business
Regulators may seek to suspend State Farm’s license, citing widespread mishandling of L.A. wildfire claims
California regulators may seek to suspend State Farm’s license for up to a year and levy millions in penalties against the insurer, alleging it mishandled January 2025 wildfire claims in Los Angeles County.
In an extraordinary step, the Department of Insurance announced Monday that it filed an administrative action against the state’s largest home insurer after an investigation into 220 sample claims found 398 violations of state law in about half of them.
“Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives,” Insurance Commissioner Ricardo Lara said in a statement. “That is unacceptable, and we are taking decisive action to hold them accountable.”
The department is seeking a cease-and-desist order to stop the insurer from engaging in unfair or deceptive practices — and to possibly suspend State Farm’s “certificate of authority” for up to a year, meaning it could not write policies during that period, department spokesperson Michael Soller said.
While the terms of the proposed suspension aren’t clear, the move could prevent the insurer — which covers more than 1 million homes — from issuing new policies at a time when the state is facing an insurance crisis.
The case will be heard by a state administrative law judge, who will provide a recommendation to Lara on a possible monetary penalty and whether to carry out the license suspension. State regulators declined to comment on the action or how it might affect policyholders.
State Farm on Monday rejected the department’s claims that it engaged in a “general practice of mishandling or intentionally underpaying wildfire claims” and said it will further respond through the legal process.
“California’s homeowners insurance market is the most dysfunctional in the country,” State Farm said in a statement. “The California Department of Insurance should take responsibility for regulatory delays and uncertainty that have contributed to fewer choices and higher costs for consumers.”
State Farm said it has paid more than $5.7 billion and handled more than 11,700 residential and auto claims. That is nearly one-third of those filed after the Jan. 7, 2025, fires that damaged or destroyed more than 18,000 structures and killed 31 people.
The department in June 2025 launched a “market conduct exam” into State Farm General — the subsidiary of the giant Bloomington, Ill., insurer that handles California home insurance — after complaints by victims of the fires in Pacific Palisades, Altadena and nearby communities.
The Times reported that within two months of the fires homeowners were getting frustrated with the insurer over its handling of smoke damage claims. They contended that State Farm was resisting hygienic testing for toxic chemicals and was trying to minimize cleanup costs, which the company denied.
Later, anger was directed at Lara, with fire victims saying he wasn’t cracking down on State Farm. More than a dozen homeowners told The Times this year that the department did little to resolve a wide range of complaints they filed against State Farm.
Los Angeles County also has an ongoing investigation into the insurer.
Nevertheless, the threat to suspend State Farm’s license because of the alleged violations was met with skepticism. The company has a roughly 20% market share. It’s unclear where its policyholders could find coverage.
State Farm’s decision to not renew some 72,000 residential policies in March 2024 because of its losses after a series of wildfires sparked fears that California’s home insurance market could be on the brink of collapse.
“Given how the department has bent over backward to prevent State Farm from carrying out its threats to leave the state due to its alleged financial problems, it’s hard to believe,” said Carmen Balber, executive director of Los Angeles advocacy group Consumer Watchdog.
Soller said the terms of a possible suspension — including whether it would apply only to new policies or existing policyholders — would be set after the hearing.
“Any order must define the terms of a suspension based on the evidence at a hearing. We cannot predict what an order after a hearing on the evidence will be,” he said.
The results of the market conduct exam were released Monday in support of the legal action.
It found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
Other alleged violations included a failure to give timely responses to claims, provide a factual or legal basis for claim denials and give victims a primary point of contact after assigning three or more adjusters in a six-month period.
The legal filing also faults the company’s handling of smoke damage claims, including denials of payments for hygienic testing.
The company denied it was at fault in some cases and admitted it was at fault in others, often saying that the problem was due to issues with specific adjusters, and that it held meetings with adjusters after hearing about the alleged violations.
State Farm said Monday that the “additional payments tied to the issues identified in the Market Conduct Examination were about $40,000 in the context of more than $5.7 billion paid.”
The alleged violations each carry a fine of up to $5,000 in general and up to $10,000 if they are found to be willful.
The department said the alleged violations could bring penalties of $2 million or more. Soller said regulators also want State Farm to make policyholders whole, but does not have authority to order restitution
Soller noted that is why the department is sponsoring a bill by state Senate Insurance Committee Chair Steve Padilla (D-Chula Vista) that would require insurers to pay restitution directly to policyholders.
State Farm released a statement April 22 that outlined five “commitments” to policyholders.
They included providing single points of contact and improved communication so there are “fewer handoffs, fewer repeated explanations, and seamless support.”
Fire victims have long called for a crackdown on the insurer and to bar a rate increase State Farm was seeking until it resolved their complaints. They also called for Lara’s resignation, claiming he was not enforcing the law, while he contended the market conduct exam needed to take its course.
The company was ultimately granted a 17% rate hike in March after a three-way agreement that also involved Consumer Watchdog, which had intervened in the matter as allowed under state law.
Joy Chen, executive director of Every Fire Survivor’s Network, a community group that led the calls to stop the rate hike and for Lara’s resignation, said the insurer must make harmed policyholders whole.
“We call on the department to act on every outstanding complaint, and report transparently on outcomes. State Farm’s parent sits on $240 billion in assets. They have the money to fulfill their obligations to L.A. fire survivors,” Chen said.
Possible sanctions against State Farm are a “positive development” but mean little in practice for Pacific Palisades property owner John Hurley, who continues to fight the insurer to mediate asbestos and heavy metal contamination from the fire nearly 16 months ago.
He said State Farm stopped reimbursing him for lost rent on the unrepaired house. Hurley has filed at least half a dozen complaints with the state insurance department, to little avail.
“I unfortunately feel the insurance companies and the state are somewhat allies,” Hurley said. Even if the state agency were to prevail in sanctions against State Farm, “who gets the money? The state … or the insured?”
Times staff writer Paige St. John contributed to this report.
Business
Read Nick Bilton’s Letter to Scott Pelley
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
Business
Aspiration co-founder sentenced to 14 years for fraud
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Business
Monterey Park takes landmark vote on banning data centers
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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