SACRAMENTO — A federal allegation that state Sen. Ronald S. Calderon tried to hide a $25,000 bribe in a charity run by his brother has shed light on the use of nonprofits by California legislators to collect cash out of public view.
Some nonprofits, set up with the stated purpose of aiding a charitable or social cause, are also being used to benefit an elected official's career, public image or personal finances, say advocates for open government.
Nonprofits: A Nov. 17 article about nonprofits formed by state lawmakers reported that billboard company owner Mark Kudler said he donated in the last two years to the nonprofit Progress California, created by Assemblyman Isadore Hall (D-Compton). After the article was published, Kudler and Hall stated that Kudler did not contribute to the nonprofit.
Several current and former California politicians or their relatives have established nonprofits in recent years. Some spent more money on travel, meals or entertainment than on direct assistance to their causes, according to their tax filings.
"This has become a huge loophole," a way to skirt campaign finance laws, said Jessica Levinson, an elections law professor at Loyola Law School.
Nonprofits like the one cited in the Calderon case allow politicians to collect contributions from special interests without having to abide by the $4,100 limit on campaign contributions in legislative races. And unlike political accounts, they are not required to identify their donors.
In addition, they can be vague in reporting on their tax returns how they spend their money. Nonprofits disclose expenditures in broad categories such as "travel," "meals" and "meetings" without noting the purpose of the expense or who benefited.
Calderon, a Democrat from Montebello, allegedly accepted $60,000 from an undercover FBI agent posing as a studio executive in exchange for pursuing legislation to expand tax breaks for film companies, according to a sealed FBI affidavit made public by a cable network.
The agent agreed to pay $25,000 of the money to a nonprofit set up by the senator's brother, former Assemblyman Tom Calderon, says the affidavit released by Al Jazeera America.
"We have this nonprofit. It is called Californians for Diversity," Calderon told the agent, according to a transcript of a recording included in the document.
The group, Calderon said, was set up to advocate positions on issues being debated in California.
"Then Tom and I down the road, we build that up, we can pay ourselves," the senator allegedly told the agent. "Just kind of make, you know, part of [a] living."
Donations to nonprofits are disclosed by the giver in certain circumstances. Walmart, Cash Advance Centers of California and the Farmers Employees and Agents PAC all reported making contributions to Californians for Diversity during the last two years.
The nonprofit, formed in 2008, also received $25,000 from "Yes We Can," a political committee of the California Legislative Latino Caucus, which made the donation in January.
The FBI affidavit alleges the "Yes We Can" donation was arranged by Sen. Kevin de Leon (D-Los Angeles) "in exchange for Ronald Calderon agreeing not to challenge Senator [Ricardo] Lara to become the Chairman of the Latino Caucus."
"They are doing exactly what contribution limits are there to guard against," said Levinson, a member of the Los Angeles Ethics Commission.
Calderon and De Leon have denied wrongdoing. None of those named in the affidavit has been charged with a crime.
Californians for Diversity was formed to "educate, inform, support and focus the California voters on the 'bread and butter' issues of California," including jobs and schools, according to its latest tax filing.