Koch Brothers’ PAC Must Reveal Major Donors in California Filings, Court Says

(Bloomberg) -- Americans for Prosperity Foundation, a conservative advocacy group linked to billionaire Charles Koch, must disclose its biggest donors in confidential tax filings in California, a U.S. appeals court ruled.

The ruling by the San Francisco-based panel reverses a trial court order blocking California from collecting information that’s already required by the U.S. Internal Revenue Service. The ruling Tuesday opens the door to the state attorney general’s potential scrutiny of the organization’s major contributors.

California Attorney General Xavier Becerra’s office uses the information to prevent charitable fraud and it’s not to be made public "except in very limited circumstances," the appeals court said.

U.S. District Judge Manuel Real in Los Angeles ruled after a 2016 trial that the donors’ constitutional rights to freedom of association and privacy outweighed the attorney general’s need for the information. The appeals court disagreed, concluding the data was "substantially related" to the state’s interest in policing charitable fraud.

Even assuming those few major donors "would face substantial harassment" if their AFPF contributions became publicly known, the court called that risk of inadvertent public disclosure "slight."

Also on the losing side was the Christian conservative Thomas More Law Center.

Second Reversal

U.S. Circuit Judge Raymond Fisher, who was appointed to the court by President Bill Clinton, a Democrat, wrote the opinion for the appellate court, which hears cases arising from lower federal courts in California, Oregon, Washington and six other western U.S. states. Joining in the ruling were another Clinton pick, Richard Paez, and Jacqueline Nguyen, who was appointed by President Barack Obama, also a Democrat.

The ruling marks the second time the court reversed Real on the donor disclosure issue. In 2015 it overturned his decision that submitting the information would chill contributors’ free speech right.

"We are disappointed by the Ninth Circuit’s latest decision and believe it imperils people’s First Amendment right to freedom of speech and of association," foundation spokesman Bill Riggs said in a statement.

The organization said there was a “demonstrated pattern of misuse” by California officials of the donor information and it will seek "further review."

The Thomas More Law Center declined to immediately comment on the ruling.

A Manhattan-based federal appeals court in February upheld a New York State disclosure requirement for those who donate more than $5,000 to nonprofits, rejecting a challenge by Citizens United.

The case is Americans for Prosperity Foundation v. Becerra, 16-55727, U.S. Court of Appeals, 9th Circuit (San Francisco). The lower court case is Americans for Prosperity Foundation v. Harris, 14-cv-09448, U.S. District Court, Central District of California (Los Angeles).

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