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Elections watchdog launches investigation into $11 million campaign donation

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California’s elections watchdog announced Thursday that it’s launched a formal investigation into an $11 million donation that became the focus of an intense legal battle just days before the election.

Arizona-based Americans for Responsible Leadership donated the money to a campaign to defeat the Prop 30 tax initiative and to pass Prop 32, the ban on payroll deductions for political contributions. The California Supreme Court ordered the group to comply with an audit a couple of days before the election. 

The Fair Political Practices Commission’s Ann Ravel says that’s when Americans for Responsible Leadership's strategy became clear: "What they admitted to was that they were not the real donors, that they were just using their names so that the real donors' identities would be hidden. And that’s money laundering."

A Virginia group called Americans for Job Security sent the money to another Arizona organization, the Center to Protect Patient Rights, which passed it to Americans For Responsible Leadership, which gave it the Small Business Action Committee in California.  

Ravel says FPPC staff is investigating further to identify the individuals who donated the money and under what conditions. The Small Business Action Committee faces an $11 million fine if it’s determined that the donors knowingly flouted California campaign finance laws.