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Attorney General Kamala D. Harris Announces $1 Million Civil Settlement for Campaign Finance Violations, Calls for Legislative Reform

Thursday, October 24, 2013
Contact: (415) 703-5837

SACRAMENTO – California Attorney General Kamala D. Harris today announced that the California Attorney General’s Office and the Fair Political Practices Commission (FPPC) have jointly secured a $1 million civil settlement against two out-of-state organizations for violations of the California Political Reform Act. 

According to the terms of the settlement, the Arizona-based Center to Protect Patient Rights (CPPR) and Arizona-based Americans for Responsible Leadership (ARL) have admitted to making millions of dollars in unlawful intermediary contributions in connection with the November 2012 election in California and have agreed to each pay a fine of $500,000. 

“This case demonstrates in clear terms that California’s campaign finance laws are in desperate need of reform,” Attorney General Harris said. “California law currently contains a loophole for certain groups to evade transparency by maintaining the anonymity of their donors. I fully endorse swift legislative action to change the law. 

In October 2012, $11 million was funneled to a campaign committee supporting Proposition 32 and opposing Proposition 30.  A civil investigation was initiated by the FPPC, which was represented by the California Department of Justice’s Civil Law Division. Following the election, the California Department of Justice’s Criminal Law Division opened an investigation to examine potential criminal wrongdoing.

The investigation revealed that a Virginia nonprofit, Americans for Job Security (AJS), raised approximately $28 million in 2012 for issue advocacy opposing tax increases and supporting "pro-paycheck public policy."  Current law permits donors to remain anonymous if their contributions are used for issue advocacy. Shortly before the general election, AJS decided that were it to spend the money on issue advocacy at that time, it would trigger a California law requiring disclosure of the funds’ sources. Instead, AJS decided to make multiple donations to another non-profit, CPPR, which has a history of funneling millions of dollars to support conservative causes. AJS expected and hoped that CPPR would be able to find other money to support AJS’s efforts in California. AJS gave CPPR a donation of $4.05 million on September 10, 2012, $14 million on October 11, 2012 and $6.5 million on October 19, 2012.

Following these donations, CPPR made two major contributions of its own. First, on September 11, 2012, CPPR donated $7 million to the Iowa-based American Future Fund (AFF). As an intermediary, AFF then made a contribution of $4.08 million to a third entity, the California Future Fund (CFF). CFF used that money to support Proposition 32 in the California general election.

CPPR’s second contribution occurred on October 12, 2012, in the form of $13 million to ARL. As an intermediary, ARL returned $11 million to California through a contribution to the Small Business Action Committee (SBAC), a campaign committee supporting Proposition 32 and opposing Proposition 30. CPPR’s contributions were funneled back to California campaign committees through intermediaries AFF and ARL, which violated civil provisions of the California Political Reform Act of 1974.

The Department of Justice’s investigation did not reveal evidence to prove a knowing or willful violation of the Act by these parties.  As a result, the California Attorney General's Office has concluded its investigation and will not pursue criminal charges.

A copy of the settlement document is attached to the electronic version of this release at: https://oag.ca.gov/news

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Signed Final Stipulation.pdf469.12 KB

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