By David Siders
Published: Saturday, Nov. 2, 2013 – 11:00 pm
Last Modified: Saturday, Nov. 2, 2013 – 11:56 pm

Jeff Miller, a fundraiser soliciting money for conservative causes in California’s initiative wars last year, had a prospective contributor lined up, but he was apprehensive.

The donor employed union members, Miller was told in an email, and feared “potential disclosure and impact with his unionized employees.”

It was a recurring problem, Miller and political consultant Tony Russo would tell investigators months later, as the state probed a network of out-of-state groups that funneled money into California through intricate channels to support Proposition 32 – a ballot initiative designed to weaken the political influence of labor unions – and oppose Proposition 30, Gov. Jerry Brown’s effort to raise taxes.

“People are afraid of the unions in a multitude of ways in California,” Miller told investigators, according to a transcript of an interview made public by the California Fair Political Practices Commission. “They’re afraid of retribution.”

When FPPC officials announced a settlement 10 days ago with political groups tied to billionaire businessmen Charles and David Koch, they touted their ability to hold the Arizona groups accountable by announcing a record $1 million fine.

Yet even as state regulators celebrated the outcome of the case – including a $1 million fine against two Arizona-based groups, the largest ever levied by the FPPC for a campaign violation – the limitations of their efforts were laid bare.

The information people wanted to know most of all had been the identities of individual donors, which remain perfectly legal for campaign organizers to conceal. Only because a document provided to the FPPC was sloppily redacted could any of them be identified.

After voters in 2000 approved Proposition 34, imposing new campaign finance limits on candidates, donors shifted contributions to independent committees. The U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission held that First Amendment free-speech protections prohibit limiting independent expenditures by corporations and labor unions, making it even harder for states to restrict independent expenditures.

“There’s just so many ways to avoid, ways to get around reporting that I just despair,” said Ross Johnson, a former state senator and former chairman of the FPPC. “Up until the decision in the Citizens United case, I really thought it would be possible to design a system that guaranteed sunlight on the process and to give average people some assurance that people weren’t buying and selling offices, and in the light of that decision, I’ve just kind of given up whatever optimism I had.”

In soliciting donations to support their ultimately unsuccessful initiative campaigns, Miller and Russo offered prospective donors a choice: They could donate money directly to the California-based Small Business Action Committee or ballot measure committees advocating explicitly for Proposition 32 and against Proposition 30, or they could donate for broader issue advocacy purposes to Americans for Job Security, a nonprofit registered in Virginia.

One advantage of donating to the nonprofit for issue advocacy is that the law does not require individual donors to be disclosed, and more than 130 contributors selected this option.

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