California watchdog only halfway to bottom of $11 million donation

SAN FRANCISCO, California Mon Nov 5, 2012 9:08pm EST

Voters take advantage of the first day of early voting at the Los Angeles County Registrar-Recorder/County Clerk's office in Norwalk, California October 25, 2012. REUTERS/Alex Gallardo

Voters take advantage of the first day of early voting at the Los Angeles County Registrar-Recorder/County Clerk's office in Norwalk, California October 25, 2012.

Credit: Reuters/Alex Gallardo

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SAN FRANCISCO, California (Reuters) - An Arizona-based nonprofit group that gave $11 million to two ballot proposition campaigns in California was forced by court order on Monday to reveal the organizational source of the money, but the individuals behind the donation remain a mystery.

The group, Americans for Responsible Leadership, which has fought to keep the identity of its financial backers secret, complied with a California Supreme Court ruling by revealing that its contribution originated from a second entity known as Americans for Job Security, a pro-business advocacy organization.

According to the state's Fair Political Practices Commission, the group also acknowledged by letter that it was merely an intermediary in transferring funds to the campaign recipients and further revealed the existence of a secondary intermediary group called the Center to Protect Patient Rights.

The commission, California's election watchdog, said Americans for Responsible Leadership had admitted to having engaged in "campaign money laundering" in providing $11 million to the two politically conservative proposition campaigns.

The chair of the commission, Ann Ravel, said the disclosure was a victory, but nonetheless showed the shortcomings of state campaign finance law, since voters would not know the ultimate sources of the money on Election Day on Tuesday.

"While we did not get a lot of information about the individual human donors, ultimately we hope that we will be able to obtain that. This is not the end of the road," Ravel told Reuters.

One of the campaigns funded by the $11 million seeks to defeat a ballot tax initiative sponsored by Democratic California Governor Jerry Brown known as Proposition 30. The other, Proposition 32, seeks to win passage of a separate measure to ban payroll deductions for political purposes, a proposal seen as a potential blow to labor unions.

The episode underscores the murky nature of large, anonymous contributions that have proliferated since a U.S. Supreme Court decision in 2010 allowing unlimited giving by corporations and unions so long as they operate independently of the political campaigns they support.

The $11 million donation itself has become fodder for the campaign, as Brown and his supporters have sought to portray their opponents as tools of rich, out-of-state, hidden interests.

"Secret $11M Az anti-30 donors keep giving + giving... to us. Great issue 4 closing stretch - person behind curtain always scarier," Brown adviser Steve Glazer tweeted on November 2.

Ravel said evidence of a conspiracy to obscure donors could lead the attorney general to press felony charges and that her commission could seek an $11 million fine as well as disgorgement of the $11 million donation.

Americans for Jobs Security did not return calls requesting comment.

The intermediary funding group, the Center to Protect Patient Rights, is a non-profit headed by an Arizona political consultant, Sean Noble, who is active in Republican and conservative politics.

He was a speaker at a meeting organized by billionaires David and Charles Koch, politically conservative brothers who have held conferences for like-minded donors. Noble was also on the agenda of a June 2010 meeting published by a left-leaning non-profit, the Center for American Progress Action Fund.

Noble did not return a phone call, and an email to Koch Industries was not answered.

The Patient Rights group has funneled tens of millions of dollars to other tax-exempt groups, according to the Center for Responsive Politics, a group that tracks campaign finance.

The $11 million California donation was one of the single largest contributions in the 2012 election season in the state, and is also the largest out-of-state donation from one independent non-profit to another for the purposes of influencing an election.

Dan Newman, founder of Maplight, a non-partisan group that researches campaign finance, said lawlessness had won, since the individual donors would not be known before Tuesday's election.

"Any fine the commission would reasonably levy is trivial compared with the stakes in this election for all Californians for decades," he said.

(Additional reporting by Tim Gaynor and Mary Slosson. Editing by Steve Gorman and Christopher Wilson)

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