Political Donors Shielded by Loophole

SACRAMENTO —  The name of the mysterious Philadelphia corporation alone makes campaign finance watchdogs suspicious.

“They call themselves Free Buffet?” asked Kim Alexander, president of the nonprofit California Voter Foundation, pondering whether that is a reference to a free buffet of perks and influence at the statehouse.

Actually, it’s Freba Fay. Freba Fay LLC.

The out-of-state limited-liability corporation with no known officers or shareholders has become a leading donor to California ballot initiatives.

Try to find out who this LLC belongs to, and you hit a dead end.

The agent the donor or donors hired to form the corporation--a man named John Taylor--won’t say. Pennsylvania law doesn’t require that the officers’ names be disclosed. And groups that have received hefty contributions from them say they simply don’t know.

“I am not going to play 20 questions with you,” Taylor said when asked who is behind the company. He described the corporate officers as philanthropists who want to help the environment and who have no financial interest in the initiative, Proposition 51, which would fund alternative transportation and open-space projects statewide, including several that would be a boon to builders.

Others suggest the group is a front for one of the landowners who could make millions if a November ballot initiative passes.

Freba Fay’s latest donation was a $100,000 check made out to supporters of Proposition 51.

Other private companies making large contributions did so in their own names. They include mega-developers Newhall Land and Farming, Tejon Ranch and Sun Ridge, all of which have projects or property included in the initiative and stand to gain if it is approved.

Opponents of the measure are betting Freba Fay stands to gain from the proposition too.

“The fact that they won’t disclose who they are suggests to me they have some specific goodie in the initiative,” said Lenny Goldberg, campaign director for No on 51.

Taylor insists that is not the case, pointing as evidence to the one other donation the corporation has made in California: $120,000 to groups fighting Proposition 22, the ballot measure approved in 2000 that prohibits gay marriage.

“Obviously that is not the kind of thing a developer would have obvious pecuniary interest in,” he said.

So do these philanthropists come from California?

“I can’t get into that,” he said.

The secrecy makes advocates for campaign finance reform uneasy.

Full disclosure of campaign finances in initiative campaigns is becoming even more important, they say, because of new limits on contributions in federal elections and the recently adopted caps to California candidates.

The initiatives have no contribution caps, and officials at the secretary of state’s office say that even though campaign finance laws are intended to prohibit anonymous donations, the scheme Freba Fay used is legal.

If the company had been formed in California, the names of its officers would be on file in Sacramento. But in some other states, including Pennsylvania, those names needn’t be disclosed.

“We’re seeing more and more of this lately,” said Robert Stern, president of the Center for Governmental Studies, a Los Angeles nonprofit focused on campaign finance issues.

“This is something the Fair Political Practices Commission should be interested in.”

Commission spokeswoman Sigrid Bathen said disclosure in such cases has not been a big issue for the FPPC. “There are no specific rules relating to limited-liability corporations,” she said.

Freba Fay’s donations follow the pattern of two Seattle limited-liability corporations called Wild Rose and Rosebud.

Those companies, which gave $1 million to two California park bond initiatives in 2000, also had no known officers. Their address was a post office box in Seattle.

After state lawmakers began asking questions and calling publicly for their officers to reveal their identities, oil fortune heiress and environmental philanthropist Caroline Getty disclosed that she was the donor behind Wild Rose and Rosebud.

Activists say the shielded donations have exposed a troubling loophole in the system. An industry could bankroll an entire ballot initiative without ever revealing any involvement.

“When there isn’t full disclosure, it raises questions about whether there is a quid pro quo taking place,” Alexander said. “Voters are entitled to know who you are and what your agenda might be.”

Goldberg suggests that if Freba Fay has no financial interest in Proposition 51, its officers should have no problem revealing who they are.

“There is an unidentified parcel of land along a tributary of the Sacramento River that is specifically designated for purchase in the initiative,” Goldberg said.

“We haven’t been able to figure out who that land is related to. But whoever it is will get $10 million if it is approved. How do we know that is not Freba Fay?”

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The Top Contributors to Proposition 51

Here are the top contributors to Proposition 51, which would fund transportation and open space projects statewide by shifting money from the state general fund:

Conservation Action Fund (Sacramento): $473,000

USC (Los Angeles): $300,000

Pardee Construction/Pardee Homes (Los Angeles): $300,000

Agua Caliente Band of Cahuilla Indians (Palm Springs): $250,000

Sun Ridge LLC (Sacramento): $190,000

Newhall Land & Farming Co. (Valencia): $150,000

Riverside Land Conservancy (Riverside): $150,000

Planning and Conservation League (Sacramento): $125,000

Hillwood Development LLC (Dallas): $120,000

Freba Fay LLC (Philadelphia): $100,000