California Attorney General Kamala Harris lost a high-profile lawsuit over her attempt to obtain donor records from an organization in the orbit of the Koch brothers.

Judging First Amendment protections to exceed what Harris had characterized as the confines of state law, U.S. District Judge Manuel Real ruled that “a nonprofit backed by conservative billionaires David and Charles Koch does not have to reveal its donors,” as the Los Angeles Times noted. Real “found that the Americans For Prosperity Foundation, a 501(c)(3) charity organization, can ignore Harris’s demand to turn over the names and addresses of those who have donated more than $5,000.”

“In court, state lawyers argued that the donor documents allow investigators to track improper loans and unfair business practices by nonprofits. But attorneys for the Americans For Prosperity Foundation countered that donors feared for their safety if their identities were somehow revealed. Judge Real agreed.”

Political motives

In a 12-page decision, Judge Real decided Harris’s argument was farfetched: “While Attorney General Harris argued that she needed donor disclosure to identify lawbreaking like ‘self-dealing’ or ‘improper loans,’ that was a stretch,” the Wall Street Journal recalled in an approving editorial. Real concluded that, “over the course of trial, the Attorney General was hard pressed to find a single witness who could corroborate the necessity of Schedule B forms in conjunction with their office’s investigations.”

Harris, as Bloomberg noted, has continued a policy of maintaining confidentiality with regard to names on donor lists. On the other hand, she has also established a track record of trying to expand state authority in what appears to be a partisan manner. “An ally of the plaintiff’s bar and unions as well as a candidate for U.S. Senate, Harris recently surfaced as a key player in the alliance of state attorneys general intent on using criminal investigatory powers to probe so-called climate denial at non-profit research and advocacy groups as well as at energy companies like ExxonMobil,” as Walter Olson noted for the Cato Institute. “That makes at least two episodes in which Harris personally has signaled interest in novel, aggressive steps to pry open the internal workings of private advocacy organizations that take positions opposed to hers.”

A federal fight

But the federal policy that lent Harris’s approach an imprimatur of reasonableness has become a target of reform in the wake of Judge Real’s decision. “Like other nonprofit groups in the state, the foundation was asked by Harris’s office to turn over a tax form listing its biggest donors that it already provides to the Internal Revenue Service,” according to the site. Now, the role of the IRS in donor databases has landed the agency in the crosshairs of congressional Republicans. “The House’s powerful tax-writing committee approved a bill Thursday that would ban the IRS from collecting the names of donors to tax-exempt groups, enraging campaign-finance watchdogs who say the move could open the door to secret, foreign money in U.S. elections,” as KGW reported. 

The Ways and Means Committee approved the bill, the Preventing IRS Abuse and Protecting Free Speech Act, by a 23-15 vote along party lines, with Rep. Peter Roskam, R-Ill., arguing that groups exempt from taxation “should not be forced to expend precious resources on unnecessary documentation and tax administration rather than focusing on their charitable missions,” KGW added. 

Critics bracing for the bill’s passage unsuccessfully scrambled to stop its progress. “Campaign finance reform and transparency proponents issued a letter calling on members of the Ways and Means Committee to oppose Roskam’s bill,” the Huffington Post noted. “Those backing the letter include Brennan Center for Justice, Campaign Legal Center, Common Cause, CREW, Democracy 21, Public Citizen, Sunlight Foundation and Rootstrikers.”

But even strong advocates for campaign finance reform and donor transparency have acknowledged that the IRS itself played a potent role in mobilizing Republican support for protecting tax-emempt organizations from excessive federal scrutiny. “Attempts to push disclosure legislation have repeatedly run aground on Capitol Hill amid forceful GOP opposition. Republicans in Congress also attached a rider to a spending bill last year that, for the moment, blocks the IRS from even writing new regulations to draw clear parameters around political activity,” according to the American Prospect. “Republicans are still livid that the agency targeted Tea Party groups and other conservative organizations seeking tax exemptions in 2013.”

Steyer is a wealthy hedge fund manager and top-Democratic donor who runs an environmental group called NextGen Climate.

Thomas Steyer, photo courtesy of Aspen Institute

In introducing Steyer, Eric Bauman, the vice chairman of the state party, touted Steyer’s spending in Democratic politics, particularly for two initiatives in Los Angeles County that helped register Latinos as Democrats.

Bauman called Steyer a “champion” for being “willing to invest (his) personal wealth” to win elections that he in which he’s not a candidate.

According to Forbes.com, Steyer is worth $1.6 billion, which makes him the 1,190th wealthiest person in the world. He was the top national individual political donor in 2014 — at least on the books — spending almost $74 million, $46 million more than the next highest donor, former New York Mayor Michael Bloomberg. This cycle, Steyer’s near the top again, having spent $13 million so far.

“We can take on the special interests and the big corporations,” Steyer told thousands of Democrats.

However, Steyer’s spending is dwarfed by the Koch brothers — the mere mention of their name drew boos from the partisan crowd as the convention. Forbes.com has both Charles and David Koch ranked at #6 richest in the world, at $42.9 billion each.

While Steyer spends more as an individual donor, the Koch brothers reportedly have a vast network through which they spend on elections, which is difficult, if not impossible, to track. They will reportedly spend almost $1 billion on campaigns and issues this cycle.

The event, located in Indian Wells, boasted the largest group of attendees in its history — around 500, according to BuzzFeed News. Participants “were briefed behind closed doors on the 2016 landscape and on of each of the presidential candidates’ policy positions early Sunday morning by two of the top officials from the Koch network,” the website noted. “Although the seminar stuck to policy during the 2016 briefing, presidential politics and the future of the party were on the minds of a lot of the donors.”

The Trump factor

Unsure who was going to place where in this week’s first-in-the-nation Iowa caucuses, anxiety around Donald Trump’s prospects ran high. “Top supporters of Senator Marco Rubio of Florida and Senator Ted Cruz of Texas held private meetings to sway potential new recruits at the annual winter conference,” according to one participant, the New York Times’ Nicholas Confessore reported, adding that “officials with the Kochs’ political operation also began sounding out allied donors about a potential campaign” against Trump, “whose evolving views on issues like corporate subsidies put him at odds with the Koch network’s own policy priorities.”

Although Cruz managed to best Trump in Iowa, with Rubio coming in a surprisingly strong third, Trump had pulled into a substantial lead over the rest of the field in the run-up to Iowa, aggravating fears among donors and more traditional Republicans that the insurgent mogul could use a dominant first-place showing to break the spirits of his rivals and run the primary-season table. Instead, Cruz’s victory — which has deepened a different sort of anxiety among some established members of the donor class, who believe Trump to be more electable and open to influence than Cruz — wound up heartening many Koch attendees, who are inclined to view Cruz more favorably than Trump.

Still, the Trump factor left attendees cagey in Indian Wells. “Despite Trump rankling donors for months, the Kochs’ political network and its members were reluctant to do anything that might cause him to launch a third-party bid, sources said this weekend,” according to BuzzFeed News. “Also, there was concern that attacks from the Koch brothers and their allies could have potentially added to Trump’s momentum and his populist appeal with the GOP base.”

Lining up votes

Cruz and Trump, once willing to treat one another with relative kid gloves, have been drawn into an increasingly fierce competition as they bump up against each other at the top of the polls. “Cruz and Donald Trump are now knotted in a statistical dead heat for top support among California’s likely GOP voters five months before the state’s primary,” the San Jose Mercury News reported. “The poll may mark the end of the blustery billionaire businessman’s dominance in California. It shows Cruz probably has room to grow his Golden State support even further, while Trump’s already might be maxed out.”

But some pro-Republican analysts have cautioned that Cruz is too conventionally conservative to draw disaffected former Republicans and so-called Reagan Democrats into the fold — especially in states like California, where those sorts of likely voters are plentiful. “According to what one of the state’s most reputable voter list companies told me not too long ago, there are about 340,000 ‘decline-to-state’ voters in California who are former Republicans, and who have a reliable voting history,” wrote James Lacy at the Orange County Register. “This special, large group of voters should be a big focus of the Republican Party’s attention right now. And the best way for these voters to empower themselves is to re-register Republican.”

Harris “has a fight on her hands trying to get the brothers’ Americans for Prosperity Foundation to give her access to the same confidential data it already provides to the Internal Revenue Service,” Bloomberg Politics reported. That organization has labored in court to maintain control over information about its contributors, arguing that they and it face routine threats of violence.

“Grotesque threats have been leveled against known associates of the foundation, ranging from threats to kill or maim to threats to firebomb buildings,” the Foundation alleged, as Courthouse News reported. “More mundane threats abound too, including boycotts, firings and public shaming, all of which are now demonstrated components of the playbook of the foundation’s more extreme opponents.”

Pressed on the prospect of public disclosure by judges at a recent hearing in federal appeals court, “Deputy Attorney General Alexandra Gordon told the judges that new regulations to prohibit such disclosure are in the making, though she didn’t know when they would be enacted,” the site added. Gordon waved away claims that Foundation contributors could be put in peril by the disclosure of their information. “We have basically some anecdotal evidence of threats, mostly arising from the founders of this foundation, the Koch brothers’ very public presence and very public events held by the foundation,” she said, according to Courthouse News Service. “That has nothing to do with whether this type of disclosure requirement is actually going to lead to harm.”

The legal battle between the Kochs and the state Attorney General began in December 2014, when Americans for Prosperity sued Harris for violating its First Amendment rights to free speech. Although California law requires all charitable organizations to register with the state and furnish copies of their public IRS filings, as the Los Angeles Times then noted, the so-called “Schedule B” filing, which lists the names and addresses of donors giving over $5,000 each tax year, is “kept confidential and not available to the public.”

While Americans for Prosperity “said they have been registered with the state since 2001 and had never before been asked for its list of donors,” the Times reported, a Harris spokesman said the Foundation “has been out of compliance with the law for a number of years” and “did not receive a communication previously from our office for one simple reason: the section responsible for enforcement has been chronically underfunded for years.”

By this year, however, the Kochs had gained the upper hand in court. This February, U.S. District Judge Manuel Real blocked Harris from pursuing the list “until the legality of the request has been resolved,” as Bloomberg Business observed, citing “a separate case in which the U.S. Court of Appeals in San Francisco halted the attorney general from enforcing the demand on the Center for Competitive Politics while that case was before that court.”

“Real rejected Harris’s argument that her office won’t publicly disclose the donor information, saying that California doesn’t have regulation preventing such disclosure and that, as such, it was left to the attorney general’s discretion whether to make it public. The judge agreed with the foundation that the attorney general’s office won’t be harmed by an injunction because it hadn’t had the donor information for the past decade.”

Whatever the outcome of the case, Harris stood to gain politically from putting the heat on Americans for Prosperity and the Kochs, who are reviled by Democrats as big-money GOP puppet masters. Of late, Harris has had to weather criticism of her own campaign spending, “using her campaign account to fund stays in upscale hotels and first-class airfares during her nearly five-year tenure as state attorney general,” as the Hill recently reported. “A review by The Hill of California campaign finance records reveals that Harris’s expenditures follow a pattern: The Democratic candidate regularly charges thousands of dollars in luxury travel and hotels to her campaign.”

At stake was nearly $890 million in funds to be allocated through the end of next year, according to the Associated Press. Although much of that sum was expected to flow into the coffers of the eventual Republican candidate for president, a potent irony pervaded the proceedings, relating to Jeb Bush. “The Kochs began their donor gatherings in 2003, a reaction to what they saw as out-of-control government growth when his brother George W. Bush was president,” as AP noted.

The confab took place at a scenic and secluded oceanfront hotel in Dana Point. A certain amount of privacy has long been standard operating procedure, with the Kochs themselves playing more of a behind-the-scenes role. “The Koch operation is not expected to formally back any candidate in the GOP primary,” as Kenneth Vogel observed at Politico. “But the Koch brothers and many of their donors can still play kingmaker roles. In addition to the massive checks many are expected to write to the super PACs aligned with specific candidates, they also serve as bellwethers for other donors.”

Jockeying candidates

Even before the event, scuttlebutt surrounded the field of Republican candidates. Not all were present. Rand Paul, who “underwhelmed donors” at a prior event, declined this time around, as Eliana Johnson reported for National Review. One Koch official told Johnson “that Chris Christie wasn’t invited because the powers that be in Koch world think he has a crummy fiscal record in New Jersey.”

Nor did Donald Trump receive an invitation. (Trump would later mock the meeting on Twitter as an assemblage of would-be “puppets” lacking his own money muscle.)

That left the Koch brothers to sit down with Jeb Bush, Ted Cruz, Carly Fiorina, Marco Rubio and Scott Walker.

Although the attendees each had their chance to speak, few were out to make headlines. Marco Rubio, known for his hawkish approach to foreign policy, did use California’s sometimes idyllic isolation from the east coast political establishment to sharpen his rhetoric on Iran’s nuclear program. “Iran will be not just a nuclear weapon power, but will have the capability to deliver that weapon to the continental United States in less than a decade,” he said, according to Time. “I don’t think any of us wants to live in a country where a radical Shiite cleric in Tehran can have a nuclear weapon and an ICBM that can hit where we are sitting right now.”

Policy over politics

But the weekend was not restricted to presidential politics. “Koch network leaders briefed some 450 donors, who pledge six-figure sums to become members of the Freedom Partners organization, on their policy and philanthropic goals for the 2016 cycle,” CNN reported.

The itinerary reflected an agenda more variegated than the Koch organization is often given credit for. “While the network has become arguably the most powerful force in Republican politics today, Charles Koch, in his welcoming speech, called out both parties for big spending, reckless foreign policy and corporate welfare,” Politico noted.

Sessions were varied. One, drawing hundreds, “focused on legislation that would limit mandatory minimum sentencing, as well as other forms of criminal justice reform,” according to CNN. “At an evening reception, the featured speaker was Dr. Michael Lomax, president of the United Negro College Fund.”

In fact, some present at the meeting suggested that too much attention had been paid to the relatively glitzy and competitive race for the GOP nomination. Longtime donor Art Pope told Politico that the spotlight belonged a bit deeper in the weeds. “The main point of this weekend’s seminar is not the elected officials or the candidates. In fact, it’s not about candidates at all. It is more about policies and issues,” he said.

Ann Ravel, the outgoing chair of the California Fair Political Practices Commission, had accused libertarian philanthropists Charles and David Koch of funneling “dark money” into ballot initiatives Proposition 30 and Proposition 32 in 2012.

The libertarian Koch brothers are reviled by the left.

Prop. 30, sponsored by Gov. Jerry Brown, was a large income tax increase on those earning more than $250,000 annually. Prop. 32 would have prohibited unions from using members’ automatic payroll-deducted funds for political campaign contributions.  Prop. 30 passed, and Prop. 32 was defeated.

At a FPPC press conference Thursday, Ravel said that Americans for Job Security “sent dark money to the Koch network, which has tentacles all over the country.”

However, during the press conference when Ravel was asked by a reporter about the $11 million donation, she admitted the FPPC had no evidence that any of the funding was actually from the Kochs. “I don’t believe we know what money was included in the $11 million, and I think that was part of the purpose of the exchange.”

Pot, meet kettle

Ravel, the outgoing chairwoman of the FPPC, held the press conference announcing the largest fine in FPPC history Thursday of last week, the day before she was leaving to become the head of the Federal Election Commission as a President Obama appointee.

The FPPC attempted to link the Koch brothers to violations of campaign finance disclosure laws, apparently without any evidence the Kochs were personally involved.

“Americans for Responsible Leadership Admits Campaign Money Laundering, Discloses $11 Million Donor,” the FPPC website headline says. “Americans for Responsible Leadership, the Arizona non-profit corporation that made an anonymous $11 million donation to a California campaign committee, today sent a letter declaring itself to be the intermediary and not the true source of the contribution. It identified the true source of the contribution as Americans for Job Security, through a second intermediary, The Center to Protect Patient Rights.”

What’s interesting is while most of the media decry the Koch brothers’ political contributions and donations, left-wing political donor George Soros is revered, despite his ties to hundreds of non-profit organizations, media outlets, and politicians. The government largely leaves Soros alone now that Barack Obama is President.

The last FEC fine handed out to a Soros organization was in 2007 by the Federal Election Commission, for $375,000.

“Numerous news reports have tried to link the Kochs to the funding, citing Sean Noble, founder of CPPR, who had worked as a consultant to Koch Industries in the past,” the Washington Free Beacon reported. “The group has no formal ties to the Koch brothers.”

Teamsters’ love the fine

“California Teamsters and allies used the power of their numbers last year to defeat Proposition 32, an anti-worker proposal secretly funded by the Benedict Arnold Koch Brothers and other anti-worker billionaires,” Teamsters Magazine reported following the press conference.

“From the Koch network, according to a story today by Dan Morain in the Sacramento Bee,” Teamster Magazine said. “Two Republican operatives cooked up Proposition 32, managed to get it on the ballot and then went looking for the money to broadcast their propaganda. There was plenty of it — many millions, in fact. The only problem was, the greedy billionaires who contributed didn’t want their identities known.”

“Ms. Ravel’s comments about Koch are unfounded and without factual basis, as she acknowledged in her press conference,” said Melissa Cohlmia, communications director for Koch Industries, in the Washington Free Beacon.

“Despite the millions of dollars rich extremists were willing to throw at Proposition 32, workers were ultimately able to prevail because they stood united against big business,” Teamsters Magazine said.

The accused

Two nonprofit groups, the Center to Protect Patient Rights and Americans for Responsible Leadership, reached a civil settlement with the FPPC, agreeing to share a $1 million fine.

The FPPC accused the non-profit groups of failing to disclose financial contributions used to oppose the union measure, which was ultimately defeated by California voters in 2012.

“The lawsuit filed against Americans for Responsible Leadership is yet another action taken by the Fair Political Practices Commission to increase political transparency and promote fairness in the election process,” the FPPC website says.

Americans for Responsible Leadership President Kirk Adams, a former Arizona lawmaker, called the fine a vindication for his group after top Democratic California officials last year made “outlandish claims of money laundering, criminal violations,” ABC news reported. Adams said ARL actions were inadvertent violations of disclosure laws.