Koch Bros. Group Can Keep Donors Secret

LOS ANGELES (CN) - Handing victory to the Koch brothers advocacy foundation, a federal judge blocked California Attorney General Kamala Harris from making the group disclose its donor names to qualify for a charitable tax exemption.

U.S. District Judge Manuel L. Real on Tuesday granted Americans for Prosperity Foundation's motion for a preliminary injunction that will allow donors to the group to remain anonymous, at least for the moment.

"Plaintiff has proffered sufficient evidence establishing that public disclosure would have a chilling effect on free speech," Judge Real said at the Tuesday morning hearing in downtown Los Angeles.

Americans for Prosperity, a conservative advocate of free-market economic policies, was the only plaintiff in the Dec. 9, 2014 lawsuit.

The foundation is represented by Harold Barza of Quinn Emanuel Urquhart & Sullivan.

"We're very pleased with the ruling and believe the court correctly addressed the issues before it," Barza told Courthouse News.

Americans for Prosperity says that Schedule B of federal tax form 990 lists the names and addresses of its donors. The foundation says it has previously submitted documentation to renew its registration in California but never had to file the Schedule B until 2013.

At that time, Harris "out of the blue" said the foundation could not register without submitting the Schedule B tax form.

In its federal complaint, the foundation says it has "learned from experience that it must zealously guard the confidentiality of its donors to ensure their safety."

"Grotesque threats have been leveled against known associates of the foundation, ranging from threats to kill or maim, to threats to firebomb buildings. More mundane threats abound too, including boycotts, firings, and public shaming, all of which are now demonstrated components of the playbook of the foundation's more extreme opponents," its 15-page complaint states.

The foundation claims that Harris delivered an ultimatum to it in October 2014, to give up the names and addresses of its donors. Otherwise, the prosecutor threatened to revoke the foundation's state tax exemption, suspend its registration, and fine the foundation's directors, according to the lawsuit.

The foundation claimed that Harris' threats violated the First Amendment.

In a Jan. 21 opposition brief , Harris said that unredacted copies of the tax form are used "exclusively for law enforcement purposes," to prevent organizations from defrauding the state or abusing their charitable status.

A Schedule B submission helps the prosecutor determine if an organization is self-dealing by siphoning charitable funds to family members or businesses, or to investigate complaints against the organization and determine whether or not they have merit, Harris said in the 26-page brief.

Judge Real was not convinced. He said at the hearing that Harris could meet her law-enforcement goals in a "manner less intrusive to First Amendment rights."

Real judge noted that the attorney general had not requested the foundation's Schedule B "for the last decade" and had not suffered any harm.

"The hardship plaintiff would face from disclosure, however, is far greater and likely irreparable," Real said.

The Koch Brothers are often mentioned in connection with the unlimited donations that have flooded the U.S. political system since the Supreme Court's 2010 ruling in Citizens United v. Federal Election Commission.

David Koch, 74, and his older Charles, 79, head Koch Industries. They are among the wealthiest people in the world, with a combined net worth of more than $75 billion.

Harris announced in January that she will seek U.S. Senate seat to be left vacant by the retirement of Barbara Boxer.

In an email to Courthouse News, Harris' press secretary Kristin Ford said the prosecutor is reviewing the ruling, adding that Real "gave his decision from the bench but has not indicated yet whether a written decision is forthcoming."

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