Arizona appeals court ruling on 'dark money' raises risk of political corruption, critics say

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The Arizona Court of Appeals' decision to lift a ban that opens the door for “dark money” contributions to political races will increase the risk of corruption in the state's politics, according to watchdog groups.

The ruling reinstated a 2017 law in which the Republican-led legislature allowed any group that the IRS classified as a nonprofit not to disclose its donors, regardless of whether the voter-created Citizens Clean Elections Commission approved. Organizations aren't disqualified under the law even if they use funding to elect or oust candidates.

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The ruling essentially defangs the commission, which voters set up up to determine whether an organization was really a charity or a political action committee (PAC) and thus required to disclose its donors.

Political parties will now be able to spend unlimited amounts on behalf of their candidates without disclosure, and individuals and special interests can pay the legal fees of candidates without the expenditures counting against mandated caps on financial aid.

Nonetheless, included in Tuesday's decision was what Tuscon.com called a "key victory" for challenger Arizona Advocacy Network.

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The appellate court judges said GOP lawmakers did not have a right to limit the Clean Elections Commission's regulations to only independent expenditures made on behalf of candidates who are accepting public financing.

That qualifier preserves the right of the commission to require disclosure of all money spent on candidates, even if it can no longer force reporting of the original source.

While the Arizona Advocacy Network appreciates the court's recognition of the role the commission plays in protecting democracy, the ruling "also gave the seal of approval to various legal loopholes created by the Arizona legislature for the sake of allowing unlimited amounts of corporate money to flow into our elections," Executive Director Joel Edman told Fox News.

"This is a deeply disturbing result on the eve of [a] historic election, and should be a reminder to voters that we badly need systemic reforms if our democracy is going to reflect the will of the people," he said.

Supporters cheer as US President Donald Trump arrives to deliver remarks at a Keep America Great rally in Phoenix, Arizona, on February 19, 2020. (Photo by JIM WATSON/AFP via Getty Images)

In the 2018 election, the Arizona Republican Party ran TV advertisements on behalf of the reelection campaigns of both Gov. Doug Ducey and Attorney General Mark Brnovich. The actual amount of money spent on behalf of each was never reported due to the 2017 law,

The Arizona Democratic Party, meanwhile, put $3.3 million into the successful effort to elect Katie Hobbs as secretary of state in 2018, a figure that was made public only because of a news release from iVote.

While nonprofits have always been exempt from donor-disclosure requirements, the Citizens Clean Elections Commission says that mere designation by the IRS is insufficient to prove an organization is truly a charity.

The Arizona Clean Elections Commission's executive director, Tom Collins, told Fox News that the commission "largely agreed that the plaintiffs were correct about the law."

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"The result does make clear the Commission has [the] authority to enforce campaign finance laws as it has since its inception," he said. "With respect to the remainder of the ruling, it appears to reset things to how they were during the 2018 election cycle. So assuming nothing else changes, Arizona has already operated under these terms."

The commission was created by voters in 1998 as a part of an effort that supporters said would help to limit the influence of money on politics.

No decision has been made on whether to appeal.

Watchdog Common Cause had monitored the case and Beth Rotman, the director of Money in Politics and Ethics, blasted the move, telling Fox News on Wednesday that it was bad for democracy and at odds with legal precedent.

She said disclosure is "really key" and that Americans have a right to know who is spending money to influence elections.

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"Whether or not it's a nonprofit and whether or not it's primarily existing for the purpose of influencing votes and getting involved in elections, no one can look at that now in Arizona and see whether it's a thinly veiled ... political action committee that should be reporting under the other rules," she explained. "No one's allowed to check that. And that means that the voters will have no transparency when those groups spend big money."

According to Rotman, Arizona "has taken a step in the wrong direction," and "given the go-ahead" to outside groups spending large sums without accountability.

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"Even in one of the worst campaign finance decisions to come out the Supreme Court, the Supreme Court itself at the same time said, 'transparency is essential.' So it's just really disappointing to see this backward step," she concluded. "That said, you know, Arizona does have some other good tools in the campaign finance bucket and it will keep marching forward."