While the FEC sits on its hands, California is actually enforcing the law against foreign money in elections. As I wrote about here, in 2012 Los Angeles passed a ballot measure which requires actors in adult films to wear condoms. A committee opposed to the initiative spent $700,000 to defeat it, and about $300,000 of that money came from two companies, Froytal Services and Manwin USA. Both concerns were subsidiaries of Manwin Liscensing, an online porn company based in Luxembourg.
The companies were controlled by Fabian Thylmann, a German national. Thylmann, was the “primary decision maker” on the Los Angeles ballot contributions, according to an investigation by the California Fair Political Practices Commission.
Of course, Federal law bars spending foreign money in elections, whether they are local, state or federal. But when a complaint was filed about foreign spending in the Los Angeles election, the FEC reached its usual 3-3 partisan deadlock. The three Republican commissioners said the foreign money ban applies only to candidate elections, not ballot referenda.
But California law is crystal clear on the matter. California Government Code Section 85320 says:
(a) No foreign government or foreign principal shall make, directly or through any other person, any contribution, expenditure, or independent expenditure in connection with the qualification or support of, or opposition to, any state or local ballot measure.
(b) No person and no committee shall solicit or accept a contribution from a foreign government or foreign principal in connection with the qualification or support of, or opposition to, any state or local ballot measure.
California’s explicit ban on foreign money in ballot measures may have something to do with why Manwin and the committee opposed to the measure did not put up much of a fight with the California Fair Political Practices Commission.
In a proposed stipulation to be voted on at the commission’s next meeting December 17, Manwin and the committee are prepared to plead guilty to 16 California election law violations. In a case of first impression, they have agreed to pay a $61,500 fine, the largest sanction the commission has levied this year. (The fine could have gone as high as $80,000 but they were given a break because they lost the election, cooperated with the probe, and this is a first-time offense.)
It also appears the committee opposing the measure received some atrocious legal advice. The day before Manwin made its first donation of $150,000 a committee consultant emailed what they had learned about foreign contributions:
Okay the lawyer did not hesitate for one moment!
Even if the parent company is abroad, as long as they have a USA company and that is where the check come [sic] from we are 100% legal.
(In a convenient memory lapse, the consultant could not recall the lawyer’s name.)
The committee also broke the law by not revealing the true economic interest behind it. Committees involved with ballot measures must have a name that “clearly identifies the economic or other special interest” of donors of $50,000 or more. There was a half-hearted attempt to comply with this provision when the committee changed its name from “No on Government Waste” to “No on Government Waste, No on Measure B, major funding by Manwin USA.” By not revealing the true economic interest behind the committee – the adult film industry – the public was deprived of “important, time-sensitive information that it was entitled to have,” the Fair Practices Commission found.
But the Los Angeles fight was just the start. Supporters of the condom requirement now want to take it statewide. They have gathered enough signatures for a condom measure to appear on the ballot in November 2016 if the legislature does not pass a law first. It will be interesting to see if the enforcement action over the Los Angeles measure will have any effect dissuading foreign money in politics more broadly.