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CA unveils AZ group’s financing, says it committed money laundering

Obscure Arizona political group now spending against ObamaCalifornia’s Fair Political Practices Commission disclosed the source of an $11 million contribution that an Arizona-based group injected into battles over two ballot measures, and declared that the organization was responsible for campaign money laundering.

Americans for Responsible Leadership received the money it spent in California from the Center to Protect Patient Rights, another Arizona-based nonprofit organization. The group used a separate nonprofit, Americans for Job Security, as an intermediary to give the money to ARL.

ARL has also spent heavily on two ballot measures in Arizona, contributing $875,000 to the campaign against Proposition 204 and $600,000 to the campaign against Proposition 121.

Numerous reports have linked the Center to Protect Patient Rights and other affiliated groups associated with Arizona political consultant Sean Noble to Charles and David Koch, who run Wichita, Kan.-based Koch Industries. The billionaire brothers are high-profile funders of conservative causes across the United States.  The FPPC did not identify the source of the Center to Protect Patient Rights’ funding.

Gary Winuk, the FPPC’s chief enforcement officer, said ARL’s money laundering, as a violation of the California Political Reform Act, could be charged as either a misdemeanor or as a civil or administrative penalty.  A civil violation could result in a fine equal to the amount of the contribution, while an administrative violation could lead to a fine of up to $5,000 per violation.

Winuk would not comment on exactly what action the FPPC would take. FPPC Chairwoman Ann Ravel said only that, “We are going to pursue this vigorously.”

Michael Bopp, an attorney for ARL, said the group disputed the commission’s determination that it was responsible for campaign money laundering.

“Neither ARL nor CPPR admit any wrongdoing,” Bopp said in a letter to the commission. “Further, ARL and CPPR reserve the right to contest any further proceedings that related to the contributions discussed in the aforementioned letters.”

Monday’s disclosure identified the source of ARL’s money. But the identities of the Center to Protect Patient Rights’ contributors are still secret, as are the contributors to Americans for Job Security.

And ARL only disclosed the $11 million it gave to the Small Business Action Committee PAC in California, not the amount of money it has spent in Arizona. ARL gave to No New Taxes, No on 204, which is fighting against an initiative for a permanent one-cent sales tax increase, primarily for education funding, and Save Our Vote, which is campaigning against Proposition 121, an initiative to create a “top-two” primary system in Arizona.

Ann-Eve Pedersen, chair of the Quality Education and Jobs campaign for Prop. 204, said she was dismayed by the likely involvement of the Koch brothers.  She questioned why the anti-Prop. 204 group had to rely on out-of-state money for its campaign.

Though the FPPC did not disclose the source of ARL’s contributions to the Arizona campaigns, Pedersen said she presumed it came from the Center to Protect Patient Rights and other Koch-tied groups.

“We’re very concerned to see the Koch brothers weighing in and trying to buy an election in Arizona,” Pedersen said. “I think that if they want to disclose where their Arizona money came from, if it was a different source, then they should feel free to do that. Otherwise, I don’t know why we would assume it was a separate source of funding.”

Pedersen also questioned the claims of Treasurer Doug Ducey and other members of No New Taxes, No on 204, who have frequently criticized Quality Education and Jobs as being funded by “special interests.” Their reasoning is that We Build Arizona, a construction and contractors industry group, has provided hundreds of thousands of dollars to the yes-on-204 campaign. Prop. 204 includes money for a state infrastructure fund.

“They were the true special interests, and they were hiding behind that,” Pedersen said. “How hypocritical and how cynical to try to pin that on us, when … they knew they were going to bring in dark money from outside of Arizona to try to buy an election.”

FPPC began looking into ARL in October after it contributed $11 million to the Small Business Action Committee PAC. The PAC is opposing California’s Proposition 30, a sales and income tax increase aimed at providing more education funding, and supporting Proposition 32, which would ban automatic paycheck deductions by labor unions and curb unions’ ability to spend in political campaigns.

ARL’s disclosure came after a weeks-long legal battle with the commission over the source of its money, which culminated with the California Supreme Court ordering the group to turn its records over to the commission. The commission demanded the records in accordance with California laws requiring nonprofits to disclose their contributors if they spend money to influence elections in that state.

Arizona does not have a similar law regarding campaign contributions from nonprofit organizations.

Matt Ross, a spokesman for ARL, did not respond to questions about the possibility of legal action against the group, or whether the Center to Protect Patient Rights was the source of the money the group spent in Arizona.

“After late night discussions, Americans for Responsible Leadership and the FPPC reached a settlement.  The Commission has received specific documents it requested,” Ross said in an emailed statement.

The Center to Protect Patient Rights is run by Noble, a political consultant in Arizona. Records from the Arizona Secretary of State’s Office show that No New Taxes, No on 204 paid Noble’s firm, DC London, $12,500 for campaign work in October.

Numerous reports have linked Noble and a handful of other nonprofits associated with him with the Koch brothers. The Koch brothers are well known for contributing millions to conservative causes and organizations, including Americans for Prosperity.

An October article by Bloomberg News described a “nonprofit daisy chain” of secret campaign money shuffled around by Noble between the Center to Protect Patient Rights, Americans for Job Security and several other groups in 2010. (http://www.bloomberg.com/news/2012-10-15/secret-political-cash-moves-through-nonprofit-daisy-chain.html)

Noble did not return a message from the Arizona Capitol Times.

Prop. 121 and Prop. 204 aren’t the only campaigns ARL has spent money on in Arizona. In August, around the same time it was funding Save Our Vote’s court challenge to Prop. 121, the group spent about $11,500 on mail pieces to assist House Speaker Andy Tobin’s reelection. It also gave $50,000 to Republican House Victory and $7,000 to the Republican Victory Fund, independent expenditures used to support GOP legislative candidates. More recently, ARL spent $10,732 on mailers opposing Democratic Rep. Eric Meyer and another $801 supporting Republican Sen. Frank Antenori.

ARL has also spent money to support Republican U.S. Sen. Orrin Hatch and oppose Democratic Congressman Jim Matheson in Utah, and recently spent about $1.4 million on phone calls opposing President Barack Obama.

The group was founded last year by businessman Robert Graham, a former GOP gubernatorial candidate who is running for Arizona Republican Party chairman, along with former Republican congressional candidate Eric Wnuck and businessman Steven Nickolas.

But while ARL started spending in August in Arizona races, its expenditures were relatively small until former House Speaker Kirk Adams became ARL’s president in early September. Adams is an ally of Noble, and DC London consulted for Adams’ failed congressional campaign in Arizona’s 5th Congressional District.

Adams and Graham could not be reached for comment.

Former Congressman John Shadegg, whom Noble served for years as his chief of staff, did fundraising for Save Our Vote earlier in the campaign. But Shadegg said he did not secure any funding from Noble or the Center to Protect Patient Rights, and said he has not raised any money for Save Our Vote in the past month.

“I talked to individuals here in Arizona. I did not talk to Sean or any of those groups,” Shadegg said.

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