In summary
Political committees now have state regulators’ OK to create an unlimited number of affiliated committees with different leaders, and then closely coordinate fundraising and candidate donations among them.
After more than two years, California’s political ethics watchdog has closed its investigation into a controversial campaign donor network, concluding that the group followed legal advice from the state and therefore did not violate contribution limits.
The decision clears the way for a bold new approach to raising and spending money in California elections. Political committees now have state regulators’ blessing to create an unlimited number of affiliated committees with different leaders, and then closely coordinate fundraising and candidate donations among them. That could exponentially increase their influence on campaigns.
Govern For California — a 16-chapter nonprofit that aims to counter the influence of organized labor at the state Capitol and which aggressively backed the rise of Assembly Speaker Robert Rivas — declared “vindication” to its supporters.
But the extent of the Fair Political Practice Commission’s probe over the past two years remains unclear. In a one-paragraph “no action closure letter” dated Monday, assistant enforcement chief Angela Brereton cited a 2020 advice letter to clear Govern For California of any wrongdoing.
“After our investigation and review of the evidence, the Enforcement Division has found that Govern For California has followed the advice given to it by the Commission,” Brereton wrote. “Therefore, we are closing this matter without further action because the allegations have been disproven.”
Brereton did not return a message seeking clarification. Shery Yang, a spokesperson for the commission, said in an email that the enforcement team “obtained and reviewed voluminous evidence to make its conclusion,” but did not answer follow-up questions about what the evidence entailed. She also declined to provide a copy of the investigative report.
Govern for California founder David Crane, a Stanford University lecturer and former economic adviser to Gov. Arnold Schwarzenegger, also did not respond to an interview request.
“We’re happy the matter is closed, though not that we were dragged through the mud and had to spend time, energy and money defending against a politically-inspired action,” he wrote in a message to his group’s mailing list. “But we are aware that this is the sort of thing that happens to people who challenge the status quo in Sacramento.”
A CalMatters report in 2022 explored Govern For California’s growing prominence in state politics as Rivas, a Salinas Democrat, made his move to take control of Assembly leadership. That election cycle, the organization donated millions of dollars to dozens of legislative candidates; most of the money came from a small group of Bay Area venture capitalists, tech executives and philanthropists who maxed out to each chapter in its statewide network.
Several campaign finance experts told CalMatters that the structure of the chapters — which consult with Crane, receive a majority of their funding funneled through a central committee and regularly make identically sized donations to the same candidates on the same days, using the same treasurer and law firm — pushes the boundaries of state law by potentially enabling donors to circumvent contribution limits.
Crane denied that characterization and compared his organization to unions and their local affiliates. But unions differ from Govern From California in some critical ways, including their broad membership of workers, who contribute small amounts to campaign spending through their dues, and their non-political functions such as collective bargaining.
Following the publication of the story, a former labor union leader filed a complaint against Govern For California with the Fair Political Practices Commission. The commission’s enforcement division quickly rejected that complaint, citing its 2020 letter that advised: “Provided the GFC Statewide Committee and all local chapters are controlled by different individuals, who independently direct and control the entities’ respective contributions, the contributions from GFC Statewide Committee and each local chapter do not share contribution limits.”
Yet Richard Miadich, then-chairperson of the commission, told CalMatters at the time that he would seek to develop new regulations more clearly defining coordination among affiliated campaign committees. He said he had questions about the independence of Govern For California’s chapters, which he said were “playing very close to the line.” The enforcement division subsequently reversed course and opened an inquiry because “further review of the relationship between the GFC and its chapters is warranted.”
Miadich has since left the Fair Political Practices Commission. He was replaced last year by Adam Silver, the former chief counsel for the Assembly’s legislative ethics committee. Miadich did not respond to several messages seeking to discuss the conclusion of the Govern For California investigation, and Silver declined to answer questions.
“In lockstep with former FPPC Chairs, I have directed our Enforcement Division to focus its resources on investigating and prosecuting, where appropriate, the most serious violations of the law, including campaign money laundering, which was alleged in the Govern for California matter,” Silver said in a statement. “I have full confidence that the Enforcement Division conducted a thorough investigation and arrived at the correct resolution.”
Dave Low, the former union leader who filed the complaint, criticized the commission’s conclusion as “weak.” He told CalMatters that the enforcement division appeared to have decided that, because of its previous advice letter, Govern For California’s actions were permissible, without digging deeper into whether the group was actually following that advice.
Low said evidence he presented to the commission included an audio recording of Crane, who is president of Govern For California and also co-chair of its statewide chapter, discussing the governance structure of his organization at an event. Excerpts from that recording — where Crane told the crowd that “we raise their money for them” and if the chapters supported a particular candidate that Govern For California’s leadership did not, “we’re not going to raise money for them next year” — circulated online in 2022.
“The chapters know everything we’re doing…” Crane said on the recording, in response to a question about how Govern for California chooses its top priorities, “and if you don’t like that, you can start your own organization.”
Low said he believed the Fair Political Practices Commission had no interest in reconsidering its analysis because it would have made them look bad. “If they would have looked into the evidence we sent them, they would have come to a different conclusion,” he said.
‘Namby-pamby, without any deep explanation’
Yang would not confirm whether the commission had authenticated or reviewed the audio recording as part of its investigation.
Campaign finance experts told CalMatters that the stamp of approval from state regulators could open the door for other donor networks with a similar structure to emerge.
“I can imagine other groups being interested in this group’s innovation,” said Justin Levitt, a professor at Loyola Law School, though he added that the degree of coordination and independence would likely be closely scrutinized in future iterations. “I don’t think this amounts to a blank check for other committees to set up affiliated groups to evade contribution limits within existing campaign finance laws.”
Ann Ravel, a former head of the Fair Political Practices Commission and its federal counterpart, the Federal Elections Commission, told CalMatters in 2022 that she considered Govern For California’s structure “undemocratic” and “contrary to the spirit” of contribution limits, but not illegal. She said this week that she believed the commission had come to the correct conclusion.
But she also called the decision letter “kind of namby-pamby, without any deep explanation” and said it lacked the clarity that should have been provided by an investigation, especially one that took more than two years.
“I don’t understand why it took so long, and I do think it’s a detriment to the public,” said Ravel, who received $25,700 from the Govern For California network when she ran for state Senate in 2020. “It’s hard for people to be accused of things and for there not to be an outcome” for such a long time.
