Propositions 30 and 32 are not yet over. There remains the matter of the secret $11 million contribution that Gov. Jerry Brown made his biggest issue in the last week of the campaign. It is possible that people involved with this contribution may face not only huge civil penalties but even criminal indictments.
In October, an Arizona group called Americans for Responsible Leadership contributed $11 million to the No on 30 and Yes on 32 campaigns, but refused to disclose the source of the funds. The Fair Political Practices Commission sued, and it turns out the funds came not from the Arizona group, but from a tax-exempt nonprofit organization that got the money from another tax-exempt nonprofit called Americans for Job Security.
The Bee wrote in a Nov. 6 editorial that this is a shadowy group that hides behind the nonprofit section of the IRS, complaining that, "there is no way for citizens to know the source of the money."
That's not true. If Americans for Job Security collected money earmarked for transfer to California, it must under California law disclose its source. Being a federal nonprofit organization has nothing to do with its duties under California campaign finance laws.
The FPPC and the California attorney general should initiate legal action to answer two questions: Did illegal money laundering occur in the three-way transfer of these funds? And how did Americans for Job Security decide to give this money?
Last spring, the Lance Armstrong Foundation made a contribution of $1.5 million to the Yes on Proposition 29 campaign, the tobacco tax. The foundation properly reported the funds and registered under California law, but did not say where the funds came from. Probably the money came out of the general treasury and thus the individual donors did not have reason to know their money would go a campaign. But the FPPC should require fuller disclosure from even obviously legitimate groups like the Armstrong Foundation when they make contributions in California.
Americans for Job Security calls itself an "issue advocacy" body on its website. If the funds transferred to California came out of its issue advocacy treasury, they may not need to disclose further, although the money laundering issue is still there. But if it came out of a fund where the donors knew or had reason to know the money would go to a California campaign, the names must be disclosed and the group may be liable for a huge civil penalty.
Just because the election is over is no reason for the FPPC and the attorney general to ease off of this case. This is a rare opportunity to restate California law that no one, not even a federal nonprofit charity, is exempt from California disclosure law. And a state lawsuit could help provide some clarity to the murky issue of exactly when federal nonprofits need to disclose their campaign activities.