State Investigating Secretive Group That Routed $170,000 to Santa Ana Election

Santa Ana voters received thousands of mailers funded by $170,000 in dark money passed through a business entity created a month before the election. That money was then transferred to a newly-created political action committee, Californians for Ethical Patient Care, which spent it on the ads.

State authorities have launched an investigation into a secretive group that routed $170,000 through an apparent shell company into last week’s Santa Ana election without disclosing the money’s original source.

The investigation is by the California Fair Political Practices Commission (FPPC), which the agency disclosed in a late October letter. It centers on Californians for Ethical Patient Care, a political committee created Oct. 12 that was one of the largest vehicles for political ads in the Nov. 6 Santa Ana City Council election.

Nearly all of its funding was $170,000 from a business entity created a month before the election under the name “19th Green OC, LLC,” for which there are no public disclosures of who controls it or where its money came from.

By setting up the LLC so close to the election, the public could not find out who was in charge of the entity before the election. State law doesn’t require disclosing the names of who controls LLCs until 90 days after the initial registration, which in this case is not until Jan. 1.

An earlier instance of local campaign money routed through an LLC led to an $80,000 fine by state authorities for not disclosing the true source of the money, in a 2010 case out of San Luis Obispo County.

The committee’s treasurer, Beverly Grossman Palmer, said she wasn’t able to say who the original source of the $170,000 was.

“No, I really can’t, honestly,” Palmer said. “I am the treasurer, so I get [the checks], I process them, and then I try to make sure the committee complies with [the law].”

Palmer said state law doesn’t require disclosure of money into corporations that donate to political committees.

The FPPC, which is in charge of enforcing California’s campaign finance laws, says state law requires election committees to disclose “the true source” of their money.

“Failure to disclose the true source of a contribution is considered one of the most serious violations of the Political Reform Act,” the FPPC says in its campaign finance manual.

“A committee receiving a contribution of $100 or more from an intermediary must report the true source and the intermediary. The campaign statement will identify both the intermediary’s and the true source’s name and address, and, if applicable, the occupation and employer,” the manual states.

In 2010, the FPPC levied an $80,000 fine over the creation of an LLC to funnel $221,000 to a political committee in San Luis Obispo while hiding the true source of the money.

“The purpose of [California’s disclosure law] is to find out whether the people funding [political ads] have interests in the outcome” of the election, said Tracy Westen, a lawyer and campaign finance expert who served as chief executive of the Center for Governmental Studies.

“It circumvents the whole purpose of the [disclosure] law to erect intermediary corporations with no names. You want to know who the real people are and what their interests are.”

With $170,000 through the LLC, Californians for Ethical Patient Care paid for mail and internet ads opposing City Council candidate Phil Bacerra, and supporting mayoral candidate Sal Tinajero and City Council candidates Roman Reyna and Sandra “Pocha” Peña Sarmiento.

The person listed as managing the Santa Ana dark money committee is Rose Redlich, a Northern California resident and longtime partner of the son of Pam Sapetto, an Orange County-based lobbyist who represents land developers.

Redlich’s address on the committee paperwork is listed in the Bay Area city of Morgan Hill, about 350 miles from Santa Ana. She appears to have previously worked for Sapetto’s lobbying firm, according to an archived LinkedIn page.

In recent months in Santa Ana, Sapetto has represented the developer of one of the city’s most controversial proposed real estate projects, the 2525 N. Main St. project, which is proposed to have 496 apartments.

Redlich and Sapetto didn’t return phone messages seeking comment about the committee.

Ryan Ogulnick, the developer behind the 2525 project, denied any involvement with the dark money group, adding Sapetto represents many developers and that he has no knowledge of her political activities.

In response to Voice of OC’s voicemail asking about the LLC, committee, Ogulnick and his project, Sapetto sent an email late Monday saying she’s not currently involved.

“I’m not involved with the organization you referenced and I am not aligned with the political activities of the person you referenced,” Sapetto wrote.

Asked if she previously was involved in the committee or the LLC, and why the committee’s principal officer was her son’s longtime partner, who also apparently worked for her firm, Sapetto didn’t respond.

State officials, in response to a claim alleging the group was hiding the money’s true source, decided to open an investigation, according to an Oct. 30 letter by the state agency, which Voice of OC obtained Nov. 21.

The complaint, by political consultant George Urch, said the committee failed to disclose in its ads who its main funder was, as required by state law.

“This is definitely an effort to hide the source of the funding from the voters for this last minute campaign committee,” Urch wrote in his complaint.

FPPC officials wrote back to say they were launching an investigation.

“This letter is to notify you that the Enforcement Division of the Fair Political Practices Commission will investigate the allegation(s), under the jurisdiction of the Commission, of the sworn complaint you submitted,” states the Oct. 30 letter from Galena West, chief of the FPPC’s Enforcement Division.

Palmer, the committee’s treasurer, said the LLC’s status as a major donor wasn’t disclosed on the mailers because that source hadn’t been confirmed at the time the ads were printed.

“The truth is, we did not have that confirmation at the time” the mailers were printed, Palmer said. As soon as the committee had that, she said, the disclosure was updated.

The committee’s assistant treasurer is Fred Woocher, a well-known election attorney based in Los Angeles who has long worked with campaigns in Orange County.

Asked whether the public will get to know who funded the committee, Woocher said he hasn’t been very involved but that he hopes the required disclosures will be filed.

“I assume that all the reporting will be done properly,” Woocher told Voice of OC.

“I haven’t been directly involved in that…I would hope and trust that all the reports that are required to be filed” will be filed.

The FPPC reminded the LLC and campaign committee it must keep original financial documents and make them available for investigations.

“Please note that under the Act, you are required to retain accounts, records, bills, receipts and other original source documentation. These records should be readily available for any audit or investigation conducted by the Fair Political Practices Commission,” the agency wrote in an Oct. 29 letter to the LLC and “Patient Care” committee, regarding another complaint that the main donors weren’t listed in ads.

In its 2010 fine, the FPPC said the public is harmed when the true sources of campaign money are hidden.

“This case involves a series of transactions which prevented the public from learning the true source of funds that were used to try and defeat [a ballot measure],” the FPPC wrote in its findings.

“The public harm inherent when someone makes contributions in a name other than their legal name and fails to properly disclose the true source of contributions made, especially when pertinent information is not disclosed before an election as required, is that the public is deprived of the right to transparency in the political process and the full knowledge of who is supporting a particular position before they make their decision to vote.”

Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at ngerda@voiceofoc.org.