State Sues Backers of Prop. 54

State regulators sued the backers of Proposition 54 on Wednesday, saying they were illegally hiding the names of contributors who gave a total of more than $1.9 million to the initiative, which would restrict government agencies from asking questions about race.

In the lawsuit, the Fair Political Practices Commission demanded that Ward Connerly and his nonprofit organization, the American Civil Rights Coalition, disclose their contributors before the Oct. 7 special election. Connerly said he wouldn’t, and he vowed to fight the case “all the way to the limits: the Supreme Court, the United Nations, the good Lord.”

Critics have charged that Connerly is hiding donors’ names either to protect them from scrutiny or because voters would be turned off if they knew who they were. He insists neither is the case.

The FPPC’s demand for immediate disclosure marks a first for the commission, which usually acts after an election. The suit was filed in Sacramento Superior Court, which scheduled a hearing for Sept. 26, just 11 days before the election.

The FPPC also asked the court to assess penalties that could equal the amount that Connerly’s organization failed to disclose. Steven Russo, head of the FPPC’s enforcement division, said the case involved one of the most serious and flagrant abuses the commission has ever seen.

“It absolutely is,” Russo said in a telephone interview. “We’re dealing with almost $2 million in contributions, and ... a committee that knows it has a filing obligation and has declined to fulfill that obligation.”

He said the commission had tried to negotiate a settlement, but Connerly refused to disclose its contributors.

Connerly said he had been willing to agree to a settlement in which he would disclose the donors and face no penalties, but that the FPPC had reneged on the deal at the last minute.

“And so I, who had never really been comfortable with releasing our list of donors ... in the first place, said, ‘Screw it.’ I think it’s an autocratic agency. I think they have no basis for compelling an organization like the American Civil Rights Coalition.”

A coalition of public policy organizations filed a complaint with the commission last month, saying Connerly, a University of California regent who has long campaigned against affirmative action, was using his nonprofit organization in effect to launder campaign contributions.

Nearly 90% of the money contributed to the Proposition 54 campaign committee came in lump sums from the American Civil Rights Coalition, which solicited funds for the initiative without filing campaign reports. As a result, the FPPC complained, it has been impossible for the public to determine the names of individuals or corporations who are supporting the proposition.

“Voters have a basic right to know who is funding political campaigns,” FPPC Chairwoman Liane Randolph said in a statement issued by the commission. “They are entitled to this information in order to make well-informed decisions at the polls.”

The commission’s action was praised by organizations that had brought the complaint against Connerly.

“We’re delighted,” said Jim Knox, executive director of California Common Cause. “This is really an extraordinary step taken by the commission, which I think underscores the seriousness of the offense.” Knox said he had seen nonprofit organizations use a similar strategy in the past to hide the identity of donors, “but never to this extent.”

Maria Blanco, national senior counsel for the Mexican American Legal Defense and Educational Fund, said it was “a little late in the game” for the commission to act, but she expressed hope that the lawsuit would force disclosure before the election.

“I think people want to know: Where did this come from? It’s a part of the debate,” she said.

She speculated that Connerly was hiding the names of donors because they were reluctant to be associated with the controversial measure. Also, she said, “It may well be that many of them ... are from out of state, which I think raises the issue of non-California people funding a constitutional issue for the voters of California.”

Russo said he hoped the court would act before the election. “Ultimately, it’s up to the court,” he said.

He noted that the FPPC rarely sues, usually settling its disputes through negotiation and the use of administrative settlements. But, he said, most violations are the result of negligence. Connerly’s organization intentionally violated the law, he said.

The American Civil Rights Coalition is dedicated to ending racial or gender preferences, and serves as a fund-raising vehicle for initiatives such as Proposition 54. Its most recent filing with the Internal Revenue Service showed that nearly all its money goes to petition drives, lobbying and Connerly’s salary as chairman.

In a telephone interview, Connerly said the organization supports a variety of initiatives and other efforts in several states, and did not solicit funds specifically for Proposition 54.

In fact, he said, some donors have told him they oppose the measure. He said his organization is on the same legal ground as many of the organizations that oppose the initiative, such as the Lawyers’ Committee for Civil Rights.

He acknowledged that the coalition’s Web site solicited donations for the initiative, but said that was irrelevant. “The people who are involved here,” he said, “couldn’t turn on a computer if their life depended on it.”

“There’s nothing to hide,” he insisted. “If you saw the donors, you’d say, ‘What’s the big deal?’ But there’s a principle involved, and we’re going to stand on that principle.”

The coalition posted a statement on its Web site late Wednesday that elaborated on the principle. It said donors to the organization enjoy a 1st Amendment right to freedom of association “without fear of harassment or reprisal from those who might disagree with one’s views.” Moreover, the statement charged that the lawsuit is “clearly political in nature and is being pursued in an unprecedented and discriminatory fashion.”

The organization suggested that the FPPC should have been equally aggressive in confronting claims that Lt. Gov. Cruz Bustamante had improperly accepted $2 million in contributions from an Indian tribe, using a loophole in the law to get around campaign finance limits

If passed, Proposition 54 would prevent state and local government agencies from collecting information about race, and from using racial classifications in research and reports. There would be exceptions for some medical and law enforcement reports, but health-care and police organizations have been among the strongest critics of the initiative, saying it would unreasonably blindfold them.

“It really will have extraordinary impact on the lives of Californians,” said Elena Stern, spokeswoman for the Coalition for an Informed California, which brought the complaint against the American Civil Rights Coalition.

“If you can’t track, prevent, cure the spread of disease and illnesses, that hurts all of us. It’s bad medicine, it’s bad for business, it’s just bad public policy.”

Connerly, who calls the proposition the Racial Privacy Initiative, has said he believes in a racially blind society. He also argues that in a multiracial, multiethnic society, racial categories are increasingly meaningless anyway.