Calif. accuses Ariz. group of laundering $11M donation

Michael Winter, USA TODAY | USATODAY

California's political watchdog on Monday accused a Republican-run Arizona group of money laundering after it admitted funneling an anonymous $11 million contribution from two other conservative organizations to influence the outcome of ballot initiatives.

Under court order, Americans for Responsible Leadership, based in Phoenix, declared that it was not the "true source" of the donation to the Small Business Action Committee, a conservative group fighting Proposition 32, which would ban unions from using dues for political purposes, and Proposition 30, Gov. Jerry Brown's temporary tax increase for education and public safety.

The donation actually came from Americans for Job Security, a Republican group in Alexandria, Va. It passed the money through another Phoenix intermediary, the Center to Protect Patient Rights, which is run by a Republican operative who is a former GOP staffer connected to the billionaire Koch brothers.

A Koch Industries spokeswoman said the company and the Koch brothers "have not provided any financial support" to pass Prop. 32 or to defeat Prop. 30, the Sacramento Bee reports.

The Center to Protect Patient Rights is also behind campaigns to defeat two ballot measures in Arizona, one to raise taxes to fund education and the other to open the state's primary elections. The Arizona Republic, published by USA TODAY's parent, Gannett, has details.

Monday's disclosure followed a unanimous ruling Sunday night by the California Supreme Court, which ordered Americans for Responsible Leadership to reveal its donor records. The Phoenix-based group made an emergency appeal to U.S. Supreme Court Justice Anthony Kennedy but later abandoned review by the high court and agreed to reveal to the California Fair Political Practices Commission where it got the money.

The nonprofit group's disclosure does not, however, identify individual donors. The Supreme Court's Citizens United decision allows 501(c)(4) advocacy groups to keep the names of donors secret.

Americans for Responsible Leadership says it "seeks to promote the general welfare by educating the public on concepts that advance government accountability, transparency, ethics, and related public policy issues."

"This isn't going to stop here," Ann Ravel, the head of the Fair Political Practices Commission, told the San Jose Mercury News. "They admitted to money laundering. We agreed to do this without an audit because we wanted to get information to the public before the election. But we in no way agreed this would preclude further action."

Mother Jones provides this background on the groups involved in what it calls "a secret daisy chain of money":

Here's what we know about Americans for Job Security and the Center to Protect Patient Rights. Founded in 1997, AJS is a nonprofit currently run by a little-known Republican operative named Stephen DeMaura. The group runs ads backing GOP candidates and does not disclose its donors. In 2008, staff attorneys at the Federal Election Commission found "reason to believe" that AJS violated the law by not registering as a political committee, but the FEC's three GOP commissioners blocked any action against the group.



The Center to Protect Patient Rights, as first revealed by the Center for Responsive Politics, is an ATM for conservative nonprofit groups backing Republican candidates at the state and federal levels. The group doled out $44 million in 2010 to the likes of Grover Norquist's Americans for Tax Reform, the Club for Growth, and Americans for Prosperity. Those recipients all went on to slam Democrats and boost GOPers in the 2010 elections.



Who funds the Center to Protect Patient Rights is a mystery: As a 501(c)(4) nonprofit, the group does not name its donors. CPPR raked in $13.7 million in 2009, according to tax filings, but said in those same filings that it did not spend any money on fundraising in 2009.



CPPR is said to have ties to billionaires Charles and David Koch and their network of conservative donors. Sean Noble, who runs the group, spoke at a 2010 Koch donor conference; Politico has called Noble a "Koch operative" and the Los Angeles Times described him as a "key operative in the Kochs' political activities." However, no direct connection between CPPR, the Kochs, or their donor network has been established.

California Attorney General Kamala Harris said her office would review whether there were any criminal or civil violations.

"Whether it's the Koch brothers or Karl Rove, this was a brazen attempt to launder money through out-of-state shell organizations, and for the sole purpose of hiding it from the voters in California," Harris told the Bee.