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Two nonprofits face more than $47,000 in fines over L.A. lobbying forms

Two nonprofits could face fines totaling more than $47,000 from the city Ethics Commission for failing to accurately report how much they had spent on lobbying at City Hall.

Ethics Commission staffers have proposed a fine of $30,000 for the Los Angeles Alliance for a New Economy, an influential organization that has successfully pushed to raise wages for hotel and airport workers, and $17,500 for the Hospital Assn. of Southern California, a regional trade group for hospitals.

The Ethics Commission is scheduled to take up the proposed fines at a meeting next week. If approved, the $30,000 fine for LAANE appears to be the highest penalty that the commission has imposed for violations tied to lobbying disclosures, according to online commission records dating back to December 1992.

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The Times reported a year ago that LAANE, a group allied with labor unions that has repeatedly won victories at City Hall, had failed to fill out key parts of city forms that are supposed to publicly reveal its lobbying activities.

Several of its employees had registered with the city as lobbyists, but the nonprofit did not report any payments to those employees or any related expenses for years at a time. Nor did LAANE report any issues that its employees were lobbying the city about.

LAANE acknowledged last year that it hadn't filled out the forms properly, calling it a mistake, and said it was retaining a law firm to help it correct the errors.

Revised reports that LAANE later submitted to the Ethics Commission showed that the nonprofit spent more than $175,000 on lobbying from October 2011 through September 2014 -- spending that had not previously been reported. The amended reports showed that LAANE had lobbied city officials on revamping the city trash hauling system, increasing wages for hotel workers and many other issues.

“As soon as we realized we made a mistake, we fixed it and gave the Ethics Commission all the information they needed,” LAANE executive director Roxana Tynan said Wednesday. “They’ve recognized that this was an unintentional mistake on our part.”

“We will be paying our fine and making sure that we are on top of this in the future,” Tynan added.

Ethics Commission investigators found similar gaps in the lobbying forms filed by the Hospital Assn. of Southern California.

The group has spoken up about city issues, pushing to exempt hospitals from the city makeover of its trash hauling system and opposing the formation of a city health department.

Like LAANE, the hospital association had registered with the city and filled out city forms but failed to accurately report how much it spent on lobbying, reporting no expenditures for nearly two years.

After Ethics Commission investigators found information suggesting it had, in fact, lobbied during that time, it submitted revised reports that showed more than $108,000 spent during 2013 and part of 2014.

Both LAANE and the hospital association could have faced fines that were twice as high, but Ethics Commission staffers recommended halving their proposed penalties because both groups had cooperated with investigators and had no history of violations at the commission.

Both nonprofits also attributed the errors to misunderstanding the rules, and Ethics Commission staffers wrote that they “found no evidence to the contrary” in either case.

After realizing the errors, “we have since modified our reporting process and procedures,” Marty Gallegos, the hospital group's senior vice president of health care policy and communications said in a statement. “We look forward to putting this matter behind us and continuing our work in advocating for patients and hospitals.”

LAANE faced more violation counts than the hospital association -- and therefore a higher proposed penalty -- because it had handed in inaccurate reports for a longer period of time.

Critics of LAANE, including business advocates who have opposed its efforts, had eyed the amount of money the group spends on lobbying because under federal tax rules governing nonprofits like LAANE, lobbying cannot be a "substantial part" of its activities.(The hospital association is a different kind of nonprofit that is not subject to those same restrictions, according to federal guidelines.)

Tynan said the group had already been fully reporting its lobbying expenses to the federal government, before and after realizing the city errors, and has been considerably under federal guidelines for the maximum it can spend on lobbying.

The highest fine previously imposed by the Ethics Commission in a case tied to lobbying reports was an $18,000 penalty imposed on lobbying firm King R. Woods & Associates in 2000, according to commission records that date back to December 1992. That firm admitted to hundreds of violations, including failing to register scores of clients.

Follow @latimesemily for what's happening at Los Angeles City Hall.

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