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Calif. proposition campaigns receive out of state money-laundered funds

November 5, 2012 12:00:00 AM PST
On the eve of the election, a campaign scandal: The biggest case of campaign money-laundering in California history comes from donations to two proposition campaigns.

The money, $11 million from a mystery donor, went to fight Prop. 30 and to support Prop. 32. Now that mystery donor has been revealed, and California's political watchdog agency says that money was illegally laundered.

Corporations and wealthy individuals wield their political influence through nonprofit groups to avoid consumer backlash against their products and services. But a new, unanimous California Supreme Court ruling says donors can no longer hide behind those nonprofits.

After a legal battle that almost ended up in the U.S. Supreme Court, the Arizona-based Americans for Responsible Leadership (ARL) finally revealed who gave the group a mysterious $11-million campaign contribution.

"They've disclosed that they were an intermediary," said Gary Winuk, an attorney with the California Fair Political Practices Commission. "It's now the largest instance of money laundering we're aware of in California history."

In a letter given to the California Fair Political Practices Commission (FPPC), the money was identified as coming from Americans for Job Security, which funneled it to yet another non-profit, Center to Protect Patient Rights, before sending it to ARL.

ARL then sent the money to the Small Business Action Committee PAC in California to use against Governor Jerry Brown's tax measure for schools, Proposition 30, and to win approval for Proposition 32, which aims to curtail labor unions' political power.

At least one of those groups is tied to David and Charles Koch, the billionaire brothers who are playing a huge role in financing anti-Obama ads in swing states and bankrolling Tea Party candidates.

"These are two individuals who are worth over $3- or 4-billion each, who have promised to spend $200- to $400-million on conservative candidates and partisan interests throughout the nation using schemes just like this: hiding money in PACs and through non-profits," said policy advocate Phillip Ung, California Common Cause.

Those opposed to the governor's tax measure hope voters look past the donor list and see Prop. 30's tax hike is still a bad idea.

"Governor Brown did a great job raising money. He's raised about $57-, $58-million for this. Our side has about $13 million," said Aaron McLear, spokesman for the No on Prop. 30 campaign. "It makes it very difficult to get our message out."

But the governor says the donor list is exactly why voters should be suspicious.

"This is the most extraordinary money laundering that I've ever seen. This was washed five times and it still is dirty and it still stinks," said Brown.

Voters got their information in time for the election. But playing a "shell game" with political money could later bring criminal misdemeanor charges and fines equal to the donation.

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