The Colorado Court of Appeals on Thursday ruled that a political committee representing the Colorado Association of Home Builders wrongly failed to report financial contributions from members in a series of television ads that targeted Colorado Rep. John Kefalas, D-Fort Collins.

The court upheld an earlier decision that the Committee for the American Dream illegally neglected to file electioneering communication reports for TV spots through the Colorado Secretary of State's office.

CAD, which supports candidates for political office with a pro-business and pro-property rights agenda, is funded by the Colorado Association of Home Builders, a membership organization.

The organization, which ran about $28,000 worth of ads through Comcast Spotlight in the 2006 campaign, argued that it was excluded from the campaign finance filing requirements because of a so-called business exemption. Kefalas was re-elected.

After a nonprofit watchdog organization, Colorado Citizens for Ethics in Government (now known as Colorado Ethics Watch), filed a complaint about the ads through the secretary of state, an administrative law judge ruled that CAD violated campaign laws and imposed a $1,000 penalty on the group.

Chantelle Taylor, director of Colorado Ethics Watch, said the decision confirms the "important precedent" established last year. She added that it would "increase transparency" in elections.

In a statement, Ethics Watch said it agreed with the court's assertion that allowing political committees to claim exemption to the laws would defeat the very purpose of campaign finance laws.