SACRAMENTO, Calif. – Two Arizona nonprofit groups that did not disclose the source of more than $16 million in political donations last year will pay a record $1 million fine under a settlement announced Thursday by the California attorney general and political watchdog.
The two California organizations that received the “dark money” will have to send all of it to the state treasury through an obscure practice called “disgorgement,” even though most of it has already been spent. One of the conservative groups quickly said it would refuse to pay the penalty.
The nonprofits being assessed the fine are known as Americans for Responsible Leadership and the Center to Protect Patient Rights. Both are based in Arizona and connected to brothers Charles and David Koch, the controversial oil magnates who fund numerous conservative causes.
Ann Ravel, the outgoing chairwoman of the Fair Political Practices Commission, said her group has been aggressively litigating and working on new laws and regulations to prevent other groups from giving similar anonymous political donations in California.
She said she hopes the fine, the largest in the FPPC’s history and reportedly the third-largest political fine ever levied in the U.S., will send a powerful message. But she conceded that the settlement does not require complete disclosure of the groups’ donors – something she and other advocates of campaign sunshine laws have called for.
“Dark money is a nationwide issue,” Ravel said. “These groups exploit loopholes in the law to undermine the clear purpose of the law-to give essential information to the public.”
Malcolm Segal, an attorney for the Center to Protect Patient Rights, emphasized in a statement that the commission found that the nonprofit had acted in good faith and did not intend to conceal any information from the public.
“There was absolutely no intent to violate campaign reporting rules,” Segal said.
According to the settlement, the Arizona nonprofit groups gathered checks last year from a complex web of donors in states as far away as Virginia, then made payments of more than $16 million to two California groups that spent the money on advertising to influence last year’s elections.
Some of the money was used to oppose Proposition 30, Gov. Jerry Brown’s tax-increase initiative, and other money was used to support Proposition 32, aimed at restricting unions’ use of dues for political purposes.
But the money didn’t do much good. In last November’s election, Proposition 30 passed easily and Proposition 32 was easily defeated.