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State Farm to Pay $250M to End RICO Trial

Forget about Russians interfering with elections. We should worry about State Farm.

The insurance giant has reportedly agreed to pay $250 million to settle a lawsuit that claims the company tried to buy a judicial election. The company allegedly poured $3.5 million into Judge Lloyd Karmeier's campaign for the Illinois Supreme Court, hoping to get a friendly judge on the state's highest court.

Plaintiffs sued under the Racketeer Influenced and Corrupt Organizations Act. The defendant denied the allegations, but agreed to settle right before opening statements.

$1 Billion Question

State Farm spokesman Jim Camoriano told reporters the settlement was "made simply to bring an end" to the litigation. Plaintiff's counsel Bob Clifford said the company agreed to pay "a quarter of a billion dollars, and I think that speaks for itself."

The story started in 1999, when a jury awarded $456 million against State Farm for breach of contract and the judge added $730 million for fraud. An appeals court lowered the awarded to $1.06 billion.

Soon after, Karmeier was elected to the state Supreme Court, which threw out the award. The plaintiffs sued again later when they learned about State Farm's election contributions, saying Karmeier should have recused himself from the decision.

Karmeier was not named in the lawsuit, but was scheduled to testify. According to reports, he cast the deciding vote in the $1 billion case.

"Probably Spooked"

David Logan, a law professor at Roger Williams University, said State Farm was probably "spooked" by the risk of an adverse verdict.

"Corporations generally don't part with that kind of money just before the opening statement of a trial unless they got a really negative vibe from the jury that was impaneled," Logan told Bloomberg.

The plaintiffs wanted $1 billion based on the original verdict, plus $1.8 billion in interest. If successful under RICO, the damages could have been tripled.

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