Dark Money Donors Unmasked In California

California Gov. Jerry Brown visits community organizing center Innercity Struggle in East Los Angeles on Nov. 3, 2012.
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Updated: November 5, 2012, 2:39 p.m. ET

In a move that cuts directly against the secretive nature of dark money political efforts, California’s campaign finance watchdog on Monday publicly released the names of the donors behind an Arizona group’s $11 million donation to ballot initiative efforts in the Golden State.

In a sharply worded press release, California’s Fair Political Practices Commission (FPPC) said the money for the donation made by Americans for Responsible Leadership came from Americans for Job Security, the conservative organization, and had been funneled through The Center to Protect Patient Rights, a non-profit helmed by Sean Noble, a former congressional aide who has been tied to the movement of millions of dollars between political non-profits. The FPPC also said that in disclosing the donors, the Arizona group Americans for Responsible Leadership admitted to “campaign money laundering.”

Americans for Responsible Leadership, a Phoenix-based 501(c)4 nonprofit group run by an unlikely collection of Arizona Republicans, began drawing criticism from California Democrats and progressives in October, when it made the enormous donation to another group, called the Small Business Action Committee PAC (SBAC). The SBAC is opposing California’s Proposition 30, which is Gov. Jerry Brown’s tax-hike initiative, and supporting Proposition 32, which would prohibit labor unions from raising political money through payroll deductions.

“Americans for Responsible Leadership… today sent a letter declaring itself to be the intermediary and not the true source of the [$11 million] contribution,” the FPPC said in its press release. “It identified the true source of the contribution as Americans for Job Security, through a second intermediary, The Center to Protect Patient Rights. Under California law, the failure to disclose this initially was campaign money laundering. At $11 million, this is the largest contribution ever disclosed as campaign money laundering in California history.”

Emails to Americans for Responsible Leadership director Robert Graham, and a call to Noble’s political consulting firm, DC London, were not immediately returned.

Dark money groups like Americans for Responsible Leadership, sometimes called “social welfare” organizations, are generally allowed to collect and spend unlimited amounts of money without disclosing their donors. But the FPPC began seeking records from the group late last month to determine whether the its donation complied with state disclosure laws. A legal battle over the FPPC’s audit authority quickly reached the state’s Supreme Court, which ruled Sunday in favor of the watchdog, ordering the Arizona group to turn over records. Americans for Responsible Leadership had at first indicated that it would ask the U.S. Supreme Court to block the California order. But that request was withdrawn Monday.

“The persistence and hard work of the FPPC has won a significant and lasting victory for transparency in the political process,” Ann Ravel, chair of the FPPC, said in a statement. “We will continue in this matter and all others to ensure that the people of California know who is funding political activity in this State.”

As TPM reported last month, Americans for Responsible Leadership was formed in July 2011, stating in an incorporation document in Arizona that the group’s purpose was “to further the common good and general welfare of the citizens of the United States of America by educating the public about concepts that advance government accountability, transparency, ethics and related public policy issues.”

Initially, the group’s board of directors included Graham, the founder of a wealth management firm, former gubernatorial candidate, and anti-union activist; Eric Wnuck, a 2010 congressional candidate; and Steve Nickolas, a beverage industry executive. The group’s incorporation document was signed and submitted by Cathleen West, a partner at the Washington D.C. and Virginia-based law firm HoltzmanVogelJosefiak PLLC, which specializes in providing counsel to outside spending groups, and is home to some of the most prominent Republican lawyers working today.

In September, the group added two new directors: Kirk Adams, a former Speaker of the Arizona House of Representatives, who ran unsuccessfully for Congress in Arizona’s newly redrawn 5th District earlier this year; and Taylor Searle, a CPA who works for The Wolff Company, a Scottsdale, Ariz.-based real estate private equity firm.

Since adding Searle and Adams (who now serves as the group’s president), American for Responsible Leadership’s spending has skyrocketed. In addition to the $11 million donation in California, the group has dropped hundreds of thousands of dollars into the battles over ballot initiatives in Arizona, and paid more than $2.3 million to companies in North Carolina and Washington D.C. for anti-Obama phone calls.

Monday’s disclosure confirms the hunches of Arizona political insiders, who had whispered that Americans for Responsible Leadership’s sudden big spending was tied to the political consultant Sean Noble, whose firm had been paid $44,000 by Kirk’s recent congressional campaign. In early October, Bloomberg reported on Noble’s activities. In 2009 and 2010, Noble’s and the Center to Protect Patient Rights contributed $55.4 million to other nonprofit political groups. Among the recipients were the Iowa-based American Future Fund, which itself has spent more than $4 million opposing Prop. 32 in California, and Americans for Job Security.

Back in May, The Los Angeles Times reported on the several links between the billionaire Koch brothers and the Center to Protect Patient Rights.

Americans for Jobs Security, founded in 1997, is a 501(c)6 “business league,” which promotes the common business interests of its members. The group’s website says its goal is to support a “free markets and pro-paycheck public policy,” and its president is Stephen DeMaura, a former executive director of the New Hampshire Republican Party. According to figures maintained by the Center for Responsive Politics, Americans for Job Security has spent more than $15 million on federal-level elections this year, most of which has gone to oppose Obama. As a 501(c)6, the group does not disclose its donors.

The FPPC provided TPM with two letters, one from Noble to Adams and one from Adams to the treasurer of the Small Business Action Committee PAC, detailing the disclosure:

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