Published: 2012-11-06

Pyrrhic Victory in CA Election Donor Disclosure Case

For the last two weeks before the 2012 election, the California Fair Political Practices Commission has been battling Americans for Responsible Leadership, an Arizona non-profit organization, to obtain the names of donors who donated to its $11 million contribution to campaigns trying to defeat Proposition 30 and support Proposition 32.

The legal wrangling included a preliminary injunction issued by a Sacramento county judge on October 31, 2012, which ordered that ARL turn over its donor records. ARL appealed to the CA Supreme Court, and after a teleconference on Sunday afternoon, the CA Supreme Court unanimously ordered enforcement of the injunction and gave ARL just one hour to comply. Three hours later, ARL submitted an emergency request for a temporary stay and the CA Supreme Court denied the request.

ARL finally disclosed their donor list Monday morning, November 5, 2012, just one day before the election.

So who are these donors that spent $11 million to defeat Governor Brown's Proposition 30 initiative? Wait for it….

According to a press release from the CA Fair Political Practices Commission, the true source of the contribution is Americans for Job Security, who funneled the funds through a second intermediary, The Center to Protect Patient Rights.

That's right. The donors disclosed are more ambiguously named Super PACs.

FPPC Says ARL engaged in Campaign Money Laundering

Importantly, the FPPC concluded that actions taken by ARL amounted to campaign money laundering.

"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," reads FPPC's statement.

The California Political Reform Act of 2012

The California Political Reform Act was originally passed as Proposition 9 in 1974. The Act has undergone revisions and amendments in the years since its original passage.

Among its many provisions, the Act states:

If a person or combination of persons who directly or indirectly receives contributions totaling $1,000 or more, the group is a committee (Govt. Code s. 82103(a)).

If a group qualifies as a committee pursuant to Govt. Code s. 82013(a) and contributes ten thousand dollars or more in connection with an election, the group must file a supplemental pre-election statement no later than 12 days before the election. (Govt. Code s. 84202.5).

No person shall make a contribution on behalf of another, or while acting as the intermediary or agent of another, without disclosing to the recipient of the contribution both his own full name and street address, occupation, and the name of his employer. The recipient is then required to report this information in its filed statement and it must be done prior to the election (Govt. Code s. 84302).

According to the FPPC, ARL did not follow any of these requirements.

Going Forward

Despite the letdown in not finding out names of actual people who donated the money to ARL, the FPPC believes that this was an important victory for transparency in political funding.

In an issued statement, Ann Ravel, Chair of the FPPC said: "The persistence and hard work of the FPPC has won a significant and lasting victory for transparency in the political process. 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."

However, Ms. Ravel acknowledged that improvements needed to be made. "This case also demonstrates the need for reform to make sure true donors are disclosed and can't hide behind innocuous committee names. The people of California deserve better."

The Political Reform Act does provide for enforcement procedures and penalties including criminal and civil penalties.

Unfortunately, there won't be any answers or consequences before Election Day.

Who Spent Money on CA Propositions in 2012

For an enlightening read on the amount of money spent for and against CA propositions in the 2012 election, the list of the Ballot Measure Committee Sources Totaling More than $10,000 can be found here.