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Arizona Nonprofit Reveals Its Donors To Be Other Nonprofits

Audio

Aired 11/5/12

An Arizona nonprofit revealed its donors on Monday.

— A California campaign finance law designed to prevent anonymous donors from funneling political money through nonprofits was put into action today. Yet the mystery behind an obscure Arizona nonprofit’s campaign spending is only partially cleared up.

This election season, a Phoenix-based nonprofit, Americans for Responsible Leadership, poured $11 million into two California ballot initiatives.

A recent California law requires nonprofits giving to campaigns to disclose their donors if they knew their money was being used for political campaigns. Americans for Responsible Leadership resisted efforts by the state’s Fair Political Practices Commission to audit the group, forcing the issue into the courts.

A last-minute ruling by the California Supreme Court over the weekend compelled the group to comply with the FPPC's demands. That's how Americans for Responsible Leadership wound up announcing its donors Monday morning.

Rather than a list of individual names, the group disclosed its backers to be a chain of nonprofits whose backers are unknown. Federal law does not require such groups to disclose their contributors.

Americans for Responsible Leadership received the money from another Arizona nonprofit, the Center to Protect Patients’ Rights, which had received funds from a Virginia nonprofit, Americans for Job Security.

“They essentially admitted to us that $11 million was solely passed through to them,” said Ann Ravel of the FPPC. “That they were essentially a shell organization that was being utilized entirely for the purpose of hiding the actual donors.”

In a statement, the FPPC called it the largest amount “ever disclosed as campaign money laundering in California history.”

The FPPC initiated the investigation after California Common Cause filed a complaint against Americans for Responsible Leadership for not disclosing its donors initially.

Phil Ung of California Common Cause called Monday’s revelation a “victory” for California disclosure laws, which are the toughest in the country.

“You can’t sneak dark money through a nonprofit and get away with it in California,” Ung said.

Still, he acknowledged the disclosure only went so far.

“Our hope was that we would eventually get individual donors,” Ung said. “But our experience supports what we have seen today, which is that these individuals will hide behind as many shell groups as possible.”

Americans for Job Security has already spent $15 million this election cycle to defeat President Barack Obama, according to records maintained by the Center for Responsive Politics. The Center to Protect Patients’ Rights spent gave tens of millions of dollars to conservative groups in 2010. The group is headed by Sean Noble, who media reports have tied to wealthy conservative funders, brothers Charles and David Koch.

Meanwhile, California officials may pursue legal action against Americans for Responsible Leadership.

“The penalty for a civil violation would be at least the amount of the contribution that was not disclosed, which would mean that at the very least $11 million penalty,” if a legal ruling goes against the group, Ravel said.

In the Arizona nonprofit’s settlement letter to the FPPC, it said neither Americans for Responsible Leadership nor Center to Protect Patients’ Rights “admit any wrongdoing.”

The nonprofit’s $11 million spending in California went to defeat Proposition 30, which would raise taxes to fund education, and supported Proposition 32, which would restrict union campaign spending.

In Arizona, the nonprofit spent about $1.5 million to defeat both Proposition 204, which would maintain a tax to fund education, and Proposition 121, which would make primaries open.

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