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10/6/14, "California FPPC suggests money laundering fines for three GOP committees," Sacramento Bee, Laurel Rosenhall
"Three Republican central committees in California have agreed to
pay fines for laundering money during the 2010 election, according to
settlements the Fair Political Practices Commission announced Monday.
The state’s political watchdog has proposed fines of $5,000 each for the Yolo County
and Santa Clara County Republican central committees for failing to
report their role as intermediaries to funnel money from Ann and Charles Johnson – an owner of the San Francisco Giants – to Damon Dunn, the Republican candidate for secretary of state in 2010.
The FPPC also proposed a $15,000 fine for the Republican Central Committee of Los Angeles County for acting as an intermediary in sending money from Paul Anthony Novelly – chief executive of Apex Oil in St. Louis – and his family to a 2010 Republican candidate for California Senate, Rabbi Nachum Shifren.
In all three cases, according to the settlements, the donors had
given the maximum allowable contributions to the candidates they
supported, but wanted to contribute more. So they worked with campaign
consultants to contribute money to the central committees, which in turn
donated almost the same amounts to the candidates, the settlements say.
That
violates state law because donations to political parties are not
supposed to be earmarked for specific candidates. The FPPC has found
similar violations in the past involving Republican central committees
moving money to support state Sens. Tom Berryhill and Joel Anderson.
It’s a pattern that likely results from limits California voters put on
campaign fundraising when they approved Proposition 34 in 2000. That
measure limits the amount donors can contribute to specific candidates,
but allows unlimited donations to political parties – as long as they
are not designated for specific candidates.
In the cases involving
Dunn, the secretary of state candidate, the FPPC found that Dunn’s
political consultant Matt Rexroad and political fundraiser Michael
Sowers played key roles in orchestrating the contributions from the
Johnsons to the central committees, and then on to the Dunn campaign.
The FPPC reviewed emails, text messages
and phone records that show how the two men coordinated the plan:
Sowers asked the Johnsons’ adult daughter to support Dunn by
contributing to the central committees, and Rexroad communicated with
the central committees to ask that the money come back to his client.
Rexroad sent an employee to pick up the checks from Johnson’s San Mateo
office and deliver them to the central committees, an FPPC documents
says, and sent an email to the central committees chairmen with
instructions on wiring the money to the Dunn campaign.
The
Johnsons ended up giving $34,000 to each central committee. The Santa
Clara committee later gave $33,000 to Dunn’s campaign and the Yolo
committee gave about $32,300. A third committee that is not being fined
by the FPPC – the Placer County Republican Central Committee – also
received a donation from the Johnsons that the FPPC says was targeted to
support Dunn. The Placer County group refunded the Johnsons’ money,
“calling the transaction ‘tainted,’ ” according to an FPPC document.
In an interview Monday, Rexroad said he did nothing wrong by asking the central committees to support his candidate.
“You
can ask and request, but in the end they get to decide,” he said. “The
central committees chose to give out of their own volition. They could
have chosen to give to any candidate they wanted to … it was entirely
within their control.”
Spokesmen for the Santa Clara and Yolo
committees said their organizations agreed to pay fines for not properly
reporting their roles as intermediaries, and were frustrated that the
FPPC agenda lists them under the heading of “money laundering.”
“The
only violation for Santa Clara County is not filling out the form
right. That’s the only violation we’ve got,” said spokesman Hector
Barajas.
Mark Pruner, chairman of the Yolo County committee, said
“this was a reporting error. That’s really what it was. And that’s the
section we were charged under.”
In the case involving Shifren, a
2010 candidate for state Senate who is known as “the surfing rabbi,” the
FPPC found that oil executive Novelly – along with his son, daughter
and son-in-law – gave a combined $39,000 to the Republican Central
Committee of Los Angeles County, of which $32,400 was then passed on to
Shifren’s campaign.
Novelly had pledged that his family would
give Shifren $50,000, the FPPC settlement says, and along with his wife
contributed $7,800 directly to his campaign. He tasked his son Jared
with making arrangements for the remainder. Emails disclosed by the FPPC
show Jared Novelly looking for a way around California’s contribution
limits:
“With the large percentage of campaign contributions that
you have already received from my parents, I feel it may be best to have
the rest of the contributions come from sources other than Missouri and
Florida residents with the last name of Novelly,” Jared Novelly wrote
in a June 2010 email to Shifren.
“Are there any political action
committees that you have had discussions with who may be interested in
contributing if they received other monies? Not sure of campaign finance
laws in CA, but if we could find these other groups, it would look
better for both your campaign and our private sensibilities.”
The
Novelly family decided against setting up an independent expenditure for
Shifren and, working with Shifren’s campaign staff, instead gave the
money to the Republican central committee for the purpose of supporting
his campaign, the FPPC settlement says.
The FPPC meets Oct. 16 to vote on the proposed penalties."
"Editor’s note: This post was updated at 3:19 p.m. with a response from
Matt Rexroad. The post was updated at 4:50 p.m. to say the committees
agreed to pay fines for money laundering. Earlier versions said they
admitted money laundering, but in fact they agreed to pay the fine
without admitting guilt."
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