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Disclosure of Arizona group's donors yields more mystery

Elections officials force a group that gave $11 million to a California campaign fund to reveal its backers. But the backers turn out to be other nonprofits. The attorney general vows to press on.

November 05, 2012|By Chris Megerian and Evan Halper, Los Angeles Times
  • Derek Cressman of Common Cause talks about the $11-million contribution in October.
Derek Cressman of Common Cause talks about the $11-million contribution… (Rich Pedroncelli, Associated…)

SACRAMENTO — After a frantic court battle, state election officials succeeded Monday in forcing an Arizona group to disclose the identities of contributors that provided $11 million to a California campaign fund.

But the revelations added little clarity for voters. The mystery donors turned out to be other nonprofits, whose individual contributors remained secret.

The money started with the Virginia-based Americans for Job Security and was transferred to a group called the Center to Protect Patient Rights. Over the course of a few days in October it was sent to the Arizona group, Americans for Responsible Leadership, and then transferred again to California.

Finding the source of the money "becomes daunting," said Derek Cressman of Common Cause, an activist organization that filed the original complaint about the donation. "How many layers can you drill through?"

The $11-million donation is being used to fight Gov. Jerry Brown's tax-hike plan, Proposition 30, and promote an initiative that could limit political spending by unions, Proposition 32.

Federal law allows nonprofits to keep donors confidential. California regulators, however, sought to curb anonymous contributions with a new rule in May requiring that donors be disclosed if they give to nonprofits with the intention of spending on state campaigns.

Discovering who wrote the original checks could prove impossible, but California Atty. Gen. Kamala Harris said authorities would continue to search for the source of the funds past election day.

"This case is not over," she said. "We'll be relentless in getting to the bottom of this."

The case highlighted the difficulty of determining who is funding some of the most hotly contested political campaigns, as big-ticket donors rely on a growing national network of advocacy groups to secretly shuttle money around the country.

Americans for Responsible Leadership is represented by a Virginia law firm, Holtzman Vogel Josefiak, that has worked for other conservative advocacy organizations concealing their donors. The firm also has shared a mailing address with American Crossroads, a powerful fundraising organization founded by Republican strategist Karl Rove.

The Center to Protect Patient Rights is run by Sean Noble, a key participant in the political activities of Charles and David Koch, the billionaire energy executives and GOP activists. During the 2010 midterm elections, the center was one of the primary conduits for anonymous political contributions, sending more than $55 million to 26 groups allied with Republicans, according to tax filings.

In a statement, a spokeswoman for Koch Industries said the Koch brothers were not involved in the California contribution.

"We have not contributed to any group with the intent of helping Proposition 32 or defeating Proposition 30 in California," Melissa Cohlmia said.

Officials at the two nonprofits that funneled the $11 million to Americans for Responsible Leadership did not respond to a request for comment.

Such nonprofits have long existed in politics, but they proliferated following the U.S. Supreme Court's 2010 decision in Citizens United vs. Federal Election Commission, which allowed unlimited spending by corporations on independent political activity.

Much of the money is spent on the presidential election and congressional contests. This year, the nonprofits spent about $302 million on federal races, according to the Center for Responsive Politics in Washington, D.C. — a nearly four-fold increase from 2008.

California's aggressive effort to force disclosure by these groups follows similar attempts elsewhere.

Americans for Job Security, one of the nonprofits involved in the $11-million donation, was investigated by Alaskan officials for its role in a 2008 mining referendum.

Authorities concluded that the organization's "sole purpose is to allow individuals and corporations to financially support various causes without having to disclose that financial support."

That investigation showed how a wealthy landowner sent $2 million to the group, which then funneled most of it back to Alaska to try to fend off construction of a mine near the landowner's property.

Americans for Job Security agreed to a settlement, paying a $20,000 fine and pledging "not to engage in similar activity" again in Alaska.

In 2009, the Federal Election Commission also probed Americans for Job Security. The commission's general counsel concluded the group had illegally spent $17 million on political ads and advised the commission to require the nonprofit to report the names of its donors. The commission, however, deadlocked in a 3-3 party-line vote and took no action.

In California, getting Americans for Responsible Leadership to disclose that its money came from other nonprofits was a major undertaking for the state's Fair Political Practices Commission. The commission was rebuffed for two weeks as it tried to audit the group's records to determine whether it was improperly shielding donors' identities.

On Sunday, in an unusually swift decision, the California Supreme Court ordered the nonprofit to turn over its records.

Still, Daniel G. Newman, who tracks campaign spending for the organization MapLight, found the outcome unsatisfying.

In a statement, he said, "lawlessness has won."

chris.megerian@latimes.com

evan.halper@latimes.com

Times staff writers Matea Gold in Washington and Paige St. John and Patrick McGreevy in Sacramento contributed to this report.

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