Consider the Source ©2013 Center for Public Integrity 2 Table of Contents

Home , Art Pope, Carl Forti, Club for Growth Action, Gene Karpinski, John Paulson, Ken Blackwell

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The 2012 election was the most expensive and least transparent presidential campaign of the modern era. This project seeks to “out” shadowy political organizations that have flourished in the wake of the Supreme Court’s Citizens United ruling. As the nation prepares for major state-level elections in 2013 and critical midterms in 2014, we provide the narrative behind the flow of money and how professional politicking is influencing a flood of new spending.

The Center for Public Integrity

PART I: Big bucks flood 2012 PART III: Nonprofits, the election stealth super PACs

Introduction 5 Nonprofits outspent super PACs in 2010, trend may continue 51 Top 25 Super PAC donors 6 What the courts said and why Pro-environment group gave we should care 8 grant to conservative nonprofit 57 Stealth spending on the rise PART II: Super PACs crash as 2012 election approaches 61 the parties Drug lobby gave $750,000 to Crossroads political machine pro-Hatch nonprofit in Utah’s U.S. Senate race funded mostly by secret donors 13 63 Finance industry makes up PART IV: Citizens United nearly half of pro-Romney in the states super PAC’s donations 18 Big business prefers GOP over Contribution limits at risk in Democratic super PACs 25 states thanks to Supreme Court 69 Super PAC appeal, give until Wisconsin recall breaks record it ‘feels good’ 31 thanks to outside cash 73 Canadian-owned firm’s mega- Judicial candidates vulnerable donation to super PAC raises to outside spending 80 ‘legal red flags’ 33 Right-wing groups attempt to Mystery firm is election’s top dislodge justices in Florida corporate donor at $5.3 million 37 and Iowa 85 Investment managers top list North Carolina governor’s race of super PAC donors 43 awash in out-of-state funds 92

Obscure nonprofit threatens PART VI: Impact: What was campaign finance limits beyond the effect of all that money? Montana 99 Mystery deepens over origins Super PACs, nonprofits of nonprofit battling Montana favored Romney over Obama 136 spending limits 107 House candidates fear super PACs 143 N.C.’s public financing system drowned out by outside House candidates draw one- spending 110 campaign super PACs 146 Bad day for super donors 148 PART V: Introducing the Republican (and Democratic) Rove-affiliated groups spend governors associations $175 million, lose 21 of 30 races 152 Adelson gave $40 million to super Pennsylvania governor benefited PACs in final weeks of election 156 from untraceable $1.5 million donation 115 Court opened door to $933 million in new election spending 162 D.C.-based governors’ associations provide back door Appendix for corporate donors 124 Quick stats on super PACs Million-dollar donation in and nonprofit organizations 167 Indiana race may skirt limits on corporate giving 130 CPI project staff 171

Go online for more stories and full profiles of super donors, super PACs, and nonprofit groups at: www.publicintegrity.org/politics/consider-source

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The Center for Public Integrity was founded in 1989 by Charles Lewis. We are one of the country’s oldest and largest nonpartisan, nonprofit investigative news organizations. Our mission: To enhance democracy by revealing abuses of power, corruption and betrayal of trust by powerful public and private institutions, using the tools of investigative journalism.

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Sexual Assault On Campus A Frustrating Search for Justice Who’s Behind A culture of secrecy the Financial surroundssurrounds higherhigher THE education’seducation’s handlinghandling Meltdown? SUBPRIME ofof sexualsexual assaultassault casescases THE TOP 25 SUBPRIME LENDERS AND THEIR WALL STREET BACKERS 25 Check their stats, including the bailout funds they’ve received

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I ntroduction he 2012 election was sion to races for governor, state su- the first presidential contest preme court and beyond. Tto be affected by the U.S. The Center for Public Integrity Supreme Court’s landmark Citizens launched the Consider the Source United ruling, which unleashed project in January, 2012, in an ef- nearly $1 billion in new spending fort to explain the new campaign in federal races. The term “super finance landscape and track the PAC” became part of the national impact of this unlimited form of vocabulary. Billionaire casino mo- spending on both state and federal gul Sheldon Adelson became a election contests. Project staff au- household name by spending more thored more than 250 stories that than $90 million in an attempt to tracked the effect of money on the elect conservative candidates. And political process, with a special fo- laws restricting spending by outside cus on the Citizens United decision. interest groups in elections were We produced detailed profiles invalidated in 24 states, extending of the most influential super PACs the impact of the high court deci- and the top 25 “super donors” who

fueled their spending. We also and Democratic Governors Asso- wrote profiles about the secretly ciations to get around campaign fi- funded nonprofits that pay for the nance limits in the states. same kinds of advertising as super The Citizens United decision and PACs. subsequent spending blitz led to a Among our stories, the tale of a public outcry and calls for reforms mysterious shell company that be- not seen since the run-up to passage came the top corporate donor to of the McCain-Feingold campaign super PACs; a story about a foreign- finance law in 2002. To date, efforts owned reinsurance firm that gave to require more disclosure of dona- $1 million to a super PAC support- tions to spending groups have failed ing the candidacy of Republican and the Federal Election Commis- presidential nominee Mitt Romney sion has been unwilling to act on — something that would have been even the most basic enforcement is- banned if the donation came from sues thanks to its 3-3 partisan split. the foreign company’s chairman; With that in mind, the Consider and a series of stories on the byzan- the Source team has much to do be- tine process used by the Republican tween now and the 2016 election. n Top 25 super PAC donors for 2012 election cycle rank Name Total Given Ideology 1 Sheldon Adelson & family $93.3 million Republican 2 Harold Simmons & wife, companies $30.9 million Republican 3 Bob Perry $23.5 million Republican 4 Fred Eychaner $14.1 million Democratic 5 Joe Ricketts $13.1 million Republican 6 William S. Rose (Specialty Group) $12.1 million Republican 7 United Auto Workers $11.8 million Democratic 8 National Education Association $10.8 million Democratic

rank Name Total Given Ideology 9 Michael Bloomberg $10 million Independent 10 Republican Governors Association $9.8 million Republican 11 James H. Simons $9.6 million Democratic 2 1 AFSCME $8.2 million Democratic 13 AFL-CIO $7.4 million Democratic 14 Robert B. Rowling $6.1 million Republican 15 American Federation of Teachers $5.8 million Democratic 16 Robert Mercer $5.5 million Republican 17 Steve and Amber Mostyn $5.2 million Democratic 18 George Soros* & family $5.1 million Democratic 19 William Koch $4.8 million Republican 0 2 Peter Thiel $4.7 million Republican 21 SEIU $4.4 million Democratic 21 Joe Craft $4.4 million Republican 3 2 John Childs $4.2 million Republican 32 Plumbers and Pipefitters Union $4.2 million Democratic 5 2 Jerry Perenchio $4.1 million Republican

Full profiles of top super PAC donors for 2012 election cycle can be found at: www.publicintegrity.org/politics/consider-source/super-donors. * George Soros is the chairman of the Open Society Foundation, which provides funding for the Center for Public Integrity. See list of the Center’s donors at: www.publicintegrity.org/about/our-work/supporters.

J. Scott Applewhite/AP Big bucks flood 2012 election What the courts said and why we should care A citizen’s guide to C itizens United By John Dunbar Published Online: January 3, 2012 n 2010, the courts reversed de- Laws aimed at limiting the cor- cades of legal precedent when rupting influence of corporate Ithey said it was OK for corpora- money in elections go back more tions and unions to spend as much than a century while restrictions on as they want to put their favorite union spending go back more than candidates in office. 60 years.

So what happened? It wasn’t until 1971 that Congress The short answer is, the First got serious and passed the Federal Amendment happened — or at Election Campaign Act. It required least a new interpretation of it did. the full reporting of campaign In a nutshell, corporations and contributions and expenditures. It unions now have the same First limited spending on media adver- Amendment right as people do to tisements. But that law was ruled spend as much money as they want unconstitutional. on advertising and other political In 1972, burglars broke in to spending to get candidates elected the Democratic National Commit- — as long as they aren’t in cahoots tee headquarters in the Watergate with them. complex in Washington, D.C. and everything changed. Some history It turned out that the break-in was funded by the Committee to The government has been consis- Re-elect the President. CREEP was tent, though not always effective, a campaign committee to fund Nix- in attempting to insulate elections on’s 1972 campaign, but was likened from the corrupting influence of to a “slush fund” filled with cash corporations and labor unions. contributions from corporations Congress first banned corpora- and various unsavory characters. tions from funding federal cam- Nixon’s subsequent efforts to paigns in 1907 with the Tillman cover up the administration’s in- Act. President Theodore Roosevelt, volvement in the break-in led to his the great reformer of the Gilded resignation in 1974 — and major Age, said at the time that such a reforms of campaign finance laws. prohibition would be “an effective method of stopping the evils aimed Post-Watergate at in corrupt practices acts.” (Ironically, it was Roosevelt him- In 1974, Congress amended the law self who benefited from those con- to, among other things, create an tributions.) In 1947, the Taft-Hart- enforcement body — the Federal ley Act extended the ban to labor Election Commission to enforce unions. The laws were weak and limits on both contributions and largely unenforceable. expenditures. The constitutional-

The Supreme Court reinterpreted the law about how money from corporations and unions could be spent on campaigns. Super PACs and other outside groups made possible by the court's decision spent nearly $1 billion on advertising in federal races.

ity of the new laws was challenged The court ruled the “absence of in the 1976 Supreme Court case prearrangement or coordination of known as Buckley v. Valeo. the expenditure with the candidate The court upheld limits on or his agent alleviates the danger contributions to candidates, say- that expenditures will be given as a ing they were “primary weapons quid pro quo for improper commit- against the reality or appearance ments from the candidates.” of improper influence stemming Corporations and labor unions from the dependence of candidates were still banned from making on large campaign contributions.” those expenditures, or contribut- But the court rejected limits on ing to organizations that made expenditures, arguing that such those expenditures. restrictions “limit political expres- sion at the core of our electoral McCain-Feingold and process and of First Amendment electioneering freedoms.” That balancing act — protecting In 2002, Congress updated the cam- free speech versus keeping govern- paign finance laws — again. The ment free from corruption — re- Bipartisan Campaign Reform Act, mains at the center of the debate also known as McCain-Feingold, over campaign finance reform. identified a new kind of spending, These “independent expendi- known as an “electioneering com- tures” by individuals are permitted, munication.” but the spenders are prohibited This is basically a broadcast or from acting in concert with a can- cable advertisement that refers to a didate. candidate but doesn’t urge the au-

dience to vote for or against him — these funds were not being spent in though the intent is usually pretty coordination with a campaign, they clear. Similar to independent ex- “do not give rise to corruption or penditures, electioneering groups the appearance of corruption.” were banned from using corporate The court did not, however, or union contributions to purchase strike down disclosure require- advertising close to an election. ments. Organizations that make McCain-Feingold’s primary con- these types of expenditures are still cern was to close a loophole on that required to report their expendi- was allowing donations from corpo- tures and donors. Unfortunately rations and unions to the national for advocates of transparency in party committees which had been elections, that disclosure require- growing rapidly during the 1990s. ment apparently does not apply to These unregulated contributions, nonprofit corporations. often called soft money, poured in from corporations and labor SpeechNow.org raises unions and were used to fund cam- the stakes paign-related “issue ads.” Issue ads were used to help or Only a couple of weeks after the hurt a candidate’s chances, but were Citizens United ruling, a lesser- generally unregulated as long as known case in the District of Co- they avoided using certain words lumbia Circuit Court of Appeals, like “elect” or “support” or “oppose.” upped the ante. The Citizens United ruling, re- The “SpeechNow.org” case, us- leased in January, 2010, tossed out ing the Supreme Court’s reasoning, the corporate and union ban on decided that limits on individual making independent expenditures contributions to groups that make and financing electioneering com- independent expenditures are un- munications. It gave corporations constitutional. and unions the green light to spend These two major court decisions unlimited sums on ads and other led to the creation of what we now political tools, calling for the elec- call “super PACs” — political orga- tion or defeat of individual candi- nizations that can receive unlimited dates. corporate, union and individual con- The court said that because tributions and make unlimited ex-

penditures to advocate for the elec- communications — but only if they tion or defeat a federal candidate. did not accept corporate or union These new super PACs are still contributions. Thanks to Citizens required to report their donors. United, that restriction has been Unfortunately, those disclosure removed. reports will not be made available But unlike the super PACs, the until after the January contests in nonprofits do not report who funds Iowa, New Hampshire, South Caro- them. For example, Crossroads lina and Florida. GPS has spent millions of dollars Of equal or possibly greater con- to help elect Republicans to office, cern, in terms of transparency of but does not report its donors to donors, are nonprofits. the Federal Election Commission. In the past, nonprofits known as Meanwhile, the FEC — which “social welfare organizations” were has three members of each party — permitted to make independent has yet to update its rules to reflect expenditures and electioneering the courts’ rulings. n

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3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part II ©2013 Center for Public Integrity 13 Crossroads political machine funded mostly by secret donors By Michael Beckel Published Online: April 20, 2012

ixw ty-t o percent of funds raised by two conservative Combined Crossroads' Sgroups associated with for- income, through 2011 mer Bush adviser Karl Rove have come from mystery donors, a statistic that shows the increasingly important role being played by nonprofits in a post-Citizens United political world. 38% American Crossroads, a super 62% PAC, and Crossroads Grassroots Undisclosed Policy Strategies, a nonprofit, were founded in 2010 by Rove and another former Bush adviser, Ed Gil- lespie. Together, they raised $123 million through the end of 2011, $123 million according to a Center for Public raised Integrity review of Federal Election Commission data and Internal Rev- Crossroads American enue Service filings. GPS Crossroads Of that sum, $76.8 million, or 62 (nonprofit) (Super PAC) percent, went to Crossroads GPS, $76.8 million $46.4 million which is a nonprofit, “social welfare”

Karl Rove, former Senior Advisor to President George W. Bush Sue Ogrocki/AP

group organized under Section the IRS, a rule that these politically 501(c)(4) of the U.S. tax code. Like active nonprofits have interpreted American Crossroads, Crossroads to mean they can spend up to 49 GPS can pay for advertising that at- percent of their funds on such ad- tacks political opponents by name vertising. and urges viewers to vote against As a nonprofit, the group is not them. required to publicly name its do- But unlike the super PAC, GPS nors, except if they give “for the is prohibited from making politics purpose of furthering” a political its “primary purpose,” according to advertisement. (GPS has told the

FEC that it has not “solicited or rein the wake of the U.S. Supreme ceived” contributions earmarked Court’s Citizens United decision and for such expenditures.) a lower court ruling called Speech- Jonathan Collegio, the commu- Now.org v. Federal Election Com- nications director of Crossroads mission. GPS, said that the group’s unnamed American Crossroads is required donors, which number fewer than to report its donors to the FEC and 100, are “individuals and business- does not have the same limitations es that support its vision of lower on spending as its sister organiza- taxes and smaller government.” tion. Election law expert Rick Hasen, American Crossroads, which was a professor at the University of Cal- launched in March of 2010, quick- ifornia-Irvine law school, told the ly established itself as the biggest Center for Public Integrity that he super PAC, raising $28 million by wasn’t surprised that more money the end of 2010, according to re- was flowing into Crossroads’ “secret cords filed with the IRS and FEC. It money option.” pulled in another $18.4 million last “For every Bob Perry who craves year – with millions more flowing the attention, there are many oth- into its coffers this year. ers, including corporations, who Records show that Texas billion- hope to influence politicians and aire homebuilder Perry, along with policy without any public account- fellow billionaire businessmen Har- ability,” he said. old Simmons and Robert Rowling, Perry is a well-known donor to rank as the super PAC’s top donors, conservative causes, and he was one having collectively donated $24.5 of the financiers behind the Swift million through the end of 2011, Boat attacks in 2004 on former through their personal and corpo- Democratic presidential candidate rate accounts. Sen. John Kerry of Massachusetts. Meanwhile, Crossroads GPS, Both Crossroads groups are al- which was created a few months af- lowed to accept unlimited contribu- ter the super PAC, collected a total tions from individuals, corporations of $76.8 million between June 1, and other groups for political adver- 2010, and Dec. 31, 2011, according tisements, thanks to changes in the to tax forms released by the group country’s campaign finance system Tuesday.

Earlier this year, the Center for Responsive Politics reported that Key findings: the Republican Jewish Coalition gave Crossroads GPS $4 million, — Crossroads GPS is a nonprofit and the Center for Public Integrity 501(c)(4) organization, a name previously reported that casino ex- that comes from the IRS tax code. ecutive Sheldon Adelson gave the They can raise and spend up to 49 group a seven-figure check for an percent of their funds attacking or unspecified amount. supporting candidates, but cannot Little is known about the group’s contribute directly to a campaign. other donors. The tax forms released by Cross- — Unlike a super PAC, donations to roads GPS show 96 contributors, nonprofits can remain completely two dozen of which gave at least $1 anonymous. Super PACs, such million, including one for $10 mil- as American Crossroads, must lion and one for $10.1 million. disclose donors' names and amounts The two Crossroads groups have contributed, which most do either a combined fundraising goal of at least $240 million for the 2012 elec- once a month or once a quarter. tion cycle, as the Center for Public — Both Crossroads organizations, Integrity previously reported, and which are associated with former they are already spending heavily Bush adviser Karl Rove, are on the on negative ads targeting President Barack Obama, as well as Demo- front lines of political spending. They crats in several top-tier U.S. Senate hope to raise at least $240 million races. total during the 2012 election cycle, Through the end of 2011, Cross- a figure that would more than triple roads GPS paid the Virginia-based the amount they raised ahead of Crossroads Media more than $38 the 2010 midterm election. million, according to the tax forms released by the group Tuesday – — Steven Law, the president of money that frequently went toward both Crossroads groups, made a placing issue ads and ads that ex- combined $1.09 million between pressly advocated for or against fed- June 2010 and December 2011. eral candidates.

Crossroads Media, which de- million to the National Federation scribes itself as the “premier Re- of Independent Business, $2 mil- publican media services firm,” was lion to the National Right to Life founded in 2001 by GOP political Committee, $600,000 to the lobby- operative Michael Dubke. ing arm of the National Rifle As- According to Crossroads GPS’s sociation, $500,000 to the conser- tax filings, it has spent more than vative nonprofit American Action $17 million on “direct” political ex- Network and $250,000 to the Re- penditures and more than $27 mil- publican Jewish Coalition. lion on “grassroots issue advocacy” These grants are accompanied through the end of 2011. But only by a letter stating that “the funds some of this spending was required are to be used only for exempt pur- to be reported to the government poses, and not for political expen- agency tasked with regulating fed- ditures,” according to Crossroads eral elections. GPS’s tax filings. According to the group’s FEC Steven Law, the president of both filings, it spent $16 million on ads Crossroads organizations, worked expressly advocating for or against 60 hours a week, split between the federal candidates in 2010 and two groups — with more time be- another $1.1 million on issue ads ing spent aiding Crossroads GPS mentioning a specific candidate during the second half of 2011. ahead of high-profile elections in For his work, Law — who served 2010 and 2011. as President George W. Bush’s depu- Its tax forms indicate that the ty secretary of Labor and later gen- big spending on “paid advertising, eral counsel of the U.S. Chamber of mailings, emails and web-based ad- Commerce — collected a combined vocacy tools” is to “influence poli- $1.1 million in salary and other cymaking outcomes through grass- compensation for both groups, in- roots mobilization.” cluding $270,000 in bonuses. It also allotted nearly $16 million “Crossroads is a serious organi- in grants to a total of 13 other con- zation,” Collegio told the Center servative organizations. for Public Integrity. “Free market That includes $4 million to an- conservative donors know that hir- ti-tax crusader Grover Norquist’s ing top CEO talent requires real Americans for Tax Reform, $3.7 compensation.” n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part II ©2013 Center for Public Integrity 18 Finance industry makes up nearly half of pro-Romney super PAC’s donations By Alexandra Duszak and Rachael Marcus Published Online: April 2, 2012

as t summer, hedge fund pioneer Julian Rob- Lertson made the maximum $2,500 contribution to Mitt Rom- ney’s campaign for the Republi- can presidential nomination. With a net worth somewhere north of $2 billion, it seemed as though he could do a lot more. Thanks to the Supreme Court’s Citizens United decision, he did. Robertson gave $1.25 million to Julian Robertson seen here with his wife Restore Our Future, a super PAC Josie in this undated photo. AP that has underwritten a relent- less advertising campaign ripping Romney’s opponents. That’s 500 PAC, $20.5 million, or 48 percent, times the contribution he made in came from finance industry donors, June. according to an analysis of Federal Robertson is not alone. Of the Election Commission data by the $43.2 million raised by the attack Center for Public Integrity.

Pro-Romney super PAC dominated by investment pros Nearly half of the contributions to the pro-Romney super PAC Restore Our Future come from investment managers and other finance interests that want to toss out financial reforms, including a combined $13.5 million from equity and hedge fund groups.

$43.2 million $5.4 million Total donations 12.4 % $20.5 million (48 %) Construction Finance industry $3.6 million $7 million 8.3 % Consumer products 16.3 % Private equity $2 million 4.5 % $6.5 million Hospitality 15.1 % Hedge funds $1.4 million 3.1 % $7 million Oil and gas 16.2 % Finance – other $7.6 million I nvesting 17.6 % Investment Other management $2.8 million Investment banks 6.6 % Miscellaneous Real estate financial Total percentages may not equal 100% due to rounding.

At least $13.5 million came from working-class Americans. The list of private equity firms ($7 million) and donors to his super PAC isn’t going to hedge funds ($6.5 million) while help much; the average contribution most of the rest came from invest- was a little more than $83,000. ment banks and other asset managers. So-called “non-bank lenders” High court changes the game that run storefront cash-for-title and payday lending operations gave the The 2010 Citizens United Supreme super PAC $437,500, according to Court decision led to the creation of the analysis. super PACs, which can accept unlim- Restore Our Future is by far the ited donations from corporations, best-funded of the super PACs back- labor unions and wealthy individuals ing presidential candidates in the and use the funds to pay for advertis- 2012 election. The super PAC closed ing and other campaign expenses, as out the month of February with $10.5 long as they do not coordinate with million cash on hand, more than candidates. Romney’s campaign, according to Hedge funds are private, largely FEC records. unregulated investment pools that are Romney, a former private equity typically overseen by a single manager executive, wants to repeal the Dodd- and usually available only to high-val- Frank Wall Street Reform and Con- ue investors, like wealthy individuals, sumer Protection Act and has said he private banks, pensions, corporate is opposed to doing away with a tax treasuries and endowments. Private loophole that has helped make pri- equity companies are more hands-on vate equity and hedge fund managers but are also mostly unregulated and enormously wealthy over the years. attract the same type of investor. The finance industry’s total per- The firms and their trade asso- centage of contributions would be ciations share Romney’s view that greater were it not for homebuilder Dodd-Frank should be repealed. and long-time Republican donor Investment managers also want to Bob Perry, who gave $3 million to the make sure “carried interest,” which super PAC in February, bringing his accounts for much of their income, total contributions to $4 million. as well as Romney’s, continues to be Romney has battled the percep- taxed at the modest capital-gains tion that he is out of touch with rate of 15 percent.

Romney opposed changes in taxa- He is a generous philanthropist, tion of carried interest when he ran pledging more than half his wealth in 2007, although his current posi- in line with Bill Gates’ and Warren tion is less clear. Buffett’s Giving Pledge, a charitable Romney is the top choice of the effort focused on earning the sup- securities and investment industry. port of billionaires. He also funds His campaign has received $6.8 mil- more than 30 full scholarships for lion with President Barack Obama students at Duke University and the a distant second at $2.3 million, ac- University of North Carolina at Cha- cording to the Center for Responsive pel Hill, his alma mater. Politics. The pro-Obama super PAC, Of more than $3 million in fed- Priorities USA Action, has collected eral contributions Robertson has $175,000 from the industry. given since 1996, $2.9 million have Wall Street investment bank Gold- gone to Republicans and Republican man Sachs’ employees have given committees. Robertson could not be $670,000 to the super PAC. Accord- reached for comment for this article. ing to the Center for Responsive Among other seven-figure donors Politics, Goldman employees have is Edward Conard, who originally given more than $535,000 to the made his $1 million donation under Romney campaign itself — the larg- the name “W Spann LLC.” Conard is est amount contributed by employees a former managing director of Bain from any one company. Capital — the private equity compa- Neither the Romney campaign nor ny co-founded by Romney. Restore Our Future responded to re- Current and former executives at quests for comment for this story. Bain Capital and their families gave at least $3.1 million to Restore Our Top donors Future, including two households that contributed $1 million or more. Robertson is the founder of the now- Conard came forward after nu- defunct Tiger Management Corp. merous media outlets raised ques- Now retired, he invests directly in tions about the legitimacy of W other hedge funds, and has a net- Spann LLC. Conard could not be work of “Tiger cubs” — hedge fund reached for comment. managers he mentored while they Paul Singer, another $1 million do- cut their teeth at Tiger Management. nor, is the founder of Elliott Manage-

ment, a hedge fund with $19 billion fund managers, according to Forbes. under management. Singer, whose He is a frequent contributor to Re- net worth is estimated at $1 billion, publican candidates and causes, no- made some of his fortune by purchas- tably donating more than $640,000 ing debts owed by countries including to Concerned Taxpayers of America. Peru and the Republic of the Congo Though he primarily donates to and suing them for payment. Republican candidates, including Singer is a fiscal conservative and Rep. John Boehner, R-Ohio, and Sen. an outspoken critic of the Federal Pat Toomey, R-Pa., he has also given Reserve. But he’s not afraid to dis- to Sen. Chuck Schumer, D-N.Y., and agree with the Republican Party’s so- former Sen. Chris Dodd, D-Conn., cial conservatives. He also supports among others. Mercer could not be gay rights and was a key backer of the reached for comment. campaign to legalize gay marriage in New York. Legislative priorities A spokesman for Elliott Manage- ment who was familiar with Singer’s The Dodd-Frank financial reform giving would not comment on the act requires investment advisers who donation. manage assets worth more than $150 John Paulson was an early million- million to register with the SEC. The dollar donor. He is founder of Paul- firms must provide basic informa- son & Co., a hedge fund with $22 bil- tion about their organizational struc- lion under management. He made ture, individuals who fill key roles, $15 billion during the recession by the types of clients they advise and short-selling subprime mortgages, any conflicts of interest. With regis- according to multiple news reports. tration also comes the possibility of He also could not be reached for surprise inspections by the SEC. comment. Investment managers oppose por- Robert Mercer, another $1 mil- tions of Dodd-Frank because it en- lion donor, is president and CEO of dangers their business model, said Renaissance Technologies, a Man- Lynn Stout, a corporate law professor hattan-based hedge fund. Mercer, an at Cornell University. “Many people NRA member and Long Island resi- have doubts as to whether this sector dent, earned $125 million in 2011, of the economy is really socially ben- ranking him 16th among hedge eficial,” she said.

But the issue nearest to the heart National Venture Capital Associa- and wallets of Romney’s former col- tion spent $2.5 million. leagues is undoubtedly carried inter- Private Equity Growth Capital est. Council president Douglas Lowen- Hedge fund and private equity stein described the proposed change managers don’t make money like in status as a “punitive 157 percent most working people. They live off tax hike [that] will hurt those com- the profits generated from invest- panies that are most desperately in ments they manage. Those are con- need of capital to sustain or create sidered “capital gains” and are taxed jobs and drive growth.” at a maximum rate of 15 percent. If that income were taxed the same as Payday lenders for Romney? earnings, the rate could be as high as 35 percent. Restore Our Future has also benefit- The relatively obscure issue be- ed from non-bank lenders that make came big news when Mitt Romney, payday loans, title loans and operate a beneficiary of the carried interest check cashing services. Dodd-Frank rule, released his tax returns, which imposes federal regulatory oversight showed he paid about a 14 percent of these lenders. tax rate for 2010 and 2011. “The payday lenders are under the President Barack Obama’s new full power of the CFPB (Consumer corporate tax plan, unveiled Feb. 23, Financial Protection Bureau), just as would treat carried interest as earned are the big banks,” said Ed Mierzwin- income. There are also proposals in ski, consumer program director at both houses of Congress from broth- U.S. PIRG. “And it’s a very important ers Sen. Carl Levin, D-Mich., and power, so the payday lenders do not Rep. Sander Levin, D-Mich., to do like the CFPB.” the same. Rod Aycox, of Loan Max, and his ti- Private equity groups, including tle loan company Select Management Bain, and hedge funds, have lobbied Resources gave $200,000 to the super to keep this change from happening. PAC. His company makes title loans, In 2011, the Managed Funds Asso- in which the borrower turns over his ciation spent $4 million on lobbying, car title as collateral and receives a the Private Equity Growth Capital loan at a very high interest rate, usu- Council spent $2.2 million and the ally based on the value of the car.

Las Vegas-based REBS Inc. do- Financial Services ($2,500). nated $25,000 to Restore Our Fu- Another donor, RTTTA LLC, gave ture, listing an address in a shopping $75,000 and is linked to J. Todd Raw- center in Las Vegas. State documents le. Rawle’s company Softwise makes show REBS’ president is James Mar- software for these lenders. Katsam chesi, the founder and president of LLC (spelled “Katsum” in filings), is Check City, a chain of payday lend- linked to payday lender Moneytree ers, one of which has the same ad- founders Dennis and David Bassford dress as REBS in the Las Vegas shop- and gave $35,000. The Bassfords ping center. could not be reached for comment. Marchesi is also on the board of FiSCA opposes further regulation the Financial Service Centers of of financial service centers on the America (FiSCA), the national trade grounds that it “could significantly association for non-bank entities that reduce, if not eliminate altogether, provide financial services like payday Americans’ access to small dollar loans, money transfers and check credit and other financial products,” cashing. He could not be reached for according to its guide to the Dodd- comment. Frank financial reform act. Jones Management Services, run by Donors to Restore Our Future may Allan Jones, gave $35,000. He is also be hoping for special treatment from CEO of one of the country’s largest a Romney presidency. But given that payday lenders, Check into Cash Inc. the candidate is largely with them on Payday loans, also known as pay- the issues already, that might not be day advances, are short-term loans the case — they may just want him secured against the borrower’s next to win. paycheck. These loans often trap “They view him as far and away borrowers in a cycle of borrowing the candidate that’s most likely to be and high interest, which averages sympathetic to be preserving busi- around 400 percent, according to ness as usual in the financial sector,” the Center for Responsible Lending. Stout, the Cornell professor, said. Other payday lenders that gave “They’ve been making a ton of profit money to Restore Our Future are and they don’t want anyone to stop Community Choice Financial, the party.” n ($30,000), QC Holdings ($25,000), Amscot Corp. ($10,000) and Express John Dunbar contributed to this report.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part II ©2013 Center for Public Integrity 25 Big business prefers GOP over Democratic super PACs By Michael Beckel Published Online: July 25, 2012

epublican-aligned businesses, often organized as lim- super PACs have benefited ited partnerships or limited liabil- Rfrom far more corporate ity companies. cash than their Democratic counter- Businesses account for only parts — a revenue stream created in about 5 percent of donations to the the wake of the controversial Citizens four most prominent Democratic United U.S. Supreme Court decision super PACs. Labor unions, which two years ago. were also given greater spending The top two super PACs — the freedom thanks to the Citizens pro-Mitt Romney Restore Our Fu- United decision, make up a much ture and Karl Rove’s American larger percentage of receipts. Crossroads — have raised nearly Proponents of campaign finance $24 million in contributions from deregulation have frequently down- companies so far this election cy- played the role of money from prof- cle, a Center for Public Integrity it-making businesses to super PACs, analysis has found. Donors include but their presence worries cam- hedge funds, energy companies, di- paign finance reform advocates. etary supplement makers and even The Center’s analysis found that a popcorn manufacturer. more than 100 companies have col- The list includes a handful of lectively donated more than $14.2 Fortune 500 and other publicly million to Restore Our Future, traded corporations, but donors the pro-Romney super PAC started are more likely to be privately held by aides of the GOP presidential

Republican presidential candidate, former Massachusetts Gov. Mitt Romney Rich Pedroncelli/AP

nominee. That’s 17 percent of the PACs have struggled to keep pace $82 million the group has raised with the GOP’s big-money operation. through the end of June. Collectively, the four main Dem- Meanwhile, about two-dozen ocratic super PACs have combined companies have combined to give to raise about $48 million, accord- $9.4 million to American Cross- ing to their most recent campaign roads, the super PAC co-founded finance filings. These groups — Pri- by top GOP strategists Rove and Ed orities USA Action, Majority PAC, Gillespie, who left American Cross- House Majority PAC and American roads in April to become a senior Bridge 21st Century — have relied adviser to Romney’s presidential extensively on unions and wealthy campaign. That’s about 23 percent individuals for their funding. of the $40 million the group has Super PACs are legally required raised through the end of June. to disclose their donors on a regu- The leading Democratic super lar basis with the Federal Election

Commission, although they are not chief where there is none” and that the only groups running political “the much predicted corporate tsu- advertisements this year. nami simply did not occur.” Politically active nonprofit or- And in June, Republican lawyer Jan ganizations, which outspent super Baran, who filed a brief with the U.S. PACs in 2010 and are likely to do so Supreme Court in support of Citizens again this election, are also spend- United, told the New York Times that ing big bucks. How much corporate super PACs have not spent a “nickel” money is flowing to politically ac- of Fortune 500 money. He was wrong. tive nonprofits, which are not legal- Baran could not immediately be ly required to publicly reveal their reached to comment for this story. donors, is unknown. So far, the In May, Florida-based Fidelity public has only had glimpses. National Information Services be- For instance, last month, health came the second Fortune 500 com- insurer Aetna accidentally revealed pany to donate to Restore Our Fu- that it had contributed $3.3 mil- ture, giving $75,000. The first was lion last year to the conservative CONSOL Energy, which donated advocacy group American Action $150,000 to the super PAC last July. Network, a nonprofit organized Other publicly traded companies under section 501(c)(4) of the U.S. that have donated to Restore Our Fu- tax code that was one of the biggest ture include Colorado-based Halla- spenders on political ads during dor Energy Co. ($100,000); Arizona- the 2010 midterm elections. based Apollo Group, the corporate As Democrats in Congress have parent of the for-profit University of pushed the DISCLOSE Act as a Phoenix ($75,000); Florida-based de- means to create new reporting re- fense contractor B/E Aerospace, Inc. quirements for groups that make ($50,000); and Kansas-based payday political ads, conservatives have lender QC Holdings ($25,000). questioned the necessity of doing so. Senate Minority Leader Mitch For-profit colleges McConnell, R-Ky., a fierce oppo- for Romney nent of campaign finance regulations, has argued that Democrats The Apollo Group was listed are promoting the DISCLOSE Act among the Fortune 500 in 2011, but to “create the impression of mis- its ranking fell to No. 504 this year.

Records show that during the first those who think corporate spend- half of 2012, the company spent ing on elections is a good thing. roughly $400,000 on education- related lobbying, an arena where it ‘More corporate spending’ has often clashed with the Obama needed administration. Earlier this year, Apollo Group “Corporations have issues too,” spokesman Rick Castellano told Backer said “They are subject to USA Today that the company backs extraordinary regulation and over- “candidates who understand the taxation. Why shouldn’t they be able important role Apollo Group plays to say, ‘Vote against so-and-so’?” in American higher education.” “We need more corporate spend- Like Restore Our Future, Ameri- ing — not less,” he added. can Crossroads has also drawn For- Craig Holman, a lobbyist for tune 500 backing. Public Citizen, the nonprofit advo- Alpha Natural Resources gave cacy group founded by Ralph Nad- $100,000 to the group in October. er in 1971, disagrees. Alpha owns Massey Energy, the “Our elections should be run by owner and operator of the West Vir- individual Americans, not by arti- ginia mine where 29 workers were ficial legal entities called corpora- killed in a 2010 explosion in the tions,” he said. worst coal mining disaster in the Holman said American Cross- United States since 1970. roads and Restore Our Future have In 2010, Ohio-based American raised a “substantial amount” from Financial Group, another Fortune companies. 500 firm, donated $400,000 to the “These companies want to dis- conservative super PAC. mantle the regulatory regimes that On the Democratic side, Cae- govern their industries,” he said. sars Entertainment Corp. is a For- Restore Our Future was an ef- tune 500 company that has given fective attack dog against Romney’s $150,000 to Majority PAC, which fo- GOP rivals during the presiden- cuses on maintaining a Democratic tial primaries and the group has majority in the U.S. Senate. now turned its sights on President Conservative attorney Dan Back- Barack Obama. American Cross- er of DB Capitol Strategies is among roads has aided conservative can-

didates in congressional races and Overall, most of the companies has recently turned its attention to that have invested in either Ameri- the presidential race. can Crossroads or Restore Our Fu- Thanks to changes in campaign ture are privately held. finance law in the wake of the 2010 The top industry donor to Restore U.S. Supreme Court’s Citizens United Our Future is William Koch’s energy ruling, super PACs are legally al- company Oxbow Carbon, LLC, which lowed to accept unlimited contribu- has given $2.75 million, including $1 tions from individuals, corporations million from its subsidiary Huron Car- and unions to fund political ads that bon, LLC. Koch himself has also given are not produced in conjunction $250,000 to Restore Our Future. with a candidate’s own campaign. William Koch is the brother of Charles and David Koch, the well- Money for something known conservative donors, but he does not own a stake in the billion- Many of the corporate donors spend aire brothers’ privately held Koch heavily on lobbying. Industries. During the first half of 2012, finan- Oxbow’s interests include coal, cial sector titan Fidelity, whose reve- natural gas and petroleum. nues hit a record $5.7 billion in 2011, spent $50,000 on federal lobbying Energy interests — all targeting the Federal Deposit Insurance Corp. over the implemen- Oxbow Carbon spent $1.1 million tation of the Dodd-Frank Wall Street on federal lobbying during the first reform law, a statute that Romney has six months of 2012, a sum that in- pledged to overturn if elected to the cluded payments to a firm run by White House in November. Heather Podesta, the sister-in-law of During the same period, Pennsyl- President Bill Clinton’s former chief vania-based CONSOL Energy spent of staff, John Podesta. nearly $1.8 million on state, federal The company has lobbied on a and grassroots lobbying, records variety of energy and environmental show. Areas of interest for the coal issues, such as greenhouse gas regu- industry giant include clean air and lations and a desired land exchange water regulations, miner safety issues in Utah and Colorado. Last year, re- and the military’s use of biofuels. cords show the company also voiced

concerns about proposed Depart- • Crow Holdings, LLC ($1.5 mil- ment of Labor regulations, which lion) Oxbow argued would “clearly and • Whiteco Industries ($1 million) undeniably skew the employment landscape in favor of unionization.” • TRT Holdings ($1 million) Five other private companies American Crossroads has also have given $1 million to Restore received $400,000 this year from Our Future: Weaver Popcorn, the Indiana-based • Florida- and Oklahoma- based maker of the popcorn brands Pop Rooney Holdings, Inc. Weaver and Trails End, which is sold by Boy Scouts across the coun- • Utah-based Eli Publishing, Inc. try. This donation is on top of the • Utah-based F8 LLC $325,000 the company gave in 2010. • Idaho-based Melaleuca, Inc., in- Both Restore Our Future and cluding Melaleuca of Japan, Inc., American Crossroads received new Melaleuca of Asia Ltd. Co. and contributions from companies in Melaleuca of Southeast Asia, Inc. June, records show. Among them, publicly traded CRC Information Systems, Wa- Scotts Miracle-Gro Co., which touts terbury Properties LLC and Fair- itself as the world’s largest marketer banks Properties LLC combined of branded consumer lawn and gar- to give $1 million apiece to both den products. Scotts gave $200,000 Restore Our Future and American to Restore Our Future. Meanwhile, Crossroads. The three companies the privately held, Cincinnati-based are all headed by Robert Brockman car dealer Jeff Wyler Automotive and all listed the same return ad- Family, Inc. gave $50,000 to Ameri- dress — a P.O. Box in Dayton, Ohio can Crossroads. — on campaign finance filings. American Crossroads spokes- Four other privately held compa- man Jonathan Collegio declined to nies have donated at least $1 mil- respond to specific questions. lion to American Crossroads so far When asked about the corporate this election cycle: contributions Restore Our Future • Contran Corp., the company of has received, spokeswoman Brit- Texas super donor Harold Sim- tany Gross said, “We don’t discuss mons ($2 million) our donors.” n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part II ©2013 Center for Public Integrity 31 S uper PAC appeal, give until it ‘feels good’ By Michael Beckel Published Online: September 5, 2012

HARLOT T E, N.C. — Super PAC fundraiser Paul Begala Cclimbed atop a table and told a roomful of VIP donors that “giving until it hurts” isn’t good enough. “I want you to give until it feels good,” he said, because it will “really hurt” to wake up Nov. 7 with Republican Mitt Romney on his way to the White House. The high-profile Democratic operative was addressing donors at a cocktail party in downtown Char- Paul Begala speaking at CPAC in lotte Tuesday, just blocks from the Washington D.C. Gage Skidmore/ convention hall where Democrats Wikimedia Commons unveiled a platform that condemns big-money politics. If elected, Romney and his fellow Created in the wake of the U.S. Republicans will “repeal the 20th Supreme Court’s Citizens United rul- century,” Begala told the room. ing in 2010, super PACs can accept Begala was one of President Bill unlimited contributions from indi- Clinton’s chief strategists and is now viduals, corporations and unions to a top adviser to Priorities USA Ac- be used to pay for political ads. tion, a super PAC that is seeking to Democrats, who are being badly re-elect President Barack Obama. outraised by Republicans in the su-

per PAC race, have criticized them, vative brothers Charles and David including Begala. Koch may spend as much as $200 “I want to live in an America with- million to influence the outcomes of out super PACs,” Begala said, shortly the 2012 elections. American Cross- before announcing that Priorities roads and its sister 501(c)(4) nonprof- USA Action had raised a record $10 it Crossroads GPS, both dedicated to million during the month of August. supporting Republicans, have a fun- Democrats have defended their draising goal of $300 million. reluctant embrace of the political Begala said Democrats can “sur- organizations, saying if they don’t vive if we’re outspent” but not if it’s create their own it will amount to by a margin of 16-1, which is what unilateral disarmament. happened to Romney’s rivals in the “If [former Soviet leader Nikita] GOP primary races. Khrushchev has nuclear weapons, I The party was the first of the want President [John F.] Kennedy to convention hosted by “Unity Con- have them too,” Begala said. vention 2012” — a joint fundraising Priorities, combined with two committee that benefits Priorities other Democratic super PACs USA Action and two other Demo- have raised about $60 million — cratic super PACS: Majority PAC, “brunch” for billionaire Sheldon which is working to help the party Adelson, Begala joked. retain control of the U.S. Senate and Adelson and family have given House Majority PAC, which aims to more than $42 million to super help Democrats regain control of PACs in the 2012 election aimed at Congress’ lower chamber. defeating Democrats so far, accord- Today, Democratic super PAC ing to research by the Center for donors will gather at the home of Public Integrity hedge-fund billionaire James Si- Priorities was created in 2011 mons, as Politico previously report- by former White House aides Sean ed. On Thursday Unity Convention Sweeney and Bill Burton. 2012 will throw a late-night celebra- Democratic super PACs and non- tion with Jessica Alba, rapper Pitbull profits have been outraised by their and the Scissor Sisters called “Su- Republican counterparts, Begala per-O-Rama” at the North Carolina said. Music Factory, following Obama’s He said that billionaire conser- acceptance speech. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part II ©2013 Center for Public Integrity 33 Canadian-owned firm’s mega-donation to super PAC raises ‘legal red flags’ By Michael Beckel Published Online: October 5, 2012

million-dollar dona- The law says that any foreign nation by a foreign-owned cor- tional is prohibited from “directly A poration to a Republican or indirectly” contributing money super PAC has raised legal concerns to influence U.S. elections. That and opened up the controversial Cit- means no campaign donations, no izens United Supreme Court decision donations to super PACs and no to new criticism. funding of political advertisements. Restore Our Future, the super But campaign finance law is not PAC supporting Republican Mitt as clear for U.S. subsidiaries of Romney’s run for president, re- foreign companies as it is for indi- ceived a $1 million donation in viduals. mid-August from reinsurance com- Most of the regulations on politi- pany OdysseyRe of Connecticut, a cal spending by subsidiaries of for- “wholly-owned subsidiary” of Ca- eign companies were written before nadian insurance and investment corporations were legally allowed management giant Fairfax Finan- to fund political advertisements or cial Holdings Limited. donate to super PACs. And Repub- Fairfax Financial’s founder is lican members of the Federal Elec- Indian-born V. Prem Watsa. Watsa tion Commission have thwarted serves as CEO and chairman and the implementation of new rules owns or controls 45 percent of the regarding the practice. company’s shares. He is also the Sen. Sheldon Whitehouse, D- chairman of the board of Odyssey- R.I., is among those concerned Re, the American subsidiary. about foreign-controlled corpora-

tions “exploiting loopholes in ex- vice chair, agrees with Ryan that isting law” to influence U.S. elec- the commission’s leadership in this tions. He calls the practice a “direct area has been lacking. threat to our democracy.” “We should make some decisions “You can bet that wholly owned about what we think the appropri- subsidiaries of foreign commercial ate role of these organizations is in entities have an agenda when they this brave new world of corporate spend millions to sway the outcome money in politics,” she said. of an election,” Whitehouse told the “By not addressing [these issues] Center for Public Integrity in a state- in a rulemaking, we’re leaving un- ment. “And you can bet that agenda certainty out there,” Weintraub is not promoting the interests of continued. “And when there’s un- middle-class American voters.” certainty, there’s always a risk that OdysseyRe’s donation “raises folks may try to use that uncertain- some legal red flags,” says Paul S. ty to their own advantage.” Ryan, an attorney at the Campaign Officials with OdysseyRe and Legal Center. Fairfax Financial maintain that no The law lays out clear rules for U.S. laws were broken. political action committees associ- Paul Rivett, Fairfax Financial’s ated with U.S. subsidiaries of for- vice president of operations, said eign companies, Ryan says, but it is that OdysseyRe’s Canadian par- hazier on spending allowed in the ent company had “no role” in the wake of Citizens United. decision to donate to Restore Our “I would be very wary if I was Future. Peter Lovell, general coun- a corporation based in the U.S., sel of OdysseyRe, likewise said the owned wholly by foreign nationals, firm’s contribution was executed by of contributing to a federal politi- a subcommittee of the company’s cal committee or making indepen- board of directors comprised only dent expenditures,” he said. of U.S. nationals. He faults the FEC for failing to “Neither our Canadian parent “provide clarity and guidance in nor any other foreign nationals this controversial and important were part of the decision-making area of the law.” process to contribute to the super Ellen Weintraub, the Democrat PAC,” Lovell said. who currently serves as the FEC’s Watsa has been called the Cana-

dian Warren Buffett and his com- a week or two’s worth of ads in panies have flourished. critical media markets. It also rep- On its website, Fairfax boasts resents one-seventh of the money that it is “results oriented” and “not Restore Our Future collected in political.” It reported more than August. $33 billion in assets and nearly Watsa told industry analysts in a $7.5 billion in revenue last year, de- conference call just before the elec- spite a “record level of catastrophe tion that the “the decision to make claims.” OdysseyRe reported assets the contribution was made entirely of $10.6 billion at the end of 2011. by OdysseyRe.” Watsa and his company cashed “OdysseyRe chose to make that in on the collapse of the U.S. hous- contribution because it is one of ing market by investing in complex the only remaining reinsurers in financial instruments known as de- the U.S. and it is paying US taxes,” rivatives, according news accounts. he said, according to a transcript. Since the beginning of 2008, Fair- “The fact that competitors have fax Financial has spent $320,000 on moved offshore and pay lower tax- lobbying in Washington, D.C., and es is a competitive disadvantage to its issues include how derivatives are OdysseyRe, and OdysseyRe believes regulated under the Dodd-Frank Gov. Romney is the best choice to Wall Street Reform and Consumer rectify this inequality.” Protection Act of 2010. Two of OdysseyRe’s board mem- The company is the subject of bers are deep-pocketed Republican an IRS whistleblower’s complaint, donors. according to the New York Times, In May, board vice chairman An- alleging that it received an unwar- drew Barnard donated $75,800 to ranted tax break of $400 million the Romney Victory Fund, a joint between 2003 and 2006, a claim fundraising committee, and Bran- Fairfax disputes. don Sweitzer has donated more The $1 million donation will than $80,000 to federal candidates likely be used for attack ads against and political groups since 2002, fed- President Barack Obama. And with eral records show, including $5,000 less than five weeks until Election to Romney’s current campaign. Day, $1 million is no insignificant All of Sweitzer’s money has gone amount. It’s enough to buy at least to Republicans, with the excep-

tion of $2,000 given to the PAC of tionals should, at a minimum, es- the U.S. Chamber of Commerce, tablish a political action committee where Sweitzer also serves as a se- or “separate segregated fund,” with nior fellow. money kept in a bank account sepa- Since the Citizens United deci- rate from the general corporate sion, concerns have been raised treasury. Furthermore, foreigners about foreign influence on U.S. should be prohibited from making elections — a specter that in the decisions about spending that mon- past has plagued both Democrats ey on political ads. and Republicans. A more restrictive proposal the Scandal tainted the 1996 re- three commissioners floated would election of President Bill Clinton have banned domestic subsidiaries after Democratic Party fundraisers of foreign corporations from fund- accepted millions of dollars from ing political ads if more than 20 China, Korea and other foreign percent of the corporation’s shares sources. And ahead of the 1994 were owned by foreign nationals, or election, then-chairman of the Re- if a third of the corporation’s board publican National Committee Hal- of directors were foreign nationals. ey Barbour secured a $2 million All of these ideas were met with loan from a Hong Kong business- unified opposition by the three man for a Republican group linked Republican commissioners on the to the RNC. FEC, resulting, twice, in dead- In October of 2010, 15 Demo- locked 3-3 votes in 2011. cratic senators, including White- None of the GOP commissioners house, urged the FEC to “protect could immediately be reached for our elections from foreign influ- comment, but Weintraub says she ence.” Weintraub and her two fel- hopes the regulatory body takes low Democratic commissioners the initiative to grapple with these pushed a proposal that outlined a issues. variety of options to keep foreign “We shouldn’t just ignore it and money out, but it was not adopted let people make their own calls,” by the commission. she said. n The Democratic commissioners proposed that U.S. subsidiaries Andrea Fuller and John Dunbar owned or controlled by foreign na- contributed to this report.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part II ©2013 Center for Public Integrity 37 M ystery firm is election’s top corporate donor at $5.3 million C omPAnies gave $75 million to super PACs By Michael Beckel and Reity O’Brien Published Online: November 5, 2012

he biggest corporate The buy was more than four contributor in the 2012 elec- times greater than the group’s pre- T tion so far doesn’t appear to vious largest single expenditure. make anything — other than very Specialty was formed only a large contributions to a conserva- month ago. Its “principal office” is tive super PAC. a private home in Knoxville. It has Specialty Group Inc., of Knox- no website. And the only name asso- ville, Tenn., donated nearly $5.3 ciated with it is that of its registered million between Oct. 1 and Oct. agent, William S. Rose Jr., a lawyer 11 to FreedomWorks for America, whose phone number, listed in a le- which is affiliated with former gal directory, is disconnected. GOP House Majority Leader Dick Rose released a press re- Armey. lease Monday saying the company FreedomWorks’ super PAC has was created to “buy, sell, develop spent more than $19 million on and invest in a variety of real estate political advertising including ventures and investments.” $1.7 million on Oct. 29 opposing In the six-page statement, Rose Tammy Duckworth, a Democrat said he was a “disappointed, yet running for Congress in Illinois staunchly patriotic, baby boomer” against tea party favorite Joe Walsh, with concerns about the adminis- a first-term incumbent. tration’s handling of the terrorist

Republican U.S. Rep. Joe Walsh, right, and challenger Democrat Tammy Duckworth. Charles Rex Arbogast/AP

attack on the U.S. diplomatic mis- roughly $75 million to super PACs sion in Benghazi, Libya, as well as in the 2012 election cycle. the Department of Justice’s botched Super PACs, which were cre- “Operation Fast and Furious” gun- ated in the wake of the controver- walking program. sial U.S. Supreme Court’s Citizens Specialty is the biggest and most United decision in 2010, can accept mysterious corporate donor to su- donations of unlimited size from per PACs, but it is not unique. corporations, unions and individu- A new analysis by the Center als. They spend the funds mostly on for Public Integrity and the Cen- negative advertising. ter for Responsive Politics shows The Centers’ analysis found that companies have contributed that 85 percent of money from

rank Company Total contributions 1 Specialty Group Inc. $5.3 million 2 Oxbow Carbon LLC $4.3 million 3 Contran Corp. $3.0 million 4 Reynolds and Reynolds $3.0 million 5 Cooperative of American Physicians $2.8 million 6 Crow Holdings $2.5 million 7 TRT Holdings $2.5 million 8 Chevron Corp. $2.5 million 9 Weaver Holdings $2.4 million 10 The Villages $1.6 million

Source/methodology: Center for Public Integrity and Center for Responsive Politics analysis of Federal Election Commission records. Totals include contributions from subsidiaries and related companies. Totals reflect donations made during 2011-2012 cycle, through Oct. 17, 2012.

companies flowed to GOP-aligned come from wealthy businessmen. groups, 11 percent went to Demo- However, about 11 percent of the cratic groups and the remainder $660 million raised by all super went to organizations not aligned PACs through mid-October has with either party. come from company treasuries — Prior to Citizens United, corpo- mostly privately held businesses, rate spending on candidate adver- sometimes organized as limited tising was not allowed. The decision partnerships or limited liability raised fears that massive donations companies. from corporate treasuries would Yet a few high-profile companies flood the election in 2012. haven’t been afraid to jump into In fact, the largest amounts have the partisan fray.

In mid-October, oil and gas gi- than a dozen companies connected ant Chevron donated $2.5 mil- to Morse and The Villages have lion to a super PAC close to House collectively steered $1.6 million to Speaker John Boehner, R-Ohio, GOP super PACs. That’s in addition called the Congressional Leader- to the $450,000 that Morse and his ship Fund, which has aired a bevy wife Renee have donated from their of ads attacking Democratic House personal funds. candidates. Notably, Morse is also the Flor- Oxbow Carbon, the energy ida co-chairman of the Romney company owned by billionaire campaign, and during the Re- William Koch, the lesser-known publican National Convention, brother of conservative industrial- Morse’s Cayman Island-flagged ists David and Charles Koch, and yacht, named “Cracker Bay,” was Contran Corp., the business of Re- the site of a soiree for some of publican super donor Harold Sim- Romney’s top donors and fund- mons of Texas, have both steered raisers. significant sums to the coffers of Other high-profile corporate do- super PACs. nors include: Oxbow Carbon has donated • The Apollo Group, a for-profit $4.25 million to GOP super PACs, education company, which gave making it the No. 2 corporate donor $75,000 to the pro- Romney Re- to super PACs, while Contran, No. 3, store Our Future and another has donated more than $3 million $5,000 to JAN PAC, the super to Republican-aligned groups. PAC of Arizona’s Republican Another top corporate donor Gov. Jan Brewer; is a retirement community in central Florida known as The Villages • Convenience store giant 7-Elev- — a Republican stronghold where en, which donated $25,000 to Paul Ryan held his first campaign Hoosiers for Jobs, a super PAC rally the day after GOP presidential that supported Sen. Dick Lugar, nominee Mitt Romney named him R-Ind., during his failed primary as his running mate. campaign; Developer H. Gary Morse creat- • Hamburger chain White Castle, ed The Villages more than 50 years which gave $25,000 to the Con- ago, and this election cycle, more gressional Leadership Fund;

• Defense contractor B/E Aero- to have influence over elections and space, which gave $50,000 to Re- elected officials, but they don’t want store Our Future; to alienate customers.” • Payday lender QC Holdings, By category, companies in the which gave $25,000 to Restore finance, insurance and real estate Our Future; and sector donated more than $15 million, “general business sector” firms • Weaver Holdings, the parent gave about $14 million and energy company of the Indiana-popcorn sector companies contributed more company known for its brands than $11 million, according to the “Pop Weaver” and “Trail’s End,” analysis. sold by Boy Scouts across the Unions, by contrast, have donat- country, which has donated $2.4 ed about $60 million to super PACs, million to American Crossroads, from their treasuries or political ac- the super PAC founded by GOP tion committees. strategists Karl Rove and Ed Gil- The top union donors include lespie. the National Education Association Only a few other Fortune 500 ($9 million), the United Auto Work- companies have joined Chevron, ers ($8.6 million) and the AFL-CIO which ranks third on the elite list ($6.4 million). All of these groups behind only Exxon Mobil and have spent heavily on Democratic Walmart, in making contributions candidates. to super PACs, and none have given Additional corporate money may as much as the energy giant. be flowing through politically ac- Caesar’s Entertainment Corp., tive nonprofits that don’t disclose for instance, ranked by Fortune at their funders. No. 288, has given $150,000 to Ma- “I strongly suspect that most of jority PAC, a group that is spending the corporate money is hiding in to help Democrats retain the ma- plain sight in trade associations jority in the U.S. Senate. like the U.S. Chamber of Com- “Fortune 500 companies are the merce,” said Ciara Torres-Spelliscy, least likely to be the ones who will be a professor at the Stetson Univer- out in front giving publicly,” said Rick sity College of Law. Hasen, a law professor at the Univer- For its part, the Chamber — sity of California-Irvine. “They want which collects dues from compa-

nies such as Aetna, Chevron, Dow audio of her saying, “Gov. Blagojev- Chemical and Microsoft — has ich has charged me with the mission reported spending more than $35 of taking care of my buddies, and million on political ads, which have that is what I’m doing.” But it leaves overwhelmingly favored Republi- out the fact that when she said “bud- can politicians. dies,” she was referring to other vet- Facts about Specialty Group Inc. erans and members of the military. are scant. FreedomWorks for America Records filed with the Tennessee treasurer and legal counsel Ryan Secretary of State’s office show it Hecker says the organization only registered on Sept. 26, listing Rose, supports candidates who are “ethi- a 61-year-old attorney as its agent. cally right.” Rose’s $634,000 home — about a Anton Becker, Duckworth’s cam- 30-minute drive from downtown paign press secretary, says it’s con- Knoxville — is listed as its “princi- servative outside groups who are pal office.” peddling “lies.” Yet the company’s money has When asked for details about made a huge impact. Specialty Group and the source of After the cash infusion from its contributions, Hecker expressed Specialty, FreedomWorks produced ignorance, and doubted that voters numerous advertisements, includ- care about where the money came ing one that blasts Duckworth as a from. crony of former Illinois Gov. Rod “We are in compliance with the Blagojevich, who was impeached law, and we are doing what we can and sentenced to 14 years in fed- to report to the Federal Election eral prison following a corruption Commission,” he said. “If there’s an scandal. issue with Specialty, it’s their issue. Duckworth is a double amputee It’s not our issue.” n and Iraq War veteran. She headed Illinois’ Department of Veteran Af- Andrea Fuller of the Center for Public fairs and later served in President Integrity contributed to this report. Barack Obama’s U.S. Department of Veterans Affairs. This story is a collaboration between FreedomWorks’ new ad features the Center for Public Integrity and the grainy footage of Duckworth and Center for Responsive Politics.

Las Vegas Sands Corp. Chief Executive Sheldon Adelson answers questions during a press conference. Sam Kang Li/AP I nvestment managers top list of super PAC donors Ta x policies could save casino titan billions By Rachael Marcus and Andrea Fuller Published Online: November 5, 2012

espite his vast wealth, contributions to a pro-Newt Gin- Sheldon Adelson was not ex- grich super PAC ended that. Dactly a household name when Adelson’s support was linked to the Republican presidential primary a shared stance with Gingrich as campaign got under way. But the ca- staunch supporters of Israel. Not sino magnate’s multimillion-dollar quite so well publicized was Adel-

son’s financial stake in who wins Adelson and family’s nearly $54 the presidency. million in contributions through A second Obama term, thanks to Oct. 17 to conservative super PACs the incumbent’s proposed tax poli- puts the gambling industry at sec- cies — could cost Adelson billions ond place among super PAC do- if he brought home profits earned nors’ corporate interests, according at his overseas casinos, according to to the Center for Public Integrity’s tax experts. analysis of data from the Center for Since Gingrich flamed out in Responsive Politics and the Federal the primaries, Adelson and his Election Commission. wife Miriam have shifted their al- With no limits on giving, eco- legiance to GOP presidential nomi- nomic analysis of donations to nee Mitt Romney, giving the pro- super PACs are more about a few Romney super PAC Restore Our wealthy individuals’ interests than Future $20 million. fulfilling an industry’s legislative With Romney as president, Adel- goals. son, the billionaire chairman and Adelson and family are respon- CEO of the Las Vegas Sands Corp., sible for more than 98 percent of all could bring his profits home tax-free. casino industry contributions to su- The Las Vegas Sands’ overseas per PACs — or $53.7 million out of operations account for 86 percent $54.6 million — but his legislative of its revenue from casinos, hotels agenda does not necessarily reflect and shopping, according to its 2011 that of the American Gaming Asso- annual report to the Securities and ciation, which lists as major issues Exchange Commission. The Sands’ online gambling and visa reform to most lucrative holdings are in Ma- allow more high rollers to come to cau, a special administrative region American casinos. in China. Super PACs like Restore Our Fu- Finance industry tops list ture can accept unlimited contributions from billionaires, corporations The top industry-donor to super and unions and spend the money PACs in the 2012 election cycle by on ads helping their favorite candi- far has been securities and invest- dates, thanks to the U.S. Supreme ments at roughly $94 million, ac- Court’s 2010 Citizens United decision. cording to records.

Securities and Joe Ricketts Investments $12.9 million Casinos and Sheldon Adelson Gambling $53.7 million Chemical and Harold Simmons Related Mfg. $26.9 million Harlan Crow Real Estate $3.2 million Other Donors Top Donor Homebuilders Bob Perry $21.5 million

IN MILLIONS $0 $25 $50 $75 $100 Source: Center for Public Integrity analysis of data provided by the Center for Responsive Politics, Federal Election Commission.

1. Securities and Investments Total: $94 million* Favorite candidate: Mitt Romney Top donors: Ken Griffin, Paul Singer, Robert Mercer, John Paulson, Joe Ricketts Donors’ interests: Most favor limited regulation of financial markets and keeping taxes low, particularly on income from investments. Industry’s interest: Same as donors.

2. Casinos and Gambling Total: $55 million Favorite candidate: Mitt Romney Top donors: Sheldon Adelson and family Donors’ interests: Keeping taxes low on overseas profits that are repatriated to the U.S., strong support for Israel. Industry’s interests: Removing online gaming restrictions and expanding the visa waiver program (so foreign tourists can more easily come to the U.S. to gamble), according to the American Gaming Association. CONTINUED 4

* Totals through October 17, 2012

Top 5 super PAC donors by industry [ CONTINUED ] 3. Chemical and Related Manufacturing Total: $31 million Favorite candidate: Mitt Romney Top donors: Harold Simmons and his company, Contran Corp. Donors’ interests: Simmons’s companies want to eliminate certain environmental regulations that have resulted in millions of dollars’ worth of environmental cleanup costs for Contran subsidiary Valhi Inc. and led to numerous personal injury lawsuits against Valhi subsidiary NL Industries, according to Securities and Exchange Commission filings. Industry’s interests: Keeping the costs of environmental and safety regulations to a minimum while improving the industry’s image relative to climate change. ● Keeping chemical regulation out of the hands of state governments and updating the Toxic Substances Control Act to ensure safety while balancing popular demand for stricter regulation with industry interests, according to the American Chemistry Council.

4. Real Estate Total: $23 million Favorite candidate: Mitt Romney Top donors: National Association of Realtors, Harlan Crow and Crow Holdings, Gary Morse and various Morse-owned corporations in The Villages retirement community in Florida Donors’ interests: The NAR wants to preserve the mortgage interest deduction, restructure Fannie Mae and Freddie Mac and raise the cap for credit union lending and Fannie- and Freddie-backed loans. Industry’s interests: Similar to those of the National Association of Realtors.

5. Homebuilders Total: $22 million Favorite candidate: Mitt Romney Top donors: Bob Perry Donors’ interests: Promotion of free markets, limitation of damage awards in jury verdicts and lowering taxes, among other issues. Industry’s interests: Maintaining federal support of home loans, preventing more foreclosures and reforming the housing appraisal process, according to the National Association of Home Builders.

The list of donors is dominated dustry is real estate at about $23 by a relatively small number of ex- million thanks to seven-figure dona- tremely wealthy hedge fund and tions from the National Association private equity millionaires and bil- of Realtors and Harlan Crow and lionaires. The top 10 individual do- Crow Holdings. The NAR favors ac- nors to this industry are responsi- cess to credit and tax breaks so more ble for almost half of its super PAC people can afford to buy homes. contributions. Twenty-one people Fifth is the homebuilding indus- and two corporations have given $1 try with about $22 million, again million or more. a category dominated by a single The average itemized individual wealthy individual — Texan Bob contribution to all super PACs is a Perry. He has given $21.5 million to little more than $23,000, according conservative super PACs to date. to the Center’s analysis. The aver- Perry is perhaps best known for age contribution to a super PAC financing the Swift Boat Veterans from the investment industry is for Truth ads during the 2004 elec- more than $96,000. tion that helped sink John Kerry’s The third-leading industry-do- presidential campaign, but he has nor, chemicals and related manu- been a major donor to Texas politi- facturing, accounts for $31 million cal campaigns since the 1980s. He of all super PAC contributions, and favors limiting damages a jury can almost $27 million comes from Har- award plaintiffs in civil suits. old Simmons, his wife Annette and his company. Contran Corp. con- Romney is ‘one of them’ trols several subsidiaries involved in chemical manufacturing, waste The largest donors from the invest- disposal and other businesses. ment industry are not investment Topping Simmons’ agenda is min- banks but an exclusive sub-group imizing the regulatory reach of gov- known as “alternative investing” ernment, according to an interview — hedge funds and private equity he gave to The Wall Street Journal firms. in March. Many of Contran’s subsid- Among the 26 donors to Restore iaries are subject to environmental Our Future who have given $1 mil- regulations that cut into profits. lion or more, 11 are in the hedge The fourth-leading donor by in- fund or private equity business.

Among the alternative invest- “They view [Romney] as one of ment industry’s top donors are them,” said David Kautter, the di- Robert Mercer, a co-CEO of the rector of the Kogod Tax Center at hedge fund Renaissance Technolo- American University. “They tend to gies, who gave $1 million to Restore view him as someone who accumu- Our Future and $600,000 to Club lated substantial wealth doing what for Growth Action, which favors they do, someone who understands eliminating the capital gains tax. what they do and someone who be- Other top donors include TD lieves that what they do provides Ameritrade founder Joe Ricketts, substantial value to the economy.” PayPal co-founder Peter Thiel, who Romney has said he would main- now runs an investment firm, Paul tain, lower or eliminate the capital Singer of Elliott Management, Wy- gains rate at various points during oming investor Foster Friess and the race. Low rates benefit hedge John Childs, chairman and CEO of fund and private equity managers, a private equity firm. whose compensation comes pri- Eighty percent of super PAC marily from investment returns. contributions from the investment Obama supports treating this community have gone to conserva- type of compensation as regular tive super PACs, according to the income and subject to income tax Center’s analysis. rates up to 39.6 percent. In addi- James Simons, the founder of Re- tion, Obama advocates raising the naissance Technologies, and George capital gains rate to 20 percent. Soros*, the chairman of the hedge fund Soros Fund Management, have Adelson’s gamble given a combined $10.1 million to on Romney pro-Obama and pro-Democratic super PACs. Romney was not Adelson’s top choice. Romney himself was a private eq- Adelson invested $16.5 million in uity man in his days at Bain Capital, former House Speaker Gingrich via which he co-founded. Winning Our Future, the primary

* George Soros is the chairman of the Open Society Foundation, which provides funding for the Center for Public Integrity. See list of the Center’s donors at: www.publicintegrity.org/about/our-work/supporters.

pro-Gingrich super PAC, before the “For Obama, the issue is only po- candidate dropped out May 2. litical; for Israel, it’s existential — a Now the top supporter of Re- matter of survival,” he wrote. store Our Future, Adelson has said On paper, both Obama and he is willing to spend $100 million Romney have similar positions on electing Romney and a Republican Israel — they both are committed Congress. The spending has made to having a “special relationship” him newsworthy. with the nation. Adelson’s steadfast and occasion- “Where they differ is in the way ally controversial positions on Israel’s the current president perceives Is- national security have also increased rael,” said Aaron David Miller, an his profile in the national media and Israel expert at the Woodrow Wil- provided fodder for the opposition. son Center. “Israel is more of a He opposes a two-state solution matter of national security interest for Israel and the Palestinian Au- than it is a values argument.” thority, once calling it a “stepping While Romney has a more “spon- stone for the destruction of Israel taneous, emotional instinct” to iden- and the Jewish people.” tify with Israel, Miller said, Obama He was also once one of the big- seems less emotionally connected. gest backers of AIPAC — the Amer- “In part it’s a generational thing,” ican Israel Public Affairs Commit- Miller said — Obama came of age tee. But Adelson broke off relations after the Israeli occupation. “And in with the group in 2007 when it sup- part it’s a matter of temperament.” ported increasing U.S. economic aid to Palestinians. Idealism or self-interest? Adelson shifted his financial support to the Republican Jewish Co- It is impossible to say for certain alition, where he sits on the board. whether Adelson’s support of Rom- The politically active nonprofit has ney is based on idealism or self-in- reported spending $4.6 million on terest or both. Adelson’s spokesman ads attacking Obama. refused to comment for this report. In an op-ed for the JNS News Romney’s tax policies and Service, Adelson wrote that Ameri- Adelson’s financial interests are can Jews should not trust Obama aligned, especially when it comes when it comes to Israel. to tax treatment of overseas profits.

The Romney-backed “territorial Will McBride, the chief econo- tax system” would allow the Sands to mist at the conservative Tax Foun- bring its future foreign profits back dation, calls the U.S. income tax on to the U.S. free from U.S. income foreign profits a “repatriation tax.” tax. Romney’s plan also calls for a “Naturally that discourages busi- “tax holiday” that would allow Amer- ness from bringing that money ican companies with profits stashed back home,” he said. abroad to repatriate them tax-free. Obama and others argue that a A 2004 tax holiday resulted in territorial tax system would encour- the repatriation of one-third of all age American businesses to move offshore earnings, according to a overseas. report from the Congressional Re- The Sands holds $5.6 billion in search Service. in overseas profits, according to its Experts predict a territorial sys- 2011 annual report. Under Rom- tem would have a similar effect. ney’s policy, Adelson and his com- “I think it is very likely that more pany could repatriate it all for free. foreign earnings will end up back The tax holiday combined with in the U.S. than we would have un- a switch to a territorial tax system der the current worldwide system,” would potentially provide a $1.8 said Kautter. billion tax break to the Sands the Obama opposes the territorial first year, according to a study from tax system and has proposed a min- a liberal think tank, the Center for imum tax for multinational corpo- American Progress. rations’ overseas earnings. Adelson himself, as majority Under the current system, owner, stands to benefit. American companies that have “By a reasonable but conserva- operations abroad pay income tax tive estimate, the tax cut he stands to the country in which they earn to get from Romney’s tax policies the money then pay U.S. income over a four-year term would be well tax when they bring profits home. over $2 billion,” said Seth Hanlon, Income taxes paid to the foreign the author of the study. “When you government are deducted from the consider he’s going to spend $100 U.S. income tax when the money is million on the presidential race, repatriated; earnings left abroad the return on investment is more are not subject to U.S. taxes. than 2000 percent.” n

Vucci/AP Tony Dejak/AP N onprofits outspent super PACs in 2010, trend may continue By Michael Beckel Published Online: June 18, 2012

hile super PACs were amid reports that major donors are cast as the big, bad wolves giving tens of millions of dollars to Wduring the last election, the secretive nonprofit groups. the groups were outspent by “so- A joint investigation by the Cen- cial welfare” organizations by a 3-2 ter for Public Integrity and the Cen- margin, a trend that may continue ter for Responsive Politics has found

that more than 100 nonprofits or- Billionaire casino owner Shel- ganized under section 501(c)(4) of don Adelson, for example, known the U.S. tax code spent roughly $95 for backing a super PAC that sup- million on political expenditures ported former House Speaker Newt in the 2010 election compared with Gingrich’s failed presidential bid, $65 million by super PACs. has indicated he would give $35 Nearly 90 percent of the spend- million more to three conservative ing by these nonprofits — more nonprofit groups, according to the than $84 million — came from Huffington Post. groups that never publicly disclosed their funders, the joint analysis of Political warfare Federal Election Commission data or ‘social welfare’? found. Another $8 million came from groups that only partially re- The 2010 midterm election was the vealed their donors. first time outside groups were per- Unlike the nonprofits, super mitted to accept unlimited contri- PACs are required to release the butions from corporations, unions names of their contributors. and wealthy individuals to spend In terms of party allegiance, con- on ads supporting or opposing servative “social welfare” groups candidates. The change occurred outspent liberal groups $78 million thanks to the U.S. Supreme Court’s to $16 million, nearly 5-to-1, ac- bombshell Citizens United decision, cording to the analysis. which came down in January 2010. So far in the 2012 election cycle, The high court’s decision and a super PACs have far outspent non- lower court ruling called Speech- profits, thanks mainly to candi- Now made possible super PACs — date-specific committees that were political groups that played a huge active during the GOP primaries. role in the GOP presidential prima- Super PACs have spent more than ry by collecting multimillion-dollar $120 million compared to about contributions from billionaires and $9 million by 501(c)(4)s. But with using the funds to blast opposing clearly defined candidates for both candidates. the White House and in most con- The Internal Revenue Service gressional races, nonprofits are ex- says that groups organized under pected to become more active. section 501(c)(4) of the tax code

“must be operated exclusively to promote social welfare.” Secret donors propel But they are also legally al- nonprofit political spending lowed to spend significant sums of money on election- Nonprofit "social welfare" organizations eering and lobbying — so outspent the more highly publicized super long as electoral politics isn’t PACs in 2010 on elections. Both can accept a group’s primary purpose. unlimited contributions from corporations, Meanwhile, the FEC re- unions and wealthy individuals, but non- quires nonprofits to report profits do not have to report their donors. their expenses if they fall into one of three categories. Social welfare The first category is adver- nonprofit $94.8 tisements that expressly advo- spending million cate for or against federal candidates, which are known as Super “independent expenditures.” PAC $65.3 The second is for broadcast spending million ads that mention a federal candidate within 30 days of a primary or 60 days of a general elec- The American Action Network tion, but don’t overtly urge viewers to alone — with its $21 million in re- elect or defeat that candidate. These ported ad spending — accounted are known as “electioneering com- for more than $1 out of every $5 munications.” in political spending by 501(c)(4) And the last type are so-called nonprofits that was reported to the “communication costs,” which are FEC in the 2010 election. internal political communications The group was created by Norm targeting a group’s own members. Coleman, former Republican senator Three conservative groups ac- from Minnesota, and describes itself counted for more than half of all as “center-right.” It has spent most of such spending: the American Ac- its money attacking Democrats run- tion Network, Crossroads Grass- ning for Congress. Its donors are se- roots Policy Strategies and the cret, but the board includes longtime American Future Fund. GOP operative and former Nixon ad-

ministration official Fred Malek and spent more than $44 million on ads billionaire Home Depot co-founder critical of President Barack Obama Kenneth Langone, according to its and congressional Democrats such most recent tax return. as Sens. Sherrod Brown of Ohio, In 2010, Crossroads GPS report- Jon Tester of Montana, Claire Mc- ed spending more than $17 million, Caskill of Missouri and Bill Nelson while the American Future Fund of Florida, who all face contentious spent about $9.6 million. Crossroads re-election fights. GPS is the sister organization of su- But because the bulk of the per PAC American Crossroads, and ads did not air within 30 days of both were co-founded by Republi- a primary or 60 days of a general can strategist Karl Rove, the former election, the group hasn’t been re- adviser to ex-president George W. quired to report the spending to Bush. The Iowa-based American the FEC. Reports Crossroads GPS Future Fund was founded by Nick has filed with the FEC this elec- Ryan, who also founded the super tion cycle say it has spent just over PAC that promoted former Pennsyl- $200,000. vania Sen. Rick Santorum during The U.S. Chamber of Commerce, the GOP presidential primaries. which is classified as a 501(c)(6), is These groups aim to be major also known for this type of spending. players in the 2012 election. But be- By November, Crossroads GPS, cause of the way election spending along with American Crossroads is reported, the exact size of their intends to spend between $240 mil- investment is unknown. lion and $300 million, according to the groups. If past trends hold, Spending untraceable the bulk of that spending is likely to come from Crossroads GPS. Nonprofit groups are not only able It wasn’t lawmakers’ intention to hide their contributors; they are that 501(c) organizations such as also able to avoid reporting their Crossroads GPS would be able to expenditures. Take, for instance, keep their donors secret. Crossroads GPS. Under the McCain-Feingold According to a source who tracks campaign finance law passed in political advertising buys, since the 2002, anyone who donated at least start of 2011, Crossroads GPS has $1,000 for “electioneering commu-

nications” was required to be iden- and other politically active non- tified. Yet in a 2007 rulemaking, profits should be off the hook when the FEC decided that it would only it comes to disclosure. require groups to disclose their do- “The two most dangerous forms nors if the person gave “specifically of money are unlimited contribu- for the purpose of furthering elections and secret money,” said Fred tioneering communications.” Wertheimer, the president of the Unsurprisingly, few people give advocacy group Democracy 21. with explicit instructions and few “History tells us that secret money groups opt for the voluntary disclo- and unlimited money are vehicles sure. for corrupting government deci- Last summer, after the FEC asked sions and officeholders.” Crossroads GPS for information Wertheimer’s group, along with about the donors who were bankroll- the nonpartisan Campaign Legal ing its spending during the midterm Center, has called for the IRS to election, Thomas J. Josefiak, a lawyer investigate several 501(c)(4) groups for the group, said in a letter that the that he says are masquerading as commission was misinterpreting its nonprofits to avoid publicly reveal- own reporting requirements. ing their funders. “No contributions accepted by The targeted groups include Crossroads Grassroots Policy Strat- Crossroads GPS, American Action egies were solicited or received ‘for Network and Priorities USA, a pro- the purpose of furthering the re- Obama nonprofit launched last ported independent expenditure,’” year by former White House aides Josefiak wrote, citing the official Sean Sweeney and Bill Burton. regulatory language for what trig- In Congress, Rep. Chris Van Hol- gers disclosure. len (D-Md.) has also been attempt- “Accordingly, no contributions ing to change disclosure require- were required to be reported,” he ments — through both lawsuits and continued. “The omission of con- legislation. tributor information on future re- Van Hollen’s DISCLOSE Act, ports should not be assumed to be which, in 2010, passed the U.S. an oversight.” House of Representatives but failed Campaign finance watchdogs to overcome a Republican filibuster don’t think that Crossroads GPS in the U.S. Senate, was re-introduced

in a slimmed down version earlier records. The super PAC was cre- this year. Sen. Sheldon Whitehouse ated by tea party darling Christine (D-R.I.) introduced companion leg- O’Donnell, who bested Rep. Mike islation this spring as well. Castle in a Republican U.S. Senate Opposition to the bill has been primary in Delaware in 2010 but fal- led by the U.S. Chamber of Com- tered during the general election. merce, with other groups, such as Similarly, the GOP-aligned Con- the Center for Competitive Politics. gressional Leadership Fund has re- Allen Dickerson, the legal direc- ported receiving more than $28,000 tor of the Center for Competitive in in-kind contributions from the Politics, says that the DISCLOSE American Action Network. Act would impose “burdensome” re- Other super PACs to report in- quirements on political nonprofits kind contributions from nonprofits and violate the civil rights of donors. include the pro-Obama Priorities “This [bill] is an enormous ex- USA Action, the main super PAC sup- pansion of the government’s inter- porting President Barack Obama, vention in the internal workings of and FreedomWorks for America, a nonprofit groups,” he said. group tied to former Republican House Majority Leader Dick Armey. Nonprofits are super PAC In fact, since their creation in donors too 2010, the Center for Public Integ- rity and Center for Responsive Poli- While super PACs have been round- tics found that about 15 percent of ly criticized for their outsized — and super PAC spending has been done largely negative — role in politics, by groups that have reported re- they at least get credit for revealing ceiving contributions from a 501(c) their donors. But when the donor is (4) or a 501(c)(6). a nonprofit, that’s not the case. Rick Hasen, a law professor at For instance, three “social wel- the University of California-Irvine, fare” nonprofits — the National As- says the attack ads produced and sociation for Gun Rights, Campaign funded by nonprofits are likely to for Liberty and Independent Wom- have a “major impact” this year, “es- en’s Voice — have paid a combined pecially in congressional races.” $22,500 to ChristinePAC for use “There’s a lot of money flowing of mailing lists, according to FEC here beneath the radar,” he said. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part III ©2013 Center for Public Integrity 57 Pro-environment group gave grant to conservative nonprofit By Michael Beckel Published Online: October 11, 2012

nvironmentalists cil, the Environmental Defense Fund punish companies without and Earthjustice give the conserva- ‘Eprotecting people” is the tive nonprofit a six-figure donation headline of a column that appeared last year? on the website of the American Ac- Records obtained by the Center tion Forum a year ago. for Public Integrity show that the The group has called for increased Energy Foundation, touted as the domestic production of oil, coal and “leading funder of projects that ad- natural gas. Officials there have criti- dress climate change,” awarded the cized President Barack Obama’s “ea- American Action Forum a $125,000 gerness to speed our progression to grant in 2011 for “high-level out- a low-carbon economy” and argued reach and communications around that the administration is “regulat- carbon policy.” ing coal out of existence.” Jenny Coyle, a spokeswoman for The American Action Forum is the Energy Foundation, says her or- also connected with a nonprofit and a ganization is “proud to fund a wide super PAC that have spent millions of variety of organizations whether they dollars on ads backing anti-regulation are viewed as progressive or conser- Republican candidates since 2010. vative.” So why did the Energy Founda- “Clean energy is not a partisan is- tion, a San Francisco-based organi- sue,” Coyle continued. “We believe zation that funds the Sierra Club, the that all demographics and groups National Resources Defense Coun- will see the benefits of a prosperous

The Energy Foundation, which has given millions in support of renewable energy and environmental causes, made a six-figure contribution to a conservative nonprofit that opposes regulations on the energy industry. Toby Talbot-David J. Phillip/AP

and healthy clean energy economy.” Against that backdrop, the Ameri- Officials at the American Action can Action Forum stands out as an Forum declined to comment about unlikely beneficiary. the grant. The group is not known as an According to records filed with environmental advocate. One of the Internal Revenue Service, the its projects tracks coal plants in the Energy Foundation doled out more U.S. that are likely to close down un- than $97 million in grants in 2010 der the Obama administration’s new to projects aimed at the adoption of “regulatory burdens.” stronger fuel efficiency standards for American Action Forum’s presi- vehicles, the promotion of renewable dent is Douglas Holtz-Eakin, who energy technologies and the retire- headed the Congressional Budget ment of existing coal-fired power Office under President George W. plants, among others. Bush, served as top adviser to 2008

GOP presidential nominee John Mc- advocacy as a “social welfare” group Cain and has had stints as a visiting organized under section 501(c)(4) of fellow at the conservative Heritage the Internal Revenue Code. Foundation and the American En- The groups are also linked to a terprise Institute. Its board includes super PAC called the Congressional former Nixon operative Fred Malek, Leadership Fund. former GOP Sen. Norm Coleman of All three organizations share of- Minnesota, former GOP Gov. Tom fice space and personnel, with Cole- Ridge of Pennsylvania and former man and Malek playing leadership GOP Gov. Jeb Bush of Florida. roles in each. Craig Holman, a lobbyist for the Malek founded both the Ameri- consumer group Public Citizen — can Action Network, where he is still which has also received grants from a board member, and the American the Energy Foundation — says the Action Forum, where he serves as American Action Forum “is not dedi- chairman of the board. He also is a cated to clean energy.” board member of the Congressional He says the group favors deregula- Leadership Fund. tion and ending federal subsidies for Coleman, meanwhile, is a board renewable energy technologies that member of the American Action Fo- would tilt the playing field toward rum and is the chairman of both the “established, traditional dirty sourc- American Action Network and the es of energy.” Congressional Leadership Fund. Catrina Rorke, the director of en- Veteran GOP operative Brian ergy policy at the American Action Walsh — who served as the National Forum, argues that federal subsidies Republican Congressional Commit- “are not the best tool to integrate tee’s political director during the new fuels into the market.” 2010 election cycle — is the president “We don’t want to preferentially of both the American Action Net- support one kind of energy over an- work and Congressional Leadership other,” Rorke said. Fund, which have run a plethora of Organized under section 501(c)(3) attack ads against Democrats. of the U.S. tax code, American Action Records filed with the Federal Forum is focused on policy research Election Commission show that dur- and is affiliated with the American ing the 2010 election cycle alone, Action Network, which engages in American Action Network reported

spending more than $18 million on porate treasury in April. political advertisements — more According to the Center for Re- than any other “social welfare” non- sponsive Politics, the Congressional profit, according to the Center for Leadership Fund has also received Responsive Politics. contributions from the political ac- In this fall’s hotly contested race tion committees connected to the in Minnesota’s 8th District, it has Nuclear Energy Institute, the Edison attacked Democrat Rick Nolan for Electric Institute, energy conglomer- siding with the Environmental Pro- ate Koch Industries, oil refining gi- tection Agency against a mining ant Valero Energy and Exelon, which company. Nolan’s campaign has said is the largest nuclear power plant op- the former congressman will support erator in the U.S. and last year was the mining industry “without rolling awarded a $646 million loan guaran- back environmental and safety regu- tee by the Department of Energy for lations for workers.” one of its solar generation subsidiar- Similarly, in the highly competi- ies. tive race in Ohio’s 16th District, the Super donors Sheldon Adelson, Congressional Leadership Fund has the billionaire casino owner from spent more than $1 million on ads Nevada, and Bob Perry, the million- blasting Democratic Rep. Betty Sut- aire home builder from Texas, have ton. Among the reasons given to op- both given generously to the Con- pose Sutton in November? Her vote gressional Leadership Fund. during the 111th Congress in sup- Neither American Action Forum port of the so-called “cap-and-trade” nor American Action Network is re- legislation, which sought to establish quired to publicly disclose donor in- both a cap on carbon emissions and formation. a requirement that large utilities in A review of IRS filings by the Cen- each state increase the percentage of ter for Responsive Politics, however, electricity they produce from renew- found that donors to the American able sources. Action Network include the Republi- Donors to the Congressional can Jewish Coalition, the American Leadership Fund include Alpha Natural Gas Alliance and Crossroads Natural Resources, one of the coun- GPS, the nonprofit sister organiza- try’s leading producers of coal, which tion of conservative super PAC jug- made a $5,000 donation from its cor- gernaut American Crossroads. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part III ©2013 Center for Public Integrity 61 S tealth spending on the rise as 2012 election approaches Oev rwhelming percentage of interest group spending on negative ads By John Dunbar Published Online: October 18, 2012

f there was a silver lin- The clearest example comes ing for open-government ad- from the top two spenders, two Ivocates in the U.S. Supreme organizations that share the same Court’s 2010 ruling that unleashed post office box in Washington, D.C. corporate and union spending on American Crossroads, the so- elections, it was that the identity of called super PAC co-founded by those who pay for all those annoy- Republican strategist Karl Rove, ing ads would be made public on a has spent $33.1 million since Labor regular basis. Day, according to Federal Election It hasn’t quite worked out that Commission records. Its top donor way. is Texas billionaire and business- Since Labor Day, spending by man Harold Simmons, who along outside groups taking advantage with his company, Contran Corp., of the high court’s Citizens United has given $13 million to the group decision totaled a little more than so far this election, according to a $229 million, including unions. For- Center for Public Integrity review ty-four percent of the total — $100 of Federal Election Commission re- million — has come from non-dis- cords. closing, nonprofit corporations. Second is Crossroads GPS, the

nonprofit sister organization of ing Obama; 71 percent at helping American Crossroads, also co- Romney. founded by Karl Rove, which has If it seems ads are mostly nega- spent $30.3 million. Its top donor tive, it is not your imagination. is — unknown. Crossroads GPS was Eighty-eight percent of indepen- organized as a nonprofit, “social dent campaign spending went to welfare” organization. The Internal negative ads, mailings and other Revenue Service does not require it materials. to disclose its donors to the public, Even super PACs, which do re- nor does the FEC. veal their donors, at times report Both groups, which back Repub- contributors that — you guessed it licans, can pay for the same type — don’t reveal their donors. of “express advocacy” ads, urging The Now or Never super PAC, people not to cast a ballot in favor which shifted from backing unsuc- of a particular candidate — often cessful tea party and Sarah Palin- in not-very-friendly ways. backed candidate Sarah Steelman Rounding out the top five spend- for Republican nominee for U.S. ers are the U.S. Chamber of Com- Senate from Missouri, is running merce, also a nonprofit, at No. 3 ads opposing Iraq War veteran ($16 million); Priorities USA Ac- Tammy Duckworth, who is running tion, at No. 4 (which favors Presi- as a Democrat in Illinois’ 8th Con- dent Barack Obama, $15.3 million); gressional District. and House Majority PAC at No. 5 The super PAC reported contri- (which favors House Democratic butions of $2.3 million in quarterly candidates, $9.2 million). filings with the FEC released Mon- Unions can make large dona- day. Of the total, $2 million came tions to super PACs and direct ex- from Americans for Limited Gov- penditures from their treasuries ernment — a nonprofit that doesn’t thanks to Citizens United. So far, reveal its donors. n the direct spending totals a little more than $4 million. Rachael Marcus contributed to this For the presidential race, inde- report. pendent expenditures since Labor Day total $121 million. Twenty- seven percent was aimed at help-

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part III ©2013 Center for Public Integrity 63 D rug lobby gave $750,000 to pro-Hatch nonprofit in Utah’s U.S. Senate race V noters u aware of donation By Michael Beckel Published Online: November 29, 2012

hen six-term GOP challenge from former state Sen. incumbent Sen. Orrin Dan Liljenquist in the 2012 elec- WHatch of Utah faced the tion. Hatch out-fundraised the prospect of a mutiny from conser- challenger by an 11-1 margin, but vative activists, his allies within the Liljenquist was helped by super pharmaceutical industry stepped in PAC FreedomWorks for America, to help defend him. which reported spending nearly $1 New documents obtained by million on anti-Hatch ads. the Center for Public Integri- Filings with the Federal Election ty show that the drug lobby’s main Commission indicate that Freedom trade group, the Pharmaceutical Path spent at least $517,000 on ads Research and Manufacturers of designed to help Hatch’s electoral America (PhRMA), gave $750,000 prospects, though Freedom Path in 2011 to Freedom Path, a non- board member Scott Bensing said profit group that spent big to help the group’s spending was closer to Hatch win another term. $1 million. Despite his solid conservative The drug lobby’s donation was credentials, Hatch drew a primary revealed on PhRMA’s newly filed

Form 990 with the Internal Rev- enue Service, which covers the 2011 calendar year. Since the donation went to a nonprofit, it was not required to be reported to the Fed- eral Election Commission. PhRMA made contributions to several other politically linked nonprofits, including: • $500,000 to “Montana Growth,” which appears to be a group that produced fliers and radio ads supporting a conservative candidate for the state Supreme Court; • $264,500 to the American Legis- lative Exchange Council, a controversial organization made up of state lawmakers and corporate executives that creates “model legislation” for state legislatures; • $250,000 to the liberal-aligned In this Thursday, June 28, 2012 photo, Citizens for Strength and Secu- Sen. Orrin Hatch, R-Utah, talks with The rity; Associated Press at his office on Capitol Hill in Washington. Cliff Owen/AP • $200,000 to anti-tax crusader Grover Norquist’s Americans for Tax Reform; Freedom Path is a “front group • $40,000 to conservative think set up to protect Orrin Hatch,” said tank the Heritage Foundation; Russ Walker, FreedomWorks’ vice and president of political and grass- • $40,000 to the Utah Families roots campaigns. Foundation, which Hatch helped “Orrin Hatch has always worked start in the 1990s and still raises hard for the drug lobby,” Walker money for. said. “He has always been an advo-

cate for their positions.” where that money is coming from,” A spokesperson for Hatch did he said. not respond to requests for com- Federal rules only require Free- ment. dom Path, which is a 501(c)(4) “so- But Dave Hansen, Hatch’s cam- cial welfare” nonprofit, to disclose paign manager, said by law the its donors if a contribution is ear- campaign couldn’t coordinate with marked for a specific advertise- Freedom Path. ment. Freedom Path officials says “We had no contact with them,” the group has not solicited money he said. “And did not know what for particular ads. they were doing, when they did it or Like Freedom Path, Freedom- where they got their funds from.” Works operates a nonprofit wing According to Bensing, Freedom that does not reveal its donors. The Path seeks a “more accountable non-disclosing nonprofit also ac- federal budget, a balanced budget counted for about 15 percent of the amendment and less intrusive gov- $15 million raised by its super PAC ernment.” arm. He said his organization has received money from about “eight to Friend of PhRMA 10” contributors, totaling roughly $1.5 million since its launch last Hatch received more campaign con- year. He declined to identify any of tributions from the pharmaceutical these backers. The group reported industry than any other member of raising $850,000 in 2011 from two Congress in the 2011-2012 election donors, according to an IRS docu- cycle, some $448,000, according to ment obtained by the Center for the Center for Responsive Politics. Responsive Politics. The 78-year-old lawmaker sits on Earlier this year, Liljenquist com- the Senate Health, Education, La- plained to The Salt Lake Tri- bor and Pensions Committee and bune about the lack of information is the ranking GOP member on the about Freedom Path. powerful Senate Finance Commit- “Organizations have just as tee. much right as people to participate As far back as 1984, he authored in politics, but there should be vis- legislation with Rep. Henry Wax- ibility on who is funding them and man, D-Calif., that helped allow

nett said in a written statement that PhRMA tax filing the group “often makes grants or charitable contributions to organi- The complete IRS Form 990 zations that share PhRMA’s goals.” for calendar year 2011 for the PhRMA spent more than $14 Pharmaceutical Research and million on lobbying in the first Manufacturers of America three quarters of this year and do- (PhRMA), the drug industry's main nated $185,500 to politicians via its lobbying group, can be found PAC during the 2012 election cycle, online at: www.publicintegrity. including $6,000 to Hatch, federal records show. org/2012/11/29/11868/phrma- In July, it also gave $50,000 to a tax-filing. joint fundraising committee that benefited three Democratic super generic drugs to flourish but also PACs: Majority PAC, House Major- gave brand-name pharmaceutical ity PAC and Priorities USA Action, companies new powers to contest which supported Obama’s re-elec- patent infringements by generics. tion. And he helped spearhead a suc- The new IRS filing further shows cessful effort to give pharmaceuti- that PhRMA contributed $5,000 to cal companies 12 years of exclusive the American Action Network, a rights to sell biologic drugs rather conservative nonprofit headed by than the seven-year period favored former Sen. Norm Coleman. That’s by President Barack Obama during down significantly from the $4.5 the health care reform debate. million PhRMA donated to the Furthermore, his son, Scott group in 2010. Hatch, is a partner at a lobbying PhRMA officials declined to firm whose clients include PhRMA comment about whether the orga- and drug-maker GlaxoSmithKline, nization gave additional money to though both Hatches have main- American Action Network in 2012. tained that Scott does not lobby his father or his office. Long-time ALEC member PhRMA declined to respond to direct questions from the Center. PhRMA has provided financial sup- Senior vice president Matthew Ben- port to the Republican-dominated

American Legislative Exchange and Montana Farm Bureau, while Council for years. Jeffrey Bond, a the Montana Growth Network at- senior vice president at PhRMA, tacked Sheehy for a case in which sits on ALEC’s “private enterprise he argued that the death penalty board.” was unconstitutional. The organization opposes poli- The $500,000 donation was far cies that would allow U.S. consum- more than the candidates raised ers to buy prescription drugs from in a state where contribution limits countries such as Canada at bargain are among the lowest in the nation. prices and bring them back to the McKinnon, who won with about United States. It has also pushed 56 percent of the vote, raised model legislation aimed at counter- about $87,000 while Sheehy raised ing proposals that advocate for gov- roughly $67,000, according to the ernment-mandated price controls nonpartisan National Institute on on pharmaceuticals. Money in State Politics. Meanwhile, in a seeming depar- ture, the trade group appears to Group’s origins questioned have given a large contribution to an organization active in Montana’s In 2010, Hatch’s Republican col- Supreme Court election. league, Sen. Bob Bennett, was tar- Montana Growth, whose address geted by tea party-aligned activ- is listed as a mailbox at a UPS store ists and thwarted from winning in Washington, D.C., on the IRS a fourth term in the U.S. Senate. form, appears to be the “Montana Hatch wanted to avoid a similar Growth Network,” which sought to fate. influence the state’s nonpartisan Bennett’s re-election was op- judicial race. State District Judge posed by the anti-tax group Club Laurie McKinnon defeated Mis- for Growth as well as Freedom- soula public defender Ed Sheehy Works, which is headed by former for an open seat on the high court, Republican House Majority Leader after attorney Elizabeth Best was Dick Armey. knocked out during a contentious Freedom Path’s first ad was primary. released in July of 2011. It tout- McKinnon was endorsed by the ed Hatch and tea party-backed Montana Chamber of Commerce freshman Sen. Mike Lee, who best-

ed Bennett in 2010, as “leading the Emerson, meanwhile, previously fight in Washington to get spend- worked for Hatch and served as ing under control,” though Lee had Ensign’s chief of staff in the U.S. declined to endorse Hatch before House of Representatives. He once the June primary. was the executive director of the Another ad in January champi- Utah Republican Party. oned Hatch as “leading the conser- During the campaign, Freedom vative charge to repeal Obamacare.” Path also hired the consulting firm And one ad in March trumpeted November Inc., which is headed by the balanced budget amendment Mike Slanker, a former NRSC op- introduced by Hatch and Lee. erative and Ensign aide. The group also produced several Sheila Krumholz, the executive advertisements attacking Liljen- director the Center for Responsive quist. Politics, said PhRMA’s $750,000 Ultimately, Hatch prevailed, cap- contribution to Freedom Path al- turing about two-thirds of the vote. lowed the drug lobby to claim some During the contested primary credit for Hatch’s victory, “without election, all that was known about being directly linked to the outside Freedom Path was its leadership, group’s expenditure if he’d lost.” which has ties to the National Re- Rick Hasen, a professor at the publican Senatorial Committee and University of California-Irvine law former Sen. John Ensign, R-Nev. school, added that voters should In addition to Bensing, the have been informed of the dona- group’s board members include tion because it would have helped GOP operative Mark Emerson. them judge the “credibility of the Bensing is a lobbyist at the firm ads.” SB Strategic Consulting, whose cli- “Groups adopt anodyne names ents include the Nevada Depart- like ‘Freedom Path’ which reveal ment of Transportation, Station nothing to voters about who is re- Casinos in Las Vegas and Zuffa ally behind [their] political adver- LLC, the parent company of the tising,” he said. “Voters may have Ultimate Fighting Championship. liked or not liked that Sen. Hatch’s He previously worked as Ensign’s election was being supported by the chief of staff and as the executive pharmaceutical industry, but they director of the NRSC. should have known about it.” n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 69 Citizens United in the states Contribution limits at risk in states thanks to Supreme Court By Amy Myers Published Online: June 27, 2012

c ampaign finance arms cerns about possible corruption, race is in danger of break- say critics. A ing out in Illinois and at Twenty-four states had bans in least three other states as lawmak- place against corporate or union ers use the Supreme Court’s Citi- spending on elections that were zens United decision as justifica- knocked down by Citizens United. tion for raising or even eliminating Nineteen of the 24 states passed campaign contribution limits. laws to require better disclosure. In Illinois, for example, the The Illinois bill, introduced by legislature voted last month to re- House Majority Leader Barbara peal limits on corporate contribu- Flynn Currie, D-Chicago, expands tions to candidates when super an existing loophole in Illinois’ PACs or individuals spend more campaign finance law. than $250,000 on a state race or In May, the bill passed the state $100,000 on a local race. House 30-26 and the Senate 63-55 The move would balance spend- with no Republican support and ing between outside groups and awaits Gov. Pat Quinn’s signature candidates, say supporters. But or veto. Quinn signed campaign fi- it could also lead to far greater nance legislation into law in 2009 spending in elections, raising con- that limited contributions to elected

Illinois Gov. Pat Quinn and Chicago Mayor Rahm Emanuel, right. M. Spencer Green/AP

officials to $5,000 from an individu- by a federal judge, who cited the al, $10,000 from a business or labor Citizens United decision. group and $50,000 from a regulated “I want to level the playing field political action committee. as best I can manage,” Currie said. The same law also limited dona- She says that her bill will help can- tions to outside spending groups. didates who face opposition from The law went into effect in January wealthy super PACs. 2011. But the outside spending pro- With the current limits on candi- vision was ruled unconstitutional dates and unrestricted spending by

super PACs, Currie said, “you’re ba- it upheld the states’ power to set sically turning over our democracy limits on direct campaign contri- to the deepest pockets.” butions to candidates as tools for That’s exactly what opponents, fighting corruption. led by Rep. Jim Durkin, R-West- The U.S. Supreme Court has said ern Springs, fear the bill will do. that contributions to candidates, He called the legislation a “direct unlike uncoordinated independent about-face” on campaign finance expenditures, have a greater poten- reform and a reversal of any prog- tial for creating corruption. ress the state legislature had made Prior to 2011, Illinois was among in combating corruption. five states to allow unrestricted do- Campaign watchdog groups nations from corporations or indi- Change! Illinois and the Illinois viduals to candidates. Lawmakers Campaign for Political Reform placed these limits after a number (ICPR) are calling for a veto of the of highly-publicized corruption bill and instead are asking for in- cases, including the arrests of two creased penalties for coordinated Illinois governors. activities between super PACs and In 2006, Gov. George Ryan was candidates. jailed on federal corruption charg- The law would give wealthy es. Three years later, Gov. Rod groups even more control — a su- Blagojevich was indicted on charg- per PAC donor would effectively es of bribery. In one instance, FBI have the power to create a no-con- tapes revealed Blagojevich request- tribution-limit election, according ing $100,000 in the form of a cam- to David Morrison, the deputy di- paign contribution from a horse rector of the ICPR. racing track owner in exchange for Morrison, testifying before a leg- huge industry subsidies. islative committee, said that spend- The push in Illinois to increase ing in races for the Illinois Supreme direct contribution limits to off- Court seats and for Chicago may- set the flow of outside corporate or had historically exceeded the spending threatens to undo the threshold proposed in the bill. regulations prompted by the scan- Though Citizens United over- dals, say advocates for reform. turned limitations on corporate The U.S. Supreme Court Mon- and/or union spending in 24 states day reversed a Montana law that

banned outside spending by corpo- ing local elections, according to rations. But state and local govern- Grayson, could spur state legisla- ments are free to set limits on dona- tors to raise or eliminate campaign tions made directly to candidates. contribution limits and increase In March, Connecticut lawmak- disclosure laws. Rather than be- ers considered a proposal eliminating proactive, lawmakers will likely ing certain limits on campaign fun- react once they see how outside draising. But the initiative did not groups are affecting state and local make it through the state legislature. races, he said. Malloy, the first governor elect- Super PAC Liberty for All played ed through a publicly financed a huge role in a Kentucky GOP pri- campaign, said that the proposal mary in May, spending about twice would level the playing field for as much as any candidate for the 4th other publicly financed candidates District state House seat. With the that face wealthy super PACs. help of super PAC funding, tea par- In Los Angeles, a city ethics com- ty candidate Thomas Massie beat six mission is considering a proposal Republicans to win the nomination to raise the 27-year-old campaign with 45 percent of the vote. donation caps for local elections. Now, state lawmakers are push- City Council President Herb Wesson ing to more than double the cam- feared that without raising the contri- paign contribution limits for indi- bution limits, city candidates could viduals, from $1,000 to $2,500 per not compete against the unlimited candidate. spending from the super PACs. According to a report from the According to the Los Angeles National Conference on State Leg- Times, he told a panel in Decem- islatures on the 2011-2012 election ber, “If it were me, I’d say let’s have cycle, just four states have no limits no limits at all but just report [do- on candidate contributions — Mis- nations] faster.” souri, Oregon, Utah and Virginia. More changes could be on the Seven states — Alabama, Indi- way, according to Trey Grayson, the ana, Iowa, Mississippi, North Dako- director of Harvard University’s In- ta, Pennsylvania, and Texas — re- stitute for Politics and former Ken- strict contributions by unions and tucky secretary of state. corporations, but allow unlimited Super PAC spending in upcom- contributions from individuals. n

Wisconsin Gov. Scott Walker is surrounded by reporters after speaking to the Illinois Chamber of Commerce on April 17, 2012, in Springfield, Ill. Seth Perlman/AP Wisconsin recall breaks record thanks to outside cash By Paul Abowd Published Online: June 3, 2012

uesday’s recall election of overwhelming majority underwrit- Republican Gov. Scott Walk- ten by out-of-state sources. Ter is the most expensive in The record spending total was Wisconsin history. More than $63.5 made possible thanks to the Citizens million has been spent by candi- United U.S. Supreme Court deci- dates and independent groups, the sion — which had the effect of in-

validating Wisconsin’s century-old Cabe, director of the campaign fi- ban on independent expenditures nance watchdog Wisconsin Democ- by corporations and unions — and racy Campaign, which compiled a state law that allows unlimited the numbers. “We have a level of contributions to the incumbent in outside interference in this elec- recall elections. tion that the state has never been The amount spent since No- seen before.” vember 2011 trounces the state’s previous record of $37.4 million, Union money pours in set during the 2010 gubernatorial campaign. Campaign contributions tell only The election has become a na- part of the story. National unions tional referendum on the future of have kept Barrett’s campaign alive public sector unions, which have by funding outside groups dedicat- been a major force within the Dem- ed to defeating Walker. ocratic Party for decades. More than a year since Walker In the first of two debates, limited collective bargaining rights Walker vowed to “stand up and for most public employees, the na- take on the powerful special in- tion’s three largest public unions terests,” suggesting that national — the National Education Associa- unions have propped up his Demo- tion (NEA), American Federation cratic challenger, Milwaukee May- of State, County and Municipal Em- or Tom Barrett. ployees (AFSCME), and the Service While Barrett has received about Employees International Union 26 percent of his $4 million in cam- (SEIU) — have channeled at least paign donations from outside the $2 million from their treasuries Badger State, Walker has drawn and super PACs to two Wisconsin- nearly two-thirds of his $30.5 mil- based independent expenditure lion contributions from out of groups. state, according to campaign fil- The American Federation of ings released May 29. Walker has Teachers, United Food and Com- outraised Barrett 7 ½ to 1 since late mercial Workers, Teamsters and 2011, though Barrett didn’t enter the United Autoworkers have also the race until late March. dipped into their D.C. treasuries “It’s big time,” said Mike Mc- for the Wisconsin recall.

The unions, however, have strug- The NEA and SEIU declined to gled to keep up with Walker’s deep- comment for this story. pocketed, anti-union friends. They include the Republican Governors Union funds ground game Association, which received a $1 million contribution from conser- A third public sector union based in vative billionaire David Koch in Washington, D.C., AFSCME, has set February, and billionaire casino up a special account for the Wiscon- owner Sheldon Adelson. sin battles, which also include recall On March 7, the NEA, the na- votes for four GOP state senators. tion’s largest union, transferred $3 Much of that money has gone to million to its super PAC, the NEA staff a vast, union-funded network Advocacy Fund. A week later, that of dozens of field offices in the state. super PAC sent $500,000 to the Two weeks before the primary, We Are Wisconsin Political Fund, the national union wrote a $500,000 a state-based independent expen- check to bolster We are Wisconsin, diture group headed by the state which has paid for union staff from AFL-CIO’s president. The fund has Alaska to Massachusetts to boost the spent the money on direct mail, ground game. phone banking, canvassing and “This election is going to boil down support for other pro-recall groups to a turnout game,” said AFSCME na- in the state. tional spokesman Chris Fleming. With access to unlimited corpo- Labor unions had heavily favored rate and union dollars, indepen- former Dane County Executive dent expenditure groups in Wis- Kathleen Falk to challenge Walker. consin may advocate for or against “Let’s face it, I wasn’t their first an opponent, but must disclose choice,” said Barrett in May. AFSC- their donors and spending to the ME, a major Falk funder, criticized state’s Government Accountability Barrett during the Democratic pri- Board. mary for trying to wring concessions In early April, the SEIU sent two from Milwaukee public employees. contributions totaling $500,000 to But when Falk lost to Barrett in the We are Wisconsin PAC, which the May 8 Democratic primary, na- makes direct donations to candi- tional unions quickly shifted their dates and parties. support to Barrett — who lost to

Walker by 5 points in 2010. Bay, putting together the largest We are Wisconsin and a second demonstrations at the Capitol since group, the Greater Wisconsin Com- the Vietnam War.” mittee, saw an infusion of union cash for Barrett’s second attempt in ‘Outrageous, wrong and legal’ May. We are Wisconsin got another $500,000 from the NEA’ Advocacy Walker, meanwhile, has benefitted Fund on May 7 — making for a cool from the state’s election finance million from the teachers union su- rules that allowed his campaign per PAC in under two months. to raise unlimited contributions The American Federation of Teach- from individuals after recall peti- ers also chipped in $350,000 in May. tions were filed in November 2011. We are Wisconsin has spread its His challengers could take no more wealth too, sending $1.3 million in than $10,000 from individuals. May to Greater Wisconsin, a one- Through April, Walker’s top stop political shop comprised of a three donors combined gave more 527, a (c)4, a PAC, and an indepen- than challenger Barrett’s campaign dent expenditure fund. had raised overall. Four of Walker’s In late May, Greater Wisconsin top seven donors are out-of-state took a $500,000 donation from AF- billionaires, including former Am- SCME and $900,000 more from the way CEO and former Michigan gu- Democratic Governors Association to bernatorial candidate Dick DeVos, fuel a final online, radio, and TV ad and casino magnate Adelson, who push in the week ahead of the vote. each gave $250,000. Walker’s campaign did not re- Adelson has given $26.5 million turn calls for comment, but the to super PACs in the 2012 election governor called Greater Wisconsin — most of it to Winning Our Fu- “a front group for all the union ture, a pro-Newt Gingrich group — money coming in.” making him the most prolific super Union leaders say the opposition PAC contributor so far, according to Walker is home grown. to a Center for Public Integrity re- “I would tell Walker to look in his port. Though he is known primar- backyard,” says Fleming of AFSC- ily for his support of Israel, Adelson ME. “There were people from Eau also has an extensive history of bit- Claire and Waukesha and Green ter disputes with unions who want

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 77 When Citizens United came down, it didn’t just nullify Wisconsin’s 1905 ban on corporate campaign cash, it also plunged much of the state’s campaign finance reporting into darkness.

to organize at his exclusively non- candidate. Also, like federal super union casinos. PACs, they must report their donors When Citizens United came down, — except when they can avoid it. it didn’t just nullify Wisconsin’s 1905 The Republican Governors As- ban on corporate campaign cash, sociation has spent roughly $4 it also plunged much of the state’s million on campaign ads through campaign finance reporting into its Right Direction Wisconsin PAC darkness. since April 23. But because the “Because corporate and labor ex- RGA’s PAC is based out-of-state, it penditures were previously illegal, only has to disclose to state regula- there were no disclosure laws to reg- tors its donations coming from in- ulate their spending,” said McCabe. side Wisconsin, a glaring loophole. “There’s been a precipitous drop off Of its most recent $4 million out- in transparency.” lay, the RGA raised only a little over Since Citizens United, Wisconsin’s $7,000 from inside the state. Government Accountability Board The RGA does have to report do- requires independent expenditure nors to the IRS, and its 2012 first groups to register as so-called “1.91 quarter filing reveals a $500,000 groups,” named for the state rule donation from the Chamber of that created them. Of the more Commerce and a $1 million Febru- than $63 million spent in the race, ary contribution from Koch. $22 million has come from these McCabe says the 1.91 groups groups, according to the Wisconsin that are based in-state, like We Are Democracy Campaign. Wisconsin and Greater Wisconsin, Similar to federal super PACs, 1.91 also have ways around disclosure groups can raise and spend unlim- rules. The nonprofit arms of these ited corporate or union dollars and organizations don’t have to disclose urge voters to support or oppose a donors, and can funnel unlimited

money from undisclosed sources known as “Wisconsin’s Business into independent expenditure Voice,” and the anti-union Center funds — making the source of a lot for Union Facts have made rough- of campaign cash “nearly impos- ly 75 percent of those purchases. sible to track.” Greater Wisconsin has spent about For example, Greater Wisconsin $2 million, according to McCabe. transferred $191,000 from its po- Despite the record fundraising litical fund to its independent ex- numbers and the unprecedented penditure fund in early May. The degree of outside influence, neither money would be spent on ads sup- Walker’s haul from out-of-state bil- porting Barrett or opposing Walker. lionaires, nor the national union Because its political fund does not cash infusion breaks campaign fi- have to report donors to the state, nance law. no one knows who paid for the ads In total, outside spending made — an end-around the state’s disclo- by independent expenditure groups sure rules that parallels campaign and Issue ad organizations, totals financing tricks at the federal level. $30.5 million in the recall election The group is required to report — well over half of which has been its donors to the IRS. Its report cov- contributed by undisclosed sourc- ering the second quarter of 2012 is es, according to the Wisconsin De- due July 15. mocracy Campaign. Then there are issue ad groups “All the spending is outrageous which raise and spend unlimited and wrong, but it’s also legal,” says funds, and do not register or dis- McCabe. close their spending. However, they are barred from urging voters to Capital versus people support or oppose a candidate. The Campaign for Wisconsin De- Wisconsin is ground zero in a na- mocracy gathers purchasing data tional fight for unions, which have from media outlets, and estimates supported state-based legal and bal- about $8.5 million in issue ads have lot campaigns to overturn laws re- been bought during the recall. stricting collective bargaining and The right-wing groups Ameri- automatic dues check offs — as they cans for Prosperity and Wisconsin have in Wisconsin, Ohio, Arizona Manufacturers and Commerce, and Michigan.

McCabe says the unions better bank on a ground game, because Update they can’t compete long-term with June 7, 2012 corporations. “I always thought it was foolhar- Outside groups made a final dy to play a capital-intensive game spending blitz on the weekend when the unions have people, and before the recall vote. According their adversaries have capital,” he to the Wisconsin Democracy says. “They just can’t keep up.” Campaign, outside spending, The intense spending by outside which includes independent groups has made a lot of Wisconsin- expenditures and issue ad buys, ites feel powerless. now totals roughly $33.5 million. Elena Barham is a West Madi- son High School senior who helped Of this sum, Walker supporters form the Students for Wisconsin outspent Barrett supporters $18 PAC. So far, the group has raised million to $15.5 million. about $30 from T-shirt sales. The state’s registered 1.91 “Our goal is not money-based,” said Barham, whose group has fo- groups —which can spend cused on voter registration among unlimited corporate and union young voters. “It’s about showing dollars to expressly advocate for that a grassroots effort could have candidates thanks to Citizens an impact.” United — spent $24.5 million. Barham’s PAC produced a Web Unions devoted their resources ad critical of Walker’s cuts to edu- to 1.91 groups, spending about cation and is canvassing in pivotal $13.5 million on ads and field staff. Dane County — where Barrett needs to win big to have a chance. The Walker camp benefited from At school, Barham has the diffi- major spending by the Republican cult task of rallying enthusiasm. Governors Association, whose “High school kids see all this big Right Direction Wisconsin group money and say, ‘I don’t have a mil- made a majority of the Walker lion dollars,’” she said. “It’s hard camp’s $11 million in independent to convince people of their politi- expenditures. cal efficacy — it’s discouraging.” n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 80 Judicial candidates vulnerable to outside spending U rgly Sup eme Court primary in Illinois By Amy Myers Published Online: August 21, 2012

eeks before the March The tide turned in a week. In- primary, Aurelia Pucin- stead of cruising to an easy victory, Wski looked like a shoe-in Pucinski lost by 28 points. for a 10-year seat on Illinois’ high- The mailers were not paid for est court. by any of her opponents. Instead, Polls published in the Chicago they were funded by Personal PAC, Sun-Times had her up by 20 points an abortion rights group that has a month before the Democratic had a hand in Illinois politics since primary. The daughter of a famous 1978. Personal PAC spent $200,000 Illinois congressman, she also had on ads to make sure its favored can- great name recognition — a rarity didate, Justice Mary Jane Theis, rein judicial races. mained on the bench. But days before the election, mail- “I lost dirty, and that troubles ers began appearing all over Cook me,” Pucinksi said. County, calling her unqualified Thirty-nine states elect at least and “anti-choice.” Pucinski says she some of their judges, according to could not address the charge — the the Brennan Center for Justice. The state judicial code of conduct pro- vast majority of cases in the country hibits candidates from commenting are heard by elected judges. on an issue that may come before Unlike non-judicial candidates, the court. anyone who runs for judge must

Sen. John J. Cullerton , D-Chicago, left, is sworn in as president of the Illinois Senate by Illinois Appellate Judge Mary Jane Theis, right, as Cullerton’s wife, Pam, looks on Wednesday, Jan. 14, 2009, in Springfield, Ill. Jeff Roberson/AP

limit the subjects they can talk operate under the same rules. And about. Illinois, like most states, thanks to the U.S. Supreme Court’s prohibits a judicial candidate from Citizens United decision, such groups making statements that “commit or can accept unlimited donations from appear to commit the candidate” wealthy individuals, corporations to an issue that may come before and labor unions and use the money them while on the bench. to attack or support a candidate. The Outside spending groups do not decision essentially invalidated laws

that limited outside spending groups in 24 states, including Illinois. Key findings Personal PAC was not an independent expenditure group, also — Democrat Aurelia Pucinski, who known as a “super PAC,” at the led her opponent by 20 points a time, though it did form one later. month before the Illinois Supreme But in Illinois, the contribution Court Democratic primary, lost by limits are so high — PACs can ac- 28 points after a political action cept $50,000 per year from corpo- committee spent $200,000 on rations and $10,000 per year from mailers calling her “anti-choice” individuals — that they can make a the week before the election. near super PAC-level impact. By way of comparison, a federal — Personal PAC, the group re- candidate can accept $2,500 per sponsible for the mailers, was not election from an individual and a super PAC at the time. However, corporate donations are banned. Illinois contribution limits are so PACs that make contributions to high — PACs can accept $50,000 candidates can accept up to $5,000. per year from corporations and Theis’ campaign manager says $10,000 per year from individuals high ratings and key endorsements propelled her to victory late in the — that “regular” PACs can have race. Theis had been appointed to an impact nearing that of super the state Supreme Court a year- PACs. and-a-half before the race. She — Because of the U.S. Supreme was endorsed by Chicago Mayor Court’s Citizens United decision, Rahm Emanuel, the Cook County super PACs can accept unlimited Democratic Party and the Chicago Tribune. donations from wealthy individu- But Pucinski blames Personal als, corporations and labor unions PAC’s attack for the sudden reversal. and use the money to attack or Enjoying a comfortable early support a candidate. The decision lead in the four-candidate race, Pu- essentially invalidated laws that cinski voluntarily capped donations limited outside spending groups in to her campaign from businesses to 24 states, including Illinois. $500 and from attorneys to $75 and

refused to ask for endorsements but was mum on the “anti-choice” from single-issue groups like Per- charge, due, she says, to the code sonal PAC. of conduct for judicial candidates. With these self-imposed limits The claim appears to be rooted in place, her campaign took in just in a 1993 Chicago Tribune story. over $30,000 and attracted no out- Pucinski said she didn’t “believe side spending. in abortion as a method of birth Theis took a different tack. She control” but would not make an raked in more than $1.1 million attempt to stop abortions in Cook thanks to fundraisers held by state County. She says she has since re- Democrats including Emanuel and fused to express her personal views spent campaign funds on ads tout- on the topic. ing her endorsements. Theis de- Despite Pucinski’s nearly two declined to comment for this story. cades of silence on abortion, Terry She told the Chicago Tribune Cosgrove, CEO of Personal PAC, days before the race that she had stands behind the group’s position reached out to a number of groups in the primary. for support, but that her endorse- “[Pucinski] spent her entire ca- ments would not undermine the in- reer trying to hide her anti-choice tegrity of the courts. and anti-birth control stance,” he ”People understand political said. campaigns are the way some judges In the end, Cosgrove and Pucin- are chosen,” she said. ski do agree on one thing — Per- A week out, polling from the sonal PAC had a major influence Theis campaign put her and on the primary. Cosgrove says that Pucinksi neck and neck. Then, Per- Personal PAC’s mailers “educated sonal PAC launched its attack. The hundreds of thousands of voters on funds went to mailers, barraging her record.” Democratic women in the Cook Pucinski says they cost her the County area with the claim that election and allowed Theis to re- Pucinski was an “anti-choice” can- main on the bench. didate. At the time of the election fight, Pucinski held a press conference Personal PAC’s legal team was a se- days before the election to decry curing a different kind of victory — the big spending by Personal PAC, this one in the federal courts.

In the 2012 election, 19 states have contestable state Supreme Court elections. Ten of those states had their laws banning corporate and/or union contributions to outside spending groups tossed out.

Prior to 2011, Illinois im- not likely to be the case. posed few, if any, limits on con- In the 2012 election, 19 states tributions. Reforms came follow- have contestable state Supreme ing indictments of former Govs. Court elections. Ten of those states George Ryan and Rod Blagojevich — Alabama, Kentucky, Michigan, on federal corruption charges. The Minnesota, Montana, North Caro- state legislature took action and lina, North Dakota, Ohio, Texas capped campaign donations to and West Virginia — had their laws guard against the quid-pro-quo sys- banning corporate and/or union tem that had become synonymous contributions to outside spending with Chicago politics. groups tossed out. The Supreme Court race was Next up for Personal PAC and one of the first under the new law. Theis is the general election, where Personal PAC moved to have she is heavily favored. She will face those limits thrown out. Cit- Circuit Judge James G. Riley, who ing the Citizens United case, the ran unopposed in the Republican group challenged the state’s con- primary. tribution limits to independent State Sen. Dan Duffy, R-Lake expenditure groups. It won. A day Barrington, who faced attacks by later the organization created “Per- Personal PAC three years ago, said a sonal PAC Independent Commit- super PAC will make Personal PAC tee,” the state’s first super PAC, and CEO Terry Cosgrove more intimi- began raking in donations. Despite dating to candidates who face the the court victory, it did not spend pro-choice organization. any super PAC money on the Su- “Now that he’s [got] a super PAC, preme Court race. he’s even more powerful than be- For judicial races this year, that’s fore,” Duffy said. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 85 R ight-wing groups attempt to dislodge justices in Florida, Iowa Het al h care reform, gay marriage at issue By Chris Young Published Online: November 1, 2012

onservative outside The campaigns include televi- spending groups have taken sion ads and dueling bus tours. Cto the airwaves in an attempt Eighteen states, including Iowa to kick four Supreme Court justices and Florida, require their appointed off the bench in Iowa and Florida Supreme Court justices to periodi- for taking positions the groups find cally face voters in what are known objectionable. as “merit retention elections.” Voters In Iowa, one organization, joined are asked whether a judge should re- by former GOP presidential candi- main on the bench. If a majority says date Rick Santorum, hopes to oust no, the governor appoints new jus- a justice who supports same-sex tices from a list of names submitted marriage. In Florida, justices face by a nonpartisan nominating com- the wrath of a pro-business group mission. and a physician who object to Presi- Historically, retention elections dent Barack Obama’s health care generate little political spending reform law. and limited voter interest. From Supporters of the justices have 2000 to 2009, retention elections paid for ads and mailers and are accounted for about 1 percent of defending the judges’ records while campaign spending on all state Su- accusing their opponents of politi- preme Court elections, according cizing the court system. to Justice at Stake, a Washington,

Former Republican presidential candidate Rick Santorum speaks to reporters before the start of a bus tour campaign by Iowans for Freedom that is trying to convince Iowans to vote Iowa Supreme Court Justice David Wiggins off the bench. AP

D.C.-based group critical of judi- Iowa who voted with his ex-col- cial elections. leagues in supporting same-sex In 2010, conservatives waged a marriage has been targeted, as successful campaign to oust three have three Florida justices. Iowa Supreme Court justices who Finding out who is funding the voted the previous year to legalize campaigns is often difficult. Spend- gay marriage. Spending on reten- ing is often from nonprofit groups tion elections that year jumped that don’t disclose their donors. to roughly 13 percent of the total Disclosure laws in the states may spent on all state Supreme Court be weak or difficult to enforce. elections. Groups that seek to oust judges The lone remaining justice in don’t always reference specific is-

“Everybody has absorbed a new playbook, which is, if you want to change rulings or simply intimidate judges, threaten them through the election process.”

sues, but instead accuse them of profit group The Family Leader, “judicial activism.” Judicial watch- sponsored a “No Wiggins” bus tour. dogs worry that the infusion of Speakers on the 17-city, four-day campaign cash from the groups road trip accused Wiggins of “ju- could actually lead to more activ- dicial activism” and urged voters to ism among judges. reject him at the polls. “Everybody has absorbed a new High-profile politicians, includ- playbook, which is, if you want to ing Santorum, a devout Catho- change rulings or simply intimidate lic and former U.S. senator from judges, threaten them through the Pennsylvania, and Louisiana Gov. election process,” says Charles Hall, Bobby Jindal, turned out to support of Justice at Stake. “So we’re really the campaign. seeing in the retention states an “You have an opportunity here ethic of ‘Rule my way, or else.’” in Iowa to continue what you did two years ago,” Santorum said dur- Iowa: A fight over gay ing a tour stop in Des Moines. marriage Iowans for Freedom is chaired by Bob Vander Plaats, a failed guber- Four of Iowa’s seven Supreme Court natorial candidate and president of justices are up for retention this year. The Family Leader, a “Christ-cen- But only one — Justice David Wig- tered organization” whose goal is gins — has become a target for con- to “honor and glorify God — not a servative groups still miffed about political party, not a candidate, and the court’s controversial 2009 deci- not a program.” sion to legalize same-sex marriage. The organization has spent more In September, the generically than $300,000 on its “No Wiggins” named “Iowans for Freedom,” a campaign, according to campaign project of the conservative non- disclosure reports.

“We want our courts to be in- In September, the Iowa State Bar dependent,” Vander Plaats says. “A Association spent nearly $11,000 court should never be independent for its “Yes Iowa Justice” bus tour to amend our constitution from the designed to counter the attacks on bench.” Wiggins and urge voters to keep Among the other contributors to him on the bench. The five-day Iowans for Freedom is CitizenLink, tour shadowed the “No Wiggins” a Colorado-based “family advocacy tour across much of the state. organization that inspires men and In October, the bar association women to live out biblical citizen- also spent more than $20,000 on ship that transforms culture,” ac- radio advertising. cording to the group’s website. Justice Not Politics Action, a non- Campaign finance records show profit group created to counter the that CitizenLink has contributed a to- anti-Wiggins campaign, has spent tal of $50,000 to Iowans for Freedom. more than $225,000 on its “Vote Patriot Voices, a Western Pennsyl- Yes on Retention” campaign. vania-based nonprofit organization “Our courts are threatened,” says co-founded by Santorum, has given former Lt. Gov. Sally Pederson, who $25,000 to the campaign against chairs the group. Voters “don’t like Wiggins. The National Organiza- the idea that money is coming from tion for Marriage, a nonprofit group outside interest groups who want to that opposes same-sex marriage, intimidate the courts.” has spent more than $135,000 on The group has received much television ads attacking Wiggins. of its funding from Iowa law firms. “We must hold David Wiggins ac- But its biggest donation came from countable for redefining marriage Human Rights Campaign. In Octo- and legislating from the bench,” ber, the national gay-rights organi- a narrator says in the group’s first zation gave Justice Not Politics Ac- campaign ad, which is co-funded tion $100,000. by Iowans for Freedom. “Vote no on Wiggins.” Florida’s ‘spending arms race’ Wiggins is not campaigning to keep his seat. But that hasn’t The point of contention in the Flor- stopped his supporters from doing ida race is Obama’s health-care re- so on his behalf. form law.

Justices R. Fred Lewis, Barbara on to discuss the need to make the Pariente and Peggy Quince voted state Supreme Court a “noble insti- in 2010 to invalidate a ballot ini- tution and bastion of liberty once tiative challenging the Affordable again.” Care Act because they determined The ad closes showing the im- it contained misleading language. ages of the three justices up for re- The decision outraged many contention above the buzz words also servatives, setting the stage for the used in the Iowa campaign: “stop merit retention effort. judicial activism.” For the first time since the system “There are lots of voters and law- was created in 1976, the executive yers who have said that the Florida committee of the Republican Party justices are not upholding the con- of Florida voted unanimously to op- stitution, and that they’re legislat- pose the justices up for retention. ing from the bench,” says Phillips. Leading the charge against Tracing the financial backers of them are two tea party groups: the campaign is difficult. Restore Justice 2012, an Orlando- Restore Justice has spent nearly based “527” group chaired by con- $12,000 on the retention election, servative activist Jesse Phillips, more than $5,000 of which went to- and Americans for Prosperity, a ward “media production,” accord- 501(c)(4) “social welfare” nonprofit ing to reports filed with the state. backed by billionaire brothers Da- Contribution records show the vid and Charles Koch. group only received about $3,000 “It’s really caused kind of a spend- in donations. ing arms race in that state,” said Ali- Under Florida law, Restore Jus- cia Bannon, of New York University’s tice is considered an “electioneer- Brennan Center for Justice. ing communications organization.” Restore Justice has produced It is permitted to raise and spend at least three Web ads thus far. In unlimited sums of money as long as one ad, a handful of young voters it does not tell viewers in its ads to describe how Florida is “at a cross- vote for or against a candidate. roads.” Restore Justice didn’t officially “Freedom is being reborn,” they register with the state as an elec- say, “but there are dark clouds of tioneering organization until Au- opposition gathering.” The ad goes gust. Between Jan. 1 and Aug. 12,

IRS records show that the group received nearly $70,000 in contributions, almost all of which came from Florida physician Al- lan Jacob. In 2010, Jacob gave $15,000 to a political committee headed by the brother of then- state Sen. Alex Diaz de la Portilla. Days after the contribution, the Republican Senate Peggy Quince is one of three Florida Supreme Court majority leader wrote justices targeted this election for invalidating a a letter that helped ballot initiative challenging the Affordable Care Act. Jacob’s kidney dialysis Steve Cannon/AP company keep a state contract. In August, state campaign fi- leased an ad saying the state’s high nance records show, Jacob gave court “denied our right” to vote $125,000 to Diaz de la Portilla’s po- against the health care law. litical committee, Citizens for Ac- It’s unclear how much money countable Government. Diaz de la Americans for Prosperity has spent Portilla is currently running for a on the Florida Supreme Court race. state House seat. The organization’s last state cam- Jacob could not be reached for paign finance report was filed in comment. 2009, when the group was listed as Phillips says Restore Justice is plan- an electioneering organization. ning “a blitz” on the radio. He esti- “Why they are not currently reg- mates that the group will have spent istered or reporting is unknown,” roughly $80,000 by Election Day to wrote Chris Cate, a Florida Depart- help oust the three Florida justices. ment of State spokesperson in an Americans for Prosperity re- email.

Officials from Americans for Roth says the organization re- Prosperity did not return phone cently filed a report with the IRS calls for comment. that lists all of its contributors, Outside spending has prompted which has yet to be posted online. each of the judges to raise their Roth provided The Center for Pub- own campaign funds. Collectively, lic Integrity with a copy of the re- the justices have raised more than port, which shows the group has $1.3 million this campaign season. received more than $1.1 million Those fundraising numbers from eight Florida law firms that dwarf totals raised by Florida judg- each gave the campaign at least es over the past decade. Between $100,000. 2000 and 2009, Florida Supreme The group’s report also shows Court justices raised a total of just some donations from a handful of $7,500 for their retention bids, ac- organizations outside of Florida, cording to Justice at Stake. including a $120,000 contribution The three justices have also been from America Votes, a liberal polit- getting help from Defend Justice ical advocacy group based in Wash- from Politics, another 527 organi- ington, D.C. zation. Like Restore Justice, state Defend Justice’s only ad to date, records show that Defend Justice is which is being broadcast in major an electioneering group, prohib- markets across Florida, accuses op- ited from “expressly” telling voters ponents of “trying to remove three to vote for or against a candidate. fair and impartial Supreme Court State campaign finance records justices so they can replace almost show the group has spent nearly half the court with judges who will $1.5 million on its campaign to sup- let them bend the rules.” port the justices, most of which has The ad goes on to urge voters to gone toward advertising. In state “stand up for our justices against filings, the group lists just one con- this political power grab.” tributor: “Defend Justice from Poli- The flood of spending from both tics.” sides worries watchdogs like Peter “We’re not hiding” the group’s Butzin, chair of Common Cause donors, says Neal Roth, a Miami Florida. attorney working with the Defend “We’re politicizing the system,” he Justice campaign. says. “I find it very frightening.” n

Cash from tough-to-track sources is flooding the North Carolina governor’s race between Lt. Gov. Walter Dalton (left) and former Charlotte Mayor Pat McCrory (right). AP N orth Carolina governor’s race awash in out-of-state funds By Paul Abowd and John Dunbar Published Online: September 5, 2012

or th Carolina’s race D.C.-based organizations whose un- for governor is expected derwriters may not even know how Nto be the most expensive their funds are being spent. in the state’s history thanks largely The state is the latest field of bat- to two deep-pocketed, Washington, tle for the Democratic Governors

Association and the Republican any stance on the North Carolina Governors Association, organiza- race. tions whose impact has increased The DGA, meanwhile, is fun- thanks to court decisions that elimi- neling large sums through a state nated limits on campaign spending. political committee, thus obscur- The two groups have spent ing the identities of the original roughly $3 million in North Caroli- donors. na — nearly as much as candidates Things won’t quiet down any Pat McCrory and Lt. Gov. Walter time soon. Not only is the state Dalton combined — and have com- filling an open governor’s seat, it mitted more to the race. Outside is also a presidential swing state groups are poised to eclipse the — one of the reasons it is host- $7.7 million record set during the ing the Democratic National Con- 2008 governor’s race. vention this week. The state is experiencing “an advertising onslaught like we’ve never Possible GOP pickup seen before” according to the Ra- leigh-based Free Enterprise Foun- North Carolina’s current governor dation. is Bev Perdue, elected in 2008. With North Carolina law caps dona- sinking approval ratings, Perdue tions to the candidates at $4,000 decided not to seek a second term. and prohibits donations from Despite the long history of domi- unions and corporations. But out- nance by Democrats, prognostica- side organizations — like the DGA tors see the state leaning right. In and the RGA — can accept unlim- 2010, Republicans took control of ited donations from virtually any the legislature for the first time in source and spend the money on more than a century. ads. RGA spokesman Mike Schrimpf Those sources are tough to told The Charlotte Observer in May track. Even though the RGA is re- that North Carolina is a “prime porting the identities of corporate pickup opportunity,” and that the funders of ads, donors contacted by RGA is “committed to provide the the Center for Public Integrity were resources to win it.” unaware their money was being Thus far, the RGA has spent spent that way and denied having roughly $1.4 million and reserved

another $3.5 million for ads this have no control over the RGA and fall. The DGA has spent roughly DGA. Outside spending groups $1.5 million on the race. may not give money directly to the Lt. Gov. Dalton captured the candidates, nor are they permitted Democratic nomination in May, to coordinate their spending with though he had to survive an expen- the campaigns. sive primary that left him low on McCrory did not respond to a funds. Filings with the state show request for comment for this story. McCrory with six times more cash Dalton’s spokesman Ford Porter as of July. called the independent advertising Dalton, at least, will get some “an unfortunate reality” and said national exposure thanks to the the Democrat’s campaign is try- convention. A spokesman said the ing to break through the “outside lieutenant governor is scheduled noise” the spending creates. to speak Thursday evening at Bank of America Stadium, the final night RGA spending of the event. McCrory, the Republican, is the The RGA’s strategy has been to link former mayor of Charlotte. He was Dalton to the unpopular governor, the Republican nominee in 2008 referring to him as Perdue’s “right- and lost to Perdue in a close race. hand man” in advertising. It blames Soon after Dalton won the pri- the lieutenant governor and Perdue mary, the RGA launched its first for “higher taxes” and “job killing attacks. policies.” The Raleigh News and A DGA-funded group responded Observer said the ad distorts the with its own ads in May, while Dal- truth. ton’s cash-starved campaign got Dalton was not Perdue’s “run- back on its feet. ning mate” — the lieutenant gov- “If Dalton hadn’t had the outside ernor in North Carolina is elected help,” said Jonathan Kappler, of the indpendently. Free Enterprise Foundation, “he The RGA is paying for the ad di- would have been sunk.” rectly and not “funneling its money McCrory has pledged to disavow through another entity,” which is negative ads run by independently what it says its Democratic counter- funded groups, but he and Dalton part is doing.

“This is a case where the RGA is spending decisions with the asso- truly being much more transparent ciation’s $150,000 contribution. than the DGA,” wrote Schrimpf in While Baas may be OK with it, an email to the Center. the use of the donation raises legal Instead, the RGA is report- questions. ing funders of its ads to the state “We appreciate and welcome board of elections. According to disclosure whenever possible,” said paperwork filed with North Caro- Kim Strach, deputy director of cam- lina election authorities, the ad was paign finance at the state’s Board of paid for by 38 out-of-state corpora- Elections, “as long as it’s accurate.” tions to the RGA — among them, a $75,000 contribution from insur- No limits ance giant AFLAC. The fact that AFLAC’s donations Corporations and unions can give were used to pay for an ad attacking $4,000 to candidates from their Dalton was news to the company, PACs that draw on small donations according to spokesman John Sul- from employees. But donations to livan. Of the donation, $25,000 was the RGA and DGA are unlimited. meant to be used for “2012 conven- AT&T gave McCrory $2,000 from tion sponsorship,” he said. its PAC in April. The next month, it The RGA says it reserved the gave a $250,000 check to the RGA. right to use the “sponsorship” mon- General Electric gave $105,000 to ey for any purpose it chose, includ- the RGA in May, more than all of ing the ads in North Carolina. its PAC donations to all North Car- The Metropolitan Milwaukee olina candidates in the last decade Association of Commerce was also combined. unaware that its donation was go- None of the corporate funders of ing toward ads attacking a sitting RGA’s ads contacted by the Center lieutenant governor 900 miles away. said their companies had declared “This is the first I’ve heard of a favorite in the race for governor. it,” said Steve Baas, director of gov- General Electric pays a “mem- ernmental affairs at the Milwaukee bership fee” to both governors as- business association, “but it’s not a sociations, according to spokes- shock to us.” woman Helaine Klasky, “to enable Baas said he trusts the RGA’s GE to participate in a wide range

of activities sponsored by the DGA forthcoming with the state’s voters. and RGA.” The DGA-funded entity is a Klasky adds that GE does not Raleigh-based organization called direct money toward specific cam- North Carolina Citizens for Prog- paigns. ress. The group has no formal af- The company’s Citizenship Report filiation with the DGA and has a says GE has a “long-standing practice separate board that makes spend- against using corporate resources for ing decisions and solicits money. the direct funding of independent The DGA is the main donor to expenditures expressly advocating North Carolina Citizens for Prog- for or against candidates.” ress, giving 93 percent of the $2.1 AT&T did not respond to calls, million the group raised this year, but has supported both major par- according to IRS reports. ties and its candidates for governor The cash infusion funded two in North Carolina for a decade. controversial ads accusing McCrory IRS filings show the company gave of “questionable ethics” during his $100,000 to the DGA in 2012, less time as mayor of Charlotte. than half of what it gave to the RGA. The DGA and the RGA are 527 In fact, of the 38 corporations groups, named for the section in and organizations that have pitched the IRS tax code that regulates into the RGA ad effort, 15 have also them. The groups report donors given to the DGA this year — in- and donations to the IRS as well as cluding GE, AT&T, AFLAC, Altria, expenditures, including contribu- and the Milwaukee Chamber. tions to other organizations. The RGA’s largest donor from The DGA avoided listing specific North Carolina, Duke Energy, gave funders of ads it financed by giving $175,000. The company, which is a the money to the local PAC. major supporter of the Democratic In addition to the DGA contribu- convention, also gave $200,000 to tion, the National Education Asso- the DGA. ciation’s super PAC, funded by the nation’s largest public employee Disclosure in the dark union, chipped in $144,000 toward the race. The RGA, meanwhile, is criticiz- “I have no idea where our money ing its counterpart for not being as came from, beyond the fact that it

comes from the DGA or the NEA,” do not ask people for their vote. said Michael Weisel, spokesman for If the 2007 decision opened the North Carolina Citizens for Prog- door, the Supreme Court’s 2010 ress, the pro-Dalton group. Citizens United ruling blew it off its While it weathers criticism for hinges. its lack of transparency, the DGA- The high court said corporate funded ads are attacking McCrory and labor donations to outside for refusing to release his tax re- spending groups are legal — in- turns. A spokesman for the DGA cluding organizations that ask vot- said it is “proud” to support the ef- ers to support or oppose a particu- forts to “expose Pat McCrory’s fail- lar candidate. The decision led to ure to release his tax returns and the creation of super PACs which other financial interests.” have played a major role in federal The DGA said it is “transparent elections. about who our donors are and what “We had entities spending mil- they have given, and we regularly lions in the state’s gubernatorial report that information.” races before Citizens United, using various vehicles,” said Bob Hall, Courts change playing field a longtime director of the state’s election watchdog group Democ- The RGA and DGA have played an racy NC. “But now, more entities increasingly significant role in the are stepping up to spend money state thanks to a series of Supreme as though the Supreme Court has Court rulings beginning in 2007, blessed the whole enterprise.” which have eroded North Caro- lina’s ban on corporate and union History of enforcement money in the state. The Wisconsin Right to Life de- North Carolina’s Board of Elec- cision in 2007 cracked open the tions has investigated the previ- door to corporate funding of ads ous two Democratic candidates for that mention a candidate but stop governor, and has also taken up short of telling viewers to vote for long battles with outside spending or against that candidate. So far in groups. North Carolina, the DGA and RGA “Groups from both sides have are funding ads of this type, which been complained about,” said

Strach, the state agency’s veteran NC, which filed a complaint which campaign finance director. prompted the hearing, claimed The RGA ran afoul of the elec- that the RGA was listing donors tions board during its unsuccessful “who had no idea their money was attempt to unseat Democrat Mike going to a North Carolina PAC or Easley in 2004. The board demand- was being used to impact a North ed that the RGA pay a penalty of Carolina election.” $196,000 for violating state limits The state-appointed board ulti- on corporate contributions. mately ruled 3-2 that the RGA and But the RGA appealed and in other outside spending groups had 2005 an administrative law judge broken no rules. reversed the board’s ruling. The Any ambivalence about what’s RGA acknowledged that its ads in OK and what’s not is gone now. the state were funded through an Before the Supreme Court’s account that commingled corpo- landmark ruling “there were lots of rate and individual contributions. groups that were nervous about get- In a letter to the State Board in ting involved, who were being told 2004, the RGA’s lawyer wrote that by their lawyers, ‘that’s too messy,’” “determining which sources of said Hall. funds were used … is an impossible Today, he says, the environ- task,” as contributions to the RGA ment is far more inviting. And the were never earmarked for specific state’s disclosure laws fail to “give use. the public a chance to understand Furthermore, the RGA argued who is backing some engine of ad- that its “major purpose” was not as vocacy.” a North Carolina PAC, and there- Strach says both RGA and DGA fore it was not subject to the state’s “are finding ways to mask disclo- contribution caps. sure,” but the Citizens United deci- In 2008, the board held a lengthy sion makes the board’s decade of hearing about the fundraising and investigations largely moot. spending by several outside groups “I don’t think those questions including the RGA and the Demo- are relevant anymore,” she said. “If cratic Legislative Campaign Com- a group wants to make indepen- mittee. dent expenditures of any kind, the Election watchdog Democracy roadblocks are no longer there.” n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 99 O bscure nonprofit threatens campaign finance limits beyond Montana Reco rds show furniture chain owner pledged $300,000 to ATP By Paul Abowd Published Online: October 22, 2012

os ter haven’t had a clue The Center for Public Integrity. who is behind American “but there is no limit to how much VTradition Partnership — you give to this program.” the Colorado-based group push- As for the state’s ban on corpo- ing to rewrite Montana’s campaign rate money in elections? finance laws — and that’s just the “Corporate contributions are way the secretive nonprofit wants it. completely legal,” the pitch assures A 2010 fundraising pitch to its potential funders. “This is one of donors promised that “no politi- the rare programs you will find cian, no bureaucrat, and no radi- where that’s the case.” cal environmentalist will ever know “You can get some traction with you helped,” and “the only thing we that pitch,” says Dennis Unsworth, plan on reporting is our success to who led the state’s investigation of contributors like you.” the group in 2010 that unearthed “Montana has very strict limits the document. “If you can offer to on contributions to candidates,” influence the elections outside the reads the document, obtained by law, that’s a great calling card.”

For three election cycles, ATP has plastered the state with mailers attacking “radical environmental groups” and moderate Republicans.

For three election cycles, ATP The U.S. Supreme Court in the has plastered the state with mailers Citizens United decision invalidated attacking “radical environmental a federal ban on corporate spend- groups” and moderate Republi- ing similar to what 24 states had on cans. their books, but Montana held fast While ATP’s funders are still to its law. ATP sued to overturn it, mostly a mystery, the Center for losing to Bullock in the state’s high Public Integrity has identified what court. But in June, the nonprofit records indicate is the secretive prevailed on appeal to the nation’s organization’s founding donor — highest court. an anti-union owner of Colorado’s ATP is pushing past its Citizens largest furniture chain — and dis- United challenge with two more covered a long list of affiliations suits to eliminate Montana’s low with national tea party groups contribution limits and disclosure funded by the conservative billion- rules, setting up a potential chal- aire Koch brothers. lenge to contribution limits nation- This election, ATP has vowed wide. to keep Attorney General Steve Bullock out of the governor’s man- Tea party ties sion. In October, voters received a brazen multi-page newspaper-style One of ATP’s founders is former flier placing the Democratic candi- Montana Congressman Ron Marle- date in a photo lineup with three nee, who served from 1977 until the registered sex offenders. state dropped from two House seats But the group hit the national to one in 1992. Marlenee used his spotlight thanks to three landmark D.C. Rolodex to raise money for the court battles with Bullock and the fledgling pro-energy group, which state of Montana. registered in Colorado in 2008.

Marlenee rallied a tea party filing so clearly he did not give crowd in Bozeman in 2010, appear- them funds,” wrote Charlie Shaulis, ing on stage with a half-burned director of communications for American flag, which he said he American Furniture Warehouse, wrestled away from a “liberal Marx- Jabs’ company, in an email to I- ist” protester. News Network in Colorado. ATP has joined tea party lob- Dalton wrote a letter to the IRS bying efforts, signing at least two asking the agency to speed up letters to Congress in the last year the process for awarding it non- urging an end to tax credits for profit status. The letter states that wind power and natural gas-fueled the approval was needed quickly, vehicles. The letters were signed otherwise Jabs would not make a by Koch-funded groups includ- contribution. The agency gave it ing Americans for Prosperity and the thumbs up four days later. tea party boosters FreedomWorks, The amount of the gift would Club for Growth and Art Pope’s be double Jabs’ total federal cam- John Locke Foundation. paign contributions since 1997, In its 2008 application for tax- which have gone exclusively to Re- exempt status as a 501(c)(4) “social publican candidates and party or- welfare” organization, ATP listed ganizations, according to FEC re- its “primary donor” as Jacob Jabs, cords. Colorado’s largest furniture retail- Jabs also poured money into a er and a donor to Republican can- failed “right to work” ballot initia- didates and causes. Jabs pledged a tive in Colorado, becoming a televi- $300,000 contribution to get ATP sion spokesman for the 2008 anti- on its feet, according to IRS records union effort. obtained by the Center for Public ATP shares resources and a D.C. Integrity. mailing address with an affiliated Jabs, through a spokeswoman, 501(c)(3) educational nonprofit on Monday said he did not make a called the American Tradition donation and has “never heard of” Institute, which works in tandem ATP or the group’s previous incar- with a network of Koch-funded nation. think tanks to oppose wind energy “He did not commit to the funds and dispute the reality of climate indicated by Athena Dalton in the change. It has launched lawsuits

against state mandates for renew- An investigation by the state’s able energy usage and targeted cli- Commission on Political Practic- mate scientists in academia. es concluded that the group had The libertarian Koch brothers, broken state law requiring outside Charles and David, have become spending groups to register as po- better known in recent years with litical action committees and dis- the rise of the tea party. They are close all donors and spending. principal owners of Koch Indus- Commissioner Unsworth con- tries Inc., the second-largest pri- cluded in October 2010 that ATP vately owned company in the U.S., had registered a “sham organiza- with major investments in the en- tion” called the Coalition for Ener- ergy industry. gy and Environment and vastly un- ATI has accepted donations der-reported its activity. The PAC’s from the Atlas Economic Research reported spending, said the state, Foundation, a free-market think would have barely covered the cost tank underwritten by Exxon Mobil of postage for the raft of glossy, and Koch foundation money, ac- full-color mailers ATP sent out. cording to a report by the Institute ATP filed forms with the IRS the for Southern Studies. same year, reporting more than Its director of litigation Chris $660,000 in spending. Horner is also a fellow at the Com- ATP maintains that its spending petitive Enterprise Institute, a free- on mailers, most targeting moder- market think tank that has taken ate Republicans running for state a half-million dollars from Koch legislative seats, is “educational” foundations since 1998, according and therefore falls outside the to the report. state’s definition of “express advocacy” that would require it to dis- ‘We won’t be shut up, close its funders and its spending or shut down’ on the mailers. ATP did not face penalties In 2008, American Tradition Part- and did not disband. Instead, it nership flooded the state with mail- changed its name from Western ers attacking ten state legislators, Tradition Partnership and sued to but reported only $12,000 in spend- strike down Montana’s disclosure ing for the entire election. laws.

The case is set for trial in March profit incorporation documents in 2013. Colorado. “We won’t be shut up or shut Scott Shires has been sued and down,” ATP said in a press release fined for his election activities, in June. but the Colorado-based political Ironically, ATP’s years-long consultant says his reputation re- court battles have pushed the ally took a hit after he signed ATP’s group into the public spotlight, forms. When Montana released the threatening the secrecy of its do- results of its 2010 investigation, nors. The group has vigorously Shires’ name began showing up in resisted discovery proceedings in the press, and he says he cut ties to court, missing several deadlines to the organization. produce evidence requested by the “The operatives writing these state. stupid ads and mailings don’t want Lawyers in Bullock’s office filed to be identified,” said Shires. “I a motion to compel ATP to pres- was the screen that allowed them ent evidence, including bank re- to hide — plausible deniability is cords, or drop their lawsuit. It has something a lot of these groups are not complied. According to a court interested in.” filing, ATP’s lawyer Jim Brown Shires listed himself as “Presi- emailed the state’s lawyers in late dent” of ATP when he signed the August, explaining, “I have a diffi- group’s request for exempt status cult client.” with the IRS in 2008. Nonetheless, the state has won He is widely known for register- access to bank records for the or- ing hundreds of political commit- ganization. If a judge makes them tees in Colorado, mostly Repub- public, they could offer voters a lican groups. The work involves glimpse at the group’s funders. some risk. He pleaded guilty to filing false tax returns for a client in ‘I was the screen’ 2008, a misdemeanor charge. He was also caught up in a scandal that The group rarely communicates linked former U.S. Rep. and 2008 with the press and it hires un- Senate candidate Bob Schaffer knowing lawyers to sign campaign with the beneficiary of a question- finance reports and its 2008 non- able congressional earmark.

ATP Executive Director Donald questionnaire to candidates in Ferguson did not return numerous early October, asking about their calls for comment. stance on land development and environmental regulations in re- ‘Not really sure who source-rich Montana. is in charge’ “Will you oppose legislation which would categorically limit de- The left-leaning Montana Conser- velopment of any specific energy vation Voters claims ATP was un- resource?” reads one. “Will you op- fazed by the 2010 investigation and pose legislation that would rescind, is “right back to doing the same reduce or shorten the tax holiday thing,” according to the group’s on oil & gas wells?” reads another. board member Ben Graybill, who Candidates who don’t respond, filed the original complaint. or don’t respond with answers fa- This year, ATP has registered a vorable to ATP’s interests, are of- PAC in the state. It sent mailers ten targeted by a direct mail cam- prior to the June primary election, paign similar to those launched at but has reported zero spending to Bullock. the state. Its adversary, the Montana con- Its filings are signed by Mon- servation group, endorses candi- tana attorney Chris Gallus, who dates for the state legislature who was “surprised” to receive a call align with its mission to “protect from the Center regarding ATP. clean water, public health, and our He claims no leadership role in the incredible outdoor heritage.” Its organization, and said he’s “not re- mid-October mailers praise Bull- ally sure who is in charge.” ock for leading “the fight against Gallus said he has not been con- corporate control of our elections.” tacted by ATP since being hired to Unlike ATP, the group reports sign their PAC reports, and does its direct and independent spend- not anticipate filing any spending to the state and lists its donors. ing reports on their behalf. “Until “They’re scofflaws,” said The- that changes, my involvement is resa Keaveny, executive director of the same as the date I signed their the Montana conservation group. forms.” Keaveny says ATP is not only in The organization sent out a violation of Montana law, but also

IRS rules for c(4) groups that dic- It would, however spend “70 per- tate ATP must not spend a majority cent” of its time and resources to of its funds on political activity. “educate citizens” about “land and According to its 2008 applica- resource development issues.” tion for exempt status, obtained It also revealed the Jabs contri- by the Center, ATP promised not bution. to “spend any money attempting to influence” elections. It also prom- Governor’s race a toss up ised not to “directly or indirectly participate or intervene on behalf Bullock, a Democrat, is running of or in opposition to a candidate against Republican Rick Hill. It’s for public office.” expected to be a close race despite Montana’s majority-Re- publican voting popula- tion. “We want citizens de- ciding elections, not corporations,” said Bullock in an October debate during which he touted his record as a campaign finance crusader. While outside spending groups, including the Re- publican and Democratic governors associations, have swarmed the state Rick Hill, the Republican candidate for with ads, the two candi- governor of Montana, lost to state Attorney dates have had to abide by General Steve Bullock despite help from Montana’s low contribu- American Tradition Partnership, a nonprofit that bombarded voters with mailers slamming tion limits — for most of the Democrat. The Center for Public Integrity the campaign. identified the group’s backers, which included In October, ATP made groups dedicated to advancing “right-to-work” national news when a fed- legislation in the states. Matt Gouras/AP eral judge agreed with the

organization and its high-profile The publication calls itself “the campaign finance lawyer, James largest and most trusted news Bopp, and struck down contribution source” but is actually a series of limits on individuals, PACs, and par- ATP-funded attacks on Bullock. ties — including the $630 cap on in- It leads with a giant headline that dividual giving to Bullock and Hill. reads “Bullock Admits Failure.” “The political establishment can The “news” story below claims no longer tell citizens to shut up be- that the attorney general has let “1 cause they’ve reached their speech in 4 sex offenders go unregistered.” limit,” said ATP Montana Director It includes four photos: three reg- Doug Lair in a press release. istered sex offenders and Bullock. Montana joined the ranks of 12 The group can continue to raise other states with no limits on con- money on the promise that “no pol- tributions to candidates, but only itician, no bureaucrat, and no radi- temporarily. A week later, a federal cal environmentalist will ever know appeals court stayed the lower court you helped make this program pos- decision pending a full appeal, put- sible,” as its 2010 briefing to donors ting the state’s contribution limits reads. “You can just sit back on elec- back in force. tion night and see what a difference Bullock’s opponent took ad- you’ve made.” vantage of the six-day free-for-all Unsworth says his 2010 investiga- between the ruling and the stay, tion did not stop ATP, and outside accepting a $500,000 contribu- spending that has already flooded tion from the state’s Republican the state is sure to intensify, partic- Party. The gift dwarfed Montana’s ularly in light of the Citizens United $22,600 limit on party giving to decision. He calls the advertising a candidates. “mess of trash that lays at the feet of the public,” paid for by “funny ‘Who’s saying these money with no legal constraints.” crazy things’ “We don’t know who’s saying these crazy things,” he added, “so A month before the vote, Montana the public has to suffer and our po- residents woke up to a fake newspa- litical system suffers as a result.” n per on their doorstep called “The Montana Statesman.” John Dunbar contributed to this report.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 107 M ystery deepens over origins of nonprofit battling Montana spending limits ‘ Someone is not coming clean’ By Paul Abowd Published Online: October 26, 2012

he origin story of the current executive director says he secretive nonprofit that is wasn’t with the organization at the Tleading efforts to invalidate time. The woman who signed the Montana’s campaign finance laws document would not return calls keeps getting murkier. from the Center for Public Integrity. In a document filed with the In- “Someone is not coming clean,” ternal Revenue Service, the group said Marcus Owens, the former di- claimed Jacob Jabs as its “primary rector of the division that handles donor” who had “agreed to provide nonprofit corporations at the IRS. $300,000” to get the group rolling “A knowing effort to mislead the in 2008. IRS is a crime and people go to jail It appears the group was refer- for that.” ring to Jacob Jabs, the president and Jabs has been a major support- CEO of American Furniture Ware- er of Republican candidates and house, based in Colorado, where causes. He gave heavily to an anti- ATP was created. union ballot initiative in Colorado But a spokeswoman for Jabs said in 2008, and is a donor to Mitt he’s never heard of the group. ATP’s Romney.

As for the gift to ATP, Jabs claims it didn’t happen. “Mr. Jabs has not heard of this group, nor did he give them money,” said Charlie Saulis, Jabs’ spokeswoman. Athena Dalton signed the September 2008 letter to the IRS which ref- erenced a communication with the furniture Jake Jabs Courtesy of Montana State University magnate, during which Jabs “assured us that he will no longer contribute” if ATP unable to operate any of our pro- did not receive its exempt status in grams,” and would “cease to exist” the next two weeks. without the Jabs contribution. A public records search reveals The IRS approved the group’s 17 listings for Jacob Jabs nation- application four days later. Shortly wide. Most of the listings refer to after, it sent out mailers in a dozen retail locations for Jabs’ American Montana legislative races attacking Furniture Warehouse. Two of the candidates. Voters don’t know who Jabs listed are deceased. Another paid for the ads, which prompted Jacob Jabs resides in an Ohio home an investigation into the group by valued at a quarter of the alleged Montana officials. donation to ATP. Athena Dalton is currently a staff Then there is the Montana-born member with the Colorado Senate owner of American Furniture Ware- Republican office. She did not re- house, whose current residence is spond to multiple calls and emails listed as a 5,000-square-foot man- requesting comment on the 2008 sion in Colorado valued at $1.8 mil- letter she signed. lion. ATP’s executive director Donald Dalton pressed the IRS, claim- Ferguson said he was “not around” ing that ATP would “be virtually the organization when the letter

was sent to the IRS, and declined to empt status, the IRS asked ATP if respond to further questions. it planned to “spend any money at- Scott Shires, the Colorado con- tempting to influence the selection, sultant who signed ATP’s 2008 ap- nomination, election or appoint- plication for exempt status, said he ment” of candidates for public of- “doesn’t remember” Dalton or the fice. It also asked if ATP published letter she signed listing Jabs as a pamphlets, brochures, newsletters donor. “or similar material.” ATP, with help from lawyer Jim ATP answered “no” to both ques- Bopp, who has made a name for tions. himself challenging campaign fi- This application, says Owens, nance rules in court, compelled “was signed under penalty of per- Montana to abide by the U.S. Su- jury.” preme Court’s Citizens United rul- Its spending activity is hard to ing and give up its century-old ban track. ATP’s Form 990 tax filings on corporate spending on elec- for 2009, 2010 and 2011 are not ac- tions. cessible online and there appears It has also sued over the state’s to be no record of them. ATP failed disclosure rules and its low dollar to respond to a Center for Public limits on contributions to candi- Integrity request for those filings. dates. In its legal challenges, ATP IRS rules require nonprofit or- has faced off with Montana Attor- ganizations to make their three ney General Steve Bullock, who is most recent annual returns publicly locked in a tight race for governor. available. The group has launched direct The Center did obtain a copy of mail campaigns attacking envi- the group’s 2009 return prepared ronmentalist forces it calls “Gang by Shires, but unsigned. In it, the Green,” and now it’s going after group reports receiving about Bullock. $100,000 in revenue, of which it In addition to the questions sur- says it spent $67,000 on “mailings rounding the Jabs donation, ATP’s concerning public issues.” filings with the IRS in subsequent Nonprofits like ATP cannot years are difficult to track, and make political activities their pri- raise further legal questions. mary function, according to IRS In its 2008 application for ex- rules. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part IV ©2013 Center for Public Integrity 110 N.C.’s public financing system drowned out by outside spending S tate judicial races rocked by C itizens United decision By Chris Young Published Online: November 5, 2012

hanks to a flood of out- Both Newby and his opponent, side spending, state supreme liberal Sam Ervin IV, accepted Tcourt races nationwide are $240,000 from the state as part of awash in tens of millions of dollars’ North Carolina’s public financing worth of ads. Just how much is be- program — established in 2004 to ing spent isn’t clear, as many states limit spending and rein in the ex- allow certain types of ads to go un- cesses of special interest money in reported. judicial races. In North Carolina, one out- Unlimited spending by unaffili- side group has single-handedly out- ated groups has threatened the ef- spent two candidates for a seat on fectiveness of the program — one the North Carolina Supreme Court. of 16 in the nation, according to The North Carolina Judicial Co- the National Conference of State alition has unleashed a torrent of Legislatures. ads on behalf of conservative Paul The flood of spending was made Newby, blanketing the state with a possible thanks to the U.S. Su- $1.3 million ad buy. Tobacco giant preme Court’s Citizens United rul- RJ Reynolds and the North Carolina ing in 2010. Unlike candidates, Chamber of Commerce gave a com- outside spending groups can raise bined $264,000 to the ad campaign. and spend unlimited sums from

people, corporations and unions. that 75 percent of the spending “Outside entities can spend in this year’s Supreme Court races as much as they want,” said Kim falls outside of the state’s reporting Strach, of North Carolina’s election system. board. “Candidates certified in our Seven candidates are vying for [public financing] program don’t two open seats. Another three are have that ability.” battling to serve the remaining two-year term of a retiring justice. Michigan Candidates have raised a combined $2.7 million. The Michigan Supreme Court elec- Democratic candidate Bridget tion is the nation’s most expensive Mary McCormack’s four-minute ad judicial race this year. The state has featuring the cast of the hit show seen millions of dollars in “off-the- “The West Wing” went viral in Sep- books” outside spending before an tember. McCormack’s sister was a election that could flip the 4-3 con- cast member. servative edge on the state’s highest One outside group, the D.C.- court. based nonprofit Judicial Crisis “This is madness,” said Rich Rob- Network, shot back with $1 million- inson, of the Michigan Campaign worth of ads attacking McCormack Finance Network, who says outside for volunteering to represent sus- spending has reached a “ridiculous pected terrorists held at Guantana- level.” mo Bay. The group does not report Parties and PACs have reported its donors. less than $680,000 in independent “Bridget McCormack volun- expenditures, but that only tells teered to help free a terrorist,” the part of the story. mother of a slain American soldier Political parties alone have pur- says in one ad from the group. chased $10 million in ads on the “How could you?” race for three seats on so-called “is- The Michigan Democratic Party sue” ads, which are not reported to ran ads claiming Democrats Con- the state. The Michigan Campaign nie Kelley, Shelia Johnson and Mc- Finance Network has been moni- Cormack would “protect children, toring the ads. not criminals.” Another ad from The watchdog group estimates the party claims that Republican

incumbents Brian Zahra and Ste- the state Supreme Court building. phen Markman, and challenger His opponent is Birmingham Colleen O’Brien “have protected Judge Bob Vance, who entered the criminals, not kids.” race in August after the Democrat- ic Party disqualified its previous Alabama nominee for making inflammatory comments about homosexuals. Five Supreme Court seats are open Despite his late start, Vance has in Alabama, but just one is con- out-raised his better-known Repub- tested. Former Chief Justice Roy lican opponent more than two-to- Moore (R) is fighting to win back one, pulling in nearly $1 million in the job he lost in 2003, when he was campaign contributions since join- removed for refusing to move a Ten ing the race. Commandments monument from One of his biggest contributors has been Alabama Voice of Teachers for Education. According to state campaign finance records, the teachers association PAC gave Vance $100,000 in October. Alabama law does not impose campaign contribution limits on individuals or PACs. Since May, Moore has received roughly $370,000 in campaign contributions, much of it from Republican candidate for Alabama Supreme outside the state. Mi- Court Chief Justice Roy Moore speaks during the Capitol Steps Rally for Life, Marriage, & chael Peroutka, a Mary- Family at the Alabama Capitol in Montgomery, land attorney who ran for Ala., Oct. 9, 2012. Moore faces Democratic president in 2004 as the challenger Robert Vance in the Nov. 6 general nominee of the staunchly election. Dave Martin/AP conservative Constitution

Supreme Court candidates in Ohio can accept a maximum of $3,450 from individuals and $6,325 from organizations. Political parties can contribute up to $316,250.

Party, has given Moore $30,000 lenge to Republican incumbent Jus- since September. tice Robert R. Cupp. Moore’s campaign released ads O’Neill filed an ethics complaint praising the former chief justice concerning $6,300 in donations his for standing “up to the ACLU and opponent and another justice, in- liberal judges to preserve our rights cumbent Terrence O’Donnell, re- and freedoms. Roy Moore knows ceived from FirstEnergy Corp. The our liberty is given by God, not gov- Akron, Ohio-based energy company ernment.” contributed shortly after the judges began hearing arguments in a case Ohio involving Ohio Edison, an electric company owned by FirstEnergy. Four candidates are competing for Weeks after the justices accept- two open seats on Ohio’s Republican- ed the gifts, Cupp and O’Donnell dominated Supreme Court, while joined a majority ruling in favor of the court’s lone Democrat fights to the company. retain her 2010 appointment. O’Neill produced a Web ad in Since July, five of the six candi- which he asks two kids to count dates have collectively raised nearly buckets of money while he decries $2 million. the thousands of dollars Cupp re- Supreme Court candidates in ceived from doctors, lawyers and Ohio can accept a maximum of utility companies. $3,450 from individuals and $6,325 “Money and judges don’t mix,” from organizations. Political par- O’Neill says in the three-minute ad. ties can contribute up to $316,250. In late October, Ohio’s Republi- Former appeals court Judge Wil- can Party released a controversial ad liam O’Neill has refused to accept stating that as a judge, “Bill O’Neill campaign contributions in his chal- expressed sympathy for rapists.”

The 15-second ad concerns an peatedly notes that his last name is appellate court opinion O’Neill pronounced “LAW-FREE.” At one wrote in 2000 in which the he over- point, Loughry opens his closet turned a rape conviction. and says, “See? No skeletons.” Cupp joined state Democrats Loughry, who has spent nearly and the Ohio State Bar Association $425,000, was the only candidate in demanding that the Republican who intended to run a publicly fi- Party pull the ad. But GOP officials nanced campaign this election sea- have refused to do so. son. But his plans were thwarted when the state Supreme Court ruled West Virginia in September to deny Loughry’s campaign matching state funds un- The race for two open Supreme der a pilot program. Court seats in West Virginia features four candidates, one of whom Retention elections has produced a quirky ad in which he shows viewers the inside of his In Iowa, a conservative outside closet to confirm that there are no spending group hopes to oust a skeletons inside. justice who supports same-sex mar- Incumbent Justice Robin Jean riage. In Florida, justices face the Davis, a Democrat, faces Republi- wrath of a pro-business group and can Alan Loughry while Democrat a physician who object to President Letitia Chafin squares off against Barack Obama’s health care reform John Yoder, a Republican. law. Outside spending has been ab- Eighteen states, including Iowa sent from this Supreme Court elec- and Florida, require their appointed tion, but the four candidates have Supreme Court justices to periodi- spent a combined $1.8 million dur- cally face voters in what are known ing the general election campaign. as “merit retention elections.” Loughry’s campaign produced Voters are asked whether a judge three ads — two of which promi- should remain on the bench. If a nently feature the candidate’s six- majority says no, the governor ap- year-old son, aptly named Justice. points new justices from a list of In one ad, the Republican gives names submitted by a nonpartisan viewers a tour of his house, as he re- nominating commission. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part V ©2013 Center for Public Integrity 115 Pennsylvania governor benefited from untraceable $1.5 million donation Funding system called an elaborate, legal ‘money-laundering scheme’ By Paul Abowd and Alexandra Duszak Published Online: October 18, 2012

t a campaign stop near Phila- Adelphia early in his 2010 bid for governor, Republican Tom Corbett announced “we’ve got to raise money,” that it was the “number-one” prior- ity. In an answer to his prayers, that same July day, a $1.5 million con- Pennsylvania Gov.-elect Republican Tom Corbett tribution arrived from — celebrates winning the 2010 race against Wisconsin? Democrat Dan Onorato. Gene J. Puskar/AP Officially, the donation was from the Wiscon- sin affiliate of a D.C.-based political Pennsylvania law bans candidates organization called the Republican from accepting corporate money Governors Association. and the RGA accepts millions of The $1.5 million could not travel dollars from some of the nation’s directly from the RGA to Corbett. largest businesses.

Also, state law requires all non- individuals to establish PACs in Key findings: Pennsylvania. In a single day, the $1.5 million — $1.5 million of the $6 million gift traveled from the D.C.-based the Republican Governors parent organization to the RGA Association contributed to Gov. Wisconsin PAC, to the RGA Penn- Tom Corbett’s 2010 gubernatorial sylvania PAC and finally to Cor- campaign is untraceable, thanks bett’s campaign account. to a loophole in state campaign By the time the donation reached finance laws. Corbett, it was impossible to identify the original source of the cash or — In the third quarter of whether the donation was permis- 2010 alone, the RGA topped sible under state law. its fundraising total for all of The well-traveled donation is 2006. The $87 million it brought a prime example of “an elaborate in during 2010 was more than it money-laundering scheme, which raised in the previous three years is legal,” used by the RGA with success in a number of races for gov- combined. ernor in 2010, according to Penn- — Five contributions totaling sylvania Common Cause Executive $3.5 million, all from people Director Barry Kauffman. living outside of Pennsylvania, The RGA’s funding played a central role in Corbett’s victory. By comprise more than half of the Election Day he had received a to- RGA’s contributions to Corbett. tal of $6 million from the RGA — 21 percent of his total fundraising, easily the top donor to the cam- Democratic Governors Association, paign, according to the National which mustered $1.9 million for Institute on Money in State Politics. Corbett’s opponent, Dan Onorato, Corbett’s campaign office did using a series of similar funding not return calls for comment for maneuvers. this story. The RGA spending spree did not Corbett’s boosters crushed the stop in Pennsylvania. competition from the D.C.-based Haley Barbour, then the gover-

nor of Mississippi and chairman of election season. The D.C.-based the RGA, cultivated an expansive organization has kept money flow- stable of wealthy donors. ing by circuitous routes into several “We can’t wait until 2012 to start states, including North Carolina, taking our country back,” said Bar- Indiana and Wisconsin. Guberna- bour in an RGA promotional video torial races are being fought in 11 released 12 weeks before the land- states, eight of which currently have mark 2010 election that saw 37 gov- Democratic governors. ernors’ seats up for grabs. Through September, the RGA Republicans won 23 races to the has spent $40 million of its $43 mil- Democrats’ 13, including the Penn- lion haul — nearly doubling the sylvania race that landed Corbett in amount raised by the DGA. the Pennsylvania governor’s mansion. By the time elections were It’s legal, trust us over, Republicans had knocked Democrats from 10 seats, and could Life would be simpler for the RGA claim 29 governorships nationwide. if it could make contributions to In the third quarter of 2010 alone, gubernatorial candidates directly the RGA topped its total fundraising from its D.C. bank account. But it for 2006 — the last election with as receives tens of millions of dollars many contested governors’ seats. Its in contributions from corporations total $87 million haul in 2010 also — and corporate contributions to topped the RGA’s total fundraising candidates are banned in 21 states, for the previous three years com- including Pennsylvania. bined, a Center for Public Integrity Even though IRS records show di- review of data from the Center for rect contributions to candidates Responsive Politics reveals. from the RGA in many of those “It’s hard not to look at the num- states, including Pennsylvania, the bers coming out of the RGA and group maintains that its activity in not marvel/quake at the Missis- 2010 was legal thanks to its use of sippi governor’s fundraising capac- state-level PACs. ity,” wrote The Washington Post’s “The RGA worked with both Chris Cillizza on the eve of the Pennsylvania and Wisconsin cam- 2010 vote. paign finance authorities in 2010 to The spending has continued this ensure we were complying with the

1. Six-and-seven-figure Corporate Individual donations are received by the Republican Governors Association in Washington, RGA D.C. from corporations and wealthy individuals.

Wisconsin RGA

2. A $1.5 million contribution is received by the Wisconsin RGA PAC from Washington. The donors are not disclosed. Corporate contributions to candidates are illegal.

3. On the same Pennsylvania day, the Pennsylvania RGA 4. Also on the same day, RGA PAC reports the RGA in Washington, a transfer from D.C., and now-Gov. the Wisconsin Tom Corbett, report a PAC for the same $1.5 million donation/ amount. Pennsylvania contribution. also bans corporate contributions to candidates.

law,” wrote RGA spokesman Mike ports with the state listing contri- Schrimpf in an email, responding butions from individuals and not to questions posed by the Center. corporations. In the Keystone State, corpora- Six-and seven-figure donations tions cannot give to candidates, but came to the state PAC from some of individuals can make unlimited the RGA’s most loyal contributors, contributions to both PACs and but only 3 percent of the PAC’s to- candidates. tal fundraising came from inside The RGA Pennsylvania PAC, the state. They included $1 million which retained the same D.C. ad- from hedge fund managers Paul dress of its parent organization and Singer of New York, Steven Co- listed the same treasurer, filed re- hen of Connecticut and Ken Grif-

fin and wife Anne from Chicago. er Singer, for example, has spent Texas home builder Bob Perry gave years, and millions of dollars, ad- $500,000. vocating for the right of same-sex Those donations alone comprise couples to marry. He has a gay son more than half of the $6 million who married in Massachusetts, and that went from the RGA to Corbett. The New York Times reports he The DGA Pennsylvania PAC also gave $425,000 to back New York’s took contributions from a smaller gay marriage bill. stable of mostly out-of-state do- Corbett ran as a staunch oppo- nors, including Texas trial lawyer nent of gay marriage in the state and Democratic mega-donor Ste- and has maintained that stance in ven Mostyn, who gave $400,000. office. Mostyn did not return numerous A spokesman for Singer declined calls for comment. to comment. Though these large gifts are per- missible under Pennsylvania law, How we got here the RGA and DGA confirm that its donors give to a general fund, The RGA took in about $117 mil- not to any specific state. The D.C.- lion from 2009-2010, according to based organizations then make the CRP, while its Democratic counter- call on whose money is counted to- part, the DGA, received less than ward which race. half of that, $55 million. The result is a listing of donors Like the national political par- to Corbett and Onorato who were ties, the RGA is a nonprofit po- not aware their donations were at- litical organization, regulated and tributed to a specific campaign. tax-exempt under Internal Reve- “It is legal,” said Ron Ruman, nue Code Section 527. But because spokesman for the Pennsylvania the RGA is focused on state, not Department of State, “as long as federal, elections, it is largely un- the contribution that went to Penn- regulated by the Federal Election sylvania was from an individual.” Commission. Still, the practice calls into ques- It is, however, required to comply tion the accuracy of the governors with IRS rules. The agency collects associations’ disclosure reports. the RGA’s fundraising and spend- Billionaire hedge fund managing reports every quarter.

The RGA has argued in court, the Republican’s campaign account with some success, that no single in Pennsylvania. Based on state dis- state overseer can regulate its activ- closure forms, the money appeared ity because its “major purpose” is to to come from one account and pass influence elections in a variety of through two others — all based in states. the RGA’s Pennsylvania Avenue “The governors associations are headquarters in D.C. — before mak- everywhere,” writes Ciara Torres- ing it to Corbett. Spelliscy, of Stetson Law School, The triple transfer effectively but “are regulated almost nowhere.” cloaked the original source of the The organization has existed in money, thanks to a loophole in Wis- a legal gray area that has spurred consin disclosure laws. investigations and lawsuits in sever- Wisconsin law only requires the al states since it emerged as a force PAC, which lists the RGA’s D.C. ad- in state elections. dress, to report donations from Wis- It’s “subterfuge,” says former consin residents. The vast majority FEC official Bob Biersack, now a of the RGA Wisconsin PAC’s money, senior fellow with theCenter for Re- however, came from out of state. sponsive Politics. “They’ve figured In the months ahead of the 2010 out this weird hole in the legal primary vote, the RGA Wisconsin structure.” PAC reported spending at least $5 The RGA has maneuvered skill- million, including the $1.5 million fully, winning in court when states gift that ended up with Corbett. have challenged its practices. In The PAC listed its in-state donors, the past four years, says Schrimpf, whose contributions amounted to the organization has “in no state barely more than $31,000. had a final judgment issued requir- “It’s very difficult to get to the ing us to pay a fine.” bottom of where their money came from,” said Nathan Judnic at the Interstate travel? Wisconsin Government Account- ability Board. If the $1.5 million July contribution When the money arrived in Cor- from the RGA to Corbett via Wis- bett’s campaign account, no one, in- consin had come by car, it would cluding the Pennsylvania Secretary have traveled 1,700 miles to get to of State, could decipher the source.

The RGA attached a letter to its earmarked for specific states. A campaign filings with Pennsylvania “clearer way” would be to say that in September 2010. While the ori- the group “has a general political gin of the $1.5 million Wisconsin budget” but “we segregate personal donation was not detailed, the RGA from corporate dollars.” assured the state that it was com- The mysterious July gift of $1.5 posed of individual, not corporate, million from the RGA Wisconsin donations. PAC came to Corbett just in time. “In the interest of complete The candidate had suffered a transparency,” wrote RGA Counsel month of bad press after criticizing Michael Adams, the organization the state’s jobless for relying on un- enclosed its full list of individual employment benefits. donors between January and June The contribution helped launch of that year. The list contained more the Corbett campaign’s first ads than $1.5 million in contributions, and a bus tour, which shifted the but did not say explicitly which of focus away from the gaffe. By the those donations made up the $1.5 end of August, his lead in the polls million that went to Corbett. was again more than 10 points, and The RGA also offered to pro- he was on the road to victory. vide copies of bank statements and In the three weeks before the cleared checks for verification. vote, the RGA would send about “These contributions are aggre- $3.6 million more to Corbett to gated into personal money-only help seal a victory. accounts, and are not commingled with other funds,” wrote Adams. States of play This appears to contradict statements by RGA spokesman Pennsylvania is not the only state Schrimpf, who told the Center in where the RGA directed its funds. July that “expenditures come out of The RGA was “the Laundromat our general fund.” and the repository for a lot of the Contacted again for this story, money that was spent all over the he said explained that “general country in 2010, there’s no question fund” is not a “legal nor a literal about it,” said Jay Heck, executive term.” Schrimpf said he uses it to director of the good government convey that contributions aren’t group Common Cause Wisconsin.

In Iowa, the RGA gave about $1.2 The RGA also gave contribu- million directly to Terry Branstad, tions in the millions directly to according to data from CRP. As in Republican parties in states where Pennsylvania, Branstad could not corporate contributions to parties receive corporate money, but could are banned. Through its PACs in take unlimited sums from individu- Michigan and Pennsylvania, it sent als. Similar to what it did in Penn- $5.3 million to Michigan’s Republi- sylvania, the RGA fed it through can Party and $2.3 million to bol- its RGA Iowa PAC, and listed indi- ster the Pennsylvania Republican viduals as donors to the PAC. Party’s efforts. Also as in Pennsylvania, By contrast, the RGA uses a more the RGA Iowa PAC received dona- direct method in states where cor- tions from the RGA’s PAC in Wis- porate contributions to candidates consin totaling $340,000. are unlimited. In Texas, the RGA gave $3 mil- The organization sent roughly lion directly to Gov. Rick Perry, ac- $2.5 million directly to Oregon Re- cording to the CRP data. The dona- publican Chris Dudley, according tion was routed through its PAC in to both data from CRP and state Michigan, apparently in an attempt campaign finance reports. Dudley, to comply with a state law banning who lost a close race for governor, corporate donations. reported the donations as coming On Perry’s campaign filings, the from the RGA’s “Corporate Unlim- donation appears as a contribution ited Account” — no pass-through from the RGA Michigan PAC — and no state-affiliated PACs were because PACs can give candidates necessary for the corporate cash unlimited funds to candidates in infusion. Texas, as long as the money isn’t corporate. A repeat performance The seed money for the RGA Mich- igan PAC came again from wealthy in- Republican candidates are lean- dividuals, including prolific political ing heavily on the RGA again as donor Texas homebuilder Bob Perry 11 more governors’ races head to (no relation to Rick). The home- the November finish line. The or- building magnate gave the RGA $4 ganization continues its maneuvers million earlier in 2010. through state and federal election

law, and is on pace to break Bar- and has shored up incumbents in bour’s prodigious 2010 fundraising Utah, Puerto Rico and Indiana. record. In the Hoosier State the RGA It continues to tap the deep used its RGA Right Direction super pockets of hundreds of donors who PAC to sidestep the state’s corpo- have pledged at least $25,000 annu- rate ban and give $1 million to can- ally as members of the RGA’s Exec- didate Mike Pence while obscuring utive Roundtable — led by venture the original donors. capitalist Fred Malek, who worked The RGA has also used the super in the White House under Presi- PAC, registered to make indepen- dents Nixon and Ford and served dent expenditures on federal races, as campaign manager for President to sponsor ads attacking Democrat- George H.W. Bush in 1992. ic candidates for governor in West Hundreds of these execu- Virginia and Montana. Donors and tives met with Barbour, Malek, spending on these ads were not American Crossroads strategist reported to the states in question Karl Rove and presidential candi- after they ran. They were finally date Mitt Romney in August for an reported, however, in mid-October Aspen fundraising and strategy ses- filings with the FEC. sion, according to Politico. Republi- Whether the RGA and the DGA can gubernatorial candidates Rick are intentionally evading state laws Hill of Montana and Rob McKenna is difficult to say because of the of Washington were also present. structure of the organizations. The RGA is devoting millions to “Their structure provides plau- four possible pickups as Democrats sible deniability to underlying do- leave open governorships in North nors,” said Stetson’s Torres-Spellis- Carolina, Washington, Montana, cy. Donors can “pretend” they’re and New Hampshire. The RGA has only giving to the associations and dedicated millions to challenge not influence policy in a particular Democratic incumbents in four ad- state, “but only that donor and the ditional states, including Missouri staff at the governors association and West Virginia. knows if this money is given with- The RGA also dropped about $8 out strings attached.” n million to protect Wisconsin Gov. Scott Walker from being recalled, John Dunbar contributed to this report.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part V ©2013 Center for Public Integrity 124 D .C.-based governors’ associations provide back door for corporate donors Or ganization raises millions from energy interests By Alexandra Duszak and John Dunbar Published Online: October 18, 2012

t was no secret in the 2010 race for Igovernor of Pennsyl- vania that Republican Tom Corbett, the state’s attorney general, was the favorite of the burgeon- ing natural gas industry. Corbett collected almost $1.3 million from donors with oil and gas interests, according to Chesapeake Energy Corp. CEO Aubrey the National Institute on McClendon. AP Money in State Politics. Aubrey McClendon, the CEO of Chesapeake Energy, the while his company’s political action nation’s No. 2 natural gas producer committee contributed $12,000. and the top driller in the lucrative But that’s a small fraction of what Marcellus Shale region of Pennsyl- Chesapeake gave to Corbett’s top vania, gave the campaign $5,000 donor.

McClendon’s company gave a little over $300,000 in 2010 to a so- Key findings: called “527” organization called the Republican Governors Association, — 21 percent of the $28.7 million according to the Center for Respon- Gov. Tom Corbett raised in the sive Politics. The RGA gave Corbett’s 2010 election came from the campaign more than $6 million, Republican Governors Association, 21 percent of the $28.7 million he a 527 organization that receives raised, according to the National significant contributions from the Institute on Money in State Politics. oil and gas industry. The RGA acts as a central deposi- tory and distributor of funds from — Corbett collected $1.3 million wealthy individuals and corporate directly from oil and gas industry treasuries that are used to under- political action committees and write governors’ races in the states. employees. The organization routinely accepts six- and seven-figure contribu- — Aft er his election, Corbett cre- tions and deals out the funds to state ated the Marcellus Shale Advisory candidates and parties. In states like Commission to plan a development Pennsylvania, where corporate con- strategy for Pennsylvania’s natural tributions are banned, the group gas deposits. The commission appears to be skirting the law. includes some of his top donors or But the RGA says it keeps track of where the money comes from and their employees and executives of adheres to all state laws and regu- natural gas companies doing work lations. Corporate and non-corpo- in the state. rate funds are segregated. Critics say, however, that such segregation is meaningless thanks to the wide — and a like amount from individu- variation in state campaign finance al donors being shifted to Corbett’s laws. campaign. Nothing, for example, would pre- Donors can say “they’re not trying vent Chesapeake’s donations to the to influence policy in a particular RGA from being spent on state races state,” said Ciara Torres-Spelliscy of that allow corporate contributions Stetson Law School. “But only that

donor and the staff at the governors he would eliminate red tape and association know if this money is regulations, said Brian Nutt, his ad- given without strings attached.” viser and former campaign manag- RGA spokesman Mike Schrimpf er, in an interview with the Center. said the group “fully complied with His opponent, Democrat Dan all Pennsylvania campaign finance Onorato, then-chief executive of laws” during the 2010 election. Pittsburgh’s Allegheny County, Chesapeake did not respond to a urged the passage of the same tax request for comment. Corbett opposed, calling the Re- publican a representative of Penn- Pennsylvania’s gas boom sylvania gas drillers instead of Pennsylvanians. Times were tough in Pennsylvania Corbett’s position attracted large in 2010 — unemployment peaked in contributions from major players in February and March at 8.7 percent. the state’s natural gas industry. Economic issues were at the fore- Christine Toretti gave nearly front of the state’s race for governor. $98,000 to Corbett’s campaign, sup- But a controversial technology that port that was reported to state cam- allowed access to deposits of natural paign regulators. Unlike in federal gas deep underground brought with races, contributions from individu- it the promise of new jobs and new als are not capped. revenue for the state. Toretti is the former chairwoman Hydraulic fracturing involves and CEO of the S.W. Jack Drilling the pumping of millions of gallons Co., which was the largest privately of water into wells to break up lay- held, land-based driller in the U.S. ers of shale and release natural gas She also gave $110,000 in 2009-2010 deposits. Environmentalists say the to the Pennsylvania Republican practice — exempt from portions of Party, which was the No. 2 donor to the Clean Water Act and other laws Corbett at $2.1 million. — contaminates private wells, low- What wasn’t reported to the state ers property values and ultimately was $50,000 in donations she made harms communities, not helps them. to the RGA, according to CRP. During the 2010 campaign, Cor- Likewise, Texan Trevor Rees- bett promised not to impose a gas Jones, founder and chairman of extraction tax on drillers and said drilling company Chief Oil & Gas,

Top 5 Pennsylvania ‘fracker’ donors to RGA 2009-2010

Exxon Mobile $704,900

CONSOL Energy $338,221

Chesapeake $302,500

Chevron $251,800

EnCana $151,350

IN THOUSANDS $0 $200 $400 $600 $800 Source: Center for Responsive Politics, Internal Revenue Service..

gave Corbett’s campaign $50,000 $100,000 and wife Kim gave and the RGA $100,000. $180,000; Terry sits on the commis- Toretti and Rees-Jones could not sion. The Pegulas founded East Re- be reached for comment. sources and built it into a major independent natural gas exploration and Donors get say development company before selling in future development it to Royal Dutch Shell in 2010. Terry Bossert, a senior executive Some of Corbett’s biggest contribu- at Chief Oil & Gas, also has a spot tors were awarded spots on his Mar- on the commission. cellus Shale Advisory Commission, a A 527 like the RGA — and its group that included executives from Democratic counterpart, the Demo- Chevron, Exxon Mobil and EQT, cratic Governors Association — is each doing business in the Marcel- not regulated by the Federal Elec- lus Shale region. tion Commission and cannot make Terry Pegula gave Corbett contributions to federal candidates.

It is required to report its donors by the Center were unaware their and expenditures to the IRS. money was headed to the Pennsyl- The DGA gave Onorato $1.9 mil- vania PAC and into Corbett’s cam- lion out of $25.3 million raised, ac- paign account. cording to the National Institute on The DGA also created a state PAC Money in State Politics. to make its contributions. Companies with an interest in the development of the natural Finding loopholes gas industry in the state, including Chesapeake, gave at least $4 million At the same time the Pennsylva- in corporate treasury funds to the nia PAC was formed, the RGA was RGA in the 2009-2010 election, ac- spending large sums in states that cording to a Center for Public Integ- do not ban corporate contributions. rity analysis of CRP data. For example, it gave $8.3 million to Among them were Exxon Mo- the Florida Republican Party, which bil ($704,900), CONSOL Energy gave $5.2 million to now-Gov. Rick ($338,200), Encana (151,400), the Scott, the Republican winner. American Natural Gas Alliance Corporate contributions in Flor- ($101,000) and two natural gas-con- ida are capped at $500 per can- suming electrical utilities. didate, but there are no limits on To show that none of that corpo- how much corporations can give to rate money made it into Corbett’s parties. Parties can make unlimited campaign account, the RGA cre- contributions to candidates as long ated a political action committee in as they are earmarked for campaign the state; actually, its address is the costs like research, events and staff. same as that of its Washington head- “It’s such a gigantic loophole that quarters. you can drive a truck through it,” Pennsylvania contribution records said Peter Butzin, volunteer state show the PAC listed contributions chairman of the Florida chapter of from 101 individuals — three of them Common Cause. residents of Pennsylvania. One do- In some states, there are no cor- nation was a mysterious $1.5 million porate limitations. In Virginia in transfer from the RGA’s Wisconsin 2009, Republican candidate Bob PAC (also housed in Washington). McDonnell collected nearly $2 mil- Donors listed who were contacted lion directly from the RGA.

Corbett, as governor, has been a provisions have been overturned in friend to the gas companies. court. Act 13, signed into law in Febru- ary, was a comprehensive update of Time equals money Pennsylvania’s 28-year-old Oil and Gas Act. Though the law contains “[We’re] making sure we’re protect- updated environmental protec- ing the environment,” said Nutt, tions, the measures take a back seat Corbett’s former campaign manager to industry interests, say some anti- and current adviser, but dealing with drilling activists. unnecessary regulations takes time, One such group, PennFuture, and “time means losses of revenue.” said the act did not bring in enough The act does levy an annual im- money for the state, is weak on en- pact fee of $5,000 to $60,000 per vironmental safeguards and favors well on natural gas drillers, but drillers over other businesses. these monies can be used only to “Pennsylvania citizens will get lit- offset the impact of drilling — not tle in return,” said Jan Jarrett, then- for the benefit of the state at large. president of the group, days before Pennsylvania’s impact fee brought Corbett signed the act into law. in more than $200 million in 2011. The act’s most controversial pro- In Texas, where each unit of natural visions allowed drilling almost any- gas is taxed at 7.5 cents on the dol- where — even in residential areas. lar, $1.4 billion was raised in 2009. Since municipalities are required to James Browning, the author of a abide by state law, Act 13 nullified Common Cause report critical of the most residential zoning restrictions industry’s activity in Pennsylvania, on drilling. For example, drilling said the state is a “worst-case scenar- operations were allowed to be locat- io” for natural resource exploitation. ed as close as one football field from But the Corbett administration buildings. defends its practices. Patrick Henderson, the gover- “[Act 13] helped to realize and nor’s energy executive, says Act 13 maximize economic benefits,” Hen- was aimed at streamlining regula- derson said. “And we think that’s a tions allowing drillers to start work good thing.” n more quickly. Since Act 13’s passage, the zoning Paul Abowd contributed to this report.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part V ©2013 Center for Public Integrity 130 M illion-dollar donation in Indiana race may skirt limits on corporate giving By Paul Abowd Published Online: July 26, 2012

he RGA Right Direction dedicated to electing as many Repub- PAC is a Washington, D.C.- licans to governorships as possible Tbased super PAC, registered — a mission fueled by contributions with federal regulators to make in- from some of the largest corpora- dependent expenditures support- tions in the country. In Indiana, can- ing or opposing candidates. So what didates can accept unlimited dona- is it doing giving $1 million directly tions from individuals and political to the Republican running for gov- action committees but only $5,000 ernor of Indiana? from corporations and unions. Cor- The donation to Mike Pence, the porations and unions can also give to largest to his campaign, appears to be PACs, but only in small sums. a way around state laws limiting cor- Whether the check to Pence was porate contributions to candidates. drawn on a bank account that con- “In one way, it’s legal,” said An- tained corporate money is not a drew Downs of the Center for Indi- matter of public record. ana Politics, at Indiana University- In an email, RGA spokesman Mi- Purdue University Fort Wayne. “But chael Schrimpf said “nothing in our if you say this is a way to give in ex- reports suggests” that the organiza- cess of corporate limits, that’s also tion gave corporate funds to Pence. absolutely true.” All RGA expenditures, he said, Right Direction is funded entirely come from a general fund. by the Republican Governors Associ- “It’s the new model of disclosure ation, a so-called “527” organization subterfuge,” said Bob Biersack, a se-

Gubernatorial candidate Rep. Mike Pence, R-Ind., received a $1 million check from the Republican Governors Association — a contribution whose original sources remain shrouded in darkness. Charles Dharapak/AP

nior fellow at theCenter for Respon- $1.3 million from the RGA since sive Politics and former longtime January. Super PACs can accept Federal Election Commission offi- unlimited donations from corpora- cial. “It’s not what a normal human tions and labor unions, thanks to being would call transparent.” the U.S. Supreme Court’s Citizens The donation to Pence appeared United decision. in FEC filings July 15. It is the lat- Right Direction’s 2010 boiler- est in a series of campaign finance plate registration letter filed with maneuvers by the RGA which have the FEC said it “intends to make prompted legal challenges in two independent expenditures” — ad states claiming the group violated buys and other spending that sup- limits on corporate giving. ports or opposes candidates. Right Direction reported receiv- FEC filings show the group has ing four contributions totaling not reported any independent ex-

penditures, but has spent money USA has given $5,000 to the Pence helping state candidates in Ohio campaign since January. These in 2010 when it was known as RGA same companies gave $350,000, Ohio PAC. $25,000, and $12,500 donations re- In addition to Right Direction’s spectively to the RGA’s 527 organi- $1 million contribution to Pence, it zation in the same time period. also made two contributions to the A corporation can also support Montana Republican Party totaling the governor by passing the contri- $200,000. The Right Direction PAC bution through a political action is registered with both Indiana and committee. It can give $5,000 to federal election regulators. the PAC during each election cycle and the PAC can give unlimited Source of funds obscured amounts to the candidate. PACs registered only inside In- In federal records, it reports its do- diana must itemize contributions nors as the RGA — which effectively in reports to the state, including obscures the original source of the those from corporations. The In- $1 million check to Pence. diana Merit Construction PAC, for There is no paperwork required example, gathered donations from by the state of Indiana that shows dozens of construction companies whether those funds were derived and gave $32,500 to Mike Pence in from the RGA’s corporate donors. June — bringing its total giving to The RGA’s Schrimpf says it is follow- the campaign to $69,000 this cycle. ing the relevant state and federal campaign finance laws “as efficient- Nothing to see here ly as possible.” According to Abbey Taylor with Right Direction is not required to the Indiana Election Division, “It’s a file such a report, according to state pretty nice little loophole, and loop- election officials. holes are meant to be exploited.” A 527 can accept unlimited Corporations can give directly to contributions from corporations, Indiana candidates, but are limited unions and individuals. They may to $5,000 donations. Drug giant As- not give money directly to federal traZeneca and Johnson & Johnson candidates but can fund issue ad- have each given $2,500 and Nestle vertising campaigns and other po-

litical activities. They are regulated candidates in 2010. The group was by the Internal Revenue Service but a top donor in the Pennsylvania, Il- not the FEC and are required to re- linois, Texas, Oregon, New Mexico, port their donors and spending. and Iowa races. In 2004 and 2008, Because Right Direction is reg- its PAC also gave a total of nearly istered with both the state and the $3.9 million directly to Mitch Dan- FEC, the Indiana Election Division iels’ successful bids for Indiana gov- cannot regulate its spending activ- ernor, according to the National ity. Co-Director Trent Deckard says Institute on Money in State Politics. state law constrains his agency to “The RGA is confident they can regulating PACs that are solely reg- get away with this — they’re riding istered with the state. on a new level of hubris,” said Edwin “I truly understand the public Bender, director of the institute. concern here,” said Deckard, “but The RGA’s 527 raised $16.7 mil- there’s 150 members of the legisla- lion since April, nearly twice as ture who would have to vote on this much as its Democratic counter- question. We can always hope for part. Fifty-seven percent of that greater transparency.” money came from corporate trea- The Election Division usually suries and corporate PACs, accord- does not take up its own investiga- ing to a Center for Public Integrity tions unless prompted by citizen analysis of IRS records. complaints. So far, none have been Koch Industries has given the lodged against the RGA’s activity. RGA $2 million, health insurance “Whether it passes the smell test giant Blue Cross/Blue Shield $1.6 is for voters to decide,” said Downs. million, and Sheldon Adelson’s “This is part of the shell game that Sands Casino group $1 million in concerns people about campaign the 2012 cycle. The U.S. Chamber finance.” of Commerce and Bob Perry have The RGA donation to Pence is each added $750,000 to the RGA nothing new. coffers, according to the Center for Responsive Politics. National campaign If Pence were running to keep his 6th District congressional seat, The organization gave seven-figure his campaign couldn’t touch a dime sums to six different gubernatorial of donations from the RGA super

PAC. But because he’s running for a state office, and doing so in a state Total Raised that allows unlimited PAC contributions to candidates, the RGA super $16,737,913 PAC can wire cash direct to his war chest. Other $4,254,540 The $1 million gift accounts for a third of Pence’s haul since April in his race to replace Daniels in the governor’s mansion. A week after % getting the super PAC infusion, 26 Pence launched an early TV ad blitz — the first of which featured % % his wife recounting Pence’s home- 57 17 grown Hoosier credentials.

Pence leads money race Corporate From 12 money individual Pence has twice as much cash as his (including donors Democratic opponent John Gregg corporate PACs) (of $100k or $9,583,373 more) as of July 16. The Democratic Gov- $2,900,000 ernors Association has given Gregg Source: Internal Revenue Service $29,000 since January. The DGA’s June filing with the FEC contains small donors as well as $250,000 dollar bailout,” Gregg’s spokes- checks from each of the national man Daniel Altman cited large teachers unions. donations from billionaire donors Its state-registered PAC only lists including the Koch brothers and the DGA’s 527 as the donor, raising Rick Santorum-backer Foster Friess similar questions about the origin as evidence that Pence is “financed of its contributions to Gregg. Offi- by out-of-state donors who do not cials at the DGA say the contribu- have Indiana’s best interests at tions in Indiana are in compliance heart.” with state election law. The Pence campaign did not re- On top of “the RGA’s million- turn calls for comment.

The state has not seen a seven- in any one state. Therefore, it has figure direct contribution to a argued, no state can regulate it as candidate since 2003 when Bren a state PAC. Simon, the widow of an Indiana “By that logic, they’re not a PAC mall magnate, gave $1.3 million to anywhere, and can’t be regulated former Democratic National Com- anywhere,” said Stetson Law profes- mittee chairman Joe Andrew’s un- sor Ciara Torres-Spelliscy. “Do we successful gubernatorial bid. have political entities that are too The $1 million contribution big to regulate?” dwarfs one made by conservative In North Carolina, the RGA car- industrialist David Koch, who gave ried the day, despite spending way $100,000 to Pence in January. Koch above the state’s limits for PACs. also gave $1 million to the RGA in Vermont’s Attorney General February. claims that both governors associations have violated state campaign Pervasive force finance laws. The state’s challenge to the DGA-funded Green Moun- The RGA has been a pervasive force tain Future 527 is headed for the in state elections. It has spent $80 state’s Supreme Court. The case million on state races in 40 states against the RGA claims the orga- since 1999 — more than half of that nization bought ads through its money has gone directly to candi- 527 during the 2010 campaign, but dates, according to the National did not report that spending to the Institute on Money in State Politics. state. The RGA is yet to present its Some states have been concerned defense in the case. about the national group’s influence. “You need a state that’s willing North Carolina and Vermont to pick a fight with the RGA,” said agencies have taken legal action Torres-Spelliscy, “but they’re so against the RGA, claiming it vio- powerful that there’s this natural lated the states’ caps on corporate reticence to ticket them for running giving and must be regulated as a the red light.” n state PAC. In both cases, the RGA has used its pervasive reach as a de- Center for Public Integrity reporters fense, claiming that its “major pur- Michael Beckel and Reity O’Brien pose” is not to influence elections contributed to this report.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part VI ©2013 Center for Public Integrity 136 S uper PACs, nonprofits favored Romney over Obama C itizens United decision helped Romney neutralize Obama’s fundraising advantage By Michael Beckel and Russ Choma Published Online: October 30, 2012

u per PACs and nonprof- about $100 million spent to help its unleashed by the Citizens President Barack Obama. SUnited Supreme Court deci- The spending helped close the sion have spent more than $840 gap on Obama’s considerable fund- million on the 2012 election, with raising advantage over Romney. As the overwhelming majority favor- Election Day approaches, Romney ing Republicans, particularly GOP and Obama are neck-and-neck in presidential nominee Mitt Romney. national polls. An estimated $577 million, or The totals are from a joint analy- roughly 69 percent, was spent by sis of Federal Election Commission conservative groups, compared data by theCenter for Responsive with $237 million spent by liberal Politics and the Center for Pub- groups, or about 28 percent, with lic Integrity. The Centers’ analysis the remainder expended by other covers the period from Jan. 1, 2011 organizations. through Oct. 28, 2012, and does Of all outside spending in the not include independent spending 2012 election, more than $450 mil- by the political party committees. lion was dedicated to the presiden- The final tally will be higher as tial election with more than $350 spending continues to accelerate million spent helping Romney and before Election Day.

AP Photos

Obama’s campaign raised more heavily on larger donors. Individu- than $632 million in the 2012 elec- als who gave $200 or less accounted tion, 62 percent more than Rom- for 34 percent of Obama’s war chest. ney’s $389 million. Even when Meanwhile, such small-dollar donors including money raised by the were responsible for only 18 percent Democratic and Republican Na- of the Romney campaign’s haul. tional Committees, Obama still has The deluge of outside spending an edge of more than $166 million: was made possible by the 2010 Citi- $924 million for the president’s re- zens United decision and a lower election team versus $758 million court ruling that allowed individu- for Romney and the GOP. als, labor unions and corporations The president’s campaign com- to give money to outside spending mittee was bankrolled to a great de- groups — mostly nonprofits and gree by money from grassroots sup- super PACs — to buy advertising at- porters, while Romney relied more tacking or supporting candidates.

Super PACs were generally The GOP candidate, facing the backed by super donors. Billion- Obama fundraising juggernaut, aire casino magnate Sheldon Adel- needed the help of outside groups son and his family, for example, to keep pace. gave $54 million to Republican The Obama campaign aired super PACs as of mid-October, far nearly three times as many ads as more than any other donor this the Romney campaign between late election cycle. April and late October, according Nonprofit “social welfare” groups to a recent study by the Wesleyan and trade associations can raise Media Project. just as much money, but are not re- Wesleyan found that the 460,500 quired to report their donors. The ads aired by the Obama cam- lack of transparency sparked legis- paign in the presidential election lation to require disclosure, but it was more than the Romney cam- was defeated. paign, the RNC and seven other Nonprofits were responsible for Republican-aligned outside spend- more than $245 million, or about ing groups combined — including 30 percent, of the $840 million the top GOP super PACs Restore in total outside spending. That’s Our Future and American Cross- about $100 million more than they roads and conservative nonprof- spent in 2010. its Crossroads GPS andAmericans for Prosperity. Spending surge helps Super PACs in the 2012 election Romney raised about $660 million. Restore Our Future alone ac- During the week of Sept. 30, about counted for about $1 out of every $16.5 million was spent by outside $5 of all super PAC donations re- groups benefiting Romney, mostly ceived. The pro-Romney group on ads attacking Obama. Three raised more than $130 million, weeks later, the seven-day total much of which was spent decimat- jumped to more than $55 million, ing Romney’s rivals during the according to FEC filings. GOP primaries. Outside spending benefiting The Obama-backing Priorities Obama over the same period never USA Action, by contrast, raised $64 exceeded $14 million, records show. million.

Other Other $15 $27

Liberal Liberal $237 $249 Conservative Conservative $397 $577

Contributions received by Outside spending by super PACS super PACS, other groups (IN MILLIONS) (IN MILLIONS)

Source: FEC/Center for Responsive Politics

In 2010, during their first year of lected in the 2012 election. The me- existence, all super PACs combined dian household income in 2011, by raised just $85 million. way of comparison, was $50,054, ac- The top 149 individual super cording to the U.S. Census Bureau. PAC donors — each of whom has Donations from large, publicly contributed at least $500,000 — traded corporations have been are responsible for $290 million of relatively rare, but in the waning funds raised. weeks of the campaign, oil and gas And 858 individuals who con- giant Chevron wrote a $2.5 million tributed at least $50,000 to super check to the Congressional Leader- PACs accounted for nearly 60 per- ship Fund, a super PAC backing Re- cent of all money the groups col- publican candidates that is closely

associated with House Speaker that wanted to expressly advocate John Boehner, R-Ohio. for or against a candidate were The emergence of super PACs limited to receiving no more than has been heralded by some, such $5,000 per donor per calendar year. as Republican lawyer Brad Smith, Donations shrouded in secrecy the former chairman of the Fed- As important as super PACs were eral Election Commission who co- in the 2012 election, the loosening founded the conservative Center of political spending rules for non- for Competitive Politics. disclosing, nonprofit organizations “[Super PACs] have helped to was also a key development follow- level the playing field between Rom- ing the Citizens United decision. ney and Obama, whereas otherwise GOP-aligned nonprofits have Obama’s spending advantage would outspent their Democratic counter- have been substantial,” said Smith. parts by a ratio of more than 8 to 1. “And in some cases they have raised Notably, this figure represents a issues that concern voters that the conservative tally of nonprofits’ po- candidates have chosen to avoid.” litical spending. Federal law requires spending to Others disagree. be reported only if a group’s advertisements encourage viewers to vote “When elected officials rely on the for or against a candidate, or if they most-wealthy of wealthy Americans, mention a candidate shortly before it means the voices of everyday a political convention or election. people lose out,” said Nick Nyhart, Justice Anthony Kennedy, the president of the advocacy group author of the Court’s Citizens Unit- Public Campaign, which favors ed 5-4 opinion, made a point of say- publicly financed elections. ing that disclosure was a key part Unlike traditional political ac- of the court’s rationale. Disclosure tion committees, super PACs have would allow citizens to monitor the no contribution limits and the new political activity. funds they raise can’t be directly “This transparency enables the donated to candidates. Instead, electorate to make informed deci- the money they raise has primarily sions and give proper weight to dif- been used to fund attack ads. ferent speakers and messages,” he Prior to Citizens United, groups wrote.

But the tax-exempt groups — $5.2 million to pro-tea party super some of which clearly exist for no PAC FreedomWorks for America in other reason than to elect favored early October. The corporation was candidates — are spared by Inter- created on Sept. 26. The name and nal Revenue Service and FEC rules address listed on incorporation from having to publicly reveal their records are those of a Knoxville, donors. Tenn., area attorney. His published Crossroads GPS, co-founded by phone line has been disconnected. GOP strategist Karl Rove, claims in The source of the funds, as of press releases to have spent more this writing, is unknown. than $120 million since January Meanwhile, more than $10 mil- 2011, of which only $57 million has lion in funds given to super PACs, been reported to the FEC. At least which disclose donors regularly, $12 million has been spent attack- have come from nonprofits, showing Obama, according to FEC re- ing that even the groups required cords. to be transparent about their fund- Voters watching its ads have no ing sources can still shield the idea where the money is coming names of donors. from. Nor do they know who is funding the work of liberal organi- Going negative zations doing the same thing, albeit with a lot less money. The explosion in outside spending Patriot Majority has reported has coarsened the political debate, spending $6.5 million on ads, flooding the airwaves in Ohio, more than half of which has op- Florida, Virginia and other battle- posed Rep. Dean Heller, the Re- ground states with negative, often publican who is running for U.S. inaccurate ads. Senate in Nevada. Roughly 80 percent of all spend- Not all secret money is coming ing by both conservative groups from nonprofits. Throughout the and liberal groups has been nega- election season, mystery corpora- tive, FEC records indicate. tions have popped up, spending Fully 100 percent of the nearly huge sums. $57 million Priorities USA Action Specialty Group Inc. of Knoxville, reported spending has been on Tenn., wrote seven checks totaling negative ads.

Eighty-eight percent of Restore Our Future’s spending went toward negative ads, as did 95 percent of American Crossroads’ expenditures.

The group, which coined the 2008 expressing disappointment slogan “If Mitt Romney wins, the with the president. middle class loses,” linked Romney The winners in the post-Citizens to the death of a woman who lost United campaign finance regime her battle with cancer. won’t be known for certain until Another of the super PAC’s most after Election Day. But Ciara Tor- memorable ads featured a worker res-Spelliscy, an assistant professor describing how building the stage of law at Stetson University’s law on which officials announced the school who previously worked as an plant’s closure, after it was bought attorney with the Brennan Center by Bain Capital, was like building for Justice, said it won’t be the vot- his “own coffin” and made him ers. “sick.” “I fear that we have lost elec- Eighty-eight percent of Restore tions on a human scale with post- Our Future’s spending went toward Citizens United spending by super negative ads, as did 95 percent of PACs” and non-disclosing groups, American Crossroads’ expendi- she said. “The losers here are vot- tures. ers who get carpet bombed with Many of these ads have criticized political ads full of half-truths and Obama’s handling of the economy, distortions.” n arguing that the country “can’t afford” four more years of Obama’s Researchers Robert Maguire of the policies. One spot features a small- Center for Responsive Politics and business owner saying, “We can’t Alexandra Duszak of the Center create more jobs until Obama loses for Public Integrity contributed to his.” this report. Graphic design by Paul Others ads have featured disil- Williams of the Center for Public lusioned Obama supporters from Integrity.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part VI ©2013 Center for Public Integrity 143 H ouse candidates fear super PACs L long Is and district draws hedge fund money By Rachael Marcus and Michael Beckel Published Online: September 13, 2012

new super PAC, backed said Viveca Novak, communications by a $500,000 contribu- director of the nonpartisan Center A tion from a wealthy hedge for Responsive Politics. “It takes less fund manager, is aiming to knock money to make an impression.” off a Long Island congressman who Congressional districts are small- doesn’t share the big donor’s views er, and candidates don’t collect on reform of the finance industry. anywhere near the amounts seen in Conservative super PAC Prosperity statewide and nationwide elections, First is bankrolled by wealthy hedge she added. fund CEORobert Mercer, whose firm Prosperity First wants to oust has lobbied against the Dodd-Frank Democratic Rep. Tim Bishop, whose financial reform law passed in the 1st Congressional District is located wake of the 2008 collapse of the bank- in eastern Long Island. According ing and real estate industries. to Federal Election Commission re- Super PACs — which were made cords, in less than a week, the super possible by the 2010 Citizens Unit- PAC has spent more than $294,000 ed Supreme Court decision — have on ads supporting wealthy Republi- played pivotal roles in high-profile can businessman Randy Altschuler national and statewide races, but and opposing Bishop. have the potential to make a far Super donor Mercer, co-CEO greater impact on House contests. of hedge fund giant Renaissance “Outside spending can certainly Technologies, gave Prosperity First have more impact in House races than $500,000 in April, accounting for in Senate or presidential contests,” nearly 80 percent of the $635,500

raised through June, according to nominee Mitt Romney, has pledged the group’s most recent filing. Mer- to maintain the current capital cer made the contribution three days gains tax rates. after Prosperity First was founded. Altschuler and Bishop is a rematch Mercer has also given $5,000 from 2010, which was a nail biter. to Altschuler’s 2012 campaign, as Both campaigns challenged the re- well as $1 million to the New York sults, and three weeks after the elec- Conservative Party to oppose the tion, just 16 votes separated the candi- construction of an Islamic cultural dates, The Hill reported. Eventually, center near Ground Zero in lower Altschuler, who primarily funded his Manhattan. own campaign, conceded. The final Mercer, through a spokesman, tally gave Bishop a margin of victory decline to comment. of less than 600 votes in a race where Altschuler’s position on Wall about 200,000 votes were cast. Street reform aligns with that of The 1st District has seen $296,000 Mercer and Renaissance. The hedge in reported outside spending this fund lobbied against the Dodd- election, according to the Center Frank financial reform law, which for Responsive Politics, with an un- tightens regulations on hedge determined amount spent on unre- funds, among other things. ported “issue ads.” Prosperity First Altschuler opposes the law, which is responsible for 99 percent of the he has described as “flawed” and a reported spending. “job killer for New York,” local news Crossroads GPS and the U.S. site Smithtown Matters reported in Chamber of Commerce have also 2010, while Bishop voted in favor of aired issue ads designed to help the legislation. Altschuler’s campaign, according to Renaissance spent $740,000 on Robert Pierce, Bishop’s communica- lobbying in 2011 and $310,000 dur- tions director. ing the first six months of 2012. Prosperity First’s television spot Another of its targets is a bill that encourages people to vote for would tax investment interest paid Altschuler and attacks Bishop as a to hedge fund managers as ordi- “pawn” of House Minority Leader nary income, which is subjected to a Nancy Pelosi, D-Calif. much higher rate. “Pelosi has one chess piece to Altschuler, like GOP presidential always count on: Her bishop, Tim

Bishop,” the ad states. The spot “It’s encouraging to know people claims Bishop voted with Pelosi 97 support our agenda,” said Weir. percent of the time — a statistic “It’s an option people have … and I backed up by the Washington Post, think that’s appropriate.” which calculated that Bishop voted Federal law prohibits a candidate 97 percent of the time with the Dem- from coordinating advertising activi- ocratic Party while Pelosi was House ties with an outside spending group. Speaker during the 111th Congress. As in 2010, New York’s 1st District Meanwhile the candidates them- is considered a tossup this year, but selves have been trading attack ads. Bishop may receive a bump from in- Bishop’s campaign has gone after creased Democratic turnout for the Altschuler’s firm OfficeTiger, which presidential election. outsources clerical business services While Bishop had a slight edge to India. Altschuler sold it in 2006 in the money race at the end of the to RR Donnelly for $250 million. second quarter — raising $1.85 mil- Altschuler insists OfficeTiger’s out- lion compared to Altschuler’s $1.4 sourcing did not cost American jobs. million — his campaign doubts the Altschuler has accused Bishop advantage will hold. of misbehavior when he allegedly “No one in this campaign is un- helped a constituent obtain fire- der the impression that we won’t be works permits for his son’s bar outspent,” said Pierce of Bishop’s mitzvah in return for a campaign campaign. “Randy Altschuler made a contribution, according to Long Is- career out of outsourcing American land’s Newsday. jobs to countries such as India, and Bishop’s campaign says it did not now his fellow outsourcing pioneers solicit contributions in exchange for are opening up their wallets for him.” official action — it was merely fol- Sumir Chadha, another top do- lowing up on the constituent’s ex- nor to Prosperity First at $50,000, pressed interest to donate. served on the board of directors Prosperity First did not respond of GlobalLogic with Altschuler, to to a request for comment. Altschul- whom he has given the legal maxi- er’s campaign manager Diane Weir mum of $5,000 this election cycle. said she was not aware of the ads GlobalLogic specializes in off- beforehand, but she welcomed the shore software research and devel- support. opment. n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part VI ©2013 Center for Public Integrity 146 H ouse candidates draw one-campaign super PACs S uper donors target congressional races By Russ Choma Published Online: October 30, 2012

andidate-specific su- during the Republican presidential per PACs, once exclusively primary when each candidate had a Cassociated with presidential supporting chorus in the form of a hopefuls, have moved down-ticket super PAC. The largest by far was Re- and are now supporting candidates store Our Future, which backs GOP in congressional races this election. presidential nominee Mitt Romney. Super PACs devoted solely to sup- Restore Our Future raised nearly porting a congressional candidate $133 million this election cycle, or spent $28 million in the 2012 election one of every five dollars raised by with about $22 million going toward super PACs. helping conservative candidates, ac- By far the biggest player in the cording to a Center for Responsive congressional candidate-specific su- Politics analysis of campaign data. per PAC world is theTexas Conserva- Federal Election Commission tives Fund, which spent $5.5 million rules prohibit “coordination” be- on independent expenditures, all tween a candidate and an outside of it during the Texas GOP primary spending group, but many super battle for U.S. Senate. PACs have gotten around those The money was spent in opposi- rules by hiring operatives who previ- tion to Ted Cruz, the tea party can- ously worked for the campaign. didate, in hopes of electing Lt. Gov. The groups became prominent David Dewhurst, who was consid-

ered the favorite of the Republican while Rick Santorum-backer Foster establishment. Cruz won the prima- Friess and hedge fund boss Robert ry and is expected to easily win the Mercer have also chipped in. general election. Super PACS dedicated to a single The primary became an all-out candidate have fought for Demo- spending war that attracted nearly crats, as well. $15 million. The pro-Dewhurst group End the Gridlock targeted Deb was outspent by Club for Growth Ac- Fischer, the Republican candidate tion Fund, a tea party-aligned super for U.S. Senate from Nebraska. She PAC that targeted moderate Republi- faces former U.S. Sen. Bob Kerrey, cans in primaries in other states. who is trying to get his old job back. The Texas Conservatives Fund’s Kerrey has a money edge over Fisch- top donors are a roll call of super er, having spent $5 million to her donors. The largest source of cash $3.4 million but has trailed in polls. was Harold Simmons, the Texas bil- In other instances, like the Texas lionaire who owns Contran Corp. Senate race, they have proven to be Simmons, the No. 2 donor to super a way for donors like Adelson, Sim- PACs this election, gave the Fund mons and Perry to wage intra-party $1.1 million. Fellow Texan Bob Per- warfare, making sure their favorite ry, the No. 3 overall donor to super candidate has support against an in- PACs, gave $600,000. Sheldon Adel- surgent. son, the top donor to super PACs, In the incumbent vs. incum- chipped in $250,000. bent matchup in California’s 30th Both Adelson and Perry have also District, pitting Brad Sherman given money to Independence Vir- against Howard Berman, both ginia PAC, a super PAC targeting Vir- Democratic House members, a ginia’s Democratic Senate candidate candidate-specific super PAC called Tim Kaine, with $2.5 million — the the Committee to Elect Effective group has only raised $2.6 million. Valley Congressman has injected Adelson gave $2 million to Flori- $1.2 million into the race, all of it in da Freedom PAC, a super PAC that support of Berman. n has spent $2.6 million on advertising in support of Rep. Connie Mack, This story is a collaboration between R-Fla., who is running for Senate. the Center for Public Integrity and Perry has given the group $250,000 the Center for Responsive Politics.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part VI ©2013 Center for Public Integrity 148 Bad day for super donors B iggest contributors to super PACs in 2012 election backed losing candidates By Rachael Marcus and John Dunbar Published Online: November 7, 2012

oney can’t buy happi- trio gave $13.4 million to Restore ness, nor can it buy an Our Future, and Ricketts’ super Melection, apparently. PAC, Ending Spending Action The top donors to super PACs Fund, spent an additional $9.9 mil- in 2012 did not fare well — casino lion helping Romney’s failed bid. magnate Sheldon Adelson, the No. The super donor winner of the 1 super PAC contributor with more night was Newsweb Corp. CEO Fred than $53 million in giving, backed Eychaner (No. 5). Eychaner gave eight losers at this writing. $3.5 million to pro-Obama super Adelson was top backer of the PACPriorities USA Action through pro-Mitt Romney Restore Our the most recent filing period, which Future super PAC, with $20 mil- ended Oct. 17, according to Federal lion in donations. Romney lost to Election Commission records. President Barack Obama. In ad- In Florida, Republican Rep. dition, Adelson’s contributions to Connie Mack lost his challenge to super PACs backing U.S. Senate the popular Democratic Sen. Bill candidates in Florida, Virginia and Nelson, who won with 55 percent of New Jersey were also for naught. the vote. Adelson gave $2 million to He was not the only conservative the pro-Mack super PAC Freedom billionaire who had a bad night. PAC, and Simmons and Perry gave Contran Corp. CEO Harold Sim- a combined $255,000 to the group. mons, (No. 2), homebuilder Bob The hotly contested Senate race Perry (No. 3) and TD Ameritrade in Virginia attracted $2.5 million founder Joe Ricketts, (No.4), also from Adelson and Perry, both giv- bet on Romney. Collectively, the ing to Independence Virginia, the

The flood of spending by independent super PACs and nonprofits unleashed by the U.S. Supreme Court’s Citizens United decision helped Republican nominee Mitt Romney stay competitive in 2012, but it wasn’t enough to overcome President Barack Obama’s dominant fundraising machine. AP

super PAC supporting former Re- re-election of Rep. Allen West, R- publican Sen. George Allen. His Fla., in Florida’s 18th District, who opponent, Democratic Gov. Tim was trailing in his battle with Dem- Kaine, won the seat with 52 percent ocratic newcomer Patrick Murphy of the vote. at this writing. Adelson also invested in the The casino billionaire’s $1 mil-

lion to Patriot Prosperity, a New at least a quarter-million dollars. Jersey-specific super PAC support- Adelson did score one point ing the Republican candidate for with his $2 million contribution U.S. Senate, Joe Kyrillos, and the that helped sink a Michigan bal- Republican candidate for U.S. lot initiative seeking to enshrine House in the state’s 9th District, collective bargaining in the state’s Rabbi Shmuley Boteach, also did constitution. Adelson runs the only not pay off. non-union casinos on the Las Ve- During the primary season, Adel- gas Strip. son’s $16.5 million in contributions Tuesday marked the first presi- to the super PAC Winning Our Fu- dential election under the new ture was not enough guide former campaign finance regime installed House Majority Leader Newt Gin- following the 2010 Citizens Unit- grich to a Republican presidential ed U.S. Supreme Court decision. nomination, though it is credited The ruling paved the way for su- with keeping him in the race longer per PACs and nonprofits, allowing than expected. Nor were Adelson’s them to accept unlimited contri- contributions enough to help Texas butions from individuals, corpora- Lt. Gov. David Dewhurst win the tions and unions, which could be GOP primary for Texas Senate ear- spent on advertising backing or op- lier this year, a cause to which gave posing candidates. n

Win-Loss Rundown Giving to candidate-specific super PACs in the federal election Sheldon Adelson, Republican, $53.7 million* Mitt Romney GOP presidential candidate Loss Connie Mack Florida Senate Loss George Allen Virginia Senate Loss Allen West House, Florida’s 18th Loss Joe Kyrillos New Jersey Senate Loss Shmuley Boteach House, New Jersey’s 9th Loss

Win-Loss Rundown [CONTINUED] Newt Gingrich GOP presidential primary Loss David Dewhurst GOP primary, Texas Senate Loss Harold Simmons, Republican, $26.9 million* Mitt Romney GOP presidential candidate Loss Connie Mack Florida Senate Loss Rick Santorum GOP presidential primary Loss Newt Gingrich GOP presidential primary Loss Rick Perry GOP presidential primary Loss David Dewhurst GOP primary, Texas Senate Loss Orrin Hatch GOP primary, Utah Senate Win Bob Perry, Republican, $21.5 million* Mitt Romney GOP presidential candidate Loss George Allen Virginia Senate Loss Connie Mack Florida Senate Loss Rick Perry GOP presidential primary Loss David Dewhurst GOP primary, Texas Senate Loss Joe Ricketts, Republican, $12.9 million* Mitt Romney GOP presidential candidate Loss Fred Eychaner, Democrat, $12 million* Barack Obama DEM presidential candidate Win

*As of Oct. 17, 2012 for the 2011-2012 election cycle. Source: Center for Responsive Politics and Center for Public Integrity analysis of Federal Election Commission records. Totals include contributions from individuals, family members and corporations that are controlled by the individual super donor.

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part VI ©2013 Center for Public Integrity 152 Rove-affiliated groups spend $175 million, lose 21 of 30 races P residency, Senate still in hands of Democrats By Michael Beckel and Reity O’Brien Published Online: November 9, 2012

f Karl Rove was an NFL coach and Inot a political strategist, he would probably be looking for a new job about now. Organizations co- founded by the GOP’s most effective fundraiser spent more than $175 million only to see President Barack Obama win a second term and Democrats actually gain seats in the Karl Rove, former Senior Advisor to President U.S. Senate. George W. Bush Sue Ogrocki/AP According to a Center for Public Integrity review of spending records, Rove’s super it counterpart, went 7-17. The two PAC, American Crossroads, went groups, which were both active in 3-10 during the 2012 election cycle, a handful of contests, had a com- while Crossroads GPS, its nonprof- bined 9-21 record.

When asked by Fox News host of five undecided contests where the Chris Wallace on Election Night if group also invested money. his groups’ spending was “worth it,” “If you look back to 2010, there Rove was unapologetic: “Look, if were lots of races where Democrats groups like Crossroads were not ac- were overwhelmed by outside mon- tive, this race would have been over ey at the last minute,” said House a long time ago.” Majority PAC spokesman Andy Meanwhile, Jonathan Collegio, Stone. “We aimed to reduce the the spokesman for the two Cross- disparity in outside GOP money to roads organizations, has main- outside Democratic money, and we tained that “sub-optimal candidate cut it in half from 2010 to 2012.” quality” contributed to Republican Zach Gorin, the spokesman losses in the Senate and that his of Majority PAC, stressed that it groups will be a “permanent entity was important for Democrats to on the center-right.” compete in the fundraising arms “By leveling the financial play- race against groups like Ameri- ing field, conservative super PACs can Crossroads and Americans for kept this race close and winnable Prosperity, which has ties to conser- all the way until the end,” Collegio vative billionaire brothers Charles told the Center for Public Integrity. and David Koch. “Our contributors are of course dis- “At the beginning of the cycle, appointed with the results, but sat- the conventional wisdom was that isfied with the impact we had.” Democrats would surely lose their Democratic super PACs fared majority in the Senate,” Gorin said. far better, especially Majority PAC, “But our growing financial momen- launched by former aides to Sen- tum in the lead-up to November en- ate Majority Leader Harry Reid, sured that we would not only be able D-Nev. The organization had a 14-3 to compete with Karl Rove and the record. Koch brothers on the air in Demo- House Majority PAC, a group fo- cratic seats, but also bring the fight cused on aiding House Democrats, to them in red states, as well.” also appears to have backed more The Democratic super PACs may winners than losers. Thirty-five of its have played a role, but they had an preferred candidates won while 31 easier task than their Republican lost. Democrats are leading in four counterparts. Democratic candi-

dates for Senate, for example, col- ate seats in Missouri and Indiana, lectively outraised their Republican which were expected to be Repub- counterparts by more than $35 mil- lican pickups, appear to have suf- lion in the seven most hotly contest- fered from “sub-optimal” candi- ed races. A similar dynamic held dates, in Collegio’s words. true in the presidential contest, Rep. Todd Akin, the GOP Senate where Obama’s campaign outraised candidate in Missouri, saw his stand- his Republican rival Mitt Romney ing in the polls drop after he said by more than $240 million. women who were victims of “legiti- In addition, Republican Sen- mate rape” rarely get pregnant.

Scorecard for the top 10 outside spenders rank Group Wins–Losses Total spent 1 Restore Our Future 0–1 $143 million 2 American Crossroads 3–10 $105 million 3 Crossroads GPS 7–17 $71 million 4 Priorities USA Action 1–0 $67 million 5 Majority PAC 14–3 $37 million 6 Americans for Prosperity 1–2 $37 million 7 U.S. Chamber of Commerce 7–33 $36 million 8 House Majority PAC 40–31 $31 million 9 Service Employees International Union 52–29 $30 million 10 American Future Fund 5–17 $25 million

Source/Methodology: Center for Public Integrity analysis of Federal Election Commission data collected by the Center for Responsive Politics and the Sunlight Foundation. Total spending and win-loss records calculated based on all 2011-2012 election cycle activity, including the November general election, primaries and special elections.

Comments about rape also con- also operate arms devoted strictly to tributed to the defeat of Indiana independent expenditures. Republican Richard Mourdock, The NRSC’s independent spend- who, during a late October debate, ing supported nine GOP Senate said that pregnancies resulting candidates, seven of whom lost on from rape shouldn’t be aborted Election Night. Eleven of 13 candi- because they were “something that dates the DSCC made independent God intended to happen.” expenditures on behalf of won. In addition to Indiana, Major- The Democratic Congressional ity PAC’s 14 “wins” included victo- Campaign Committee and Nation- ries in Montana and North Dakota, al Republican Congressional Com- states where Obama lost the popu- mittee had more mixed results. lar vote to Romney. The GOP managed to retain Super PACs and nonprofits, control of the U.S. House of Rep- which proliferated after the contro- resentatives though its advantage versial 2010 Supreme Court’s Citi- appears to have dropped by a hand- zens United ruling, are allowed to ful of seats. As of press time, the accept contributions of unlimited Associated Press had still not called size from individuals, corporations nine races. and unions. This money can be used “The money was not decisive in on advertisements, officially called a lot of races,” said Kyle Kondik, an “independent expenditures,” but analyst at the Center for Politics at spending cannot be coordinated the University of Virginia. “Candi- with campaigns. dates matter too.” The scorecards of the Democrat- Despite the Crossroads organi- ic Senatorial Campaign Committee zations not having “a very good re- and the National Republican Sena- cord to point to,” Kondik says that torial Committee mirrored those Rove “still does have a lot of cachet of their aligned super PAC and on the right.” nonprofit allies, even though they Conservative attorney Dan Back- face limits on fundraising. er, too, predicts Rove is here to stay. Party committees can only accept “Karl Rove is not retiring any- limited contributions from individu- time soon,” Backer said. n als and PACs, and while some of their spending can be coordinated, they Andrea Fuller contributed to this report.

Sheldon Adelson, chairman and CEO of the Las Vegas Sands Corp. Vincent Yu/AP file Adelson gave $40 million to super PACs in final weeks of election By Michael Beckel and Andrea Fuller Published Online: December 21, 2012

illionaire casino mag- aligned super PACs In the final nate Sheldon Adelson and three weeks of the 2012 campaign, Bfamily poured nearly $40 bringing their total giving to the million into the coffers of GOP- groups to more than $93 million.

Adelson ranks as the top donor political process, open doors and to the outside spending groups by a be kingmakers simply because of wide margin, according to a Center the size of their bank account,” for Public Integrity analysis of cam- he said. “The threat of the spend- paign finance records. ing just hangs over all the political Super PACs raised roughly $830 decisions that are happening on million in the 2012 election, with [Capitol] Hill.” conservative groups accounting for After focusing primarily on the about 60 percent of the total, ac- presidential contest, in the final cording to the nonpartisan Center weeks of the campaign, Adelson for Responsive Politics. ramped up his giving to GOP- By contrast, President Barack aligned super PACs active in House Obama’s presidential campaign and Senate races. raised nearly $720 million and Re- In Virginia alone, Adelson in- publican challenger Mitt Romney’s vested $4 million into a super PAC raised almost $450 million, accord- that ran attack ads against Demo- ing to Federal Election Commis- crat Tim Kaine in the final days of sion filings. the election. In all, the top 25 super PAC su- His million-dollar contribution per donors doled out more than to a super PAC called the “Hard- $310 million, about 37 percent of working Americans Committee” ac- all super PAC receipts, according to counted for the bulk of the money the Center’s analysis of data from used in an unsuccessful last-ditch the FEC and Center for Respon- effort to defeat incumbent Sen. sive Politics. Ninety-one individu- Debbie Stabenow, D-Mich. als gave at least $1 million to super And a GOP-aligned super PAC PACs and collectively donated more known as the “America 360 Com- than $330 million, according to the mittee” received $500,000 from the analysis. Adelsons as it touted incumbent The unlimited donations, which Sen. Scott Brown, R-Mass., and crit- are used primarily to fund candi- icized Democratic challenger Eliza- date attack ads, concern advocates beth Warren in telephone calls and such as Stephen Spaulding, staff mailings. counsel at Common Cause. Despite the spending, however, “People are able to distort the Democrats prevailed in the most

contentious races — including bat- that used a super PAC to direct tles for U.S. Senate seats in Massa- funds into state races. None of chusetts and Virginia. these donors broke the $20 million Adelson’s donations to super mark. PACs — which can accept unlimit- Billionaire New York City May- ed donations from individuals, cor- or Michael Bloomberg, No. 9, was a porations and unions — set a new new addition to the list. Bloomberg standard in political giving. gave more than $10 million to a Texas businessman Harold Sim- group he launched called Indepen- mons, the billionaire owner of Con- dence USA PAC, whose priorities tran Corp., ranked a distant second include stronger gun control laws among super donors, giving $30.9 and marriage equality for same-sex million, including donations from couples. his company and wife, Annette Other new additions to the Cen- Simmons. ter’s list of top donors include: One of Simmons’ business ven- • William S. Rose, Jr., No. 6, the tures includes a site in West Texas 61-year-old attorney tied to two built to store nuclear waste. The companies that gave more than Nuclear Regulatory Commission is $12 million to conservative super currently debating rules that could PAC FreedomWorks for Ameri- result in sizeable contracts for Sim- ca since the beginning of Octo- mons’ company. ber; Another Texan, millionaire Bob • the American Federation of Perry, ranked third, giving $23.5 State, County and Municipal million to conservative super PACs. Employees, No. 12 at $8.2 mil- Perry is the owner of Perry Homes lion; and an advocate for the business- led effort to limit damages awarded • the American Federation of in lawsuits. Teachers, No. 15 at $5.8 million; Millionaires and billionaires and pepper the Center’s list of the top • the United Association of Jour- 25 super donors (see page 6). The neymen and Apprentices of list also includes seven unions and the Plumbing, Pipefitting and the Republican Governors Associa- Sprinkler Fitting Industry, tied tion, a so-called “527 committee” for 23rd at $4.2 million.

Rose’s companies — Special- jority PAC, Women Vote!, the super ty Investments Group, Inc., and PAC of abortion rights advocacy Kingston Pike Development, LLC group EMILY’s List, and America — both list their address as Rose’s Votes Action Fund, a super PAC that $634,000 private home outside of funded get-out-the-vote efforts. Knoxville, Tenn. Both were regis- Liberal billionaire hedge fund tered with the state of Tennessee manager George Soros* made it on in late September, and neither have the list, donating about $2.8 mil- websites. lion split among four Democratic Rose, after intense press scru- groups. His children Andrea, Al- tiny, went public saying Specialty’s exander and Jonathan also each mission is to “buy, sell, develop donated six-figure sums to Demo- and invest in a variety of real estate cratic super PACs, as did his daugh- ventures and investments.” Rose re- ter-in-law Melissa, bringing the leased a lengthy press release, but family’s total giving to $5.1 million, did not indicate where the money enough to rank 18th. for the donations originated. Soros’ children collectively gave Rose did not respond to requests $1.1 million to the pro-campaign for comment for this story. finance reform super PAC “Friends The top Democratic-aligned su- of Democracy,” which was launched per donor was Chicago media mo- by Jonathan Soros. gul Fred Eychaner, who gave $14.1 This is a far cry from the $23.7 million over the course of the elec- million Soros donated during the tion cycle, split among five groups. 2004 election to 527 groups — the That sum earned him the No. 4 predecessors of super PACs — when spot on the Center’s top 25 list. he ranked as the top 527 commit- The pro-Obama Priorities USA tee financier, according to the Cen- Action super PAC collected $4.5 ter for Responsive Politics. million from Eychaner, ranking Despite fears to the contrary, as his top beneficiary. He also donations from blue-chip corpora- backed Majority PAC, House Ma- tions were rare, although a month

* George Soros is the chairman of the Open Society Foundation, which provides funding for the Center for Public Integrity. See list of the Center’s donors at: www.publicintegrity.org/about/our-work/supporters.

George Soros AP Photo

before the election, Chevron, the during the final three weeks of the third-largest American company election. according to Forbes, donated $2.5 American Crossroads was co- million to a Republican super PAC founded by GOP strategists Karl closely allied with House Speaker Rove and Ed Gillespie. John Boehner, R-Ohio. Unlike traditional political ac- One of the largest, high-profile tion committees, there is no limit corporate donors was Weaver Hold- on contributions to super PACs. ings, the parent company of the In- They emerged following the U.S. diana-popcorn company known for Supreme Court’s Citizens United de- its brands “Pop Weaver” and “Trail’s cision and a federal court ruling End,” which is sold by Boy Scouts called SpeechNow.org v. Federal across the country. Weaver Hold- Election Commission. ings, along with Weaver Popcorn, Adelson is a staunch ally of Isra- donated $3.4 million to American el and an opponent of unions. He Crossroads, including $1 million first hit the news when he and his

relatives pumped more than $16 million into a super PAC that supported former GOP House Speaker Newt Gingrich’s failed bid for the Republican nomination for president. He and his wife Miriam gave $30 million to the pro-Romney super PAC Restore Our Future, which accounted for nearly 20 percent of the nearly $154 million raised by the group. In late October, the Adelsons also gave $23 million to American Crossroads, their first donations to the group. Crossroads spent more than $90 million in an unsuccessful effort to help Romney oust Obama. Roughly two-thirds of Adelson’s $93 million went to super PACs that backed just one or two specific candidates. None of Adelson’s preferred candidates prevailed in any Collect ’em all! of the 10 races in which these super Super donor PACs were active. Earlier this month, a defiant ‘all-star’ cards Adelson told the Wall Street Jour- nal that he would spend even more Full profiles of the super donors money in future elections. on the Center for Public Integrity “I happen to be in a unique busi- website at: ness where winning and losing is www.publicintegrity.org/ the basis of the entire business,” 2012/04/26/8754/meet- Adelson told the newspaper. “I don’t super-donor-all-stars cry when I lose. There’s always a new hand coming up.” n

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Part VI ©2013 Center for Public Integrity 162 Court opened door to $933 million in new election spending CITIZENS UNITED Decision led to spending blitz in 2012 By Reity O’Brien and Andrea Fuller Published Online: January 22, 2013

he Supreme Court’s cording to a Center for Public Integ- Citizens United decision un- rity analysis. All but one of the top Tleashed nearly $1 billion in 10 recipients bought advertising in new political spending in the 2012 various media markets on behalf of election, with media outlets and a super PACs and nonprofits. Eighty- small number of political consult- nine percent of the expenditures ing firms raking in the bulk of the made to the top 10 went to spots at- proceeds. tacking candidates, the data show. Spending records released by the “For some in the industry, it has Federal Election Commission show been a definite boon,” said Dale Em- that throughout the 2012 election, mons, president of the American corporations, unions and individu- Association of Political Consultants. als that could take advantage of the “This election appears to have set a high court’s ruling were responsible new benchmark on the amount of for about $933 million of the esti- money that could be spent, because mated $6 billion spent during the there were no limits on what could contest. be spent.” Nearly two-thirds of the new The 2010 Citizens United decision money — about $611 million — went and a lower-court ruling allowed to 10 political consulting firms, ac- unlimited donations to super PACs

and nonprofits, independent groups Second was Crossroads Media, that used the funds primarily to fund which was paid about $163 million ad campaigns. to buy media time for conservative Media buyers keep only a fraction super PACs and nonprofits in 2012. of the total spending — usually 15 The firm is run by Michael Dubke, percent, according to Federal Com- the former president of Americans munications Commission records, for Job Security — a pro-Republican with the rest going to media outlets. nonprofit and one of Crossroads’ top clients. The winners Waterfront Strategies, which worked for Democratic groups, The top recipient of independent ranked third, at $81 million. spending among media buyers was Democratic-aligned Mundy Ka- Mentzer Media Services, the Towson, towitz Media, fourth on the list, was Md.-based media placement firm the preferred vendor for the pro- run by longtime GOP consultant Obama super PAC Priorities USA Ac- Bruce Mentzer. tion, placing more than $57 million Mentzer attracted nearly $204 mil- in television ads for the group. lion from conservative super PACs American Media & Advocacy and other outside groups. In a tough Group, a favorite of conservative year for Republicans, only 26 percent groups, ranked No. 5 at $27 million. of the candidates who were supposed Target Enterprises — a Los Ange- to benefit from the ads won their rac- les-based media buyer for conserva- es, according to a Center for Public tive super PACs — was paid $17 mil- Integrity analysis. lion, ranking it No. 6. The firm had The firm was the preferred ven- a dismal success rate, coming in dead dor for the pro-Mitt Romney super last among firms catering to super PAC Restore Our Future, which paid PACs and nonprofits. Seven percent Mentzer nearly $132 million to pur- of its preferred candidates won on chase air time in presidential battle- Nov. 6. ground states. A woman who answered the A Mentzer employee who an- phone at Target Enterprises Tuesday swered the phone declined to com- said both principals of the company ment on the firm’s involvement in were “mid-flight” and unavailable for the 2012 election. comment.

The Center analyzed FEC data address as GMMB — a well-known compiled by the Sunlight Foundation Democratic media consulting firm and the Center for Responsive Politics. and the preferred vendor for Presi- The $933 million in spending came dent Barack Obama’s 2008 and 2012 from super PACs, nonprofits, and to a campaigns. lesser extent, “527” organizations that Waterfront was the beneficiary of were the favorite independent spend- $81 million paid by some of the big- ing vehicle in past elections. gest Democratic outside spending groups — including Majority PAC, a FEC coordination law a ‘joke’ super PAC backing Democrats running for Senate, and the League of The Citizens United decision opened Conservation Voters. a huge new potential market for con- The Huffington Post reported sultants, but there was a catch. Con- that Waterfront is an internal branch sultants who work for candidates of GMMB. It was incorporated in — but also work for “independent” Delaware, and its president is listed groups that support those same can- as Raelynn Olson, GMMB’s manag- didates — have to be careful. ing partner. The high court’s decision did not Both Waterfront and its par- affect the ban on donations to candi- ent company, GMMB, worked to dates from corporations and unions, elect Democrat Richard Carmona nor did it affect contribution limits in his unsuccessful bid for Arizona’s from individuals. Instead, it focused open U.S. Senate seat. Majority PAC on spending by independent groups, hired Waterfront to purchase airtime unaffiliated with candidates. for ads supporting Carmona and at- As long as super PACs act inde- tacking his Republican opponent, pendently of the candidate, there is then-Rep. and now Sen. Jeff Flake. no danger of corruption, the high Carmona’s campaign hired GMMB court reasoned. for its ad buys in the same race. But sometimes the separation One Majority PAC ad used the between the campaign and the like- same childhood photo of Carmona minded super PAC or nonprofit can that was featured in an official Car- be hard to discern. mona campaign ad. Waterfront Strategies, for exam- GMMB did not reply to requests ple, in its FEC filings lists the same for comment.

Setting up spinoffs is more about Records show that American Me- “optics” than skirting coordination dia shares an Alexandria address with rules, said Paul S. Ryan, senior coun- the high-profile, bipartisan consult- sel for the nonpartisan Campaign ing group Purple Strategies. Purple Legal Center. Strategies failed to respond to the Under current law, as long as a Center’s repeated inquiries about firm assigns each client separate any affiliation that it might have with consultants — and those two don’t American Media & Advocacy Group. coordinate their activities — that American Media and Advocacy is constitutes a satisfactory firewall, ac- “well aware of the FEC coordination cording to Ryan. rules, including the common vendor “That’s a pretty ridiculous and rules,” said Jim Kahl, the group’s at- modest constraint on campaign co- torney, “and they have procedures in ordination,” Ryan said. place to comply with them.” In Ohio, American Media & Advo- Texas two-step cacy Group was paid by the Congres- sional Leadership Fund to purchase American Media & Advocacy, which ads slamming Democrat Betty Sut- also has no website, received nearly ton in the House race for District 16. $27 million to buy media for super American Media was also working PACs and other outside groups. for Sutton’s Republican opponent, The organization worked for the Rep. Jim Renacci. Congressional Leadership Fund, a The same person was listed in re- super PAC that paid for ads attack- cords as buying media in the Cleve- ing Pete Gallego, a Democrat who land market — at the same TV sta- defeated Republican Francisco Can- tion in at least one case — for both seco in the race for U.S. House of the Renacci campaign and the Con- Representatives in Texas’ 23rd Dis- gressional Leadership Fund. trict. The firm also worked for Can- Candidates and super PACs can seco’s campaign. avoid charges of coordination alto- Records show that at least one of gether by sending up smoke signals American Media’s buyers purchased in cyberspace. media in the San Antonio market for For example, one of Target’s top both the Congressional Leadership clients was Freedom PAC, a super Fund and the Canseco campaign. PAC that paid the firm nearly $3.4

million for ad buys supporting Rep. campaign committees and the out- Connie Mack, the unsuccessful Re- side groups that boost their candi- publican candidate in the Florida dates may share material as long as it Senate race. is publicly available. Freedom PAC released an ad con- “It’s a pretty big joke that any- taining some of the same footage one would really believe that these that was on the Mack campaign’s groups are truly independent from YouTube channel. the candidates,” Ryan said. “They’re Under FEC coordination rules, not.” n

Beneficiaries from Citizens United The 2010 U.S. Supreme Court ruling that led to the creation of super PACs and free-spending political nonprofits added nearly $1 billion in new spending to the 2012 election. Nine of the top 10 beneficiaries were media buyers, which usually collect a 15 percent commission of the amount billed.

Rank Name Total Given 1 Mentzer Media Services $204 million 2 Crossroads Media LLC $163 million 3 Waterfront Strategies (GMMB) $81 million 4 Mundy Katowitz Media $59 million 5 American Media and Advocacy Group $27 million 6 Target Enterprises $17 million 6 Red Sea LLC $17 million 8 Revolution Media Group/Revolution Agency $16 million 9 Arena Communications (direct mail) $14 million 10 Main Street Media Group $13 million

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Appendix ©2013 Center for Public Integrity 167 Quick stats on super PACs Full profiles at: www.publicintegrity.org/politics/consider-source/super-pacs R estore Our Future Ending Spending Action Supports: Mitt Romney Fund Founded: Oct. 8, 2010 Supports: Conservative candidates Website: www.restoreourfuture.com Founded: Oct. 5, 2010 Principals: Carl Forti, Charles Spies, Website: www.endingspendingfund.com Larry McCarthy, Steve Roche Principals: J. Joe Ricketts, Brian Baker, Nancy Watkins Priorities USA Action Supports: Barack Obama FreedomWorks for Founded: April 29, 2011 America Website: www.prioritiesusaaction.org Supports: Conservative candidates Principals: Bill Burton, Sean Sweeney Founded: Sept. 6, 2011 Website: www.freedomworksforamerica. Congressional Leadership org Fund Principals: Ryan Hecker, Russ Walker, Supports: Republican candidates Matt Kibbe, Dick Armey, Dean Clancy Founded: October 21, 2011 Website: www.congressionalleadership American Bridge 21st fund.org Century Principals: Norm Coleman, Brian Walsh, Supports: Democratic candidates Fred Malek, Vin Weber Founded: Nov. 23, 2010 Website: www.americanbridgepac.org YG Action Fund Principals: David Brock, Kathleen Supports: Republican candidates Kennedy Townsend, Rodell Mollineau Founded: Oct. 27, 2011 Website: www.ygaction.com Majority PAC Principals: John Murray, Brad Dayspring Supports: Democratic Senate members and candidates Club for Growth Action Founded: June 11, 2010 Supports: Conservative candidates Website: www.majority2012.com Founded: Aug. 9, 2010 Principals: Susan McCue, Monica Dixon, Website: www.clubforgrowth.org Harold Ickes, Jim Jordan Principals: Chris Chocola

Quick stats on super PACs [ CONTINUED ] Full profiles at: www.publicintegrity.org/politics/consider-source/super-pacs House Majority PAC Citizens for a Working Supports: Democratic House members America PAC and candidates Supports: Republican candidates Founded: April 6, 2011 Founded: Sept. 10, 2010 Website: www.thehousemajoritypac.com Website: www.citizensforaworking Principals: Alixandria “Ali” Lapp, Candace americapac.com Bryan Abbey Principals: Ken Blackwell, Ed Brookover, David Langdon, Jeremy Hughes Americans for a Better Tomorrow, Tomorrow Winning Our Future Supports: Political satire Supports: Newt Gingrich Founded: June 30, 2011 Founded: Dec. 13, 2011 Website: www.colbertsuperpac.com Website: www.winningourfuture.com Principals: Stephen Colbert, Trevor Principals: Becky Burkett, Gregg Phillips, Potter, Shauna Polk Rick Tyler American Crossroads Strong America Now Supports: Republican candidates Supports: Newt Gingrich Founded: July 9, 2010 Founded: Nov. 1, 2011 Website: www.americancrossroads.org Website: www.strongamericanow.org Principals: Mike Duncan, Steven Law, Principals: Mike George, Peter O’Rourke, Carl Forti, Karl Rove, Haley Barbour F. Scott O’Grady Cain Connections Supports: Conservative candidates Leaders for Families Founded: Dec. 14, 2011 Supports: Rick Santorum Principals: Herman Cain, Anthony Holm, Founded: Dec. 27, 2011 Matk Block Website: www.thefamilyleader.com Principals: Charles Hurley, James Bopp 9-9-9 Fund Supports: Herman Cain R ed, White and Blue Fund Founded: Oct. 20, 2010 Supports: Rick Santorum Website: www.americansforhermancain.com Founded: Oct. 1, 2011 Principals: Scott Mackenzie, Jordan Gehrke Website: www.rwbfund.com

Quick stats on super PACs [ CONTINUED ] Full profiles at: www.publicintegrity.org/politics/consider-source/super-pacs Principals: Nick Ryan, Stuart Roy, Endorse Liberty Christopher Marston Supports: Ron Paul R evolution Founded: Dec. 20, 2011 Supports: Ron Paul Website: www.endorseliberty.com Founded: July 14, 2011 Principals: Abraham D. Niederhauser, Website: www.revolutionpac.com Jeffrey Harmon, Ladd Christensen, Stephen Oskoui, Dan Backer Principals: Gary Franchi, Lawrence W. Lepard, Penny Langford Freeman

Quick stats on nonprofits Full profiles at: www.publicintegrity.org/politics/consider-source/nonprofits Patriot Majority USA Location: Washington, D.C. Supports: Democratic candidates Founded: 1999 Location: Washington, D.C. Website: www.clubforgrowth.org Founded: 2010 Principals: Chris Chocola, Chuck Pike, Website: www.patriotmajority.org Stephen Moore Principals: Craig Varoga, Joe Householder, Bill Burke American Commitment Supports: Conservative candidates League of Conservation Location: Washington, D.C. Voters Inc. Founded: April 10, 2012 Supports: Pro-environment candidates, Website: www.americancommitment.org mostly Democrats Principals: Phil Kerpen Founded: 1969 Website: www.LCV.org Americans for Prosperity Principals: Gene Karpinski, Patrick Supports: Conservative candidates Collins, Navin Nayak, Tiernan Founded: 2004 Sittenfeld, Scott Nathan Location: Arlington, Va. Website: www.americansforprosperity.org Club for Growth Inc. Principals: Tim Phillips, Art Pope Supports: Conservative candidates

Quick stats on nonprofits [ CONTINUED ] Full profiles at: www.publicintegrity.org/politics/consider-source/nonprofits Ending Spending 60 Plus Association Supports: Fiscally conservative Supports: Republican candidates candidates Founded: 1992 Founded: 2010 Location: Alexandria, Va. Location: Washington, D.C. Website: www.60plus.org Website: www.endingspending.com Principals: Amy Noone Frederick, Jim Principals: J. Joe Ricketts, Brian Baker, Martin Stephanie Mesick U.S. Chamber of Commerce American Future Fund Supports: Describes itself as “bipartisan” Supports: Conservative candidates but mostly supports Republican Founded: 2007 candidates Location: Des Moines, Iowa Website: www.uschamber.com Website: www.americanfuturefund.com Principals: Thomas J. Donohue, R. Bruce Principals: Nick Ryan, Sandra Greiner, Josten, Edward B. Rust, Jr. Allison Dorr Kleis Crossroads GPS American Action Network Supports: Republican candidates Supports: Conservative candidates Founded: 2010 Location: Washington, D.C. Location: Washington, D.C. Founded: July 23, 2009 Website: www.crossroadsgps.org Website: www.americanactionnetwork.org Principals: Steven Law, Karl Rove, Ed Principals: Norm Coleman, Douglas Gillespie Holtz-Eakin, Brian Walsh, Fred Malek Americans for Tax Reform Supports: Republican candidates Founded: 1985 Location: Washington, D.C. Website: www.atr.org Principals: Grover Norquist

3PREVIOUS ARTICLE SHOW CONTENTS NEXT ARTICLE4 Consider the Source | Appendix ©2013 Center for Public Integrity 171 Project staff Paul Abowd, Reporter took him inside the U.S. Supreme Paul is a money and politics reporter Court multiple times, including to oral for the Center for Public Integrity’s arguments of the landmark campaign Consider the Source project. He finance case Citizens United v. Federal comes to D.C. from Detroit, where he Election Commission. Previously, he reported for Labor Notes magazine completed a yearlong editorial fellow- and Critical Moment. His story on ship with Mother Jones, wrote for two President Obama’s charter school alternative newsweeklies in Colorado policy won a 2010 Project Censored and performed legislative research award. He also wrote and co-pro- at Project Vote Smart. Michael is a duced a documentary about Detroit’s graduate of Colorado College. Brewster-Douglass housing projects, which premiered in April 2012. His sto- John Dunbar, Project Director ries have appeared in Mother Jones, John is director of Consider the The Washington Post, In These Times, Source, an ongoing investigation of on MSNBC.com and elsewhere. Paul’s the impact of money on state and website is www.paulabowd.net. federal politics, and managing editor for political coverage. He created the Michael Beckel, Reporter Center’s Well Connected project, an Michael joined the Center for Public investigation of the political ties of the Integrity as a money and politics media and broadband industries, and reporter in February 2012. He previ- led the Who’s Behind the Financial ously spent three years with the Meltdown investigation into the sub- Center for Responsive Politics in a prime lending industry. He returned similar capacity. Michael’s work there to the Center in 2011 after two years

The Center would like to thank Wellspring Advisors, the Open Society Foun- dations, the Omidyar Network, the Deer Creek Foundation the Overbrook Foundation, the William Penn Foundation the Wyncote Foundation and the Rockefeller Family Fund for their generous support of this work.

as director of the Connected project Andrea Fuller, Data Reporter at the Investigative Reporting Work- Andrea joined the Center for Public shop at American University, where Integrity in September 2012 as a data he investigated the political influence reporter. She previously worked at of the telecommunications and media The Chronicle of Higher Education in industries. Prior, he reported on a similar role. There, she oversaw the media and technology issues and the publication’s award-winning analysis of financial meltdown for the Washing- presidential pay at nonprofit colleges. ton bureau of the Associated Press. She also worked on stories and He is a graduate of the University of interactive graphics about a number of South Florida in Tampa. other higher education issues, including student debt, conflicts of interest and Alexandra Duszak, Reporter fraud. Andrea previously interned for Alexandra served as a reporter for The Chronicle, The New York Times, The the Center for Public Integrity’s Con- Hill and the Asheville Citizen-Times. She sider the Source project. Previously, is a graduate of Stanford University. she was the Center’s 15th James R. Soles Fellow. She has interned at Dave Levinthal, Senior Delaware Today, DC magazine and Reporter The News Journal (Wilmington, Del.). Dave is the Center for Public Integ- While in college, Alexandra was a rity’s senior political reporter. Before reporter and editor at The Review, joining the Center, Dave reported on the University of Delaware’s award- campaign money and lobbying for winning student newspaper. She Politico and co-wrote the daily Politico served as executive editor from 2010- Influence column. He also edited 2011 and is the recipient of multiple OpenSecrets.org from 2009 to 2011, awards from the Delaware Press where he led coverage that won the Association. Alexandra is a 2011 Online News Association’s top honors Honors graduate of the University in 2011 for best topical reporting. From of Delaware, where she majored in 2003 to 2009, Dave worked as a politi- international relations and minored cal reporter for The Dallas Morning in journalism and economics. News, and from 2000 to 2002, he cov-

ered the New Hampshire Statehouse Amy Myers, Reporting Intern for The Eagle-Tribune of Lawrence, Mass. Dave is a Buffalo, N.Y., native and Reity O’Brien, James R. Soles graduate of Syracuse University. Fellow Reity is the Center’s 16th James Rachael Marcus, Reporter R. Soles Fellow. She graduated As a reporter for the Consider the from University of Delaware in May Source project, Rachael wrote the 2012 with an Honors degree in Daily Disclosure feature, which tracked political science and economics and outside spending and campaign ads minors in Spanish and journalism. in the 2012 elections. She joined the She worked for The Review, the Center for Public Integrity in Septem- university’s student-run newspaper, ber 2011 as an American University where she served as city editor and Fellow. Previously, she interned for covered Delaware’s turbulent U.S. the Portland Mercury, an alternative Senate contest in 2010. Reity has newsweekly, and freelanced for several been the recipient of awards from local newspapers and magazines in the Maryland Delaware DC Press Laguna Beach, Calif., and Portland, Ore. Association and the William P. Frank Rachael holds a master’s degree in Scholarship Fund. She has held journalism from American University internships at Fortune Small Business and is a graduate of Reed College in Magazine, the Cecil Whig and The Portland. Rachael is now a freelance Philadelphia Inquirer. investigative reporter in San Francisco. n

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