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SACRAMENTO -- Assembly Speaker Fabian Nunez used a small charity as a conduit to funnel almost $300,000 from companies and organizations with business in the Capitol to events that helped him politically.
By giving to the charity, the donors whom Nunez solicited earned tax deductions for which they would not have qualified had they given directly to Nunez's campaign accounts. They were also able to donate more than the $7,200 maximum allowed under California's campaign fundraising rules.
Those donors include Zenith Insurance Co., AT&T, Verizon Communications Inc., the California Hospital Assn., the state prison guards union, Pacific Gas & Electric Co. and Blue Cross of California -- all groups with high stakes in legislation.
The money was used for events including "Assembly Speaker Fabian Nunez's Toy Drive," "Assembly Speaker Fabian Nunez's Soccerfest 2006," "Assembly Speaker Fabian Nunez's Inaugural Legislative Youth Conference" and airplane flights for 50 children from Nunez's district for "Assembly Speaker Fabian Nunez's Sacramento Student Summit," according to state documents.
That arrangement may have violated federal tax laws, according to experts. The Internal Revenue Service has a strict policy against charities serving as a pass-through for funds.
In addition, experts say, a plan under which a politician solicits a donation to a charity and then directs how it can be used may violate state ethics rules.
"It raises the question of whether these donors are making a contribution to a charity or simply currying favor with a politician -- and getting a tax deduction for it," said Jack Siegel, a lawyer and accountant who advises nonprofits nationwide through his Chicago firm, Charity Governance Consulting.
Records Nunez filed with the state show that donations to the charity, Collective Space Inc., ranged from $2,500 to $50,000 in 2005 and 2006. The last year in which the charity served as a conduit for Nunez was 2006.
Nunez directed the donations to the charity, and his staff told the charity where to spend the money. No mention was made of the charity in the toy giveaway fliers posted around Nunez's downtown district.
Indeed, the charity, based in the MacArthur Park neighborhood of Los Angeles, was not supposed to be operating at all at the time. State tax authorities suspended it two years ago -- before the donations -- for failing to file tax returns.
In a telephone interview, Nunez, a Democrat who represents parts of Los Angeles, said he did not learn that state authorities had suspended the charity until The Times asked about it recently.
He said soliciting donations to Collective Space from those who also were seeking legislative help in Sacramento was "absolutely appropriate."
"It's appropriate to request of corporations to be good corporate citizens, especially if you can put those monies or resources in the hands of the neediest Californians, absolutely," he said.
Nunez insisted that his solicitation of donations was not intended to benefit himself. But when asked why events featured his name, he said that "when you're doing good things like this, nothing wrong with letting people know that you worked on it or made it happen."
Donors, most of whom had already given money to his campaign accounts, got nothing in return, Nunez said, an assertion echoed by donors interviewed by The Times.
In an e-mail to The Times, Nunez spokesman Steve Maviglio said Collective Space "simply served as a conduit for the funds; the speaker did not raise money for Collective Space."
But experts say that may be precisely the problem under federal tax laws.
Charities can, under certain circumstances, lend their nonprofit status to projects they do not conceive themselves, but "you are not supposed to be a conduit," said Gregory Colvin, a San Francisco lawyer specializing in nonprofit organizations.
The sums requested for Collective Space are part of more than $484,000 that Nunez has reported raising for various nonprofit groups since 2004, according to reports filed with the Fair Political Practices Commission, which collects information from lawmakers who solicit charity donations.
Nunez is not alone in steering large donations to favored charities. In reports filed in 2006 and so far this year, Assembly members took credit for nearly $2 million in donations to such charities as domestic violence shelters and youth centers, largely given by interests seeking help in the Capitol.
By giving to the charity, the donors whom Nunez solicited earned tax deductions for which they would not have qualified had they given directly to Nunez's campaign accounts. They were also able to donate more than the $7,200 maximum allowed under California's campaign fundraising rules.
Those donors include Zenith Insurance Co., AT&T, Verizon Communications Inc., the California Hospital Assn., the state prison guards union, Pacific Gas & Electric Co. and Blue Cross of California -- all groups with high stakes in legislation.
The money was used for events including "Assembly Speaker Fabian Nunez's Toy Drive," "Assembly Speaker Fabian Nunez's Soccerfest 2006," "Assembly Speaker Fabian Nunez's Inaugural Legislative Youth Conference" and airplane flights for 50 children from Nunez's district for "Assembly Speaker Fabian Nunez's Sacramento Student Summit," according to state documents.
That arrangement may have violated federal tax laws, according to experts. The Internal Revenue Service has a strict policy against charities serving as a pass-through for funds.
In addition, experts say, a plan under which a politician solicits a donation to a charity and then directs how it can be used may violate state ethics rules.
"It raises the question of whether these donors are making a contribution to a charity or simply currying favor with a politician -- and getting a tax deduction for it," said Jack Siegel, a lawyer and accountant who advises nonprofits nationwide through his Chicago firm, Charity Governance Consulting.
Records Nunez filed with the state show that donations to the charity, Collective Space Inc., ranged from $2,500 to $50,000 in 2005 and 2006. The last year in which the charity served as a conduit for Nunez was 2006.
Nunez directed the donations to the charity, and his staff told the charity where to spend the money. No mention was made of the charity in the toy giveaway fliers posted around Nunez's downtown district.
Indeed, the charity, based in the MacArthur Park neighborhood of Los Angeles, was not supposed to be operating at all at the time. State tax authorities suspended it two years ago -- before the donations -- for failing to file tax returns.
In a telephone interview, Nunez, a Democrat who represents parts of Los Angeles, said he did not learn that state authorities had suspended the charity until The Times asked about it recently.
He said soliciting donations to Collective Space from those who also were seeking legislative help in Sacramento was "absolutely appropriate."
"It's appropriate to request of corporations to be good corporate citizens, especially if you can put those monies or resources in the hands of the neediest Californians, absolutely," he said.
Nunez insisted that his solicitation of donations was not intended to benefit himself. But when asked why events featured his name, he said that "when you're doing good things like this, nothing wrong with letting people know that you worked on it or made it happen."
Donors, most of whom had already given money to his campaign accounts, got nothing in return, Nunez said, an assertion echoed by donors interviewed by The Times.
In an e-mail to The Times, Nunez spokesman Steve Maviglio said Collective Space "simply served as a conduit for the funds; the speaker did not raise money for Collective Space."
But experts say that may be precisely the problem under federal tax laws.
Charities can, under certain circumstances, lend their nonprofit status to projects they do not conceive themselves, but "you are not supposed to be a conduit," said Gregory Colvin, a San Francisco lawyer specializing in nonprofit organizations.
The sums requested for Collective Space are part of more than $484,000 that Nunez has reported raising for various nonprofit groups since 2004, according to reports filed with the Fair Political Practices Commission, which collects information from lawmakers who solicit charity donations.
Nunez is not alone in steering large donations to favored charities. In reports filed in 2006 and so far this year, Assembly members took credit for nearly $2 million in donations to such charities as domestic violence shelters and youth centers, largely given by interests seeking help in the Capitol.
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