Disclosure flaw: the perils of campaign-finance disclosure laws

Reason, March, 1996 by Brian Doherty

Politics is a realm of unintended consequences. In California, a wave of post-Watergate revulsion with arrogant, corrupt politicians led to the passage of the Political Reform Act in 1974. That law slapped strict campaign-finance disclosure requirements on state political campaigns. Twenty years later, the same law is being used to strike at private citizens who attempted to discipline a powerful politician they considered arrogant and corrupt. The results raise worrisome questions about the possible abuses of even the seemingly most innocuous regulations on citizens' participation in politics.

In October 1995, California's Fair Political Practices Commission, charged with enforcing the PRA, levied the largest fine in its history, $808,000, against Southern Californians Russell Howard and Steve Cicero. They had been the president and treasurer, respectively, of Californians Against Corruption, a now-dormant group of political gadflies that was part of a coalition dedicated to unseating California Democratic state Sen. David Roberti. Roberti, a 23-year Senate veteran, had been Senate president pro tem for 13 years. The recall coalition got its new election in April 1994, collecting more than twice the necessary 20,670 signatures.

But in doing so, CAC didn't keep up with the complicated paperwork requirements the PRA demands. Their hefty fine is mostly for hundreds of counts of not reporting the occupation, employer, and address of people who donated more than $100 to the recall cause.

Despite admittedly not filling out the proper forms at the proper times, a weary Howard insists, as the list of charges is read to him, that the FPPC has at its disposal all the information it wants. "They have a copy of every check we ever received, and the vast majority have those addresses on the check," he says. "My life should be ruined because I didn't fill out the proper forms in triplicate?"

While CAC asked all contributors to fill out employer and occupation information with their contribution, the vast majority simply didn't, Cicero says. Gary Huckaby, an FPPC spokesman, says it's the organization's legal responsibility to collect that information or not accept the money.

The PRA was one part of a national wave of post-Watergate state and federal campaign-finance reform law. The motives and goals of such laws seem pure and sensible: to get a public handle on the possible secret governmental influence of big money interests. But applying such a law to a nonpartisan recall campaign raises different issues.

As Cicero wrote in a letter responding to the FPPC's charges, "It is one thing to practice oversight on the people's behalf to insure that politicians running for office are kept honest. They stand to reap enormous personal gain from the power and influence they will have once elected. It is another thing entirely to harass grassroots organizations seeking to improve the government to which they are subjected."

Some perspective: Californians Against Corruption's entire recall campaign spent only $103,091 - about one-eighth the fine they received for not reporting properly. The fine is the largest ever given out by the FPPC. The next largest was $772,000 against a developer for laundering money to Oakland City Council members and mayoral candidates. The level plunges from there; the third highest FPPC fine was $447,500 against a shipping company, also for laundering money to city council members, this time in Los Angeles.

Ken Gross, a former head of enforcement for the Federal Elections Commission, says the fine against CAC "seems totally out of bounds. It offends any sense of reasonableness. [The CAC's violations] don't compare with what are considered more substantive elements of illegal funding."

Though Roberti won the recall election, he has since been ousted by term limits. Still, Howard says Roberti's long years of power in California raise the possibility that the FPPC's huge fine is a political revenge hit. Roberti denies any influence on the fine, and any personal connection with the commission members. "I haven't gone through the details about how they base the fine, and I don't want to second-guess them," Roberti says. "Suffice it to say I think a hefty fine is warranted."

The FPPC's Huckaby agrees. Howard and Cicero's violations were in "outright defiance" of the law, and were "fully intentional, with aggravating circumstances, not mitigating ones. We have a $2,000 maximum per-violation fine, instituted 20 years ago. If the commission were unilaterally reducing fines, you'd quickly lose parity or equity among all the cases." Each donor's missing occupation cost $2,000; each missing employer cost another $2,000; and so on. Few lawbreakers face such hefty fines, however. Generally, the FPPC negotiates a less-costly settlement. But Howard and Cicero refused to cooperate and got hit with the maximum fine for each violation.

Howard admits contempt for the law. But he has his reasons. He maintains that California's Political Reform Act is a clear violation of the First Amendment. "The law sets up prerequisites for the exercise of First Amendment rights that are extremely complicated and enforced as selectively as they want. I'd have to be an attorney or an accountant to be able to wade my way through [the PRA]. If I had had to stay up until five in the morning filling out those forms, there never would have been a Roberti recall. We were a grassroots organization. We all had other jobs. We're not like the big parties. [Complying properly] would have taken a huge percentage of our resources."