Initiative Foes’ War Strategy: The Stealth Donation

The leader of the campaign against the countywide slow-growth initiative has told publicity-shy financial backers that they can keep their identities secret by contributing to the Transportation League, a new nonprofit corporation.

But the state Fair Political Practices Commission says a nonprofit corporation must disclose the identities of donors of $100 or more if it spends more than $1,000 on a public opinion survey or similar research for political purposes. The Transportation League’s founder says it already has spent about $18,000 on such polling.

The strategy to avoid disclosing donors’ names was contained in a Feb. 23 letter to potential supporters written by John Simon, the Newport Beach attorney who earlier this year formed the Citizens for Traffic Solutions. Simon’s organization is working to defeat the countywide slow-growth initiative at the polls June 7.

In the letter, a copy of which was obtained by The Times, Simon stated that a new group named the Transportation League had been formed and was seeking Internal Revenue Service status as a nonprofit corporation.

“Its long-range purpose,” Simon wrote, “will be to find and promote solutions to the traffic problem. In the short term, it can be used as a vehicle to accept contributions from those who do not desire to have their contributions disclosed.”

Supporters of the ballot measure responded angrily when told of Simon’s letter.

“I doubt that it’s legal, but even if it is, using such tactics simply proves that our opponents intend to take the low road in this fight, as I’ve predicted all along,” said Tom Rogers, co-founder of Orange County Tomorrow, the group that drafted the ballot measure.

“I don’t think they can get away with this,” said Belinda Blacketer, a Laguna Beach attorney who helped write the initiative. “Hey, come on, boys, this is a big world. Lots of stuff goes on and people look the other way. But this is pretty ridiculous.”

But Simon strongly defended his letter, saying: “I don’t see anything unethical about it. . . . The public is not entitled to know who has given money to nonprofit corporations, whether we (campaign committees) benefit from it or not. I know it looks bad to the public, but I didn’t write the law.”

A spokeswoman for the state Fair Political Practices Commission would not comment specifically on Simon’s letter. But, speaking generally, she said the Fair Political Practices Act requires that donors to a nonprofit corporation be publicly identified if the corporation spends more than $1,000 on a political survey or similar research “even if it has not taken a position pro or con.”

“The nonprofit status of an organization has no bearing on its disclosure obligations,” FPPC spokeswoman Jeanette Turvill said.

Another FPPC spokeswoman, Sandra Michioku, added that a campaign committee that receives research from a nonprofit group would have to list the market value or cost of producing the research as an in-kind contribution on its campaign finance statements.

Under the Fair Political Practices Act, any organization that becomes involved in political activity must file campaign finance statements with the secretary of state’s office.

Simon has said his Citizens for Traffic Solutions expects to receive the results of research conducted by the Transportation League, including public opinion surveys paid for by the league--some of which have already been completed.

A violation of the Fair Political Practices Act may be punished through either a criminal or civil proceeding, depending upon its seriousness, and can result in fines or jail sentences in especially serious cases.

Informed Wednesday of the FPPC’s position that nonprofit corporations are not exempt from disclosure requirements, Simon said: “I don’t have any second thoughts abut what I said in that letter. . . . I have to rely on the advice of the lawyers we’ve hired, and their advice is different. The letter simply meant to say that if you don’t want your name disclosed, you can still participate in solving traffic problems.”

The Transportation League filed incorporation papers with the secretary of state Feb. 8 but did not disclose its purpose or list its officers. State officials said the group has until May 8 to supply such information but is not required to include sources of income.

Nevertheless, former Brea City Manager Wayne Wedin acknowledged recently that he created the league. He said the group has raised about $18,000, “almost all of which was spent on some polling we did.” But he said he could not divulge the names of the donors yet because he was still trying to contact them--to see if they object to being identified.

According to Wedin, the Transportation League does not consider itself a political committee and won’t file a campaign finance statement even though he knows that Simon’s committee will use the league’s information.

“I don’t believe we have to,” Wedin said, “because this is not the kind of organization that goes out and recommends that you vote yes, vote no, or that kind of stuff. We’re just going to develop information and share it.”

Wedin said he would consult lawyers about the FPPC’s statement indicating that donors’ names might have to be disclosed.

Michioku said a nonprofit corporation might be able to avoid being listed as an in-kind contributor on a campaign committee’s finance statements if it simultaneously released to the general public the same information it was sharing with the committee.

Wedin said that is what he intends to do.

But that would not affect the Transportation League’s obligation to disclose where it got its money, FPPC officials said.

Both Wedin and Simon declined to disclose to The Times the results of polls already conducted by the league and Simon’s group.

Wedin, a business consultant and former chairman of the Orange County Chamber of Commerce’s transportation committee, said the league also will go out and “collect the same kind of information that’s freely available to anyone for the asking.”

Such information would be used to correct false claims made by slow-growth advocates, Wedin said. “That’s not the same as taking a firm position pro or con,” he said.

But Rogers, a key initiative supporter, disagreed.

“Wayne Wedin has been on the sawdust trail speaking against the initiative,” Rogers said. “I doubt anyone would believe Wayne Wedin when he says (the Transportation League’s) activities will be purely informational.”

Wedin acknowledged that he probably would not release research about allegedly false statements made by initiative opponents. Asked if his group will propose alternatives to the initiative, Wedin said, “We’re working on it, but there may not be enough time before the election.”