Two secretive Arizona-based groups with links to the Koch brothers have agreed to pay $1 million in fines and admitted to making millions of unlawful intermediary contributions during the 2012 California campaign season.
NPR's Ina Jaffe filed this report for our Newscast unit:
"The two non-profits linked to industrialists Charles and David Koch illegally donated a total of $15 million. Part of the money went to a campaign to defeat a tax increase backed by California Governor Jerry Brown. It prevailed anyway. Some of the money went to promote an initiative that would have made it harder for unions to engage in politics. That was defeated.
"California's Fair Political Practices Commission said it will sue to recover the rest of the $15 million in illegal donations from the California organizations that received them.
"At the federal level, non-profits, like the ones fined by California, are allowed to keep their donors secret. The investigation was spurred by a complaint from California Common Cause."
The two organizations are the Center to Protect Patient Rights and Americans for Responsible Leaderships.
As The New York Times reports the two groups are part of a network that has played an influential role across the country and has grown more powerful as regulation of campaign donations has loosened, in large part due to the Supreme Court's Citizens United decision.
The paper adds:
"Records and documents uncovered during the California investigation provide a rare glimpse into how such groups closely coordinate transfers of money that mask the sources of the contributions and skirt state and federal disclosure rules.
"'This case highlights the nationwide scourge of dark money nonprofit networks hiding the identities of their contributors,' said Ann Ravel, the commission's chairwoman, in a statement."
Essentially, the California Attorney General explains in a press release, a series of non-profits passed around money in an effort to skirt a California law that requires the disclosure of who donated the money to begin with.
Here's how the AG explains the complex scheme:
"The investigation revealed that a Virginia nonprofit, Americans for Job Security (AJS), raised approximately $28 million in 2012 for issue advocacy opposing tax increases and supporting "pro-paycheck public policy." Current law permits donors to remain anonymous if their contributions are used for issue advocacy. Shortly before the general election, AJS decided that were it to spend the money on issue advocacy at that time, it would trigger a California law requiring disclosure of the funds' sources. Instead, AJS decided to make multiple donations to another non-profit, CPPR, which has a history of funneling millions of dollars to support conservative causes. AJS expected and hoped that CPPR would be able to find other money to support AJS's efforts in California. AJS gave CPPR a donation of $4.05 million on September 10, 2012, $14 million on October 11, 2012 and $6.5 million on October 19, 2012.
"Following these donations, CPPR made two major contributions of its own. First, on September 11, 2012, CPPR donated $7 million to the Iowa-based American Future Fund (AFF). As an intermediary, AFF then made a contribution of $4.08 million to a third entity, the California Future Fund (CFF). CFF used that money to support Proposition 32 in the California general election.
"CPPR's second contribution occurred on October 12, 2012, in the form of $13 million to ARL. As an intermediary, ARL returned $11 million to California through a contribution to the Small Business Action Committee (SBAC), a campaign committee supporting Proposition 32 and opposing Proposition 30. CPPR's contributions were funneled back to California campaign committees through intermediaries AFF and ARL, which violated civil provisions of the California Political Reform Act of 1974."