Large Out of State Donors Backing Prop 90 Conceal Identity

A 2006 chronology:

* March 10. The Fund for Democracy, which shares Rich’s address in New York and describes itself as “a revocable trust dedicated to assisting citizens assert their constitutional rights,” launches the Protect Our Homes Coalition with a $1.5 million contribution. The California group raises a total of $310 in other contributions during the three-month reporting period.

* May 8. Montanans in Action, a tax-exempt organization backing Initiative 154 and two other ballot initiatives in Montana, wires $600,000 to the Protect Our Homes Coalition. Montanans in Action is funded by Rich’s Fund for Democracy.

* August 14. Club for Growth State Action, a tax-exempt organization that shares its address with Americans for Limited Government (see below), contributes $220,000 to the Protect Our Homes Coalition. Rich is the president of Club for Growth State Action.

* August 31. Colorado at its Best, a tax-exempt organization that Internal Revenue Service records show was based at the Illinois address of Americans for Limited Government (see below), gives $50,000 to the Protect Our Homes Coalition. Rich is a director of Colorado at its Best.

* September 18. Americans for Limited Government, a tax-exempt organization in Chicago that says it has “no hidden or personal agendas,” gives $1 million to the Protect Our Homes Coalition. Rich is the chairman of Americans for Limited Government.

Through California’s latest reporting period, ending September 30, the five separate contributions accounted for more than 90 percent of all funds collected by the Protect Our Homes Coalition.

Officers of the Protect Our Homes Coalition did not respond to the Center’s inquiries about the contributions and whether the organization intended to seek additional donations from any of the five political funds connected with Rich.

According to the California Fair Political Practices Commission, “failure to disclose the true source of a contribution is considered one of the most serious violations of the Political Reform Act [of 1974].” Under state law, “any person who intentionally or negligently violates any of the reporting requirements of [the Act] shall be liable in a civil action … for an amount [up to the amount(s)] not properly reported.”

Any organization that contributes $10,000 or more to a candidate or ballot committee in California must register as either a “major donor committee” or a “recipient committee.”

An organization that registers as a recipient committee must report the name of anyone whose money it uses in California elections. A recipient committee is defined as a group whose donors or members knew, or had reason to know, that any of their money would “be used for political activities in California.” California law presumes donors or members to have such knowledge whenever a group has spent at least $1,000 in state and local elections in California during a calendar year or in any of the preceding four years.

An organization that registers as a major donor committee, however, is allowed to make a single large contribution to a candidate or ballot committee without disclosing its donors, as long as the donors didn’t know their money would be used for political activities in California. In the event that a major donor committee makes more than one such contribution, it generally is required to register as a recipient committee.

In an interview with the Center, Karen Getman, the immediate past chair of the Fair Political Practices Commission, called this the “one-bite-of-the-apple rule.”

As of October 20, none of the five donors to the Protect Our Homes Coalition listed above had registered as a recipient committee, which would have forced them to disclose their own sources of funds.

The pattern of donations in California is unique because, in other states, these and yet other political funds connected to Rich have made multiple contributions to the committees pushing similar ballot initiatives. In Arizona, for example, Americans for Limited Government made at least 12 separate contributions, totaling more than $1 million, to Arizona HOPE, the Phoenix-based counterpart of Protect Our Homes Coalition.

Interestingly, the $600,000 that Montanans in Action contributed to California’s Protect Our Homes Coalition is more than three times the amount the organization has spent on its own takings initiative in Montana.

In a set of written questions to John Tillman, the president of Americans for Limited Government, the Center asked whether any donors to his organization knew that their money might go to the Protect Our Homes Coalition, and whether his organization knew, in funding Montanans in Action, that the Montana group would in turn give funds to the California operation.

Tillman, in responding to the Center’s inquiries, left these two questions unanswered.

The Center for Public Integrity is a Nonprofit, nonpartisan research organization in Washington, DC, that concentrates on ethics and public service issues.

Jim Morris is a project manager for the Center for Public Integrity. He is a veteran journalist who specializes in coverage of industries and government agencies. He has won more than 50 journalism awards, including the George Polk award, the National Association of Science Writers award, the Sidney Hillman Foundation award and five Texas Headliners Foundation awards. Before joining the Center for Public Integrity in March 2006, he was a deputy editor at Congressional Quarterly.