The state's campaign watchdog agency accused an Arizona nonprofit today of "money laundering" to donate $11 million this month and announced that two other nonprofits - Americans for Job Security and The Center to Protect Patient Rights - routed the money.
The Americans for Job Security is a nonprofit "business league" that does not have to disclose its donors. The group has run millions of dollars in ads against President Barack Obama.
The Center to Protect Patient Rights also does not have to disclose its donors as a 501(c)4. The Center for Responsive Politics reported the group has spent millions of dollars attacking Democratic congressional candidates this year and in 2010.
The Fair Political Practices Commission said in a release this morning that Americans for Responsible Leadership "sent a letter declaring itself to be the intermediary and not the true source of the contribution."
"Under California law, the failure to disclose this initially was campaign money laundering," FPPC wrote. "At $11 million, this is the largest contribution ever disclosed as campaign money laundering in California history."
Americans for Responsible Leadership donated last month toward a business committee opposing Brown's tax initiative, Proposition 30, and supporting a measure restricting union dues collection, Proposition 32. ARL attorneys argued that the FPPC was targeting the group because it opposed the governor's initiative.
Matt Ross, spokesman for Americans for Responsible Leadership, said in a prepared statement, "After late night discussions, Americans for Responsible Leadership and the FPPC reached a settlement. The Commission has received specific documents it requested."
Although it could not be confirmed, the Center to Protect Patient Rights has been connected to Kansas-based Koch Industries, whose owners, David H. Koch and Charles G. Koch, are conservative advocates.
In a September interview with Bee columnist Dan Morain, Center to Protect Patient Rights president Sean Noble offered little explanation about where its money comes from.
"Our goal is to promote freedom, and we support groups that do the same," said Noble, who once worked as chief of staff to an Arizona congressman and as a lobbyist opposing the federal health care overhaul. "It's very straightforward. There is nothing to expand upon."
Asked about reported ties to the Center to Protect Patient Rights, Koch Companies Public Sector spokeswoman Melissa Cohlmia said in an email, "Contrary to some media reports, Koch Industries, Charles Koch, and David Koch have not provided any financial support in favor of Proposition 32 and are not involved in this issue."
Asked further about Proposition 30, Cohlmia said, "Same goes for Prop 30 - no financial support and no involvement."
Attorney General Kamala Harris said by phone this morning that her office must still review whether there are any civil or criminal violations related to money laundering, though it is not pursuing any as of yet. Harris' office has represented the FPPC in its suit against Americans for Responsible Leadership.
"Whether it's the Koch brothers or Karl Rove, this was a brazen attempt to launder money through out-of-state shell organizations, and for the sole purpose of hiding it from the voters in California," Harris said.
Brown, who has kept up constant criticism of the Arizona donation for weeks, is campaigning for his initiative throughout the state today. Ace Smith, whose company, SCN Strategies, is running Brown's campaign, said on Twitter that the FPPC had unraveled a "truly evil money laundering scheme."
Editor's note: Updated throughout the morning to include comments from Harris, Ross, Smith and a Koch spokeswoman.