Dan Morain

Shedding some light on dark money in Yes-on-64 campaign

Lt. Gov. Gavin Newsom.
Lt. Gov. Gavin Newsom. hamezcua@sacbee.com

Recall the stench that emanated from the secretive $11 million that flowed into California politics in the closing days of the 2012 election.

Seizing on an issue he knew would resonate with voters, Gov. Jerry Brown declared: “They’re ashamed of themselves. That’s why they conceal their identity.”

In 2012, the dark money was being used in failed campaigns to kill Proposition 30, a tax increase initiative pushed by Brown and teachers unions, and to pass an anti-union initiative, Proposition 32, that was intended to curb labor spending on elections.

The Fair Political Practices Commission took the unprecedented step of suing to force pre-election disclosure. The lawyer representing the donors, Jason Torchinsky, responded by saying that “if your speech is unpopular, expect reprisals.” He was more right than he knew.

In 2016, dark money continues to be the coin of the realm in initiative politics. Only this time, some of the nonprofit money is helping to fund an initiative promoted by good liberals led by Lt. Gov. Gavin Newsom to legalize recreational use of marijuana.

The Drug Policy Action, a nonprofit with an Oakland address, has given $4.7 million to pass Proposition 64. Nearly $4 million of that came from an entity called Fund for Policy Reform based in Washington, D.C. Billionaire George Soros, it turns out, is the source of that money, though you wouldn’t know it from campaign finance reports.

Andrew Acosta, a Democratic consultant who is helping to run an underfunded campaign to defeat Proposition 64, was first to pull at the thread by signing a complaint to the FPPC last week urging that it investigate the nonprofits and discover the donors “now, before the election.”

Jason Kinney, the spokesman for the Yes-on-64 campaign and one of Newsom’s consultants, called the complaint “silly, sloppy, totally groundless,” intended to distract from a complaint his campaign filed over a far smaller sum being spent against the legalization initiative.

To which Acosta replied, deadpan: “They’re not answering the question. Who are the donors?”

Actually, they did, but only after I pressed them. First, some background.

The Yes-on-64 campaign readily discloses the source of much of its money. Silicon Valley billionaire Sean Parker has given more than $7.3 million. Other entrepreneurs and venture capitalists who could profit from legalization also are donating heavily.

But to Acosta’s point, Drug Policy Action also is funding the Yes-on-64 campaign. It, in turn, gets money from the Fund for Policy Reform, an arm of Open Society, founded by Soros, long an advocate of liberal causes including drug legalization.

As billionaires go, Soros is reasonably open about his political giving. And late Friday, Ellen Flenniken of Drug Policy Action told me Soros was the source of the $4 million that ended up in the Yes-on-64 campaign fund, though nothing in public campaign finance filings identifies him as the donor.

“Weird. Why go through all this trouble to do this?” asked Sacramento attorney Thomas Hiltachk, who specializes in campaign finance law and helped Acosta write the complaint.

If, as Flenniken says, Soros is the source of the $4 million, certain California laws would be triggered. He would have to be identified in ads as one of the measure’s major funders. He’s not.

In his complaint, Acosta recalls the “unprecedented” steps the Fair Political Practices Commission took to force disclosure of the donors to the 2012 initiative campaigns. Commission lawyers found that wealthy people who didn’t want their identities publicly disclosed gave to one nonprofit corporation which gave to another, which gave to a third, which gave to the California-based Small Business Action Committee, a campaign committee headed by conservative consultant Joel Fox.

I recall the secrecy well, having made a call to one of the outfits, only to have the person at the other end of the phone hang up.

In 2013, then-FPPC Chairwoman Ann Ravel declared that the donors were part of the “Koch Network,” a reference to billionaire brothers David and Charles Koch, financiers of conservative causes and candidates, who often have hidden their donations. California ended up extracting a record $1 million fine.

In 2014, the commission pushed for legislation giving it greater authority to compel pre-election disclosure, marking the occasion of Brown signing the bill by calling it a “serious blow to individuals trying to conceal the identities of major donors.”

On Friday, commission spokesman Jay Wierenga wouldn’t discuss Acosta’s complaint but did issue a statement saying the commission’s “goal is to resolve cases when it matters most – before the election.”

That’d only be fair. Dark money is dark money, whether it comes from David and Charles Koch’s pals, or donors who want to legalize marijuana. Unless, that is, Democrats who were so righteously demanding that dark money be brought to light in 2012 were simply blowing smoke.

Given that Flenniken identified Soros as the source of the $4 million, Acosta’s complaint probably is moot. That’s fine. I’m happy to have helped the commission do its work. Now, the Yes-on-64 campaign should amend its campaign finance reports to clearly show Soros is the source of $4 million, not some corporate shell.