Campaign organization pays state $300,000 of $11 million owed

<i>This post has been corrected. See the note below for details.</i>

SACRAMENTO — A campaign group that received $11 million in “dark” political contributions and now owes it to the state has paid only $300,000.

California’s ethics agency on Friday announced receipt of the funds from the political arm of the Small Business Action Committee, whose president said the group’s PAC would pay no more and would close.

The state has yet to collect any money from a second group, the California Future Fund, which owes $4 million but has shut down. An attorney for the organization did not return calls Friday.


The two organizations received the contributions in 2012 from Arizona nonprofit groups that kept mum about where the money had come from.

After investigating the donations, the state found that the source of the funds had not been properly reported by the Arizona groups, and thus the contributions were tainted.

The California committees were ordered to forfeit equivalent sums to the general fund, where the money can pay for government services.

The Arizona groups have paid $1 million in fines for their role in hiding the donors’ identities.

On Friday, a Fair Political Practices Commission official called the $300,000 payment “a win for Californians and for campaign finance disclosure.”

“This case had unique circumstances because it involved two of the largest campaign contributions ever made in California,” said Gary Winuk, the commission’s chief of enforcement.


Joel Fox, president of the Small Business Action Committee, said his group settled its case reluctantly.

“As a result of an obscure law, the FPPC was required to seek a judgment for disgorgement,” Fox said.

He disputes the constitutionality of that law but said he preferred not to fight the state in court. He views the $300,000 payment as a settlement, he said.

Kathay Feng, president of California Common Cause, noted that the $300,000 is “a small fraction” of the $15 million that the two groups owe the state.

“The difficulty of collecting these kinds of fines only underscores the need for stronger campaign disclosure legislation in California,” she said, “to ensure that voters are able to make informed decisions based on who is funding campaigns.”

The money from Arizona went to the fight against Gov. Jerry Brown’s 2012 ballot measure to increase taxes, which voters passed, and to the promotion of a measure intended to reduce the influence of unions, which was defeated.


Originally, money was donated to a Phoenix nonprofit called the Center to Protect Patient Rights, which is run by a political consultant tied to billionaire Republican contributors Charles and David Koch.

The center sent money to the campaign committees, which spent it on political advertising.

[For the record 11:05 a.m. PST Jan. 25: A headline with an earlier version of this post stated that the Small Business Action Committee violated disclosure rules. The committee did not violate those rules.]