Political Donors Shielded by Loophole;
>A corporation whose officers are secret is a major contributor to California Propositions.
BY EVAN HALPER,
Copyright 2002 / Los Angeles Times
September 30, 2002
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?"
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