Disgorgement Fight Could Shape Dark Money's Future in CA

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(Sacramento, CA)
Monday, November 4, 2013
California’s Fair Political Practices Commission is trying to collect $15 million in penalties from two political action committees that accepted “dark money” contributions last year.  The PACs won’t pay, saying they’ve done nothing wrong - and there's a lot at stake in this dispute.

The illegal donations last fall paid for ads from the Small Business Action Committee.  Last month, the FPPC settled a year-long legal battle by announcing two non-profit organizations will pay the state $500,000 each.

But even that record campaign finance penalty is chump change to the Koch Brothers – the conservative donors connected to the non-profits.  “I doubt they will have trouble coming up with a million dollars or half a million dollars to pay up this fine.  That’s why they settled at that amount, because I think they know that they can get away with it,” says Phillip Ung with the public interest group Common Cause.

What the FPPC really wants is to prevent future “dark money” donations.  To ensure that, a second penalty called “disgorgement” requires the PACs to forward every “dark” dollar they received to the state.  That’s $15 million.

“If you accept a contribution and it turns out that you didn’t get the true source, regardless of whether or not you knew or didn’t know, you have to give it up,” says the FPPC's Gary Winuk.

In other words, the next time a PAC gets a mysterious donation, it should send it back.  “If you suspect that you’re receiving a contribution and you don’t know the true source, you do so at your peril” Winuk says.

Not fair, says Beth Miller with the Small Business Action Committee.  She points out that even the FPPC says her PAC did nothing wrong.  “Why should the innocent party have to be fearful of accepting contributions solely because – even if they do everything right, they may be penalized?” Miller says.

Success in the FPPC’s disgorgement effort could make it a lot harder for similar donations in the future.  Failure could reopen the “dark money” floodgates.

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