Are Koch Brothers Behind $11M Gift to Prop. 32 Group?

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October 25, 2012 in Politics & Government

The most recent gusher of Super PAC cash to flow into California’s 2012 election cycle came last Tuesday in the form of an $11 million contribution that has prompted speculation about possible involvement of the Koch brothers. The recipient of the massive donation was the Sacramento-based Small Business Action Committee PAC and its No on Proposition 30/Yes on Proposition 32 efforts. The infusion made headlines, not only because of its generosity but because of its source — an obscure group called Americans for Responsible Leadership, based in Phoenix, Arizona.

The idea of a previously bush-league, locally-focused Arizona PAC writing an $11 million check to out-of-state political campaigns raised an odor that could be smelled all the way to Sacramento. That’s where, it was reported Wednesday, that Ann Ravel, the California Fair Political Practices Commission chairwoman, ordered FPPC attorneys to demand that Americans for Responsible Leadership disclose the contribution’s original donors.

The FPPC sent the demand, with a Wednesday deadline, to the group’s Warrenton, Virginia lawyers — the up-and-coming Republican Super PAC specialists, Holtzman Vogel Josefiak PLLC. It is not yet known at the time of this writing whether the firm had complied.

Ravel’s action comes in response to a complaint filed October 19 by California Common Cause and its Vice President for State Operations, Derek Cressman.

The request that the FPPC act on what Common Cause believes may be the largest “secret political donation in California history” came about when Cressman noticed the uncanny coincidence that Americans for Responsible Leadership shared Holtzman Vogel Josefiak as the same attorneys as the Koch brothers-backed Americans for Prosperity PAC and Karl Rove’s Crossroads PAC.

“What we found is there is a Virginia law firm that seems to be ground zero for dark money all across the country,” Cressman says. “They’re tied to the Koch brothers, they’re tied to Karl Rove’s operation, and they’re also behind this Americans for Responsible Leadership group.” That common denominator, he explains, “gives a strong indication of where this money is coming from.”

The implications of those relationships are hardly news to veteran Arizona political operatives. Ever since ARL dropped its $11 million bombshell onto Sacramento, Phoenix has been humming with speculation that the money originated with the Koch brothers.

According to one scenario discussed by longtime observers of Arizona politics, who spoke on condition of anonymity based on the available facts, the Kochs may have wanted to anonymously dump another massive payload on the Yes on 32 campaign. To do so they would need an out-of-state entity in order to get around California’s reporting requirements. These observers conjecture that Americans for Responsible Leadership accommodated by passing the contribution onto SBAC PAC. The price for doing that—according to these observers—may have been to let ARL skim $350,000 off the top in order to fight one of ARL’s in-state bête noires, Arizona’s single open primary initiative, Proposition 121, a ballot measure that ARL fears would bump Tea Party candidates off the general election ballot.

Though Phoenix media consultant Joe Yuhas says he can’t personally confirm such speculation, he is quick to point out that two days after SBAC reported the $11 million contribution, the anti-Prop 121 Stop Top Two Committee revealed it accepted a single $350,000 contribution from ARL.

For his part, Cressman believes that such a scenario sounds “sort of right: It’s like, ‘Sure, you can run some money through us, but let us shave some stuff across the top to work on issues we care about in Arizona.’” It is, he says, “exactly how these deals go down.”

Yuhas, who works for the Phoenix-based media company Riester, is a consultant for both the Prop. 121 campaign and for Arizona’s Proposition 204, an initiative that would create a one-cent-per-dollar sales tax to benefit education. He is no stranger to ARL or its colorful chairman, Robert Graham.

Graham, who ran against Arizona Governor Jan Brewer in the 2010 Republican gubernatorial primary and is currently making his second bid to become the state’s GOP chairman, is positively phobic when it comes to labor unions. Besides writing a book proclaiming the world would be better off without them, he made a promotional video in which he compares unions to parasites.

According to Yuhas, Graham was a prominent “supporter of Tea Party candidates in the most recent Phoenix municipal election in 2011.” In fact, he points out, “this is where Americans for Responsible Leadership first emerged. … They funded campaigns against mainstream candidates in support of Tea Party candidates.”

Sam Wercinski works with the Phoenix-based Arizona Advocacy Network to, as he puts it, “promote clean elections and accountability to the voters, not donors. He is well acquainted with Graham, ARL and the SBAC contribution rumors. “What I’ve heard,” Wercinski says, “is that Americans for Responsible Leadership has used Arizona sort of as a laundering site for money to then pour into California. … And Arizona got a slice of that, to then work against citizens’ initiatives.

What has struck Wercinski most about the stories is not that they exist, but their pervasiveness and consistency. “When you start hearing rumors from so many different sources,” he says, “you just have to wonder if this is true or not.”

Establishing the truth of such tales is now in the hands of Ravel and the FPPC. (Frying Pan News calls to Graham and his ARL co-founders, Eric Wnuck and Steven Nickolas requesting comment went unanswered at press time.) To Cressman, however, there’s a victory in the mere fact that the FPPC is taking an active interest.

“They’re acting on our complaint,” he exults, “which is huge.

Bill Raden is a freelance writer based in Los Angeles.

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Bill Raden
Bill Raden is a freelance Los Angeles writer.
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