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Legal Fight Continues in Arizona Group’s Contributions To California Initiatives

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Aired 11/1/12

A judge ordered a mysterious Arizona group that donated millions to two California ballot initiative campaigns to turn over records about its donors by Thursday. But the group has appealed.

— A mysterious Arizona nonprofit that funneled millions into two California ballot initiative campaigns has appealed a California Superior Court judge’s order to turn over records.

The judge ruled on Wednesday the group had to reveal records about its donors to state regulators by Thursday, Nov. 1.

The case is a test of campaign finance regulations, and the big question is if it will be resolved before the election.

The controversy began when the Phoenix-based nonprofit, Americans for Responsible Leadership, gave $11 million to campaigns for and against certain California ballot measures.

The funds went to a political action committee that is working to pass Prop. 32 and defeat Prop. 30. The first measure would restrict union campaign spending, the second would raise taxes for education.

“This is the largest, most unusual situation where such a large amount of money and no information given about this group to give any indication of who is behind it,” said Ann Ravel, the chair of the state Fair Political Practices Commission.

The FPPC wants to audit Americans for Responsible Leadership to find out if its violating state rules by shielding its donors. A California rule requires nonprofits making political donations to disclose its donors, if those donors were aware their donation would be used for a political cause.

The California chapter of the advocacy group Common Cause filed a complaint against the group, which prompted FPPC’s investigation.

“Wealthy individuals in the conservative movement have promised to spend millions in nonprofit spending schemes,” said Phillip Ung of California Common Cause. “In this case we are fortunate that California has strictest disclosure laws in the country.”

When Americans for Responsible Leadership refused to hand over records to the FPPC, Superior Court judge Shelleyanne Chang ordered the group to do so. Chang said it would cause Californians "irreparable harm" if the audit is not performed, since the results could impact voters' view of the two ballot measures.

But late Thursday, Americans for Responsible Leadership appealed to the state’s 3rd District Court of Appeal.

“We have asserted all along that we don't believe that the FPPC has the legal authority to conduct an audit in advance of an election,” said Matt Ross, a spokesman for the group. “The action they have taken is unprecedented.”

Meanwhile, on Thursday afternoon, the FPPC filed their own motion to the appeals court, requesting immediate action so the audit could proceed before the election.

Americans for Responsible Leadership has also given a much smaller amount -- about $1.5 million as of Nov. 1 -- toward defeating two Arizona propositions. Arizona Prop. 204 would maintain a tax to fund education, and Prop. 121 would create open primaries.

It has also given almost $2 million to defeat President Barack Obama, and tens of thousands to help several Republican candidates.

Ross declined comment about the nonprofit’s goals. The named officers of the group are Robert Graham, Eric Wnuck and Steve Nickolas.

All three men Phoenix-area businessmen who have been active in Republican circles in the past. In an email message, Graham declined to comment and referred media inquiries to Matt Ross.

The nonprofit was formed in July 2011.

Editor's Note: The story was updated to reflect complete contributions by Americans for Responsible Leadership up to Nov. 1.

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