Ex-Election Watchdog Urged to Probe Donation to Newsom Recall Bid

This photo shows California Governor Gavin Newsom dining at the exclusive restaurant French Laundry. Newsom was heavily criticized when the photo surfaced in November because it appears to show him violating his own Covid-19 restrictions. (Image via Courthouse News)

LOS ANGELES (CN) — The California attorney general should launch an immediate investigation into a “dark money scheme” involving a company’s $500,000 donation to the Republican-led recall campaign against California Governor Gavin Newsom, a former Federal Elections Commission member said Monday.

The recall campaign, Rescue California, is led by Lincoln Club of Orange County and former state Republican Party Chair Tom Del Beccaro. The $500,000 donation was made on Dec. 18 by the Orange County-based “Prov 3:9, LLC” according to state records.

“The entity appears to be nothing more than a shell company being used to evade disclosure of the person or persons funding the recall contribution,” wrote Ann Ravel, a former Democratic FEC commissioner and former chair for the California Fair Political Practices Commission (FPPC) in a letter to Becerra and FPPC chair Richard Miadich.

“But the people of California are entitled to know who is trying to force a costly special recall election that could cost $80-100 million just months before the primary elections for the same office.”

According to Ravel, Prov 3:9 LLC has no record of providing any consulting services and does not have a registered business license. Filings with the California Secretary of State show just two members listed as agents with the company: Orange County-based attorney Gordon Schaller as agent for service of process and Thomas Liu, an Irvine-based CPA who has the same business address as Prov 3:9.

Liu did not immediately return calls for comment.

The company takes its name from the book of Proverbs in the Bible, which says, “Honor the Lord with your wealth and with the best part of everything you produce.”

But the anonymous donation to recall Newsom likely violates the Political Reform Act, Ravel said.

She noted that in 2012, while she was a member of the state’s Fair Political Practices Commission, two groups linked to the ultra-conservative Koch brothers were fined $1 million as part of the FPPC’s investigation into $15 million spent by those groups on ballot proposals that were not properly disclosed.

“I therefore respectfully request that the attorney general and FPPC take the same action that we did in 2012, and immediately investigate who is behind ‘Prov 3:9, LLC,’” Ravel wrote. “Such an investigation is also in keeping with the FPPC’s recent crackdown on the disclosure abuses by LLCs, calling them the ‘darkest of dark money.’

“Without immediate action, California will be giving the green light to wealthy donors to evade disclosure laws by setting up shell companies through which to make contributions. That in turn would be an existential threat to our state’s campaign finance disclosure laws.”

Ravel said Senate Bill 27, passed by the Legislature in 2014 in response to the Koch brothers incident, requires nearly all organizations or groups engaged in nonpolitical activity must report the source of funds for their political donations over $50,000.

Prov 3:9 LLC’s donation likely requires the company to file a recipient committee and reveal its donors.

Ravel said that if the LLC has only one individual donor, that person should have been reported as the contributor rather than the LLC itself.

“Put differently, it simply is not credible to believe a person would give $500,000 to a shell company without any strings attached or without any understanding or agreement regarding the purpose for which the funds were provided. Yet unless that is the case here, Prov 3:9 has violated the state’s campaign finance laws,” Ravel wrote.

The FPPC said it received the request for an investigation.

The Rescue California campaign did not immediately respond to request for comment.

In recent months, the recall campaign has gained some momentum, with the campaign’s organizers recently claiming they’ve gathered over 800,000 signatures. Organizers need nearly 1.5 million signatures — or 12% of the total number of voters in the last election — to advance their recall petition to a future ballot.

Newsom won the 2018 gubernatorial race in a landslide against businessman Republican challenger John Cox. The two vied for the seat after former Governor Jerry Brown termed out, with Newsom scoring 62% of the vote or roughly 7.7 million votes.

Upon taking office Newsom inherited a healthy $7 billion budget surplus and a $22 billion rainy-day fund. But by mid-2020, the pandemic spun California into a fiscal freefall with a $54 billion deficit though the true figure remains unknown.

Newsom’s response to the virus has galvanized conservatives in the Golden State who say his restrictive health lockdowns have been ineffective given the state has become the nation’s Covid-19 epicenter.

The governor’s personal stumbles don’t help curry favor: He attended a crowded birthday party for a lobbyist at the elite Napa restaurant French Laundry even as restaurants across the state struggled with bans on indoor — and in some counties outdoor — dining. Newsom has since apologized.

Former San Diego Mayor Kevin Faulconer has expressed interest in running for governor and recently launched an exploratory committee.

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