State Farm Pays $250 Million In Bribery Scandal

State Farm Mutual Automobile Insurance Company last week agreed to pay $250 million to settle a lawsuit over substandard vehicle repairs and racketeering. The nationwide class action was filed in Illinois over twenty years ago, but a $1 billion jury verdict against the company was thrown out by the Illinois Supreme Court in 2005. What revived the suit was the undue influence that State Farm exerted over that decision by secretly funding a justice’s campaign.

Lloyd A. Karmeier was elected to the high court in 2004, and now serves as chief justice. He joined while the rest of the court was deadlocked over Avery v. State Farm, and the lawsuit’s proponents say his vote proved decisive in State Farm’s favor. According to the testimony of forensic accountant Thomas A. Myers, State Farm funneled over $3.5 million to Justice Karmeier’s campaign, more than three-quarters of the cash raised for his run.

The plaintiffs alleged that State Farm laundered the money and organizational effort through front groups like the Illinois Civil Justice League, which had former State Farm CEO Edward B. Rust Jr and current State Farm lobbyist William G. Shepherd on its executive committee.