Well-Funded Groups Play ‘Shell Game’ With Political Ads

For more than a year, individuals and groups have spent massive amounts of money on political advertising in California, hoping to influence votes on an array of critical issues, including education spending, tax increases and who runs city hall.

This spending is regulated by campaign finance laws, which in the weeks before Election Day require that it be promptly reported to the state's Fair Political Practices Commission so the public can know which power brokers — whether they be corporations, unions or ideological groups — are paying for the ads.

But because the punishments for breaking the laws are so mild — fines from $200 to $5,000 per violation — these deep-pocketed special interests often choose to ignore them and simply consider the fines a cost of doing business, according to campaign finance watchdogs.

“That’s a cost that they’re willing to accept as a price for playing this game,” said Kathay Feng, executive director of California Common Cause. “They’ll just absorb it.”

Meanwhile, it can be extremely difficult or impossible for voters to know who’s behind various attack ads before Election Day.

“When an organization is hiding the true source of its funds [it is] essentially cheating voters of important information that they are legally required to provide,” Feng added.

In the year after the 2010 election, FPPC staff referred for enforcement at least 130 campaign finance disclosure violations among more than 55 committees and individuals, according to a Voice of OC review of commission records. More than half were targeted with fines of $400 or less.

“The problem is that the penalties for nondisclosure have fallen behind the enormous amounts that are spent on the ads themselves,” said Tracey Westen, vice president of the Center for Government Studies. “Obviously it may be worth it to some of these political ad [funders] to conceal their identities,” he added.

Campaign disclosure has been a hugely controversial issue this election season, with the Citizens United ruling by the U.S. Supreme Court opening the floodgates for unlimited political spending by powerful interests.

In the wake of Citizens United, political strategists have set up secretive “dark money” groups to bypass disclosure laws and funnel huge amounts of secret cash into campaigns. One of those nonprofits, the Arizona-based Americans for Responsible Leadership, recently pumped $11 million into California to fight Proposition 30, Gov. Jerry Brown’s tax proposal.

The FPPC took the group to the state Supreme Court this weekend to force it to disclose who was behind the donation. Justices unanimously ordered the group to divulge the donors, though that has only lead to other obscure groups with more ties to the billionaire Koch brothers.

Americans for Responsible Leadership is the largest case of "campaign money laundering" in state history, the FPPC says.

More locally, a secretive East Coast nonprofit funded by anonymous donors recently gave $200,000 to defeat Democratic candidates for Irvine mayor and City Council.

Even in the post-Citizens United world, however, there still are lots of reporting requirements. For example, traditional political action committees (PACs) have to disclose any new contributions and expenses more than $1,000 every 24 hours in the two weeks leading up to Election Day.

This requirement leads to many of the FPPC fines. When tagged with a violation, the PACs will invariably claim that it is the result of an oversight, not a conscious effort to conceal information from the public.

That was the case recently with Atlas PAC, a business-friendly group that mailed attack ads in Huntington Beach last month.

Atlas PAC sent out three sets of negative mailers last month targeting a Huntington Beach City Council candidate but failed to report its donors, said Debbie Cook, an environmental activist and former Huntington Beach mayor.

Cook filed a formal complaint with the FPPC on Oct. 29, alleging several violations of state law.

After her complaint and a call from a Los Angeles Times reporter, Atlas divulged its funding sources. One of the donations originated with Connecticut-based Poseidon Resources, according to the Orange Juice blog. Poseidon is seeking to build a large, controversial desalination facility in Huntington Beach.

The Atlas case shows that the fines are so weak that some big-money groups calculate they’ll gain more by breaking the law, Cook says.

“Apparently the money doesn’t really mean anything to them,” she said.

Atlas PAC didn’t return a message seeking comment, and Poseidon declined a request for a phone interview.

Some political insiders argue that secret campaign contributions are free speech, and that the public doesn’t have a right to know who’s trying to influence them.

“If you’re not able to protect the names of your donors, soon you won’t have any donors,” political consultant John Fleischman said recently.

Westen calls that thinking “completely contrary to law and American tradition. … It’s basically concealing information that could lead people to make up their minds."

Ultimately, campaign finance watchdogs say, the practice will continue until enforcement is beefed up.

“We think that this is going to be a trend that only increases until the courts and the FPPC put some teeth into our disclosure laws,” said Feng of Common Cause.

“A lot of these organizations are playing a shell game.”

You can reach Nick Gerda at ngerda@gmail.com, and follow him on Twitter: twitter.com/nicholasgerda.

Comments are closed.