PAC received $11 million of anonymous money for Prop 30 and Prop 32.

by Brian Leubitz

It turns out that everything comes around in the end.

The political arm of the Small Business Action Committee (SBAC) filed official termination papers on Monday, six months after agreeing to hand over $300,000 in campaign cash to state officials for accepting what turned out to be the largest anonymous donation to a political effort in California history. (KQED / John Myers)

If you don’t remember exactly what happened, check the dark money tag. Long story short, a few payments, totaling over $10 million, were dropped into the SBAC accounts right before the November 2012 election to fight for Prop 32 (unions) and against Prop 30 (Brown’s tax measure). Common Cause filed a complaint, and the FPPC eventually came down with the biggest fine ever.

Now, the fine would have worked out just fine if those meddling good government types hadn’t gotten in the way of the profligate spending right before the election. That fine is just another cost of buying an election, if you have that kind of money. But, in the end, the problem was that the money played directly into the campaign message that the Prop 32 opponents (including me) had been stating for the past 6 months. While the SBAC was able to spend a lot of money right before the election, it could be argued that the earned media was just as valuable for the other side.

Closing down a PAC isn’t really that big of a deal, because it isn’t hard to open another one. If Joel Fox or his compatriots have any big plans, there is no doubt that a similar group will be up and running in a few days. Nonetheless, it does mark something of a turning of the page on the 2012 election.

$10 million disappears in right-wing money laundering operation

by Brian Leubitz

How go those Gap jeans you are wearing today? And your Charles Schwab account is growing, I’m sure. And, of course, you totally bought Eli Broad’s support of Gov. Brown’s tax measure, right?

Well, welcome to the world of dark money, a bizarro land where people get to say and do very different things. Reports released by state investigators show a complex money laundering scheme involving several shady right-wing money movers and organizations, all to help hide the donors of about $25 million intended to fight against Gov. Brown’s tax measure, Prop 30, and for the anti-labor measure, Prop 32. While many of the names will be unfamiliar, some of them are pretty much household names. But these are people that don’t really want the attention, they just want to get their way. Because they are rich and that is what happens.

So, a pair of Republican consultants, Tony Russo and Jeff Miller, went about laundering the money through a vast network of Koch brother connected organizations in order to hide the true source of the money. Just to be clear, there is a word for that here in California: illegal.

The Fisher family, of the clothing firm Gap Inc., contributed more than $9 million. San Francisco investor Charles Schwab gave $6.4 million, and Los Angeles philanthropist Eli Broad sent $1 million.

The money went to a Virginia nonprofit that would use it to pay for the ad blitz and be allowed to keep the contributors secret. Nonprofits, unlike political action committees, are not required to identify their donors under federal law. … But things went from bad to worse. Although Russo handed over $25 million, only about $15 million ended up back in California. And when the money surfaced, it sparked an investigation by state authorities, who last month levied $16 million in penalties against the Arizona group and three others.(LA Times

Somewhere along the line, Sean Noble, a Koch-affiliated operative, decided that he actually wasn’t into sending the last $10 million back to California through their little washing machine. The attention had gotten to be too much. The fact that Russo claims he still doesn’t know what happens to that cash is something of a funny post script.

But the real fight is over the large penalty handed down to the Small Business Action Committee(SBAC), the California PAC that spent the money attacking Prop 30 and supporting Prop 32. The FPPC levied a “disgorgement” penalty that requires the group to pay to the state an amount of money equal to the dark money that they accepted. Of course, the SBAC is fighting the fine, and the result of that fight could mean a lot for how ballot measures are run over the next few years.

Perhaps if voters had easy access to more information, they could simply vote against any initiative campaign that was using the shady money. But in the real world, cash is still king.  If the fine is upheld, dark money could stall at the state border. If it is overturned, expect the secretive cash to become an even bigger (yet still overwhelmingly shady) tool in initiative campaigns.

Photo credit: Mayor Gavin Newsom on Flickr. Mayor Newsom (a prominent supporter of Prop 30) appeared with Charles Schwab at the opening of the Charles Schwab flagship space in San Francisco.

by Steve Smith, California Labor Federation

California’s Fair Political Practices Commission today sent a strong message to shadowy out-of-state special-interest groups and donors trying to influence our state’s elections by levying record fines for contributions to committees that supported Prop 32 and opposed Prop 30.

According to the Sacramento Bee:

In a campaign finance case watched around the country, California’s political watchdog has levied a $1 million fine against two non-profit groups for inappropriately laundering money during last year’s ballot initiative wars.

The Fair Political Practices Commission announced the settlement with the Center to Protect Patient Rights and Americans for Responsible Leadership, two groups based in Arizona that the FPPC describes as part of a network operated by the conservative Koch brothers.

The commission also sent letters to two California committees demanding they pay the state general fund more than $15 million they received from groups that didn’t properly report the source of their funds.

These groups used every dirty trick in the book to try to hoodwink voters into passing the pernicious Prop 32, a measure which would have silenced workers, and defeat Prop 30, the tax measure to fund our schools. Ultimately, they failed because voters saw through the façade.

Reaction was swift from union leaders to this landmark settlement.

California Labor Federation Leader Art Pulaski:

With today’s record fine, California sent a strong message to shadowy special-interest groups that we won’t tolerate illicit campaign donations that undermine our democracy. We applaud Fair Political Practices Commission (FPPC) Chair Ann Ravel for aggressively pursuing this investigation and holding these out-of-state dark-money groups accountable for violating California law.

California Professional Firefighters President and Alliance for a Better California Chair Lou Paulson expressed outrage that the California-based Small Business Action Committee (SBAC) was the lynchpin for the illegal effort. SBAC was ordered by the FPPC to repay the $11 million it received from the out-of-state front groups.

The FPPC action offers final proof of an open secret: Corporate California is using dark money to try to game California’s election process. It’s clear there was a calculated effort by California political operatives to hide the involvement of California interests in the Prop. 30 and 32 campaigns. We’re appalled that the SBAC would be the conduit for this money-laundering scheme.

SEIU California President Laphonza Butler also applauded today’s action, yet noted more needs to be done to shed light on these dark money groups that try to rig elections in California.

With the identity of the secret donors still unknown, it’s clear that our campaign finance laws contain loopholes that allow shadowy front groups to deceive voters by hiding the source of campaign dollars. We call on legislators to strengthen campaign finance laws to prevent billionaires and corporate titans like the Koch brothers from using shadowy front groups to buy California elections.

Money laundered from engineering trade group to a campaign against Prop 30 and for Prop 32

by Brian Leubitz

This was bound to happen at some point, the first of the donors to the so-called “Small Business Action Committee” that supported Prop 32 and opposed Prop 30 has been outed by reports.

An engineering trade organization that advocates for privatizing government work has been tied to the group behind the $11 million dark money donation that prompted a legal showdown in California last fall.

The $400,000 that can now be traced back to a group called the American Council of Engineering Companies in California (ACEC-CA) may not be the biggest of disclosures, but when it comes to dark money in politics, any transparency at all is a revelation.

Campaign finance reports released last week in California show that the Sacramento, Calif.-based ACEC-CA wrote two checks to the conservative group Americans for Job Security in 2012, one in July for $150,000 and one in September for $250,000, which were described in disclosures to California’s Secretary of State as intended for “issue advocacy.”(TPM)

Now, the biggest checks were still written by a man we know all too well, Charles T. Munger, the son of Warren Buffet’s business partner. But, we may yet learn a few more names about who else laundered a bit of cash to support Prop 32’s anti-labor agenda.