Subpoenas issued in California probe of Koch-backed political group: report

By Stephen C. Webster
Monday, March 25, 2013 12:06 EDT
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A man blinded by money. Photo: Shutterstock.com.
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The California Fair Political Practices Commission has issued roughly a dozen new subpoenas in the investigation of $11 million that was laundered through a network of dark money groups and funneled into the state during the last election, according to unnamed sources who spoke to The Huffington Post.

It’s not yet clear where the original $11 million came from, but investigators have so far traced it back to a group called Americans for Job Security (AJS), run by Stephen DeMaura, a blogger for Red State and the former executive director of the New Hampshire Republican Party. AJS told the Internal Revenue Service (IRS) it would not engage in political spending, but its application to accept tax deductible contributions has yet to be accepted.

Investigators said AJS gave $11 million to the Center to Protect Patient Rights (CPPR), which was run in 2010 by Sean Noble, a former Republican congressional staffer whom Politico called a “top” operative for the billionaire industrialist brothers Charles and David Koch. The CPPR was instrumental during that year’s midterm elections in dolling out more than $44 million to groups that attacked Democrats and health care reform, according to The Center for Responsive Politics. Noble eventually moved on to work for another Koch-linked group, Americans for Limited Government.

CPPR remained in service leading up to the 2012 elections and delivered AJS’s $11 million to an Arizona group called Americans for Responsible Leadership (ARL), which turned around and gave $11 million to a California group called the Small Business Action Committee (SBAC), the only organization in the chain with tax-exempt status.

In the final weeks of the election, SBAC spent the money on two initiatives: fighting Prop. 30, a tax increase on the wealthiest Californians to pay for education, and supporting Prop. 32, which would have banned unions from contributing to campaigns. That caught regulators’ attention.

Once elections watchdogs realized Americans for Responsible Leadership violated a state law requiring donors advocating for or against state-based initiatives be disclosed, they came after the group’s list of funding sources and fought them for it all the way to the California Supreme Court. When the donors turned out to be two other non-profit groups, the investigation looked like it had hit a dead end, even as the Fair Political Practices Commission slammed the still-obscured dollars as the “largest contribution ever disclosed as campaign money laundering in California history.”

If reporter Peter H. Stone’s sources are right and more subpoenas have been issued, the hunt may be on yet again, but there were no official confirmations given.

Photo: Shutterstock.com.

Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
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