Oct. 25--Political groups with ties to the conservative Koch brothers acknowledged Thursday they gave about $15 million to block a tax increase and weaken union influence in California last year without properly reporting the source of the money.
In a settlement with the state Fair Political Practices Commission, the groups agreed to pay a $1 million fine, the largest the agency has ever levied for a campaign violation.
The Arizona-based groups, the Center to Protect Patient Rights and Americans for Responsible Leadership, are part of a network of nonprofits operated by billionaire businessmen Charles and David Koch, agency officials said. The brothers have used their groups, which aren't required to reveal the names of donors, to fund a variety of pro-business and anti-union efforts.
The settlement didn't require release of the original individual donors to the effort. But a sloppily redacted document released by the FPPC shows that all but six of 132 contributions came from California donors.
The commission also sent letters to two committees demanding they pay the state general fund the improperly reported $15 million they received.
The Arizona groups jumped into California politics for the first time last year to support Proposition 32 -- intended to curb the ability of labor unions to raise political cash -- and oppose Proposition 30, a tax increase pushed by Democratic Gov. Jerry Brown.
A Koch representative issued a statement denying that the brothers played a role in the California election.
"We had no involvement whatsoever, financial or otherwise, neither directly nor indirectly, on anything to do with Prop 30 or Prop 32," said an emailed statement from Rob Tappan, who represents the Koch brothers, their foundations and the Koch Industries companies. "In addition, we did not give directly or indirectly to any nonprofit group in support or defeat of these ballot initiatives."
Representatives for the two Arizona groups said they simply made a reporting mistake.
"It was a good-faith error," said Barrett Marson of Americans for Responsible Leadership. "There was no intent to skirt or deceive California officials."
The lawyer representing the Center to Protect Patient Rights said his client got confused by California's campaign finance laws because they create a "very complicated environment with many, many regulations."
"This was the first contribution they had ever made in the state of California," Malcolm Segal said. "They believed they were in compliance."
Americans for Responsible Leadership gave $11 million to the combined effort just weeks before last November's election, in the heat of California's initiative wars. But it didn't reveal that its money came from the Center to Protect Patient Rights until the FPPC brought the group to court. Americans for Responsible Leadership was a largely unknown group when the contribution came in, while the Center to Protect Patient Rights is more widely associated with the Kochs.
"Secrecy and money don't mix well in a democracy," Brown said in a statement. The Democratic governor said the case also shed more light on loopholes that allow some donors with political agendas to conceal their identity.
When donors give directly to a political campaign, their identities become public in campaign finance reports. When donors give to a nonprofit, however, the law does not require their identities be disclosed. Campaigns are allowed to use their money to expressly ask for votes, while the nonprofits are supposed to confine themselves to a broader discussion of issues.
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