SACRAMENTO – Today Assemblymember Marc Berman (D-Menlo Park) introduced the LLC Dark Money Ban Act, which strengthens California’s campaign contribution disclosure laws. Specifically, AB 236 requires a political committee that receives campaign contributions from a limited liability company (LLC) to disclose the name of each individual who owns or controls the LLC and the name of each individual who controls the contributions or expenditures of the LLC, and establishes conditions under which an LLC is required to disclose the true sources of money that it uses to make campaign contributions and expenditures in California.
“Wealthy donors should not be able to launder money through a shell corporation to hide their involvement in the political process,” said Assemblymember Marc Berman, chair of the Assembly Elections Committee. “The LLC Dark Money Ban Act will increase transparency by closing a loophole in the law that allows big dollar donors to anonymously funnel money through LLCs to influence California voters.”
Under California law, an LLC can make campaign contributions or expenditures in the name of the LLC without disclosing any information about the source of the funds expended by the LLC or the individuals responsible for operating the LLC.
Last month, an LLC named “Prov. 3:9” made a $500,000 campaign contribution to a committee that was created to support an effort to recall Governor Gavin Newsom. At the time it made the contribution, no information was publicly disclosed about the source of funds that it used to support the recall effort. Prov. 3:9 originally was established in October 2018, and describes its business as “consulting services” in business filings made with the California Secretary of State. There is little evidence, however, that Prov. 3:9 actually engages in business in California. According to a complaint filed with the Fair Political Practices Commission, it has no website or social media presence, and it does not have a business license with the city where it is based. Last week, the manager of Prov. 3:9, LLC publicly stated that an Orange County-based investor is its sole financial backer, but Prov. 3:9 has not filed campaign disclosure reports to confirm that the investor is the true, original source of the money used to make the contribution in support of the recall effort. The campaign contributions made by Prov. 3:9, LLC are just one example of large campaign contributions made by LLCs for which little public information is available through public campaign disclosure reports.
Assemblymember Berman introduced similar legislation—AB 2407—in 2020, but did not move forward with the bill due to the onset of the COVID-19 pandemic. AB 236 reflects the scope of AB 2407 and includes additional protections to ensure full transparency for LLCs, which in light of recent events, has made this change even more necessary.
Contact: Kaitlin Curry, (916) 319-2024