Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, May 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Assistant AG Says Koch Donor Suit Suspicious

LOS ANGELES (CN) - A prosecutor with California Attorney General Kamala Harris' office said in a video deposition played in court Friday that the Koch brothers' suit to keep wealthy donor names secret had put her "suspicions on alert."

The admission came in the morning before parties gave closing arguments in the afternoon, bringing to an end a six-day trial that began on Feb 23. The trial resumed Thursday after an extended break in U.S. District Judge Manuel Real's downtown courtroom.

Americans for Prosperity Foundation is the charitable arm of Charles and David Koch's libertarian advocacy group, Americans for Prosperity, which has more than 2.5 million members.

Since 2014, the nonprofit has been locked in a legal battle with Harris over her office's requirement that charities seeking a tax exemption as a nonprofit file a Schedule B federal tax form.

Harris says the forms are one of many tools the Charitable Trusts Section uses to detect fraud. The foundation meanwhile says the disclosure violates its constitutional rights under the First Amendment, that Harris, a Democrat, is targeting the group, and that the prosecutor has made use of the form in only a handful of cases.

In addition, it says that the Registry of Charitable Trusts has inadvertently disclosed thousands of confidential tax forms and that it was once possible for visitors to the online registry to manipulate URLs to bring up private records.

During heated testimony on Friday morning, Americans for Prosperity Foundation attorney Derek Shaffer pressed Senior Assistant Attorney General Tania Ibanez on whether she was suspicious of the foundation because of the lawsuit.

After Ibanez testified that she had not yet made a determination, Shaffer then played a Jan. 6, 2016 video deposition to the court in which he asked the prosecutor if the group's actions made her suspicious.

"You're suing us and you don't want to give us your Schedule B. So, that puts my suspicions on alert," Ibanez said in the video, adding later: "The litigation caused me to have some concerns."

During direct examination of Ibanez, Deputy Attorney General Alexandra Gordon sought to highlight how the tax forms help investigators detect fraud. Ibanez said that examining the tax forms helped prosecutors as California brought a case against LB Research and Education Foundation.

But during the trial, Judge Real has exhibited hostility not just to the state's argument but to their attorneys - barking questions, interrupting counsel and overruling their objections without pausing for breath.

During Gordon's opening argument last week, Real blasted the "laziness" of the state's Charitable Trusts Section and asked why the IRS could not do the investigative division's job just as well.

Tension punctuated exchanges between Shaffer and Ibanez on Friday, with the witness frequently giving terse answers.

When Gordon asked what conclusion she could draw from a document shown to the court, Real barked, "I have to make the conclusions here, counsel, not her," pointing at Ibanez, who was sitting on the witness stand.

Real's agitation grew as he questioned Ibanez after cross-examination.

"Are you telling me that the attorney general of the state of California has a right to the privacy of an individual," Real snapped.

Real refused to take her "no" answer on its face.

"That's what you're telling me," he said.

Ibanez has worked at the Charitable Trusts Section, Division of Public Rights since 2002. She declined to comment outside the courtroom.

Gordon did not fare much better during closing arguments as she faced frequent interruptions from a judge who often gave the impression he had made his mind up before a single witness took the stand.

The deputy attorney general has argued that there is little evidence of actual harm to foundation donors and says the group has not met its burden of proving actual and cognizable harm.

"It's one thing to thing to claim that something is violating your First Amendment rights and another thing to prove it," Gordon said.

Americans for Prosperity sought to prove the Harris' team wrong by putting on the stand several foundation executives and prominent North Carolina libertarian Art Pope, who said they had been subjected to death threats and harassment because of their membership in the nonprofit.

Real did not indicate when he would rule. The judge told the parties to submit post-trial findings by March 15.

Attorneys on both sides declined to comment.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.