- Associated Press - Monday, January 27, 2014

SACRAMENTO, Calif. (AP) - In a story Jan. 24 about a campaign committee that paid the state $300,000 after an investigation by California’s political watchdog agency, The Associated Press reported erroneously the reasons for the penalty against the Small Business Action Committee. The committee was required to return the money because two groups that gave it improperly concealed their contributions, not because the committee incorrectly reported the contributions.

A corrected version of the story is below:

California collects $300,000 in campaign case

California collects $300,000 in ethics case against 2 campaign committees that owe $15 million


Associated Press

SACRAMENTO, Calif. (AP) - California’s political watchdog agency said Friday it has collected $300,000 from one of two campaign committees that received large contributions transferred from shadowy, out-of-state groups in a case that prompted the largest ethics fine in state history.

In separate agreements filed in Sacramento County Superior Court, the two committees also agreed to repay $15 million in contributions, as ordered by the California Fair Political Practices Commission.

However, it is unlikely that most of that will be recovered because the money was spent on the campaigns in the 2012 election.

The groups that received the campaign donations - the Small Business Action Committee and the California Future Fund - spent heavily in the final days of the election. Their goal was to thwart Gov. Jerry Brown’s tax initiative and pass a measure that would have restricted the power of unions.

Voters approved the tax measure and rejected the union initiative.

The groups received the money from groups based in numerous states, including Arizona, Iowa and Virginia.

After tracing the source of the cash, state investigators described the money as “part of the ‘Koch Brothers Network’ of dark money political nonprofit corporations,” referring to billionaire brothers Charles and David H. Koch, who have given millions of dollars to conservative causes across the country.

“Recovering an initial $300,000 is a win for Californians and for campaign finance disclosure,” FPPC Enforcement Chief Gary Winuk said, adding that the settlements should be a significant deterrent for other groups seeking to obscure the sources of campaign donations.

The California Future Fund, which was ordered to repay $4 million, has since disbanded. The Laguna Niguel-based Small Business Action Committee agreed to make the $300,000 payment and also will be disbanded, said its president, Joel Fox.

“Both the FPPC and attorney general confirmed that SBAC PAC had done nothing wrong and were not aware of any violations by anyone else,” Fox said in a statement.

Fox said his group believes the law applied in the case is unconstitutional but challenging it “would put us in the same quandary many small businesses find themselves during litigation: spend an exorbitant amount of money to fight or agree to settle, justified or not.”

Winuk said the Small Business Action Committee and California Future Fund did not deliberately violate the law but were not authorized to accept the money because they failed to fully track down its true sources.

The FPPC said its investigation last year found that donors were given the choice of directly contributing to the ballot measure campaigns or giving money to an Arizona-based nonprofit that would not disclose their names, allowing them to avoid possible retribution from unions, according to documents released as part of the investigation.

Just days before the election, the FPPC and state Attorney General Kamala Harris sued Americans for Responsible Leadership, which had no history of political activity in California, to force it to disclose the donors, as required by California law.

The case went to the state Supreme Court as the November election approached. The day before the election, the group disclosed it had received the $11 million from a group called Americans for Job Security through an intermediary, the Center to Protect Patient Rights. Both are out-of-state, federally registered nonprofits.

Americans for Responsible Leadership and the Center to Protect Patient Rights each previously paid $500,000 fines for hiding the source of the donations to the California groups.

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