'Dark Money' Disclosure Sought By New York Attorney General Eric Schneiderman

12/12/2012 12:21 pm ET | Updated Dec 12, 2012

WASHINGTON -- In response to the massive increase in undisclosed "dark money" in the nation's elections, New York Attorney General Eric Schneiderman has announced new regulations that require nonprofits spending money on politics in New York state elections to disclose their donors.

The regulations, publicly filed on Tuesday, would, if enacted, require nonprofits that spend more than $10,000 on political campaigns to disclose the names of donors giving more than $100 to any individual group. This would apply to spending that either explicitly calls for the election or defeat of a candidate, or advocates for a particular issue within 180 days of an election and mentions a candidate by name.

"When people spend money to try to influence our elections, the public needs to know where that money is coming from, and how it is being spent. Nonprofits should not be used to subvert that basic principle," Attorney General Eric Schneiderman said in a statement. "Simply put, transparency reduces the likelihood of corruption."

The push for new disclosure requirements comes after "dark money" nonprofits spent more than $400 million in the 2012 election, up from approximately $80 million in the 2008 campaign. The increase in unsourced spending came after the Supreme Court's 2010 Citizens United ruling, which freed corporations, including nonprofit corporations, and unions to spend freely in elections.

Schneiderman's proposed regulations largely mirror efforts in Congress to increase disclosure in federal elections. The legislation that has been proposed, voted on and filibustered by Senate Republicans is called the DISCLOSE Act and similarly requires the disclosure of donations to groups that spend more than $10,000 on political campaigns.

Lisa Gilbert, director of Public Citizen's Congress Watch, hopes that Schneiderman's move will encourage both Congress and federal agencies that can issue disclosure regulations to follow suit and require these groups to disclose.

"States are the laboratories of democracy, and I think it's a really great thing that [Schneiderman's] making these strides, because there are a lot of moving pieces at the federal level," Gilbert said. "We do really hope that agencies like the [Securities and Exchange Commission] take their cue from what's happening in innovative places like New York."

While attention has largely focused on this increase in dark money at the federal level, states have seen a rapid rise in unsourced spending as well and are looking for ways to require disclosure.

The most prominent case came just weeks before the election in California, where a brand-new conservative nonprofit named Americans for Responsible Leadership donated $11 million to a ballot initiative committee.

An ensuing investigation by the state's Fair Political Practices Commission went to court, and the state's Supreme Court forced the conservative group to comply with an internal audit. That audit determined that Americans for Responsible Leadership received the $11 million contribution from the Center to Protect Patients Rights, which, in turn, received the money from the Virginia-based Americans for Job Security. The actual human or corporation who originated the donation is still unknown.

The Fair Political Practices Commission in California called this daisy-chain contribution the largest act of "political money laundering" in state history, and the state's attorney general is investigating whether to pursue charges against the groups involved.

Schneiderman's regulations appear to cover this activity as they count the transfer of funds "for the purpose of supporting or engaging in express election advocacy or election targeted issue advocacy" as an election expense that triggers the disclosure requirement.

A staffer in Schneiderman's office also stated that current regulations entail other criminal enforcement actions, including prosecution for fraud, that could occur in the event of a daisy-chain contribution like the one seen in California.

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