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Shell Games Hide Sources of Donations

With record spending expected in the Nov. 8 initiative battles, campaigns have become adept at obscuring what is being raised, paid out.

October 23, 2005|Dan Morain | Times Staff Writer

SACRAMENTO — When Californians vote Nov. 8 after what may turn out to be the costliest initiative battles in state history, they won't fully know who was behind the campaigns: Politicians and their backers are using holes in state law that help hide the source of donations.

Despite restrictions implemented in California in recent years, political money is being raised and spent with scant public disclosure by the tens of thousands, hundreds of thousands and even millions of dollars.

In this high-priced fight over the eight initiatives on the special election ballot, advocates on all sides can transfer money from one campaign committee to another, use committees that do not have to report their donors right away and route money through nonprofit corporations that are not required to reveal donors' names at all.

There won't be full accountings for some campaigns until January, long after the votes are counted. Contributors to others won't be disclosed until a few days before the election -- after many early voters have cast ballots.

Even experts at tracking political money are stumped this year. Kim Alexander, director of the nonpartisan California Voter Foundation, has spent 15 years following donations in Sacramento. But the volume and the speed with which money is moving from one account to another this year has made the task harder than ever, she said.

"Political players get better and better at playing the money shell game," said Alexander, whose group provides information about campaign measures, including the largest donors.

Elizabeth Garrett, director of the USC-Caltech Center for the Study of Law and Politics, said that because voters take cues from groups they trust when deciding issues, timely disclosure of donations is crucial.

"If the information is not available at the moment the voter is making her decision," Garrett said, "then disclosure is irrelevant."

"Only when you know who is behind an initiative and how much they're spending can you competently vote," she said.

In some ways, political donations have never been more transparent in California. Anyone with Internet access can track most of the $200 million-plus being raised in this year's campaign. (See

But it is still easy to obscure what is being raised and spent.

In March, Gov. Arnold Schwarzenegger disclosed that a Republican committee in Hamilton County, Ohio, gave him $44,535. The California disclosure offers no hint of whose money that was. The Ohio reports are not available online; paper copies are in Cincinnati.

Obtained by mail, the Ohio report shows that Carl H. Lindner, owner of the Cincinnati Reds baseball team and chairman of a national insurance company, was by far the largest single donor to the Republican committee that month, having given $31,750. He has been a major donor to the governor, and his insurance company does business in California.

Another issue is timing. Some funds must report donations daily, others only periodically.

Senate President Pro Tem Don Perata (D-Oakland) and Assembly Speaker Fabian Nunez (D-Los Angeles) are raising money to defeat Proposition 77, which would strip legislators of the power to draw district boundaries and give it to retired judges.

Using funds controlled by Senate and Assembly Democrats, Perata and Nunez in recent weeks transferred $2.25 million to the No on 77 effort.

Under the rules governing the lawmakers' funds, donations made since June 30 won't be revealed until the end of October. And money they raise between Oct. 23 and election day won't be disclosed until the end of January.

Schwarzenegger is disclosing his donors on a daily basis even though the law does not require it, his campaign attorneys say.

He "wanted to set a good example ... and shine daylight into how we operate," said spokesman Rob Stutzman.

Not all of the governor's allies are following that example.

Early in the year, Schwarzenegger and Democratic legislators were negotiating to avert the special election, while a petition drive commenced to place Proposition 75 on the ballot. The highly charged initiative could weaken the sway of public employees unions by restricting their ability to raise money for political campaigns.

The Small Business Political Action Committee paid for much of the drive. But the source of its funds was not clear until its periodic filing Aug. 1, about six weeks after Schwarzenegger ordered the election.

The Aug. 1 report showed the Small Business PAC spent $640,000 to qualify Proposition 75 for the ballot. The group's donors were also among the governor's biggest donors, including California Business Properties Assn., which gave $200,000, and New Majority Political Action Committee, at $150,000.

Separate filings made Aug. 1 showed that mortgage lender Ameriquest Capital Corp. was a donor to all three committees, giving a combined $710,000 in the first half of 2005.

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