$11 Million Donation Tied to Koch Brothers; Calif. Agency Alleges 'Money Laundering'

By Steve Harmon, McClatchy News

06 November 12

nding a mystery that captivated the run-up to Election Day, the Arizona group behind an anonymous $11 million donation revealed under court order Monday that the shadowy donation was laundered through two groups, including one tied to David and Charles Koch, the billionaire brothers who have played a huge role in spreading anonymous political cash around the country.

The donation, the largest anonymous contribution to a ballot measure campaign in California history, was made to the Small Business Action Committee, a conservative group running a campaign for Proposition 32, the measure that would curb labor's ability to collect political cash, and against Proposition 30, Gov. Jerry Brown's tax-hike initiative.

"This isn't going to stop here," said Ann Ravel, chairwoman of the Fair Political Practices Commission, the state's political watchdog. "They admitted to money laundering. We agreed to do this without an audit because we wanted to get information to the public before the election. But we in no way agreed this would preclude further action."

Ravel said Phoenix-based Americans for Responsible Leadership conceded it was the intermediary and not the true source of the contribution. The true source was Americans for Job Security and was made through a second intermediary, the Center to Protect Patient Rights, she said.

Since the late 1990s, Americans for Job Security has been described by the nonpartisan Center for Responsive Politics as "pro-Republican," "pro-business" and "established to directly counter labor's influence."

The Center to Protect Patient Rights is run by Sean Noble, an operative of the Koch brothers. Noble admitted to the FPPC that the Center to Protect Patient Rights received $11 million from Americans for Job Security.

The admission of money laundering is a misdemeanor, but a conspiracy to commit money laundering is a felony.

The revelation came after a 7-0 decision by the state Supreme Court on Sunday ordering attorneys for Americans For Responsible Leadership to immediately hand over documents related to the $11 million donation to the California business PAC.

After turning to the U.S. Supreme Court seeking another delay, attorneys backed down. Rather than hand over all communications, however, they settled on providing the name of the group that provided the money.

"The persistence and hard work of the FPPC has won a significant and lasting victory for transparency in the political process," Ravel said. "We will continue in this matter and all others to ensure that the people of California know who is funding political activity in this state."

The Arizona group is a 501(c)4 nonprofit advocacy organization, which under IRS rules does not have to reveal donors' names. These groups have become prominent in this election cycle as hundreds of millions of dollars in political cash was unleashed by the U.S. Supreme Court's 2010 Citizens United decision to allow unlimited corporate spending in campaigns.

As corporations and wealthy individuals became more involved, they have sought to keep their names concealed and have found the nonprofit groups an effective conduit to wielding influence without the potential backlash from consumers. They have spent one-fourth of all campaign cash this year, according to ProPublica, an independent investigative group.