Two groups that used secret political donations haven’t paid penalties


SACRAMENTO — State authorities have yet to receive $15 million in penalties they imposed on campaign groups after a headline-making investigation into secret political donations.

The money is owed to California’s general fund, where it could support government programs.

Two Arizona nonprofits paid $1 million in fines for their role in hiding the source of political cash sent to California in 2012. But the two campaign groups that received and spent the money were ordered to pay $15 million and have sent nothing — seven weeks after the Nov. 30 deadline.


One of those groups, the Small Business Action Committee, disputes its $11-million penalty and had only $11,260.74 in the bank as of June 30, according to the latest reports available. The other group, the California Future Fund for Free Markets, faces a $4-million penalty but has disbanded. The penalties were levied in October by the California Fair Political Practices Commission.

“I don’t know if they’re ever going to see the full amount,” said Jessica Levinson, a Loyola Law School professor who tracks campaign finance issues. “It can be very difficult to ever collect the money.”

The yearlong investigation showed fundraisers shuttling secret political contributions — “dark money” — into California to fight Gov. Jerry Brown’s 2012 tax-hike campaign and to promote a measure intended to curtail unions’ political influence.

As part of the scheme, donations were sent to the Phoenix nonprofit Center to Protect Patient Rights, which is run by a political consultant tied to billionaire Republican contributors Charles and David Koch.

Campaign cash was then relayed through other nonprofits to the two campaign groups registered in California. They spent the money on political advertising.

State regulators said the transfers violated California law because they were not properly disclosed. The Center to Protect Patient Rights and a second Arizona group, Americans for Responsible Leadership, agreed to a $1-million fine and paid it in October.

The $15 million that the California-registered groups were ordered to pay is equivalent to the money they received from Arizona.

“If we do not receive full payment by November 30, 2013, it will become necessary to take formal steps to collect the funds,” the state wrote to the campaign groups in October.

But the state cannot take legal action to compel payment until a judge certifies the $1-million settlement, said Gary Winuk, enforcement chief at the Fair Political Practices Commission.

Phil Ung, who filed a complaint over the donations from Arizona when he worked at California Common Cause in 2012, said he hopes the state aggressively pursues the penalties.

“If this is something the FPPC truly feels is a violation of law, the FPPC should truly go after them,” he said.

Winuk said the state has never failed to collect such a penalty, although the sums levied are typically much smaller, usually about $5,000 or less.

The California Future Fund has dissolved. Its treasurer, Chris Marston of Alexandria, Va., said California authorities have not come to him requesting payment. He was an addressee of the state’s October letter, but Marston said his only responsibility at the organization was making sure forms were filed correctly and on time.

“The money comes in, and I record where it comes from,” he said. “The money comes out, and I record where it was spent.”

The Small Business Action Committee has argued it shouldn’t face a financial penalty because it was not accused of wrongdoing by regulators. The state’s position is that the money the group received was tainted and must be forfeited.

“There’s no money to pay,” Steve Churchwell, a lawyer for the committee, told reporters in October. “But even if there were…. I would never let my client do something that wasn’t required by the law.”

Beth Miller, a spokeswoman for the Small Business Action Committee, said Wednesday that the group has been in conversations with state authorities, “and we expect those to continue.”