Lobbyist organizes second legislative junket to Cuba
December 1, 2013 - By John Hrabe
An influential Sacramento lobbyist — who paid out a $500,000 settlement for allegedly engaging in “pay-to-play” behavior — has organized a second junket to Cuba for California lawmakers. This week, Darius Anderson, the founder and president of Sacramento-based lobbying firm Platinum Advisors, will host a six-day, five-night trip to Havana for California lawmakers.
The trip, which kicks off on Monday, is the second legislative junket to Cuba organized by Anderson this year. During the Legislature’s spring break, eight lawmakers participated in a similar trip that included a tour of a castle, afternoon salsa lessons and rooftop cocktails, among other activities, according to Assemblyman Katcho Achadjian, R-San Luis Obispo, the only legislator to speak publicly about the trip.
The legislative junket to Cuba has been criticized by ethics experts for conflict of interest issues as well as the questionable practice of setting up a nonprofit organization that is “a wholly owned subsidiary” of a lobbying firm.
Assemblywoman Campos confirmed as participant
It is unclear how many legislators or their staff are participating in this week’s trip. At least one legislator has been identified as a participant. The San Jose Mercury-News reports that Assemblywoman Nora Campos, D-San Jose, and her husband, Neil Struthers, are going.
“It’s an opportunity to develop economic and trade ties,” Campos spokesman Steve Harmon told the Mercury-News by email.
However, an ethics expert said this type of trip gives lobbyists an unfair level of influence.
“It absolutely raises ethical questions when lobbyists travel with elected officials,” Jessica Levinson, a Loyola Law School professor who specializes in ethics, told CalWatchdog.com in April. “We want elected officials to hear from all of us, not just those who are taking trips.”
The trip’s price tag, according to the invitation, is $4,175 per person with a $500 supplement for single occupancy. But legislators won’t be paying for it out of their own pockets. A spokesman for Campos told the Mercury-News that the San Jose Democrat would use campaign funds to pay for the trip.
Under the California Political Reform Act, legislators and their staffs cannot accept gifts worth more than $10 per month from a registered lobbyist. However, campaign accounts provide legislators with an easy vehicle for circumventing these strict limits on lobbyist gifts. Lobbyists can direct their clients to donate to a member’s campaign account. Then the member can use the campaign account to pay for personal expenses, including foreign travel.
Nonprofit has links to lobbying firm
In order to comply with the State Department’s ban on travel to Cuba, the trip was arranged by Californians Building Bridges, a shadowy nonprofit organization controlled by Anderson. The organization’s website was registered by an employee of Platinum Advisors in August 2010, who provided contact information for Platinum Advisors.
The nonprofit’s board of directors includes Anderson as well as Holly Fraumeni and Melinda McClain, both of whom are registered lobbyists with Platinum Advisors. Only two other individuals serve on the board of directors, Kevin Murray, a former state senator and lobbyist, and James Bruner, the director of Orrick’s Governmental Affairs Practice Group in Sacramento.
That information, Levinson previously suggested, raised the question of whether “the nonprofit is a wholly owned subsidiary of the lobbying firm.”
More evidence of lobbying firm directing trip
The latest trip provides even more evidence that Anderson has used the nonprofit organization as a subsidiary of his lobbying business. In June 2013, Anderson invited lawmakers on the trip on behalf of “Platinum Advisors” and signed the invitation on Platinum Advisors letterhead.
“On behalf of Platinum Advisors and in partnership with Californians Building Bridges, we are excited to invite you to join us on an upcoming trip to Havana, Cuba during December 2-7, 2013,” Anderson wrote on Platinum Advisors letterhead. “In 2010, I founded an exciting nonprofit organization, Californians Building Bridges (CBB), which gained independent approval from the U.S. Office of Foreign Assets Control in 2011 to travel to Cuba and coordinate educational exchanges.”
Nevertheless, despite overwhelming evidence that the nonprofit is a subsidiary of the lobbying firm, Californians Building Bridges denies that lobbying will occur on the trip.
Jason Kinney, a spokesman for the nonprofit, told the Los Angeles Times that no policy issues are discussed. “These are nongovernmental educational exchanges with the people of Cuba — which means that no policy issues are discussed and certainly none relating to anything going on in Sacramento,” Kinney said in interview with the newspaper earlier this year.
83% of nonprofit funds spent on travel
Federal tax documents, filed by the organization on May 28, 2013, for the 2012 tax year, claim that the group’s primary purpose is to support other charitable endeavors. In 2012, $541,363, or 83 percent of the organization’s overall expenses, was spent on travel.
“The organization’s primary purpose is to assist other charitable organizations in expediting projects, setting priorities, and achieving goals,” the group stated as its charitable mission on tax forms for the past two years. “Californians Building Bridges will develop humanitarian programs that help volunteers and corporate partners alike make a useful connection to a world in need.”
Despite its tax-exempt status, Californians Building Bridges has little to show in the way of charitable activities. Californians Building Bridges, according to its most recent tax return, provided no financial support to domestic or international charities.
In fact, Californians Building Bridges, which spent $652,200 last year, has never spent a penny in support of grants or contributions to other charities, according to the two tax returns that are publicly available. Yet the organization’s mission, according to its tax return, listed as a priority making “one-time financial grants and donations of supplies and materials to charitable organizations that lack their own resources or do not qualify for assistance through existing agencies and organizations in their region.”
Darius Anderson: Sacramento’s ‘best connected lobbyist’
According to state disclosure reports, Anderson’s firm is the lobbyist of record for 68 government organizations and special interest groups, including Anthem Blue Cross, AT&T, California Thoroughbred Breeders Association, Clear Channel Communications, Station Casinos, Sutter Health, United Food and Commercial Workers, UPS, and the counties of Alameda, Napa, Orange, San Bernardino and Ventura.
In 2009, Anderson was voted by state legislators as the “best connected lobbyist,” according to a survey of all 120 legislators conducted by Capitol Weekly.
In 2010, Anderson and Platinum Advisors “paid $500,000 to settle claims by New York Atty. Gen. Andrew Cuomo stemming from a yearlong investigation into so-called pay-to-play practices in city and state pension fund investment partnerships,” according to the Los Angeles Times.
As of Sept. 12, seven of the eight legislative members on the spring-break trip to Cuba have been identified. Attendees include: Achadjian, Assembly Majority Leader Toni Atkins, D-San Diego; Assemblywoman Shirley Weber, D-San Diego; Assemblywoman Holly Mitchell, D-Los Angeles; Assemblywoman Nancy Skinner, D-Berkeley; state Sen. Ron Calderon, D-Montebello; and state Sen. Cathleen Galgiani, D-Livingston.
Additional background information, past coverage
California Building Bridges 2012 tax return
CalWatchdog: 7th legislator on Cuba junket identified
San Jose Mercury-News: Nora Campos’ junket to Cuba
Tags: Achadjian, Andrew Cuomo, Cathleen Calgiani, Cuba, Darius Anderson, Holly Mitchell, John Hrabe, Legislative Junkets, Nancy Skinner, Nora Campos, pay-to-play, Platinum Advisors, Ron Calderon, Shirley Weber, Toni Atkins