Virginia Group Funneled Secret Money to Fight Tax Measure

A nonprofit group that gave $11 million to fight California ballot initiatives to raise taxes and curb union political influence said it got the money from another organization whose donors remain anonymous.

The California Fair Political Practices Commission had sued to force Americans for Responsible Leadership to disclose its donors. As part of a settlement, the regulator said it was informed that the money came from Americans for Job Security in Alexandria, Virginia, through the Center to Protect Patient Rights in Phoenix. The Virginia group said in a tax filing that its cash comes from members it doesn’t identify.

The donation is part of a wave of secret money flowing through nonprofits to hide the identities of the true sources in the aftermath of the U.S. Supreme Court’s 2010 Citizens United decision, federal records indicate. Under California law, refusing to disclose the donors amounted to “campaign money laundering,” the regulator said today in a statement.

“After late-night discussions, Americans for Responsible Leadership and the FPPC reached a settlement,” Matt Ross, a spokesman for the Phoenix-based leadership group, said in a statement. “The commission has received specific documents it requested.”

The commission asked a court to force the leadership group to name the ultimate source of the financing after the organization refused to comply with an audit to show whether it violated laws aimed at letting voters know who is bankrolling ballot-measure campaigns. California’s Supreme Court yesterday upheld a lower court order requiring the disclosure.

Republican Boosters

Both Americans for Job Security and the Center to Protect Patient Rights have spent tens of millions of dollars to boost Republican candidates and causes, using money from anonymous donors, U.S. Internal Revenue Service filings show.

California Attorney General Kamala Harris said “further investigation” of the group’s disclosure is warranted.

“It won’t be over on Election Day,” Harris said by phone from Ohio. The FPPC could ask her office to get involved, she said, adding, “We are not at that point.”

The case is California Fair Political Practices Commission v. Americans for Responsible Leadership, 34-2012-00131550, California Superior Court, Sacramento County (Sacramento).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE