After anonymous donation to Newsom recall, Democrat revives campaign finance proposal

A California Democrat is reviving his effort to force more large political contributors to disclose their identities after an Orange County investor kicked in $500,000 to a campaign seeking to recall Gov. Gavin Newsom and remained anonymous for weeks.

Assembly Bill 236, introduced by Assemblyman Marc Berman, D-Menlo Park, would require limited liability companies, or LLCs to disclose their sources of funding in the event the LLC contributes $50,000 or more to political campaigns in the state in a given year, or a total of $100,000 in four consecutive years.

The bill would effectively require companies to “pierce the corporate veil” and identify funders and investors who contributed more than $1,000 to the LLC in a given year and whose monies were used in political donations, Berman said.

Under California law, an LLC can make campaign contributions or expenditures in the name of the LLC without disclosing any information about the source of the funds expended by the LLC or the individuals responsible for operating the LLC. Berman, chair of the Assembly Committee on Elections, introduced a similar bill last year, but it was shelved.

“The bill is closing a pretty glaring loophole that currently exists in the law that does allow people to... hide their involvement,” he told The Sacramento Bee.

The legislation relates to concerns around a recent contribution to the campaign to recall Gavin Newsom. In December, an Orange-county based LLC known as Prov 3:9 donated $500,000 to the effort, the largest contribution to date.

State records turned up the name of one Irvine accountant, Thomas Liu, who acted as the spokesperson and manager for the LLC, but did not reveal who was behind the donation or why.

After Ann Ravel, the state’s former lead political watchdog, called on the attorney general and members of the Fair Political Practices Commission to investigate Prov 3:9’s “dark money” contribution, Liu disclosed that the corporation’s singular member to be John Kruger, an Orange County investor who said he was unhappy with the governor’s decisions to close churches during the pandemic.

“I am voluntarily identifying Mr. Kruger’s funding of Prov 3:9, but note that he seeks no credit for having done so,” Liu said.

Berman told The Bee he thinks LLCs need to be held to higher standards.

“When people find these workarounds, when people find these loopholes, they’re going to exploit it and do it in a large way,” he said. “And hundreds of thousands of dollars is a significant amount of money, even in California politics, so it’s important that we nip it in the bud before it becomes the preferred method for wealthy people to hide their involvement in the political process.”

This story was originally published January 13, 2021 at 10:00 AM.