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FACTSHEET

Gov. Schwarzeneggger Violated Campaign Finance Laws

FTCR's Complaint to the Cal. Fair Political Practices Commission

February 10, 2004

Enforcement Division
Fair Political Practices Commission
428 J St., Suite 620
Sacramento, CA 95814


VIOLATION REPORT

Person Making Complaint
Carmen Balber
1750 Ocean Park Blvd, Ste. 200
Santa Monica, CA 90405
Ph: 310-392-0522 ext.324
Fx: 310-392-8874
carmen@consumerwatchdog.org

Alleged Violator
Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814
Ph: 916-445-2841
Fx: 916-445-4633

Provisions of Political Reform Act Allegedly Violated
1) Government Code Sec. 84504:

84504. (a) Any committee that supports or opposes one or more ballot measures shall name and identify itself using a name or phrase that clearly identifies the economic or other special interest of its major donors of fifty thousand dollars ($50,000) or more in any reference to the committee required by law, including, but not limited, to its statement of organization filed pursuant to Section 84101.
(b) If the major donors of fifty thousand dollars ($50,000) or more share a common employer, the identity of the employer shall also be disclosed.
(c) Any committee which supports or opposes a ballot measure, shall print or broadcast its name as provided in this section as part of any advertisement or other paid public statement.
(d) If candidates or their controlled committees, as a group or individually, meet the contribution thresholds for a person, they shall be identified by the controlling candidate's name.

2) Government Code Sec. 84503:

84503. (a) Any advertisement for or against any ballot measure shall include a disclosure statement identifying any person whose cumulative contributions are fifty thousand dollars ($50,000) or more.
(b) If there are more than two donors of fifty thousand dollars ($50,000) or more, the committee is only required to disclose the highest and second highest in that order. In the event that more than two donors meet this disclosure threshold at identical contribution levels, the highest and second highest shall be selected according to chronological sequence.

Description of Facts Constituting Alleged Violations
"Governor Schwarzenegger's California Recovery Team" has been utilized by Governor Schwarzenegger to launder campaign dollars into the "Californians for a Balanced Budget -- Yes on 57 & 58" committee in such a fashion that the source of funding for the ballot measures promoted by the Governor is hidden from the public. By taking these evasive actions, Governor Schwarzenegger has violated those sections of the Political Reform Act that require committees to reveal to voters the true source of funding behind a ballot measure.

1) Governor Schwarzenegger controls ballot measure committee #1261406, "Governor Schwarzenegger's California Recovery Team," which was opened on December 13, 2003.

The "Recovery Team" committee has received contributions totaling $4,036,741 from 94 donors. These contributions include five donations of $250,000 each from banking firm American Sterling Corporation, the high tech Emulex Corporation, builder William Lyon Homes, developer Castle and Cooke, media mogul Jerry Perenchio and retired private investor William Robinson.

Government Code Sec. 84504 requires "Any committee that supports or opposes one or more ballot measures shall name and identify itself using a name or phrase that clearly identifies the economic or other special interest of its major donors of fifty thousand dollars ($50,000) or more in any reference to the committee required by law, including, but not limited, to its statement of organization filed pursuant to Section 84101."

Governor Schwarzenegger has violated Section 84504 by failing to indicate the economic or special interests of the contributors to the committee in the name: "Governor Schwarzenegger's California Recovery Team." This name conceals the large business and corporate interests -- including the finance, real estate, technology and entertainment lobbies -- which have donated to the "Recovery Team" committee.

2) Governor Schwarzenegger also controls the ballot measure committee #1261936, opened on January 14, 2004, and named "Californians for a Balanced Budget -- Yes on 57 & 58."

"Yes on 57 & 58" has received $2,085,000 from 5 donors. $2 million, the vast majority of the committee's funds, was transferred to the committee by "Governor Schwarzenegger's California Recovery Team."

Government Code 84503 requires "Any advertisement for or against any ballot measure shall include a disclosure statement identifying any person whose cumulative contributions are fifty thousand dollars ($50,000) or more."

Campaign ads just released by the committee indicate that they are "Paid for by Californians for a Balanced Budget Yes on 57 & 58. Major funding provided by Gov. Schwarzenegger's California Recovery Team." By funding "Yes on 57 & 58" through money transfers from the "Recovery Team," Governor Schwarzenegger has violated the requirements of Government Code Sec. 84503. Indicating that major funding to the "Yes on 57 & 58" committee came from the "Recovery Team" makes it look as though the initiative is paid for by Schwarzenegger himself, rather than revealing the true source of campaign cash -- the corporate donors to the "Recovery Team."

3) This matter is particularly urgent because the Governor has announced a fundraiser on February 24 to raise money for Propositions 57 & 58. The minimum donation at this event is $50,000 and top donors, at $500,000, will be given the title of "Co-Chair" of the California Recovery Team. It can only be assumed that Governor Schwarzenegger intends to continue his pattern of raising money into the "Recovery Team" committee and then transferring those funds to "Yes on 57 & 58." Timely action is required to stop the imminent recurrence of this violation of the Political Reform Act, as described above.

Documentation Enclosed
"Yes on 57 & 58" campaign advertisements can be found online at: www.yes57and58.org/ads.html. The text of these advertisements, printed in the Los Angeles Times on February 10, is enclosed.

The statements of organization, form 410, for "Governor Schwarzenegger's California Recovery Team" and "Californians for a Balanced Budget -- Yes on 57 & 58" are enclosed.

A San Francisco Chronicle news article of February 6, 2004, reporting the February 24 fundraising event is also enclosed.

Contributions to "Californians for a Balanced Budget -- Yes on 57 & 58" are found online at: www.cal-access.ss.ca.gov/Campaign/Committees/Detail.aspx?id=1261936&view=late and spreadsheet is enclosed. Contributions to "Governor Schwarzenegger's California Recovery Team" are found online at: www.cal-access.ss.ca.gov/Campaign/Committees/Detail.aspx?id=1261406&view=late and spreadsheet is enclosed.




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