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Wednesday, June 12, 2024 | Back issues
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Koch Entities Owe $15M for|’Dark Money’ Use in 2012 Election

(CN) - So-called "dark money" corporations associated with the conservative Koch brothers owe a record fine and $15 million in disgorgement for concealing election contributions aimed at downing education tax and busting unions in California.

The California Fair Political Practices Commission (FPPC) announced the record civil settlement with Arizona-based Center to Protect Patient Rights and Americans for Responsible Leadership - members of a network of nonprofits operated by billionaire businessmen Charles and David Koch.

Those conservative groups had jumped into California politics shortly before the November 2012 election in support of Proposition 32, a measure intended at curbing labor unions' ability to raise political cash, and in opposition of Proposition 30, a tax increase pushed by Gov. Jerry Brown.

A joint investigation by the FPPC and state attorney general's office soon uncovered that the groups concealed $11 million in contributions that it should have reported to the Small Business Action Committee (SBAC), a California independent expenditure committee, via intermediary Americans for Job Security, in October.

The groups also failed to report an initial $4.08 million contribution to the California Future Fund (CFF), made through the American Future Fund as intermediary, on Sept. 11, 2012.

All contributions preceded the November election, where voters approved Prop. 30 and defeated Prop. 32.

The funds in question were raised by free market-group Americans for Job Security and its political consultant, Tony Russo, to purchase issue advertisements related to both propositions, the FPPC found.

California law, the FPPC announced Thursday, requires disgorgement of both the $11 million contribution to the SBAC and its principal officer, Joel Fox, and the $4.08 million contribution to CFF and its principal officer, Barbara Smeltzer.

The FPPC added the groups were notified of the required disgorgement and fine the same day, via letter.

Video of the announcement is available online.

"This case highlights the nationwide scourge of dark money nonprofit networks hiding the identities of their contributors," FPPC Chair Ann Ravel said in a statement. "The FPPC is aggressively litigating to get disclosure and working on laws and regulations to put a stop to these practices in California."

Gov. Jerry Brown called the results of the investigation "shocking."

"Secrecy and money don't mix well in a democracy," Brown said in a statement. "For 40 years, I have been fighting for disclosure and honest reporting of campaign spending. Today's shocking revelation by the FPPC makes it plain we still have big loopholes to close."

The California Fair Political Practices Commission - a bipartisan, five-member group created in 1974 - investigates alleged violations of the state's Political Reform Act, including regulation of campaign financing and spending, among other duties.

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