For a prominent California consumer group and savvy political consultants, documents reveal a close financial relationship
If there’s a clear mantra for Consumer Watchdog, one of California’s most visible and vocal advocacy groups, it’s that hidden financial relationships shouldn’t shape politics and public policy.
The Santa Monica-based nonprofit has spent more than three decades reprimanding politicians and interest groups for doing the bidding of those who give them money. Its official motto is “expose, confront, change.”
“We are loud, and we speak more of a populist truth than the way people usually talk to each other in Sacramento,” said Jamie Court, Consumer Watchdog’s president.
That voice, though, is funded by donors who are largely shielded from public view. Some of its money, according to a Los Angeles Times review of federal tax documents, was donated through a nonprofit operated at the time by Chris Lehane, an influential political strategist and corporate consultant.
Between 2012 and 2015, Consumer Watchdog accepted $260,000 in donations from Lehane’s group, a nonprofit called Main Street American Values. One $45,000 payment was made only weeks before Consumer Watchdog lent public support to one of Lehane’s clients, Airbnb.
“At the very least, by appearances it makes it look like money is driving the policy,” said Jessica Levinson, a Loyola Law School professor who specializes in ethics and lobbying rules.
Main Street American Values gave nearly $1 million to another group during the years it was led by Lehane, the nonprofit Tides Foundation. Over the same period, Tides gave a similar-sized contribution to Consumer Watchdog.
According to Lehane, 50, none of his nonprofit’s money came from Airbnb. But he declined to identify the sources of his organization’s contributions.
Lehane and longtime business partner Mark Fabiani, 60, once served as advisors to President Clinton and Vice President Al Gore, earning the moniker “masters of disaster” for their skill in winning tough political fights. They served as consultants to some of the nation’s most powerful corporate players: AT&T, Los Angeles Clippers owner and former Microsoft CEO Steve Ballmer, and Hollywood producers during the 2007 writers’ strike.
For three years, Lehane and Fabiani served as directors of Main Street American Values — an organization with no staff and a low public profile. In every year the nonprofit made donations, it sent checks to Consumer Watchdog. Lehane said in an email to The Times that he’s known Court and others “for a long while” and that he has “been in the foxhole with them on various consumer-related projects over the years.”
In 2015, Consumer Watchdog joined Airbnb, then a Lehane client, in a successful effort to kill legislation in the state Capitol that would have imposed new rules on the home-sharing industry.
The bill would have required Airbnb homeowners to tally up the nights rented and the amount paid to ensure taxes were collected, though it did not require any personal information from renters. The day before a key legislative hearing, Consumer Watchdog claimed the bill was a privacy threat.
More than five dozen local government and public safety groups supported the measure; Airbnb, two industry groups and Consumer Watchdog were opposed. “We didn’t make any friends, as we often don’t do,” Court said.
The bill’s author, state Sen. Mike McGuire (D-Healdsburg), said the eleventh-hour opposition was a surprise. “When we tried to talk to Consumer Watchdog about the facts of the legislation, they seemed quite entrenched and weren’t interested in learning more about the bill,” he said.
Court said his organization’s opposition was based on a concern that the legislation could make it easier for cities to target homeowners for things like zoning violations. “I feel pretty good about the stand” on McGuire’s bill, he said.
Lehane’s nonprofit had given Consumer Watchdog its $45,000 donation five weeks earlier, according to documents provided to The Times by Court. Asked if the money was intended to support any specific position, Lehane declined further comment.
Court’s group gave Airbnb another boost that year, opposing similar home-sharing rules in San Francisco’s Proposition F. Through statements in TV ads and other campaign efforts, Consumer Watchdog again warned of an erosion of privacy rights. Voters rejected Proposition F by 11 percentage points in November 2015.
By early 2016, Lehane and Fabiani handed over control of Main Street American Values to others after Lehane was hired as Airbnb’s chief of global policy. Fabiani now runs his own communications company.
Under federal tax law as a 501(c)(3) nonprofit, Consumer Watchdog is not required to reveal its donors. But Court, who has been president since 2003, in the past has frequently advocated for transparency. In a book that year, he lamented the “growth of deception” caused by donors — in his example, corporations — to groups “who hide their identities from the public.”
A major Consumer Watchdog donor was the San Francisco-based Tides Foundation, which gives money to social justice and human rights efforts. For the four years beginning in 2012, federal tax returns show it gave more than $1 million to Consumer Watchdog. Over the same period, it received $955,000 in donations from Lehane’s nonprofit.
Rachel Dearborn, a Tides spokeswoman, declined to comment on the specific circumstances surrounding the donations to Consumer Watchdog. But she said Tides sometimes makes grants that are “recommended by our donor partners.” Lehane said in an email that his nonprofit gave money to Tides because it supported “the kind of progressive policy efforts [Consumer Watchdog] was leading on.”
Said Court: “We don’t take money with strings.”
For example, Court said, “there were no specific conditions” applied to the $90,000 donation Main Street American Values made in 2013, just days after he testified in Sacramento in support of drug testing for doctors. At the time, Lehane was helping draft a ballot measure that included a drug-testing provision. Court told The Times that his organization had been working on similar healthcare issues since the 1990s.
Consumer Watchdog has been a strong proponent for publicly disclosing the identity of those who subsidize policy and political fights. But in an interview, he said that revealing details of the source of Consumer Watchdog’s money could scare off donors. Disclosure “makes it easy for our enemies to defund us,” he said.
Consumer Watchdog has criticized politicians for hiding the source of their donations. Last year, it filed a state ethics complaint alleging oil companies secretly funneled money to Gov. Jerry Brown’s 2014 reelection campaign. The group accused Brown’s administration of kowtowing to oil industry demands, though state officials dismissed the crux of the complaint in May.
Court said the comparison is unfair. “We are not a government official with a duty, a public duty, taking taxpayer money with public powers,” he said.
While the lack of donor disclosure may be legal for an advocacy group like Consumer Watchdog, said Levinson, of Loyola, it creates a perception that can be damaging.
“It still appears that they were saying favorable things about their funders,” she said. “That’s the issue of transparency. Is Consumer Watchdog saying something because they believe it, or because it’s helpful to their funders?”
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