California Digging Deeper Into Election Money Laundering

California's Attorney General has convened a Grand Jury to investigate the influx of laundered right-wing funds into the state during the 2012 election cycle.

Here's an update on the investigation into how right-wing groups laundered $11 million to funnel it into California ballot initiatives that involved taxes and unions. In a nutshell, Koch-fueled nonprofits moved $11 million through a few different 501(c)(4) organizations into California in order to defeat a tax increase Governor Brown put on the ballot, and to weaken unions in the state.

California officials were not amused, and as they dug deeper into the money trail, the Attorney General decided a Grand Jury investigation was warranted. Via the Daily Beast:

The state grand jury, previously unreported, is part of an expanding investigation that’s been spearheaded by the state’s attorney general and the Fair Political Practices Commission (FPPC), according to two people familiar with the probe, who requested anonymity since they weren’t authorized to discuss the ongoing grand jury proceedings, which are secret.

[...]

Since the probe’s inception, the FPPC, in tandem with the A.G., has issued subpoenas for documents and financial records to the PAC and the dark-money groups as well as individuals and other groups suspected of involvement in channeling the funds for the ballot drives, according to a person familiar with the inquiry. In recent weeks, the A.G.’s office, which has been ramping up its involvement, sent out another round of subpoenas, according to the same person.

Charles R. Schwab, the chairman of the Charles Schwab Corp., or an entity affiliated with Schwab has received a subpoena, according to a person familiar with the probe. In 2011 Schwab was one of about 30 wealthy donors who was cited in a speech by Charles Koch as having given at least $1 million the prior year to Koch backed conservative projects.

A spokesperson for Schwab declined to comment, as did Jason Torchinsky, a lawyer who has represented the PAC and also the three dark-money groups.

The involvement of a grand jury often indicates that an inquiry is intensifying. Grand juries are commonly used in cases where prosecutors are moving to bring chargesor pressuring targets to cut deals, say white-collar lawyers. It's not known whether any of the three dark-money groups, the PAC, or others have received target letters, which often signal that charges are in the works.

Evidently the targets thought they could hide behind IRS rules governing 501(c)(4) organizations in order to evade disclosure of their donors, but California laws trump IRS laws when the activities are in our state. Koch Industries has done a very clever defensive maneuver to pretend there's no involvement from them, too:

"We had no involvement whatsoever, financial or otherwise, neither directly nor indirectly, on anything to do with Prop. 30 or Prop. 32," a spokesman for Koch Industries, Rob Tappan, said in an email. Tappan, however, indicated he spoke only for Koch and not “independent entities,” such as Noble’s Center. Asked if the Kochs had received subpoenas from the grand jury, Tappan said it was company policy not to comment on “the existence or nonexistence of investigations.” Noble did not return phone calls seeking comment.

Of course they didn't have any involvement. They're not stupid. Koch Industries wouldn't have to have any direct or indirect involvement to involve Charles and/or David Koch. Koch Industries and the Koch Brothers are entirely separate entities. So we know the funds didn't come from Koch Industries. That's no surprise, because the Kochs spend their own funds on political endeavors. With a privately-held company worth billions, $11 million is just a small, tiny drop in a very large right-wing bucket.

Stay tuned. Attorney General Kamala Harris is a smart lady, and she's not going to let go of this.

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