Advertise Here

Deliver your message to thousands of readers every day.

Our readers are influential opinion makers - politicians, journalists and activists.

Learn more about ads.

Our latest headlines

Want more? Dive into the archives.

About Us

David Greenwald, Editor. (Contact David.)
CFC Education Foundation, Publisher. (Contact us.)

Got a news tip? Want to write a guest column?
Contact David here.

About California Progress Report.

Founded by Frank D. Russo (Publisher and Editor, 2006-08).

Books

Out of State Interests Launder Big Bucks on California Ballot Props

Supporters of Electoral College Grab, Hidden Agenda Eminent Domain Measure, and Opposition to Term Limits Reform Don't Want You to Know Who They Are

By Frank D. Russo

Powerful out of state interests are contributing millions of dollars for and against California ballot propositions and they don't want you to know who they are. On at least three measures, the pattern is clear. Money is received by an out of state nonprofit organization and then a donation is made in the name of the organization, but the contributors are not known and hide behind the group and a loophole in California law known as the "one bite" rule.

This is a serious subversion of a great reform--the initiative--that came out of the progressive movement in the early years of the 20th Century--championed in California by Hiram Johnson, a progressive Republican Governor. And it is a subversion of another reform coming out of the scandals of the Watergate era, when Jerry Brown spearheaded and California passed disclosure laws--sunshine--on campaign contributions in the Political Reform Act--Prop 9--approved by the voters in 1974.

It is bad enough that money plays such a pivotal role in the passage or defeat of ballot propositions. It is even worse when out of state interests supply the bulk of money on some of our ballot propositions--in one case approaching 90%--and downright insulting when they hide behind the skirt of non-profit organizations to mask their identities.

So it was--and is--with the Republican attempt to change the Electoral College just before the November 2008 Presidential Election--and the secrecy about out of state donors. We wrote about that last month in an article, "California Voters Have Right to Know Who Financed, Aided , and Abetted Attempt to Rig the Electoral College" and you can read about the machinations to hide donors in that article.

Some of the groups and individuals who do not want their identities known or want to launder others' money work on multiple ballot initiatives.

Last year, in a series of articles, we exposed Howard Rich, a New York multimillionaire and real estate tycoon, who backed Proposition 90 on the November, 2006 ballot with out of state money coming from unidentified sources. California voters ultimately rejected Rich's proposition, in part out of concern over where the money was coming from. In September of 2006, we wrote that:

"Hardly a “grassroots” movement, Prop. 90 is being funded primarily by one man and his web of organizations: New York-based developer Howie Rich.

"According to online reports from the Secretary of State’s office than 90% of Proposition 90’s contributions have come from:

"$1,500,000 from “The Fund For Democracy” based in New York, New York
$600,000 from “Montanans in Action”, based out of Winifred, Montana
$220,000 from “Club for Growth State Action” out of Glenview, Illinois
$50,000 from “Colorado at Its Best” out of Golden, Colorado"

Well, he's back. Rich is the President of a Virginia based organization, U.S. Term Limits, which opposes Prop 93, the term limits measure on the California February ballot and also supports a hidden agenda eminent domain measure headed for the June ballot.

Yesterday, the California League of Conservation Voters sent a letter to the No on 93 committee asking for the identity of the large out of state donors to the campaign--where $1.5 million came from and asked some pointed questions about the involvement of Rich and U.S. Term Limits. The silence and lack of a response to these questions is deafening.

Here is some background on Rich's involvement on Prop 90.

The Center for Public Integrity, a nonprofit, nonpartisan research organization in Washington, DC that concentrates on ethics and public service issues, wrote an article, Large Out of State Donors Backing Prop 90 Conceal Identity.

That article starts out:

"More than $3 million in contributions to the chief backer of Proposition 90, California’s Protect Our Homes Coalition, appear to have been orchestrated to circumvent state disclosure laws.

"The contributors are all out-of-state political funds headed by or otherwise connected to Howard Rich, a political activist who lives in New York City who has been leading the charge for initiatives that will be put before voters in California and four other Western states on November 7. Like the other initiatives, Proposition 90 would compel governments to pay property owners for environmental and land-use regulations (including zoning rules) that could reduce the value of their holdings."

Read the rest of this article and you'll learn a lot about the chronology of the contributions and the confusing welter of front groups involved. That article also discussed the loophole in California law:

"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."

Yesterday, in a phone conference, Oliver Griswold, of the Ballot Initiative Strategy Center (BISC) in Washington, DC, a progressive think tank for ballot measure research, underscored the importance of campaign funding disclosure. He said:

"BISC has done a lot of work on donor disclosure because it is really in a ballot initiative campaign the foremost mechanism to ensure that the debate around a ballot initiative is an honest debate. The lack of contribution limits in ballot measure campaigns allows wealthy individuals and powerful special interests to routinely spend thousands and sometimes millions of dollars to qualify and pass measures.

"Without the partisan cues inherent in candidate campaigns, information about donors provides an important smell test for most voters. In general, ballot measure contribution and expenditure procedures are already much weaker than candidate disclosure practices, and that's because the courts have routinely treated ballot measure campaigns as a free speech issue and not an electioneering issue. We don't disagree with the courts but it does help voters if they have as much information as possible". [Emphasis added]

Here are some of the clues for your own smell test on Prop 93 that Griswold recited about Americans for Limited Government, which Rich led in 2006 and used to help qualify 15 or so ballot propositions with an infusion of $15 million:

"Howie Rich and Americans for Limited Government operated one of the shadiest funding mechanisms we've ever seen in the ballot initiative world. He basically set up shell organizations in different states and then funded those organizations, some of which were campaign committees, some of which were non profits, and pinged money around the country from one organization to another to try to hide exactly where the money was coming to and going from and going to and vice versa.

All of this is outlined at www.howierichexposed.com.

The ultimate question I came away with is one I think California voters should think long and hard about before voting on Prop 93: Why do these secret out of state wealthy interests want to have a more inexperienced and malleable legislature elected in California and why are they really opposing Prop 93's reasonable changes to replace the current system with a 12 year in one house rule?

Posted on November 29, 2007

Comments

The proponents of the eminent domain reform measure have made clear that they want to abolish rent controls. Hardly a hidden agenda

Posted by: Ben at November 29, 2007 07:53 PM

Can one presume that your point of view applies to everyone, or just those you disagree with politically?

As reported in yesterday's Los Angeles Times, the California League of Conservation Voters (CLCV) is demanding to know the source of $1.5 million being used to defeat Prop. 93, a California ballot measure that would extend the terms of State Legislators. However, they have not demanded the same transparency of their own campaign to defeat eminent domain reform in California. The CLCV and taxpayer financed (non-profit) organizations such as the League of California Cities, the California State Association of Counties and the California Redevelopment Association are the principle sponsors of campaign to defeat the California Property Owners and Farmland Protection, a comprehensive eminent domain reform ballot measure slated for the June 2008 ballot.

Over the past two years, their coalition has spent over $7.5 million dollars (yes, $7.5 million!) to defeat eminent domain reform ballot measures in California by using anonymous campaign committees that don’t disclose the source of its revenue or contributors. (Sound familiar?)

I appreciate CLCV’s new found interest in campaign disclosure and the need for greater transparency in the political process. However, they really should apply the same standard to their campaign by demanding a full accounting of every penny that their campaign has used to defeat eminent domain reform in California. California taxpayers in particular would welcome this noble gesture, after all, we are financing the organizations managing these anonymous campaign accounts!

The CLCV and the League of California Cities are co-sponsors/authors * of the so-called “Homeowner and Private Property Protection Act,” a phony eminent domain ballot measure that will allow government to profit by allowing them to seize private property from unwilling sellers for private projects, such as big-box stores and industrial parks, for wealthy and politically connected developers.

*See Susan Smartt, Executive Director of the California League of Conservation Voters, on the ballot measure.

-------------------------------------------------

From the Los Angeles Times

Disclosure of ballot campaign donors sought
Two groups cite a legal loophole, but others say the law protects them.

By Patrick McGreevy
Los Angeles Times Staff Writer

November 29, 2007

SACRAMENTO — Backers of two campaigns to change California law are crying foul over donations to their opponents made through nonprofit groups that can hide the origin of the money.

In their separate protests, organizers of ballot measures to change term limits and restrict governments' use of eminent domain have highlighted a growing trend: the use of tax-exempt entities to finance political campaigns in a way that withholds from voters the identities of financial backers.

In response, a coalition that includes the Howard Jarvis Taxpayers Assn. has proposed an initiative to prohibit some nonprofits from contributing. And the watchdog group California Common Cause has asked the state Fair Political Practices Commission to consider new regulations.

"It's a huge loophole in the campaign finance rules," said Jon Coupal, president of the Jarvis association, referring to contributions by groups such as the League of California Cities.

Full Article - http://www.latimes.com/news/local/la-me-money29nov29,1,6974416.story?coll=la-headlines-california&ctrack=1&cset=true

Posted by: Property Owner at November 30, 2007 07:17 AM

It is highly disturbing that contributors can hide their identities, but this goes both ways. Why don't you question the propriety of entities such as the California League of Cities and the Association of Redevelopment Agencies to spend enormous amounts of money to fund their views? It's just as (and maybe more) pernicious for governmental agencies (and, no matter how they slice it, that's what they are) to use their financial wealth to undermine the initiative process. And you fail to note that, as far as the eminent domain Kelo issue is concerned, we wouldn't have the current predicament if the Legislature acted responsibly to reject Kelo ... and it hasn't done a thing. You'd be more responsible if you pointed out the misuse of money on both sides.

Posted by: Barbara Blinderman at November 30, 2007 09:14 PM

This is to "Property Owner"

FACTS ABOUT LOCAL GOVERNMENT TRADE ASSOCIATIONS AND POLITICAL CAMPAIGN FINANCE

Background:
The League of California Cities (League), California State Association of Counties (CSAC), and California Redevelopment Association (CRA) are all private, non profit organizations, dedicated to representing the interests of local government in California and the residents who rely on local government services. These organizations promote their missions through public education, legislative advocacy, and participation in ballot campaigns that support local governments and local control and in opposition to measures that threaten local control and local government services.

Eminent Domain Reform:
Financial Stakes High for Landlords Who Want to Abolish Rent Control
The League, CSAC and CRA are part of a broad coalition of homeowners, seniors, business, labor, environmental and tenants’ groups supporting responsible eminent domain reform – the Homeowners Protection Act – that would prohibit the taking of a home to transfer to a private party. The coalition is also opposing the California Property Owners and Farmland Protection Act, which uses the issue of eminent domain to trick voters into abolishing rent control. More than 90% of the nearly $2 million contributed to this campaign has come from apartment and mobile home park owners and the political organizations that represent them. They stand to make millions if their measure passes. Predictably, these landlords have taken to attacking CSAC, the League and CRA for opposing their efforts.

Facts About League, CSAC and CRA Finances and Political Contributions
Each of the three local government associations essentially has two sources of revenues: public revenues (taxpayer funded) and non-public funds (non taxpayer). Each association has accounting processes in place to ensure public and non-public funds are separated.

 Public revenues: The League, CSAC and CRA each receive dues from their member local governments (cities, counties and redevelopment agencies). By law public funds cannot be used for political campaigns. The League, CSAC and CRA do not use public funds for ballot campaigns.

 Non public funds: Each association also operates like a business. Separate from their public financing, they receive private sector revenues from business activities such as advertisements in their magazines; leasing of office space in buildings they own; sponsorships and exhibitor fees at their conventions and other private revenues. By law, these non-public funds can be used for ballot measure campaigns. Over the last 10 years, political contributions to ballot initiative campaigns represents a miniscule portion of League, CSAC and CRA’s total non public funds.

 Political Action Committees (PACs). Like many other trade associations, the League of Cities also operates two Political Action Committees (Save our Services and CityPAC). These are issues-oriented PACs that are only used to promote the interests of local governments in statewide election issues. Individual donors to these PACs are fully disclosed as required under state law.

All three associations comply with all state and federal laws in reporting any and all political contributions they make from their non public funds accounts to ballot measure campaigns.

Revenues Come from Customers, not “Political Donors”. The Landlords’ claim about disclosing “individual donors” is a red herring.
Kaiser Permanente does not report every paying patient they treat every time they make a contribution to a ballot campaign. Likewise, Microsoft does not report every customer that buys its software each and every time they make a political contribution. Similarly, the League, CSAC and CRA do not list every advertiser from their magazine, or exhibitor at their conventions each and every time they contribute to a ballot campaign. These are customers, not political donors. It would make no sense to report customers as individual donors. It’s not required by law and would be irrelevant and confusing.

Posted by: Another Property Owner at December 2, 2007 07:42 PM

Get Email Updates

Want the California Progress Report by email? Once a week, we'll send you the latest and greatest headlines.

Stat tracker