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Wednesday, November 7, 2012

Arizona Group's Mega-Donation Illuminates Loophole in California's Finance Laws

Posted By on Wed, Nov 7, 2012 at 7:55 AM

It is not easy to clean money.
  • It is not easy to clean money.
Yesterday's $11 million disclosure was a mild win for campaign finance transparency. The names of the actual people who spent that money will remain unknown. But, as Attorney General Kamala Harris noted, we do know that the money passed through a group with "an affiliation with the Koch brothers."

Beyond that, though, this two-week battle between California campaign finance watchdogs and the Arizona-based Americans for Responsible Leadership has shown -- in case you already didn't know -- the lengths to which megadonors will go to ensure their anonymity. It's also shown how those megadonors can side-step California's campaign finance laws.

See Also: Secret Donors Behind Arizona Political Nonprofit Group's $11 Million Are Revealed

Under state law, any group that donates money for a specific political purpose must reveal its individual contributors. Federal law, in contrast, states that non-profit organizations do not have to disclose its funders. These conflicting laws allowed the people behind the money to filter the funds through the Arizona group, wiping it clean of any recognizable scuff marks.

It worked like a car wash.

The $11 million originated with Americans for Job Security, a Virginia nonprofit based in the same building as Karl Rove's Crossroad's media. Then it went to Center to Protect Patients' Rights, which multiple news reports have tied to oil tycoons Charles and David Koch. Then the money went to Americans for Responsible Leadership.

On Oct. 15, Americans for Responsible Leadership sent $11 million to Small Business Action Committee PAC, which supported Proposition 32 -- the measure that would have limited unions' ability to raise political funds -- and against Prop. 30 -- Gov. Jerry Brown's proposal to raise income and sales taxes. By that time, of course, the ties to the Koch Bros. and Rove were distant.

Fair Practices Political Commission, the state's campaign finance watchdog, called ARL out, declaring that the Arizona group had to reveal its funders. The California Supreme Court agreed with state authorities. ARL initially said it would appeal to the U.S. Supreme Court, but perhaps fearing an official audit, it eventually decided to disclose the two other groups from whom the money came.

Speculatively speaking, it's not hard to imagine the benefits of the convoluted white-wash: Policy endorsements from the Kochs and Rove would not have played well in Blue California, would have made some fence-sitters think, "wait a minute, isn't that the Bush guy and aren't those the ones spending millions of dollars to defeat Obama? I don't think I like those guys."

In one sense, though, the strategy did work: While the groups holding the money have been exposed, the individual donors remain anonymous.


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Albert Samaha

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