Arizona-based Americans for Responsible Leadership, having lost in California courts all the way to the Supreme Court, abandoned its appeal to the U.S. Supreme Court and revealed the true source of its $11 million contribution to a California initiative campaign.
The source of the money was the Koch-backed Americans for Responsible Leadership. It passed the money through another PAC, Center to Protect Patient Rights, based in Arizona. This is a 501©(4) non-profit “social welfare organization,” whose principal concern is the welfare of billionaires. Eventually, the money passed to Americans for Job Security. The money has been used to oppose Proposition 30 (education funding) and to promote Proposition 32 (hobbles union political spending).
California FPPC News Release
Sacramento - Americans for Responsible Leadership, the Arizona non-profit corporation that made an anonymous $11 million donation to a California campaign committee, today sent a letter declaring itself to be the intermediary and not the true source of the contribution. It identified the true source of the contribution as Americans for Job Security, through a second intermediary, The Center to Protect Patient Rights. Under California law, the failure to disclose this initially was campaign money laundering. At $11 million, this is the largest contribution ever disclosed as campaign money laundering in California history.
“The persistence and hard work of the FPPC has won a significant and lasting victory for transparency in the political process,” said Ann Ravel, Chair of the FPPC. “We will continue in this matter and all others to ensure that the people of California know who is funding political activity in this State.”
California’s Political Reform Act requires disclosure to the people of California of the true source of campaign donations. This information is required in most cases before the election, when it matters. The Act requires those who serve as intermediaries, or middlemen, for contributions to disclose their true source to the recipient of the contribution.
Americans for Job Security has ties to many GOP noteworthies, including Rove’s Crossroads GPS.
More coverage of this:
Road map of contributions in Arizona nonprofit case
California officials consider civil, criminal action in mystery donation case
The actual donors behind the $11 million that landed in California’s initiative battles last month remain a mystery, but two more layers became known Monday when the Arizona nonprofit in question revealed two other opaque nonprofits that routed the money its way.
Based on letters and campaign finance records, the money trail went like this:
On or before Oct. 15: Alexandria, Va.-based Americans for Job Security gave $11 million to Phoenix-based The Center to Protect Patient Rights.
Oct. 12 and Oct. 15: The Center to Protect Patient Rights served as an “intermediary” and gave $11 million to Phoenix-based Americans for Responsible Leadership.
Oct. 15: Americans for Responsible Leadership gave $11 million to the Small Business Action Committee PAC No on 30/Yes on 32.
California regulators and attorneys said today they are seriously weighing next steps - including criminal charges - against parties involved in the $11 million contribution whose known trail leads through three different out-of-state nonprofits.
A lawyer for Americans for Responsible Leadership, the Arizona-based donor at the center of the controversy, appeared to acknowledge the possibility of future legal action in a letter he filed this morning with the state Fair Political Practices Commission.
Attorney Michael D. Bopp wrote that while new disclosures from Americans for Responsible Leadership and The Center to Protect Patient Rights may relate to state codes banning hidden intermediary contributions, the groups do not admit wrongdoing.
California’s Biggest “Campaign Money Laundering” Scheme, Revealed—Kinda
California’s elections watchdog has been fighting for weeks to unmask a secretive group that gave $11 million to defeat Proposition 30, Gov. Jerry Brown’s temporary tax increase to fund schools, and to pass Proposition 32, which would kneecap state labor unions. That battle ended Tuesday morning in something of a stalemate.
Americans for Responsible Leadership, the Arizona nonprofit that made the $11 million donation, had refused demands by California’s Fair Political Practices Commission to name its donors. So the state watchdog sued ARL, and judges agreed that ARL needed to fess up. ARL relented Tuesday, but its response is far from satisfying: ARL’s $11 million originally came from…another shadowy group called Americans for Job Security, which is run out of an office in Alexandria, Virginia. To complicate matters more, Americans for Job Security had funneled the $11 million through a third nonprofit, the Center to Protect Patient Rights, before it finally landed in ARL’s coffers.
Think of it as a daisy chain of secret money. The Fair Political Practices Commission described the scheme as the largest case of “campaign money laundering” in California’s history. Money laundering is a misdemeanor in California, according to FPPC’s chair Ann Ravel. (The state attorney general has the power to take action against ARL.) But the real source of the money, the individuals or corporations that first gave it, remains a mystery. Disclosure, in other words, is not transparency.
Here’s what we know about Americans for Job Security and the Center to Protect Patient Rights. Founded in 1997, AJS is a nonprofit currently run by a little-known Republican operative named Stephen DeMaura. The group runs ads backing GOP candidates and does not disclose its donors. In 2008, staff attorneys at the Federal Election Commission found “reason to believe” that AJS violated the law by not registering as a political committee, but the FEC’s three GOP commissioners blocked any action against the group.
The Center to Protect Patient Rights, as first revealed by the Center for Responsive Politics, is an ATM for conservative nonprofit groups backing Republican candidates at the state and federal levels. The group doled out $44 million in 2010 to the likes of Grover Norquist’s Americans for Tax Reform, the Club for Growth, and Americans for Prosperity. Those recipients all went on to slam Democrats and boost GOPers in the 2010 elections.
Who funds the Center to Protect Patient Rights is a mystery: As a 501©(4) nonprofit, the group does not name its donors. CPPR raked in $13.7 million in 2009, according to tax filings, but said in those same filings that it did not spend any money on fundraising in 2009.
CPPR is said to have ties to billionaires Charles and David Koch and their network of conservative donors. Sean Noble, who runs the group, spoke at a 2010 Koch donor conference; Politico has called Noble a “Koch operative” and the Los Angeles Times described him as a “key operative in the Kochs’ political activities.” However, no direct connection between CPPR, the Kochs, or their donor network has been established.
Even as it hailed forcing Americans for Responsible Leadership to reveal the trail of secrecy behind its $11 million donation, California’s Fair Political Practices Commission admitted the victory was bittersweet. “This case also demonstrates the need for reform to make sure true donors are disclosed and can’t hide behind innocuous committee names,” said Ann Ravel, the FPPC’s chair. “The people of California deserve better.”