Record FPPC Penalties and Shoddy Redacting Inconvenience Mystery Election Donors Linked to Koch Brothers

Friday, October 25, 2013

The state Fair Political Practices Commission (FPPC) announced record penalties for two members of “the Koch brothers network of dark money political nonprofit corporations” and let slip out a surprising list of rich California donors (pdf) who fueled their attempt to influence the election in November 2012.

FPPC Chair Ann Ravel, heading to Washington soon as a newly-appointed member of the Federal Election Commission (FEC), announced fines of $500,000 each for two non-profits involved in the convoluted plan that targeted Governor Jerry Brown's Proposition 30 tax hike for defeat and supported the anti-union Proposition 32 with $11 million in last-minute campaign donations.

The saga began when 150 rich California donors, seeking anonymity, contributed $29 million to Virginia-based Americans for Job Security (AJS). Public Citizen calls AJS a “sham front group that would be better called Corporations Influencing Elections . . . masquerading as a non-profit to conceal its funders and the scope of its electioneering activities.”

Some of that anonymity was stripped away when a poorly-redacted document, released by the FPPC, identified some of the contributors. The Los Angeles Times figured out that Fisher family members, owners of the GAP, contributed $9 million, and the Huffington Post said Charles Schwab, founder of Charles Schwab Corp., ponied up $6.4 million. Anne Gust Brown, the governor’s wife, used to be a top GAP executive.

Additional contributors included: Eli Broad, a public supporter of Prop. 30, who gave either $500,000 or $1 million, depending on your source; billionaire Sheldon Adelson and his wife, $500,000; Karl Rove’s Crossroads GPS, $2 million; Greg Penner of Walmart, $500,000; and Margaret Bloomfield of Baron Real Estate Fund, $500,000.

Around $24.6 million of the donor money funneled to AJS was distributed to Center to Protect Patients Rights (CPPR), which was identified by the FPPC as being the key nonprofit in the Koch Brothers’ network. It agreed to pay a $500,000 fine.

CPPR gave money to American Future Fund, which channeled $4.08 million to California Future Fund for Free Markets, and Phoenix-based Americans for Responsible Leadership (ARL), which gave $11 million to the Laguna Nigel-based Small Business Action Committee.

Americans for Responsible Leadership said it would pay its $500,000 fine, but ARL President Kirk Adams, a former Arizona lawmaker, called the fine a vindication for his group after top Democratic California officials last year made “outlandish claims of money laundering, criminal violations.” He said ARL actions were inadvertent violations of disclosure laws.

Last November, Governor Brown said, “This money is so dirty it had to be laundered five times—and it still stinks.”

State officials sought to trace the source of the donation when it first surfaced weeks before the election, but were thwarted by election laws inspired by the U.S. Supreme Court's 2010 Citizens United decision that unleashed virtually uncontrolled financing of political campaigns. At the time of its decision, the high court indicated that transparency would provide all the necessary regulation of campaign contributions, which it associated with free speech.

The FPPC told American Future Fund and Small Business Action Committee on Thursday that they have to forfeit the improperly-deployed money to the state.

But that might not happen.

Steve Churchwell, an attorney for Small Business Action Committee, said the group won’t pay the $11 million because the law applies only to candidate elections and not ballot initiatives and the organization hasn’t been found in violation of any campaign finance laws. Oh, and they spent all the money on the election.

Ravel and the FPPC touted the fines as a victory for electoral transparency. But the largest fines in the state’s history pale compared to the amount spent, and disclosure laws prevented the agency from overtly revealing the names of all the donors.

All this unfolds against a backdrop of a looming U.S. Supreme Court decision that is being called by some Citizens United 2.0. The case of McCutcheon v. Federal Election Commission seeks to remove the $123,200 cap that one person may contribute during a two-year election cycle to federal candidates, political parties and committees.

–Ken Broder


To Learn More:

Group Linked to Kochs Admits to Campaign Finance Violations (by Nicholas Confessore, New York Times)

California Investigation Reveals Some Donors in Dark Money Scheme (by Viveca Novak, Open Secrets)

FPPC Seeks Repayment of $15 Million in Mystery Money (by Laurel Rosenhall, Sacramento Bee)

California Issues Largest Campaign-Reporting Fine (by Juliet Williams, Associated Press)

“Dark Money”: California Political Watchdog Slaps Conservative Groups with Historic Penalties (by Jessica Calefati, San Jose Mercury News)

California to Levy Massive Fine against Koch Brothers Groups (by Reid Wilson, Washington Post)

Gap Clothing Chain Founders Were Behind California 'Dark Money' Campaign (by Paul Blumenthal, Huffington Post)

List Unmasks Secret Donors to California Initiative Campaigns (by Anthony York, Los Angeles Times)

Unmasked $11 Million Mystery Political Donor Group Is No Mystery to Critics but Its Members Are (by Ken Broder, AllGov California)

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