Activists face $14,000 fine for disguising source of money to Irvine election

Reporting from Sacramento —  A Pennsylvania activist and Virginia nonprofit have agreed to pay $14,000 in fines to California’s ethics watchdog agency for hiding his identity as the donor of $200,000 to a political action committee that worked to unseat the Democratic majority on the Irvine City Council in 2012.

Libertarian activist Howard Rich admitted that he failed to report himself as the true source of his donation, which was funneled through a Virginia nonprofit group called Citizens in Charge. Rich agreed to pay $9,000 in fines for not disclosing his contributions and Citizens in Charge agreed to pay $5,000 in fines for reporting that it, not Rich, was the source of the money.

That group gave $200,000 to a campaign committee controlled by Orange County-based Jon Fleischman, who runs the influential conservative blog FlashReport and is the former executive director of the California Republican Party.

Fleischman is not charged with wrongdoing in the Rich settlement, but the state Fair Political Practices Commission is still investigating whether his PAC acted improperly, an officials said. It is one of a few of the FPPC’s cases involving “dark money,” campaign funds whose original source is disguised by funneling them through nonprofit groups.

A report by the FPPC staff on Monday called the violations “serious,” adding that they go to the heart of the Political Reform Act.

“A central purpose of the Act is to ensure that receipts and expenditures in election campaigns are fully and truthfully disclosed so that the voters may be fully informed, and improper practices may be inhibited,” the staff report said.

Citizens in Charge funneled Rich’s $200,000 to the Irvine-based California Term Limits PAC, whose principal officer is Fleischman, and disclosed the money as a contribution from Citizens in Charge, not Rich.

In August of 2012, Fleischman asked Paul Jacob, the president of CIC, for a contribution to California Term Limits PAC, saying his committee would put the money toward its goal of improving the initiative and referendum process in California, the FPPC report said.

Jacob contacted Rich and asked him for money to contribute to California Term Limits PAC and Rich provided the money by a wire transfer to CIC. The group then sent a check to California Term Limits PAC in the amount of $200,000.

California Term Limits PAC reported receiving a $200,000 contribution on Sept. 5, 2012, from Citizens in Charge.

“CA Term Limits PAC spent nearly all of the $200,000 on independent expenditures supporting certain candidates for city council and mayor in Irvine and opposing other candidates for those offices,” the report said.

The independent expenditures were made in slate mailers sent to voters in Irvine. That year’s election saw Republicans take over from Democrats as the majority on the City Council.

CIC later filed a late report that it made the $200,000 contribution to the PAC.

“This filing was made in error since Respondent CIC was not actually a contributor but rather an intermediary on the contribution to CA Term Limits PAC,” the report said.