What does the death of Mollie Tibbetts, an Iowa college student murdered by an undocument farm worker in Iowa back in July, have in common with downfall of America? Well, if you had asked Fox News or President Trump in the days following the revelation that Mollie’s murderer was ‘an illegal’, they would have told you illegal immigration is what the murder and America’s downfall have in common.
But then the real common link between Mollie’s murder and the downfall of America was discovered and the right-wing noise machine suddenly stopped talking about Mollie’s murder. Because that common link turned out to be a person. The person who illegally employed and housed for years Tibbetts’s murderer. A person the Republican party and the billionaires it works for would rather the American public not read about because she happens to be one of the Republican Party’s masters of the dark arts of wielding ‘dark money’ in American politics: Nicole Schlinger, an influential Iowan Republican fundraiser and an important figure in a network of Republican political operatives who founded and operate American Future Fund (AFF), a 501(c)(4) (‘social welfare’) political super PAC.
Nicole was AFF’s first president. And it turns out the story of AFF, which was started in 2008, two years before Citizens United, is the story of what was wrong with the US campaign finance system in the pre-Citizens United era and the story of how it got much worse in the post-Citizen United era.
The story of American Future Fund is also a story about how the mega-donor networks operated by the Koch brothers and Karl Rove were responsible for the vast majority of new ‘dark money’ flowing into the US political system post-Citizens United. The right-wing donor networks operated by the Kochs and Rove have played a massive role in that worsening post-Citizens United situation and Nicole Schlinger’s AFF was an important tool for both networks in exploiting that worsening situation. AFF provides a full spectrum of political services, but one of its most important services is operating largely in the dark without the public knowing what its doing and who hired it.
Schlinger also runs CampaignHQ, a call-center business that provides robo-calling and fundraising services for a number of the most anti-immigrant GOP politicians today, from Ted Cruz to Corey Stewart (the ‘Alt Right’ GOP gubernatorial candidate in Virginia this year). And in Ted Cruz’s and Corey Stewart’s cases, Schlinger raised funds for them in their races this year. Keep in mind that Cruz was locked in an exceptionally tight reelection race this year when this story broke, so this the kind of story that could have had significant political ramifications if it ended up making Cruz look like a hypocrite who will defend the employers of undocumented workers when they’re raising money for him. And Corey Stewart straight up says in the first article below that he doesn’t really care with Schlinger does “in her personal life” as long as she’s good a fundraising.
That’s all part of why the Republican Party would likely prefer the American public remains in the dark about the story of Nicole Schlinger, her career as a Republican fundraiser and officer in dark money entities like American Future Fund, and her propensity for hiring undocumented immigrants. And in the context of the current fixation within the GOP today on illegal immigration, the fact that a key Republican master of dark money politics is the person who illegally hired Tibbetts murderer is a perfect storm story for shining a light on American’s dark money infrastructure.
So when the right-wing noise machine suddenly stopped talking about Mollie’s murder shortly after Nicole Schlinger’s name entered the story it’s hard to avoid the conclusion that a desire to keep Schlinger’s personal biography as a master of the dark money politics out of the news. A biography that, again, really is like the quintessential story of how right-wing billionaire money has infested American politics.
That’s the story we’re going to look at in this post. The story of the American Future Foundation. It’s a story that overlaps with Schlinger’s life but has a life of its own. A story with the following key points:
1. AFF was started in 2008 as a 501(c)(4) ‘social welfare’ nonprofit, with Schlinger as its first president. But Schlinger was just one of the Iowan Republican power brokers behind it. As we’re going to see, maintaining the pretense of being a ‘social welfare’ nonprofit is central to how dark money operates in American politics and AFF’s adoption of that ‘social welfare’ status is particularly emblematic of the farcical nature of dark money entities claiming ‘social welfare’ status.
2. By 2009, AFF was lobbying the Federal Election Commission (FEC) to weaken state regulations on political robo-calling in anticipation of robo-calling campaigns explicitly advocating for and against politicians in the 2010 mid-terms. As we’re going to see, the rules for 501(c)(4)s for political attack ads that directly advocate for or against a candidate require the disclosure of how much was spent on the ads but not who paid for them. And lack of donor disclosure requirements is a critical feature of 501(c)(4)s that make them ideal for letting billionaires inject massive amounts of money in politics anonymously.
3. AFF appears to be closely affiliated with DCI Group, a shady Republican lobbying firm known for taking on clients like RJ Reynolds Tobacco and the Burmese Junta. AFF was contracting a DCI Group affiliate in 2009 and both AFF and DCI Group were hired by Doral Financial Group in 2014 to lobbying the government of Puerto Rico.
4. Two of the key figures behind the formation of AFF were previously associated two of the sleaziest political attacks in modern American presidential politics: the hyper-racist Willie Horton ad from 1988 used against Michael Dukakis and the ‘Swiftboat Veterans for Truth’ smear campaign used against John Kerry in 2004. Specifically, Ben Ginsberg — the former chief outside counsel to the Bush-Cheney 2004 campaign who resigned after it was revealed that he was also providing advice to Swift Boat Veterans for Truth — was AFF’s legal council. AFF’s media strategist was Larry McCarthy, the guy who produced the 1988 Willie Horton ad.
5. When the 501(c)(4) system was started nearly a century ago, these ‘social welfare’ entities were expected to “exclusively” focus on social welfare causes and avoid explicit partisan advocacy for or against politicians in American politics. But that was “exclusively” rule was changed in 1959 to “primarily” and suddenly 501(c)(4) ‘social welfare’ entities were allowed to spend up to half of their expenditures on political attack ads. But that 50 percent cap can effectively be raised to almost 100 percent via the use of networks of affiliated 501(c)(4)s all donating to each other. AFF can, and does, act as such a for-hire node in networks of 501(c)(4)s.
6. 501(c)(4)s can run “Issue ads” — ads that don’t directly advocate for or against a candidate — that don’t count as political attack ads. So a 501(c)(4) could spend half of its money on political attack ads advocating for or against candidates and spend the other half on “issue ads” that are also indirectly advocating for or against a candidate. In the past, the difference between a political attack ad and an issue is a nebulous issue that largely comes down to whether or not certain “magic words” were used in the ad based on the 1976 Buckley v Valeo Supreme Court Case. Today, the rules aren’t quite so arbitrary and the FEC has the power to factor in the larger context of an ad can be used to determine whether or not its a political attack ad, but Republicans on the FEC board consistently prevent the FEC from using that broader power and the “magic words” criteria remains the de facto rule. AFF is an expert in navigating these grey lines.
7. The amount of money flowing into 501(c)(4)s exploded over the past decade. in 2006, $5.2 million was raised by 501(c)(4)s. It grew to $310 million by By 2012. The Supreme Court’s Citizens United ruling was in January of 2010. The vast majority of that rise in 501(c)(4) donations was to right-wing groups $265.2 million of the $310 million). AFF was a major recipient of that money. Almost all of AFF’s donations during this period were from the Koch network. The Koch and Rove donor networks played the largest roles in this spike in 501(c)(4) donations.
8. Other key entities in the Koch network of 501(c)(4)s include 60 Plus (supposedly a conservative version of the A.A.R.P. that actually works as lobbying mercenary), the TC4 Trust and the Center to Protect Patient Rights (CPPR). TC4 and CPPR were dubbed “shadow money mailboxes” after it was revealed how they acted as key middle-men organizations that would accept donations from the Koch network and then re-gift that money to other entities in the Koch network to the obscure the money flows. The money trail was further obscured by TC4 and CPPR using “disregardable entities”, which are sub-units of 501(c)(4)s that use different names to the public. The use of these “disregardable entities” was further obscured by incorrect IRS filings that left out the existence of these “disregardable entities” and were only corrected in later years with tax filing amendments.
9. Following the 2012 election, AFF was largely kicked out of the Koch network after it was revealed that AFF’s work on a 2012 California ballot initiative violated California law. A Koch-based entity, Americans for Job Security, gave $24 million to CPPR. CPPR, in turn, gave $7 million to AFF and $13 million to Americans for Responsible Leadership, another Koch-backed 501(c)(4). AFF and Americans for Responsible Leadership then passed the money along to various California ballot initiatives. This was considered campaign money laundering by California law.
10. AFF responded to getting cut off from the Koch funds by finding other clients. Like corporate lobbying for Doral Financial Group. In 2014, Karl Rove’s Crossroads GPS 501(c)(4) hired AFF to get involved in the North Carolina senate race. But AFF didn’t back the Republican. AFF backed the Libertarian candidate as part of a strategy to bleed off younger voters away from the Democrat by emphasizing the Libertarian’s advocacy for legalizing marijuana. The Republican candidate won that race.
11. By 2016, AFF’s clients included the establishment Republican mega-donors backing Marco Rubio’s run for the White House. Rubio’s campaign directly hired AFF for the general election after Marco Rubio dropped out of the presidential race and jumped back into the Senate race.
12. In 2016, AFF donated $3 million to the National Rifle Association, highlighting its service as a middle-man donor.
13. In 2018, AFF was used by the House Republican leadership to secretly get involved in California’s unusual “Jungle” primaries (where all candidates from all parties run in a single primary and the top two head to a general election run-off). This included providing services like hiring an army of door-knockers across three California districts that knocked on 400,000 doors. At the time, Republicans were openly anxious about the lack of national Republican party involvement but it was later revealed that the Republican party leadership wanted their hiring of AFF to remain a secret over concerns that their moves could anger the Republican base.
14. While the spending by 501(c)(4)s is tax free, the donations to 501(c)(4)s has been subject to the gift tax since the 1980s, but the IRS never consistently enforced this rule and many large donors never paid it. In 2011, the IRS attempted to audit five large 501(c)(4) donors over whether or not they paid their gift taxes on previous donations. The Republicans in Congress pressure the IRS to shut down the audit. In 2015, Congress was passed a law eliminating the gift tax for all nonprofits, including 501(c)(4)s, citing that 2011 audit attempt as justification.
15. In July of this year, the IRS declared that 501(c)(4)s no longer need to disclose the identities of large donors to the IRS itself. This is seen as potentially inconsequential because the IRS almost never audits 501(c)(4)s anyway. The 2015 lifting of the gift tax on 501(c)(4)s by congress was used as a justification for this move. The right-wing hysteria and outrage over the fake ‘IRS was targeting conservatives’ scandal of 2013 was also used as a justification. And while experts see this as largely inconsequential since the IRS rarely audits 501(c)(4)s anyways, one area that experts do see this impact is watching out for foreign donations. Although groups like AFF or Limited Liability Corporations can be used to obscure foreign donations so it still might not matter.
16. In September of this year, the Supreme Court actually made a potentially historic ruling that 501(c)(4)s do actually have to disclose donor identities for the money used for political attack ads (i.e. ads that explicitly advocate for or against a particular candidate). But experts expect this ruling to have a limited impact on the disclosure of donor identities thanks to the use of groups like AFF that can act as middle-men entities between the donor and the entities that run the actual ads (i.e., the only donors that will be disclosed will be the names of groups like AFF, not the names of the people who donated to AFF).
That’s the story we’re going to be looking at in this post. The story of how 501(c)(4) ‘social welfare’ organizations were used by wealthy right-wing donors to unleashed a flood of unlimited anonymous political spending in America’s campaigns. That’s the story of American Future Fund. A story that’s one degree removed from the murder of Iowa college student Mollie Tibbetts.
So let’s start off with an article looking at how Nicole Schlinger and her husband Eric Lang just happen to own the farm that employed and housed Cristhian Bahena Rivera, the undocumented immigrant who killed Mollie Tibbetts. Rivera was one of 10 other undocumented immigrants employed by the farm. The story was immediately promoted by the Republican party as somehow the most important story in the country after Rivera was identified as the murderer. It’s a particularly awkward situation for not just Schlinger but her Republican clients too. Clients that include some of the most anti-immigrant politicians running in 2018 like Ted Cruz and Corey Stewart. And yet, as the article notes, Schlinger and her husband have somehow managed to avoid the media spotlight, an impressive feat the couple has managed to maintain to this day:
Associated Press
The Man Accused of Killing Mollie Tibbetts Lived on Land Owned by GOP Fundraiser
By RYAN J. FOLEY
Aug. 24, 2018IOWA CITY, Iowa (AP) — A top Republican fundraiser whose firm works for several prominent immigration hardliners is the partial owner of the land where the Mexican man accused of killing Iowa college student Mollie Tibbetts lived rent-free, a farm spokeswoman said Friday.
Nicole Schlinger has long been a key fundraiser and campaign contractor for GOP politicians in Iowa and beyond, including this cycle for Texas Sen. Ted Cruz and Virginia Senate candidate Corey Stewart.
Schlinger is the president of Campaign Headquarters, a call center that makes fundraising calls, identifies supporters and helps turn out voters for conservative candidates and groups. Her business is one of the largest in Brooklyn, the central Iowa town where Tibbetts disappeared while out for a run on July 18.
Schlinger is married to Eric Lang, the president of the family-owned dairy that has acknowledged providing employment and housing for the last four years to Cristhian Bahena Rivera, the man charged with murder in Tibbetts’ death.
The couple — along with her husband’s brother Craig Lang and his wife — own farmland outside Brooklyn that includes trailers where some of the dairy’s employees live for free as a benefit of their employment, farm spokeswoman Eileen Wixted confirmed.
She said Rivera lived there for the duration of his employment, and about half of the farm’s other 10 workers do so as well. Under the arrangement, the farming company pays the couples to rent the land but workers do not have to pay, she said.
In an email Friday, Schlinger said that she was “shocked and deeply saddened” by Tibbetts’ death and had never met Rivera. “The perpetrator should be punished to the fullest extent of the law, and when he meets his maker, suffer the consequences he deserves,” she wrote.
She said that she was gifted an ownership interest in the land many years ago from her husband’s family and that she has no role in the farming operation.
Still, the fact that one of its own operatives has indirect ties to the case could complicate GOP efforts to highlight the gruesome slaying in its political messaging ahead of the November midterm election. Dairy co-owner Craig Lang also was a Republican candidate for Iowa agriculture secretary, finishing third in a five-way race in the June primary.
Republicans such as President Donald Trump and Iowa Gov. Kim Reynolds called for stricter immigration laws and enforcement almost immediately after Rivera, who is suspected of being in the country illegally, was charged Tuesday. Some have blamed Democratic policies for the slaying, even though studies have disputed the notion that those in the country illegally are more likely to commit violent crime.
“Every victim below would be alive today if we enforced our immigration laws,” U.S. Rep. Steve King of Iowa tweeted Friday, above a picture of Tibbetts and other victims. “Leftists sacrificed thousands, including their own, on the altar of Political Correctness.”
Schlinger’s business calls itself “the best conservative call center in America.” Her biography claims she is the most prolific fundraiser in Iowa GOP history, having brought in more than $50 million for politicians and causes. She has said her business has made millions of phone calls for candidates seeking offices ranging from president to city council since its founding in 1999. Her firm’s client list includes several politicians who routinely call for stricter immigration enforcement.
Federal Election Commission records show that Cruz’s re-election campaign has paid CampaignHQ nearly $1.7 million since the beginning of 2017. A Cruz campaign spokeswoman had no immediate comment.
Stewart, who has made stepping up deportations of immigrants in the country illegally a major campaign theme, has also employed the firm, along with the campaigns of Sen. Mike Lee of Utah and Rep. Joe Wilson of South Carolina. The now-defunct Stop Sanctuary Cities PAC paid the firm $3,449 for its services in March.
In an interview Friday, Stewart said he had no problem with Schlinger’s property ties to the suspect, saying her firm does a “great job” raising money.
“I hire people for their ability to do the work for my campaign,” he said. “Whatever she does in her personal life is her business.”
After Rivera was charged, Reynolds denounced an immigration system that “allowed a predator like this to live in our community.” CampaignHQ was a top vendor for the campaigns of former Iowa Gov. Terry Branstad, who selected Reynolds as his running mate in 2010, and has also done some work directly for Reynolds’ campaigns, state records show.
Investigators say that Rivera came to the country from Mexico illegally several years ago when he was in the late teens. He is accused of stalking Tibbetts while she was out for a run a few miles from his home, killing her after she threatened to call police on him, and dumping her body in a cornfield. Preliminary autopsy results show that Tibbetts died from multiple “sharp force injuries.”
Schlinger and her husband have managed to largely avoid the intense media spotlight that has followed the case. They did not speak at a press conference Wednesday when farm manager Dane Lang said Rivera presented an out-of-state identification and Social Security number with a different name when he was hired in 2014. Dane Lang said he was shocked to learn to that Rivera’s allegedly not in the country legally.
But others around town, including Rivera’s defense lawyer, question whether the family had to have had suspicions, if not known, about Rivera’s immigration status.
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“Still, the fact that one of its own operatives has indirect ties to the case could complicate GOP efforts to highlight the gruesome slaying in its political messaging ahead of the November midterm election. Dairy co-owner Craig Lang also was a Republican candidate for Iowa agriculture secretary, finishing third in a five-way race in the June primary.”
The killer’s employers are big time Republicans. It’s quite a complication for the GOP efforts to capitalize on the gruesome slaying. Not only is it obviously politically embarrassing, but Nicole Schlinger is also a key fundraiser for politicians in Iowa and beyond via her CampaignHQ call center company. That includes fundraising for two candidates in tough races this year: Ted Cruz in Texas and Corey Stewart in Virginia:
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Nicole Schlinger has long been a key fundraiser and campaign contractor for GOP politicians in Iowa and beyond, including this cycle for Texas Sen. Ted Cruz and Virginia Senate candidate Corey Stewart.Schlinger is the president of Campaign Headquarters, a call center that makes fundraising calls, identifies supporters and helps turn out voters for conservative candidates and groups. Her business is one of the largest in Brooklyn, the central Iowa town where Tibbetts disappeared while out for a run on July 18.
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And Schlinger and her husband Eric Lang didn’t just employ Rivera for the last four years. They also provided his housing free of charge along with 10 other workers. That sure sounds like the kind of arrangement that a company that knew it was employing undocumented workers would do:
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Schlinger is married to Eric Lang, the president of the family-owned dairy that has acknowledged providing employment and housing for the last four years to Cristhian Bahena Rivera, the man charged with murder in Tibbetts’ death.The couple — along with her husband’s brother Craig Lang and his wife — own farmland outside Brooklyn that includes trailers where some of the dairy’s employees live for free as a benefit of their employment, farm spokeswoman Eileen Wixted confirmed.
She said Rivera lived there for the duration of his employment, and about half of the farm’s other 10 workers do so as well. Under the arrangement, the farming company pays the couples to rent the land but workers do not have to pay, she said.
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Then there’s the fact that a number of Schlinger’s clients are viruently anti-immigrant politicians:
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Schlinger’s business calls itself “the best conservative call center in America.” Her biography claims she is the most prolific fundraiser in Iowa GOP history, having brought in more than $50 million for politicians and causes. She has said her business has made millions of phone calls for candidates seeking offices ranging from president to city council since its founding in 1999. Her firm’s client list includes several politicians who routinely call for stricter immigration enforcement.Federal Election Commission records show that Cruz’s re-election campaign has paid CampaignHQ nearly $1.7 million since the beginning of 2017. A Cruz campaign spokeswoman had no immediate comment.
Stewart, who has made stepping up deportations of immigrants in the country illegally a major campaign theme, has also employed the firm, along with the campaigns of Sen. Mike Lee of Utah and Rep. Joe Wilson of South Carolina. The now-defunct Stop Sanctuary Cities PAC paid the firm $3,449 for its services in March.
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It’s a tricky situation for GOP: extreme opportunity coupled with possible political peril. Political peril exemplified by Corey Stewart’s response to the revelation that one of fundraisers, Schlinger, was blatantly employing undocumented workers: Stewart simply said he sees no problem and it was none of his business what Schlinger did with her business. It’s the kind of answer Trump’s base probably didn’t like:
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In an interview Friday, Stewart said he had no problem with Schlinger’s property ties to the suspect, saying her firm does a “great job” raising money.“I hire people for their ability to do the work for my campaign,” he said. “Whatever she does in her personal life is her business.”
...
“Whatever she does in her personal life is her business.”
That’s quite a statement from an Alt Right candidate who has defined his political persona with his fixation on the dangers of illegal immigration.
And yet, despite the politically explosive nature of this twist in the murder of Mollie Tibbetts, Schlinger’s ties to this story received hardly any coverage:
...
In an email Friday, Schlinger said that she was “shocked and deeply saddened” by Tibbetts’ death and had never met Rivera. “The perpetrator should be punished to the fullest extent of the law, and when he meets his maker, suffer the consequences he deserves,” she wrote.She said that she was gifted an ownership interest in the land many years ago from her husband’s family and that she has no role in the farming operation.
...
Schlinger and her husband have managed to largely avoid the intense media spotlight that has followed the case. They did not speak at a press conference Wednesday when farm manager Dane Lang said Rivera presented an out-of-state identification and Social Security number with a different name when he was hired in 2014. Dane Lang said he was shocked to learn to that Rivera’s allegedly not in the country legally.
But others around town, including Rivera’s defense lawyer, question whether the family had to have had suspicions, if not known, about Rivera’s immigration status.
...
And as we now know months later, the ties Schlinger and Lang have to the murder of Mollie has largely stayed out of the media spotlight, in large part because the murder of Mollie just suddenly became a non-story not long after Schlinger and Lang’s ties were revealed.
Nichol Schlinger’s American Future Fund is the Story of the Present Day American Dark Money Nightmare
That’s all part of what is complicating what would normally be a prime opportunity for GOP anti-immigrant demagoguery. But as we’re going to see in this post, the political consequences of serious media attention to Nicole Schlinger could have significant repercussion. Repercussions that could, and should, shine significant light on the public’s understanding of how political ‘dark money’ operates in America’s broken campaign finance system. The story of Nichole Schlinger’s American Future Fund is a profoundly symbolic story about how the flood of money from anonymous wealthy donors is actually put to use to influence elections.
Because American Future Fund is both a provider of campaign services — everything from developing and running TV ad campaigns to hiring armies of door knockers to sign petitions — and a for-hire ‘social welfare’ organization node in a larger network of ‘social welfare’ 501(c)(4)s organizations. Like the Koch network of politically active 501(c)(4) ‘social welfare’ organizations. And Karl Rove’s network of politically active 501(c)(4) ‘social welfare’ organizations. AFF has worked for both networks. Specifically, after the Koch network kicked AFF out of its network in 2013 after AFF was caught breaking the 501(c)(4) rules in California, AFF found a new home in Karl Rove’s network. We’re going to see that story play out in the articles below.
So let’s start off our tour of American Future Fund (AFF) and the shadowy world of political 501(c)(4) political ‘social welfare’ entities by looking at this November 2009 Talking Points Memo piece about Schlinger’s AFF informing the Federal Election Commission that it’s planning on running a series of robo-call ads in the 2010 mid-term elections that are going to be explicitly advocating for or against candidates. AFF was advocating that federal laws on robo-calls override Iowa’s more stringent state laws on robo-calls and asking the FEC to make a ruling. As the article notes, it was a request for an FEC ruling that would have impacted all US states, not just Iowa.
So in 2009, AFF was trying to weaken the nation’s laws regulating robo-calls in anticipation of its 2010 robo-calling campaigns on behalf of Republicans. Or at least that was one of the things AFF was up to in 2009. As we’ll see, it’s often up to a lot.
As the article also notes, AFF back in 2009 consisted more people affiliated with the Republican party than just Nichole Schlinger. Jason Torchinsky, a lawyer for AFF’s political action group that would be carrying out the robo calls, was one of the architects of the American Center for Voting Rights (ACVR), a faux “voting-rights” outfit that was set up by GOP operatives in 2005 to “give ‘think tank’ academic cachet to the unproven idea that voter fraud is a major problem in elections.”
Jason Torchinsky worked at the time for a law firm run by Alex Vogel and his wife, Virginia State Senator Jill Holtzman Vogel. Alex Vogel was ACVR’s executive director and a former RNC lawyer. His wife Jill had a track record of hardball tactics, including having her babysitter level a campaign finance irregularity allegations against her primary opponent and a local prosecutor who was a supporter investigate it. She won the primary. The charges were dropped. Given the fact that the legal existence of something AFF is a giant violation of prudent campaign finance law, it’s ironic to have someone affiliated with the AFF with a history of making fraudulent campaign finance violation allegations as a political dirty trick.
Also keep in mind that this was just a couple months before the January 2010 Citizens United Supreme Court decision that sanctioned unlimited secret corporate and union political spending through 501(c)(4)s. Unlimited money that would pay for a lot of robo-calls. Although it’s also important to point out that AFF withdrew its request for the FEC to rule that federal robo-call regulations overruled stricter state regulations just a couple months later in January of 2010. So this was more of an aspiration attempt to weaken American’s robo-calling laws. The key point in the article is that AFF was boldly announcing plans for overly political advertising advocating for and against specific candidates in the 2010 mid-terms. In other words, it was behaving exactly like a highly partisan political entity. And yet it’s legally allowed to masquerade as a nonprofit ‘social welfare’ entity, granting it all sorts of privileges, like hiding its donors from the public.
Finally, as the article notes, because the AFF is a 501(c)(4), it’s not required to publicly disclose very much information. We’ll take a much closer look into those disclosure laws below. And the AFF fully embraced that lack of required disclosure by having no one talk to the media. It was operating as a black box entity and a very large political mega-phone simultaneously. And Nichole Schlinger was president at the time. So the article makes clear, avoiding media exposure is something Nichole Schlinger has long had experience with. It’s an integral aspect of her line of work as a dark money political operative
Talking Points Memo
MuckrakerShadowy GOP-Linked Group Plans Barrage Of 2010 Robo-Calls
By Zachary Roth
November 23, 2009 8:10 amA shadowy conservative group with ties to the operatives behind a host of GOP dirty tricks is working to undermine state restrictions on political robo-calls, as it gears up to unleash a barrage of such calls in 2010 races.
Last month, American Future Fund Political Action (AFFPA) informed the FEC that it’s planning robo-calls in congressional races. Jason Torchinsky, a lawyer for AFFPA, wrote that the group “wishes to distribute pre-recorded telephone calls … as part of a nationwide program of political outreach.” The calls, wrote Torchinsky, “will expressly advocate the election or defeat of one or more clearly identified candidates for Federal office.”AFFPA was asking the FEC for an advisory opinion on whether state laws restricting robo-calls should apply, or whether, as AFFPA argues, they’re pre-empted by a less restrictive federal law that sought to standardize the regulation of robo-calls. An FEC ruling in AFFPA’s favor would badly undermine state laws such as Minnesota’s, which requires the listener to actively consent to hearing a recorded message before the message can be played.
That’s worth paying attention to in itself. But behind the robo-call effort is a team of high-powered GOP operatives behind a slew of sleazy campaign tactics over the years.
You might remember Torchinsky, AFFPA’s lawyer, as one of the architects of the American Center for Voting Rights (ACVR), the bogus “voting-rights” group that was set up by GOP operatives in 2005 to “give ‘think tank’ academic cachet to the unproven idea that voter fraud is a major problem in elections,” as election law expert Rick Hasen has written.
For several months, ACVR’s executive director was Alex Vogel, a former RNC lawyer whose consulting firm reportedly was paid $75,000 for the ACVR gig. (Also involved with ACVR: TPMmuckraker favorite Pat Rogers, the New Mexico GOP activist who helped get David Iglesias fired for not pursuing bogus voter fraud complaints.)
Vogel also appears to have a hand in AFF: Torchinsky, a former Bush campaign lawyer, works for the law firm run by Vogel and his wife, Virginia State Senator Jill Holtzman Vogel.
Holtzman Vogel’s own political career may owe something to similarly hardball tactics. A former RNC counsel herself, she faced a tight primary in her Virginia Senate race, but prevailed after her opponent, Mike Tate, was indicted for campaign finance irregularities. The person who brought the complaint to the attention of authorities was Holtzman Vogel’s baby-sitter, and the local prosecutor who initially handled it was a Holtzman Vogel supporter. The charges against Tate were eventually dropped.
As for AFF itself, the group already has earned a reputation for trafficking in vicious and misleading shots against Democrats. A typical recent ad alleged that the government “planned to give flu shots to detainees at Guantanamo.”
It also has worked closely with Dick Armey’s FreedomWorks to help promote the Tea Party rallies against health-care reform. Republican heavy-hitters Jan Van Lohuizen, Ed Tobin, Ben Ginsberg are all reportedly involved with the group.
Because AFF is a 501c4, it’s not required by law to release much information about itself, and no one seems eager to speak on its behalf. Torchinsky declined to speak to TPMmuckraker on the record. Tim Albrecht, an Iowa GOP activist who now works for the gubernatorial campaign of Terry Branstad, was quoted earlier this month as a spokesman for the group, but told TPMmuckraker that he could no longer serve in that capacity, and declined to pass our inquiry on to any other specific representative, saying only that he could forward it to the group’s general mailbox. A separate email to that address went unreturned. AFF’s website lists Sandra Greiner, another Iowa Republican, as president, while the Iowa secretary of states database lists Nicole Schlinger, a local GOP consultant as president. Neither Greiner nor Schlinger returned a call.
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“A shadowy conservative group with ties to the operatives behind a host of GOP dirty tricks is working to undermine state restrictions on political robo-calls, as it gears up to unleash a barrage of such calls in 2010 races.”
The attempted undermining of political robo-calling regulations in anticipation of a big political ad campaign the next year. It’s just one of the many political activities AFF was up to in 2009:
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Last month, American Future Fund Political Action (AFFPA) informed the FEC that it’s planning robo-calls in congressional races. Jason Torchinsky, a lawyer for AFFPA, wrote that the group “wishes to distribute pre-recorded telephone calls … as part of a nationwide program of political outreach.” The calls, wrote Torchinsky, “will expressly advocate the election or defeat of one or more clearly identified candidates for Federal office.”AFFPA was asking the FEC for an advisory opinion on whether state laws restricting robo-calls should apply, or whether, as AFFPA argues, they’re pre-empted by a less restrictive federal law that sought to standardize the regulation of robo-calls. An FEC ruling in AFFPA’s favor would badly undermine state laws such as Minnesota’s, which requires the listener to actively consent to hearing a recorded message before the message can be played.
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And while AFF isn’t technically a branch of the Republican Party, it clearly should be seen as such based on the people behind it. People like Jason Torchinksy and Alex and Julia Vogel:
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That’s worth paying attention to in itself. But behind the robo-call effort is a team of high-powered GOP operatives behind a slew of sleazy campaign tactics over the years.You might remember Torchinsky, AFFPA’s lawyer, as one of the architects of the American Center for Voting Rights (ACVR), the bogus “voting-rights” group that was set up by GOP operatives in 2005 to “give ‘think tank’ academic cachet to the unproven idea that voter fraud is a major problem in elections,” as election law expert Rick Hasen has written.
For several months, ACVR’s executive director was Alex Vogel, a former RNC lawyer whose consulting firm reportedly was paid $75,000 for the ACVR gig. (Also involved with ACVR: TPMmuckraker favorite Pat Rogers, the New Mexico GOP activist who helped get David Iglesias fired for not pursuing bogus voter fraud complaints.)
Vogel also appears to have a hand in AFF: Torchinsky, a former Bush campaign lawyer, works for the law firm run by Vogel and his wife, Virginia State Senator Jill Holtzman Vogel.
Holtzman Vogel’s own political career may owe something to similarly hardball tactics. A former RNC counsel herself, she faced a tight primary in her Virginia Senate race, but prevailed after her opponent, Mike Tate, was indicted for campaign finance irregularities. The person who brought the complaint to the attention of authorities was Holtzman Vogel’s baby-sitter, and the local prosecutor who initially handled it was a Holtzman Vogel supporter. The charges against Tate were eventually dropped.
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Nicole Schlinger was then the president of AFF, but she nor anyone else associated with AFF were interested in talking about its political activities and could get away with this thanks to the secrecy benefits that 501(c)(4) organizations get:
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Because AFF is a 501c4, it’s not required by law to release much information about itself, and no one seems eager to speak on its behalf. Torchinsky declined to speak to TPMmuckraker on the record. Tim Albrecht, an Iowa GOP activist who now works for the gubernatorial campaign of Terry Branstad, was quoted earlier this month as a spokesman for the group, but told TPMmuckraker that he could no longer serve in that capacity, and declined to pass our inquiry on to any other specific representative, saying only that he could forward it to the group’s general mailbox. A separate email to that address went unreturned. AFF’s website lists Sandra Greiner, another Iowa Republican, as president, while the Iowa secretary of states database lists Nicole Schlinger, a local GOP consultant as president. Neither Greiner nor Schlinger returned a call.
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Yep, it turns out that American Future Fund (AFF) listed Nicole Schlinger as its president and “principle officer” back in 2009. It’s worth noting that Iowa state senator Sandra Grenier was president of AFF as of February of 2011, so Schlinger’s time as president was relatively short. But as the first president of AFF that signifies a particularly close association with the people behind it.
And it’s important to note another activity AFF was up to in 2009: working to promote the then-nascent Tea Party on behalf of the Koch-financie FreedomWorks:
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As for AFF itself, the group already has earned a reputation for trafficking in vicious and misleading shots against Democrats. A typical recent ad alleged that the government “planned to give flu shots to detainees at Guantanamo.”It also has worked closely with Dick Armey’s FreedomWorks to help promote the Tea Party rallies against health-care reform. Republican heavy-hitters Jan Van Lohuizen, Ed Tobin, Ben Ginsberg are all reportedly involved with the group.
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One of the reasons this work by AFF in 2009 to promote the Tea Party is important to note is because the fact that billionaire-backed entities like the AFF were promoting the Tea Party in 2009, and this was publicly known, doubles as a justification for the scrutiny give by the IRS to the flood of new Tea Party groups filing for 501(c)(4) status in 2010–2012. That scrutiny led to right-wing outcry 2013 charging that the IRS was targeting conservative 501(c)(4)s in a partisan manner. Scrutiny designed to investigate whether or not these groups applying for 501(c)(4) social welfare status truly were social welfare groups and weren’t just political entities masquerading as social welfare entities.
And as we’ll see below, that outcry in 2013 over ‘IRS targeting Tea Party’ groups was also used to justify the further weakening of campaign finance laws in recent years. So the fact that AFF was working with the Koch brothers’ FreedomWorks 2009 to promote the Tea Party highlights the fact that the question of whether or not the IRS should have applied scrutiny to groups applying for 501(c)(4) status is really a question of whether or not billionaire-backed groups like AFF that are clearly deeply political entities should be allowed to call themselves a nonprofit 501(c)(4) social welfare organization and get all of the tax and secrecy benefits that come with that nonprofit status. The Supreme Court may have allowed for unlimited money to flow into 501(c)(4)s with the 2010 Citizens United ruling, but the decision by regulatory agencies to let blatantly partisans entities like AFF pretend to be social welfare organization and obtain that 501(c)(4) status also plays a critical role in introducing unlimited spending on US election.
The American Future Fund’s For-Hire Corporate Lobbying Services And the DCI Group: It’s Another One of AFF’s ‘Social Welfare’ Services
Talking Points Memo followed up the above look at AFF the next day with the following article that pointed out one of the more egregious aspects of AFF’s claim of ‘social welfare’ status: AFF appeared to have ties to DCI Group, a Republican lobbying firm with a reputation for for dirty tricks and shady clients like RJ Reynolds Tobacco and the Burmese Junta:
Talking Points Memo
GOP Group Undermining Robo-Call Laws Has Ties To DCI
By Zachary Roth
November 24, 2009 12:37 pmAmerican Future Fund (AFF), the shadowy conservative advocacy group working to undermine state laws against robo-calling, has ties to DCI Group, a Republican lobbying firm with a reputation for dirty tricks and shady clients. And a closer look at AFF suggests the group has been designed to carry out political attacks while escaping scrutiny from the press and public.
AFF paid $249,000 last year to McKenna & Associates for fundraising work, according to a copy of AFF’s 990 form for 2008 that was obtained by TPMmuckraker. The Arlington, Virginia-based firm is run by Andrew McKenna, a GOP operative and former senior vice-president of DCI Group. McKenna did not immediately respond to TPMmuckraker’s request for comment.DCI Group, a Republican lobbying and PR shop with close ties to Karl Rove, has represented the Burmese junta. In the 1990s, it worked to develop “smokers’ rights” groups on behalf of RJ Reynolds Tobacco, and later helped the Bush administration gin up fake grassroots support for privatizing social security. A DCI offshoot, FLS Connect, recently announced it would conduct an internal audit after its seedy fundraising techniques were exposed by TPMmuckraker and others. FLS also launched its own robo-call attacks against Barack Obama last fall, that were so vicious and misleading that they were denounced even by some Republicans.
Despite its plans to launch a barrage of robo-calls next year, and its ongoing misleading political attacks against supporters of health-care reform, AFF is taking pains to avoid disclosing information on its funding, and to create confusion about its organizational structure.
AFF reported a total revenue of just under $7.5 million last year, according to the 990 form, which, as a public copy, does not include the identify of the group’s contributors.
When the Des Moines Register reported on AFF’s effort to undermine robo-call laws, it spoke to Nick Ryan, who it identified as the chair of AFF’s board. But Ryan, an Iowa GOP political operative, appears to play a more active role. The contact phone number listed both on AFF’s website and on its 990 goes to the Concordia Group, a Des-Moines-based political consulting and lobbying firm that Ryan founded and runs. A press release sent out by AFF this week — praising Iowa’s Republican senator, Chuck Grassley, for his vote in opposition to health-care reform, and slamming Democratic senator Tom Harkin for his vote in support — lists Jill Latham as a contact for AFF. Like Ryan, Latham works for the Concordia Group. And AFF paid Concordia $300,000 for “consulting” last year, according to the 990 formDes Moines Register.
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“American Future Fund (AFF), the shadowy conservative advocacy group working to undermine state laws against robo-calling, has ties to DCI Group, a Republican lobbying firm with a reputation for dirty tricks and shady clients. And a closer look at AFF suggests the group has been designed to carry out political attacks while escaping scrutiny from the press and public.”
Yep, not only does AFF have ties to DCI Group, described as “a Republican lobbying firm with a reputation for dirty tricks and shady clients”, but AFF appears to have been designed to carry out political attacks while escaping scrutiny from the press and public. It’s, again, a reminder Nicole Schlinger’s ability to escape scrutiny isn’t just useful in the context of the Mollie Tibbetts murder. Avoiding attention and scrutiny is a core service of entities like AFF. A service that requires maintaining its 501(c)(4) status and the absurd pretense that it’s a ‘social welfare’ organization.
But while AFF was already working in the Koch brothers orbit by 2009 — like with its FreedomWorks Tea Party promotion work — it sounds like Karl Rove may have been one of the key people behind DCI Group.
And DCI Group isn’t just offering services to political parties. It also represented clients like the Burmese Junta and developed a fake grassroots “smokers’ rights” campaign for RJ Reynolds. And AFF was found to have paid a firm in 2008 for “fundraising work” run by Andrew McKenna, a former DCI Group senior vice-president:
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AFF paid $249,000 last year to McKenna & Associates for fundraising work, according to a copy of AFF’s 990 form for 2008 that was obtained by TPMmuckraker. The Arlington, Virginia-based firm is run by Andrew McKenna, a GOP operative and former senior vice-president of DCI Group. McKenna did not immediately respond to TPMmuckraker’s request for comment.DCI Group, a Republican lobbying and PR shop with close ties to Karl Rove, has represented the Burmese junta. In the 1990s, it worked to develop “smokers’ rights” groups on behalf of RJ Reynolds Tobacco, and later helped the Bush administration gin up fake grassroots support for privatizing social security. A DCI offshoot, FLS Connect, recently announced it would conduct an internal audit after its seedy fundraising techniques were exposed by TPMmuckraker and others. FLS also launched its own robo-call attacks against Barack Obama last fall, that were so vicious and misleading that they were denounced even by some Republicans.
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RJ Reynolds and the Burmese Junta. DCI Group is that kind of entity. Snd while the above article described how AFF hired a consulting firms run by a DCI Group former senior vice president in 2008 for fundraising work, as we’re going to see below, DCI Group actually hired AFF to run lobbying campaigns on behalf of DCI’s corporate clients. In particular, AFF was hired to run a lobbying campaign in Puerto Rico on behalf of Doral Financial Group at the same time DCI Group was lobbying for Doral. DCI Group denied it subcontracted AFF to do this work. We’ll look at that scheme more later on.
The Roots of the American Future Fund: Willie Horton Meets the Swift Boaters
But AFF’s associations to the people behind DCI Group is far from the only collection of the AFF’s ties to ethically dubious hyper-partisans. As the following profile of the American Future Fund in the Iowa Independent (available via the Wayback Machine) informs us, some the key figures behind AFF itself include people involved with both the 2004 “Swiftboat” smear ads against John Kerry in 2004 and the 1988 racist Willie Horton ads used by George H. W. Bush against Michael Dukakis.
Specifically, the piece points out that Ben Ginsberg — the former chief outside counsel to the Bush-Cheney 2004 campaign who resigned after it was revealed that he was also providing advice to Swift Boat Veterans for Truth — was AFF’s legal council. In addition, AFF’s media strategist was Larry McCarthy, the guy who produced the 1988 Willie Horton ad.
The profile is from 2008, the year the AFF formed, and is a particularly important report on the AFF at the time given that almost nothing was listed on its website about its leadership and who was funding it.
What the article doesn’t list is who exactly was financing AFF at this time. The article also describes how it is that AFF was able to operate with so little known about who is financing it: AFF claims to be a “social welfare organization”, making it a 501(c)(4) entity under the US tax code. And thanks to various loopholes in US campaign finance laws — loopholes that predate the notorious 2010 Citizens United Supreme Court ruling — as long as an organization doesn’t spend the majority of its funds on political advocacy and as long as its political ads avoid certain things (like explicitly saying to vote for a certain candidate), that organization can largely avoid US campaign finance laws and keep its donors entirely secret. Which is exactly how AFF operates: In the dark, hiding behind the pretense that it’s a “social welfare” organization.
And as we’re going to see in subsequent article excerpts, the secret donors behind the AFF went from the Koch brothers (who were almost entirely funding the group by 2012), then shifted to Karl Rove’s fundraising network and other Republican establishment donors, including the Republican House leadership. In other words, the AFF isn’t just any ‘ol shady 501(c)(4) dark money entity. It’s been quietly one of the key dark money entities used by some of the most powerful forces behind the Republican party. It’s, again, why the connection between Nicole Schlinger and the AFF is potentially such a sensitive story. The story of the AFF is the story of the rise of the ascendance of dark money in US politics:
Iowa Independent
Secrets of the American Future Fund
Iowa-based conservative advocacy group includes masterminds of Swift Boat and Willie Horton adsBy Jason Hancock 8/19/08 12:29 PM
A network of Iowa Republicans is playing a leading role in a secretive group advocating nationally on behalf of “conservative and free market ideals” in congressional races around the country. Among the group’s leaders are two media consultants who played key roles in the Swift Boat Veterans for Truth ads in 2004 and the Willie Horton ad in 1988, both of which helped defeat Democratic presidential candidates.
The American Future Fund (AFF), operating out of Des Moines, is sponsoring advocacy advertisements in closely contested congressional races from New York to Louisiana to Minnesota and Colorado. It is one of the most ambitious conservative independent expenditure groups to emerge in 2008. Most observers expect AFF to begin increasing its role in elections around the country, stoking speculation that it will spend heavily to prop up lightly funded Republican campaign committees.
Because of the way the group is organized under Internal Revenue Service guidelines for nonprofit organizations it does not have to disclose its donors and is not governed by the Federal Election Commission (FEC).
But an Iowa Independent investigation has found the group has deep roots in state Republican politics. And, unlike MoveOn.org, a similar group advocating liberal causes, it’s hard to determine who is actually behind the AFF. The key players include:
Nicole Schlinger, the group’s president, the former executive director of the Republican Party of Iowa.
Tim Albrecht, a former spokesman for Republicans in the Iowa House who worked for Mitt Romney’s presidential campaign and spent a short time this year working for the Republican Party of Iowa, is the group’s communications director.
David Kochel, another former state GOP executive director and a senior adviser to the Romney campaign, who has served as spokesman for AFF, although Albrecht said he is no longer associated with the group.
The Washington Post reported in March – and Albrecht confirmed to Iowa Independent — that Ben Ginsberg, of the high-powered D.C. law firm Patton Boggs, is the group’s legal counsel. Ginsberg resigned as chief outside counsel to the Bush-Cheney campaign in August 2004 when it was revealed that he was also providing advice to Swift Boat Veterans for Truth, a group that sponsored error-laden attacks on the military service record of 2004 Democratic presidential nominee John Kerry.
Larry McCarthy, president of D.C.-based media firm McCarthy Marcus Hennings, is AFF’s media strategist. In 1988, McCarthy produced the infamous, racially tinged Willie Horton television ad that helped then-Vice President George H.W. Bush bury Michael Dukakis under charges that he was soft on crime.
Public records show the AFF also has connections to Iowa businessman Bruce Rastetter, who is widely believed to be considering a run for governor in 2010. Rastetter is a regular donor to the Republican Party and founder of Hawkeye Renewables, the fourth largest ethanol producer in the nation. Eric Peterson, business manager at Summit Farms, another of Rastetter’s companies, is listed on documents filed with the Iowa Secretary of State’s office as president, secretary and director of Iowa Future Fund, a conservative nonprofit that essentially morphed into American Future Fund.
The address listed on an AFF ad buy in Minnesota is a post office box used by Nick Ryan, a Des Moines lobbyist who works primarily for Rastetter’s companies and who served as campaign manager for 2006 Republican gubernatorial candidate Jim Nussle. In February, Ryan was acting as spokesman for Hawkeye Renewables when 29,000 gallons of ethanol was accidentally spilled at the company’s Iowa Falls plant.
The many faces of AFF
The Iowa Future Fund, technically the first incarnation of AFF, gained public attention in March when it ran a series of television and radio ads accusing Gov. Chet Culver of increasing spending by 20 percent over the past two years and raising taxes and fees by $100 million.
“Culver raises taxes and spends more money and wants to use your tax dollars to benefit Microsoft,” the ad’s narrator said, referring to a tax package that Culver backed and that the legislature passed geared to lure companies like Microsoft Corp. and Google to the state.
The Iowa Democratic Party filed a complaint with the Iowa Ethics and Campaign Disclosure Board to determine whether the ads constituted political advertising, which would require disclosure of the group’s donors.
Charlie Smithson, executive director of the Iowa Ethics Campaign and Disclosure Board, said the complaint has not yet been fully settled.
“It is still under investigation,” he said. “The determination was made that it did not violate the state campaign laws because it did not ‘expressly advocate’ for or against Gov. Culver or a clearly identified candidate for office. The issue the Board is now looking at is whether any of the state lobbying laws were triggered.”
The next Ethics Board meeting is Aug. 28.
In April, Iowa Future Fund effectively split into two groups: AFF, which focuses on federal races around the country, and the Iowa Progress Project, which puts its resources toward state issues.
Albrecht said AFF and Iowa Future Fund “are completely unrelated.” But they share an organizational history. AFF and IFF were incorporated on the same day by the same Virginia law firm. David Kochel served for a time as spokesman for IFF and AFF before becoming president of Iowa Progress Project.
In March, an ad run by AFF in the race between Democrat Al Franken and Republican Sen. Norm Coleman for Minnesota’s U.S. Senate seat caused the state’s Democratic-Farmer-LaborParty to file a formal complaint with the FEC alleging that the group violated federal election law and that its ads constitute blatant electoral advocacy.
“The American Future Fund is a shadowy nonprofit organization,” the complaint said. “It purports to be exempt from tax under section 501(c)(4) of the Internal Revenue Code. But its notion of ‘promoting the social welfare’ is to send valentines to electorally troubled Republican Senate candidates. The Commission should take immediate steps to enforce the law and expose this group’s secret financing to light of day.”
Under federal election law, the organization is prohibited from engaging solely in “express advocacy,” which would include asking voters to vote for or against a certain candidate. But so long as the ad hasn’t been coordinated with a campaign and doesn’t outright say “vote for” or “vote against,” it is not considered express advocacy, according to Paul S. Ryan, FEC program director for the Campaign Legal Center, a Washington, D.C.-based organization.
“An organization that is careful about how it writes the script of its ad can fly under the radar or stay outside of the net of campaign finance activity,” he said.
The ad in question didn’t ask voters to vote for Coleman, but rather asked voters to “call Norm Coleman and thank him for his agenda for Minnesota.”
In 2004, several groups filed complaints against so-called independent expenditure committees saying they ignored campaign finance law. It took the FEC two years to rule on the complaints. In the end, the groups had to pay less than 2 percent of the fund they illegally raised and spent.
Brad Smith, a former chairman of the FEC and currently a professor of law at Capital University Law School in Columbus, Ohio, said that if a group’s “major purpose” is not trying to affect elections, “they are not regulated by the FEC.” But Smith added the definition of “major purpose” is not clear, which could open the door for some nonprofit groups to face a challenge on their tax status.
“I think there would be an opening for someone who wanted to prosecute a group who is spending millions of dollars on advertising,” said Smith, a Republican who has been a vocal critic of campaign finance reform.
Albrecht said there is no validity to claims that AFF is anything but an issues-focused organization.
“We are an issues organization,” he said. “That is evident by the things that are prominently displayed on our Web site and in our work.”
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Albrecht said AFF is simply a reaction to liberal groups like MoveOn.org who have dominated this realm of politics for years.
“For far too long the left has been on the field with no opposition,” he said. “American Future Fund has said it’s time to play ball. We’re not going to sit on the sidelines any longer. It’s important for free market, conservative principles to be highlighted in public, and that’s what we intend to do.”
The difference is that MoveOn.org, a decade-old liberal group, identifies its leadership on its Web site, boasts more than a million members and never shies away from the spotlight as a means for amplifying its message. AFF is decidedly lower-profile, disclosing nothing about its leaders, history or membership on its Web site, and it makes little or no effort on public appearances, press conferences and media bookings.
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“Secrets of the American Future Fund” by Jason Hancock; Iowa Independent; 08/19/2008
“Because of the way the group is organized under Internal Revenue Service guidelines for nonprofit organizations it does not have to disclose its donors and is not governed by the Federal Election Commission (FEC).”
That’s one of the core elements of the scandalous nature of the American Future Fund: it’s able to do what it does in secret by simply organizing itself in a way that technically makes it a nonprofit organization. A nonprofit entity that tried to water-down robo-calling regulations in 2009 in anticipation of its planned 2010 partisan robo-calling campaign on behalf of Republican candidates.
And the AFF is typical, at least in terms of exploiting these 501(c)(4) rules. But it’s not typical in terms of who was behind it at its inception. As we saw, it was a who’s who of Iowa’s Republican establishment:
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A network of Iowa Republicans is playing a leading role in a secretive group advocating nationally on behalf of “conservative and free market ideals” in congressional races around the country. Among the group’s leaders are two media consultants who played key roles in the Swift Boat Veterans for Truth ads in 2004 and the Willie Horton ad in 1988, both of which helped defeat Democratic presidential candidates....
But an Iowa Independent investigation has found the group has deep roots in state Republican politics. And, unlike MoveOn.org, a similar group advocating liberal causes, it’s hard to determine who is actually behind the AFF. The key players include:
Nicole Schlinger, the group’s president, the former executive director of the Republican Party of Iowa.
Tim Albrecht, a former spokesman for Republicans in the Iowa House who worked for Mitt Romney’s presidential campaign and spent a short time this year working for the Republican Party of Iowa, is the group’s communications director.
David Kochel, another former state GOP executive director and a senior adviser to the Romney campaign, who has served as spokesman for AFF, although Albrecht said he is no longer associated with the group.
...
Public records show the AFF also has connections to Iowa businessman Bruce Rastetter, who is widely believed to be considering a run for governor in 2010. Rastetter is a regular donor to the Republican Party and founder of Hawkeye Renewables, the fourth largest ethanol producer in the nation. Eric Peterson, business manager at Summit Farms, another of Rastetter’s companies, is listed on documents filed with the Iowa Secretary of State’s office as president, secretary and director of Iowa Future Fund, a conservative nonprofit that essentially morphed into American Future Fund.
The address listed on an AFF ad buy in Minnesota is a post office box used by Nick Ryan, a Des Moines lobbyist who works primarily for Rastetter’s companies and who served as campaign manager for 2006 Republican gubernatorial candidate Jim Nussle. In February, Ryan was acting as spokesman for Hawkeye Renewables when 29,000 gallons of ethanol was accidentally spilled at the company’s Iowa Falls plant.
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Note that Iowa businessman Bruce Rastetter was characterized in 2015 by Politico as Iowa’s GOP “Kingmaker”. Don’t forget the outsized importance Iowa has in American politics with the early Iowa causes in the primaries. So being an Iowan GOP kingmaker is an extra big deal in American politics.
And then there were the two people that don’t appear to be based in Iowa but who had histories in the dark arts of political communication: Ben Ginsberg (Swift Boat smears) and Larry McCarthy (Willie Horton race-baiting):
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The Washington Post reported in March – and Albrecht confirmed to Iowa Independent — that Ben Ginsberg, of the high-powered D.C. law firm Patton Boggs, is the group’s legal counsel. Ginsberg resigned as chief outside counsel to the Bush-Cheney campaign in August 2004 when it was revealed that he was also providing advice to Swift Boat Veterans for Truth, a group that sponsored error-laden attacks on the military service record of 2004 Democratic presidential nominee John Kerry.Larry McCarthy, president of D.C.-based media firm McCarthy Marcus Hennings, is AFF’s media strategist. In 1988, McCarthy produced the infamous, racially tinged Willie Horton television ad that helped then-Vice President George H.W. Bush bury Michael Dukakis under charges that he was soft on crime.
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Note that it was April of 2008 that the AFF officially formed. But it really was just the result of the Iowa Future Fund splitting its federal and state operations into the AFF (federal) and the Iowa Progress Project (state). So the AFF really predates 2008 and it’s also a reflection of the national ambitions of this group of Iowa Republicans.
Of course, as we’ll see, it’s also a vehicle for laundering national GOP establishment money by mega-donors like the Koch network and Karl Rove’s donor network. So whether or not the AFF primarily represented the national ambitions of ‘Kingmaker’ Bruce Rastetter or whether it was acting as a laundering outfit for national entities like the Kochs and Rove from the start is an interesting question. But regardless of how it started, The AFF has clearly become a laundering entity for GOP mega-donors at this point:
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The many faces of AFFThe Iowa Future Fund, technically the first incarnation of AFF, gained public attention in March when it ran a series of television and radio ads accusing Gov. Chet Culver of increasing spending by 20 percent over the past two years and raising taxes and fees by $100 million.
...
In April, Iowa Future Fund effectively split into two groups: AFF, which focuses on federal races around the country, and the Iowa Progress Project, which puts its resources toward state issues.
Albrecht said AFF and Iowa Future Fund “are completely unrelated.” But they share an organizational history. AFF and IFF were incorporated on the same day by the same Virginia law firm. David Kochel served for a time as spokesman for IFF and AFF before becoming president of Iowa Progress Project.
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And from the very beginning, the mercenary AFF maintained a pretense of being a “social welfare” advocacy group. Because that absurd nonprofit pretense is what’s required to qualify as a 501(c)(4) entity and avoid reporting donors to the FEC and avoid scrutiny by the IRS:
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In March, an ad run by AFF in the race between Democrat Al Franken and Republican Sen. Norm Coleman for Minnesota’s U.S. Senate seat caused the state’s Democratic-Farmer-LaborParty to file a formal complaint with the FEC alleging that the group violated federal election law and that its ads constitute blatant electoral advocacy.“The American Future Fund is a shadowy nonprofit organization,” the complaint said. “It purports to be exempt from tax under section 501(c)(4) of the Internal Revenue Code. But its notion of ‘promoting the social welfare’ is to send valentines to electorally troubled Republican Senate candidates. The Commission should take immediate steps to enforce the law and expose this group’s secret financing to light of day.”
Under federal election law, the organization is prohibited from engaging solely in “express advocacy,” which would include asking voters to vote for or against a certain candidate. But so long as the ad hasn’t been coordinated with a campaign and doesn’t outright say “vote for” or “vote against,” it is not considered express advocacy, according to Paul S. Ryan, FEC program director for the Campaign Legal Center, a Washington, D.C.-based organization.
“An organization that is careful about how it writes the script of its ad can fly under the radar or stay outside of the net of campaign finance activity,” he said.
The ad in question didn’t ask voters to vote for Coleman, but rather asked voters to “call Norm Coleman and thank him for his agenda for Minnesota.”
In 2004, several groups filed complaints against so-called independent expenditure committees saying they ignored campaign finance law. It took the FEC two years to rule on the complaints. In the end, the groups had to pay less than 2 percent of the fund they illegally raised and spent.
...
The whole absurd situation is exemplified by the quote from Tim Albrecht, AFF’s founding communications director, who declared “We are an issues organization, that is evident by the things that are prominently displayed on our Web site and in our work,” while referencing a website that disclosed nothing about its leaders, history or membership. It’s a blatant black box squawking about how transparent it is. And it is transparent in the sense that it’s transparently opaque:
...
Albrecht said there is no validity to claims that AFF is anything but an issues-focused organization.“We are an issues organization,” he said. “That is evident by the things that are prominently displayed on our Web site and in our work.”
...
Albrecht said AFF is simply a reaction to liberal groups like MoveOn.org who have dominated this realm of politics for years.
“For far too long the left has been on the field with no opposition,” he said. “American Future Fund has said it’s time to play ball. We’re not going to sit on the sidelines any longer. It’s important for free market, conservative principles to be highlighted in public, and that’s what we intend to do.”
The difference is that MoveOn.org, a decade-old liberal group, identifies its leadership on its Web site, boasts more than a million members and never shies away from the spotlight as a means for amplifying its message. AFF is decidedly lower-profile, disclosing nothing about its leaders, history or membership on its Web site, and it makes little or no effort on public appearances, press conferences and media bookings.
...
And note how the AFF was expected to become a national player in elections with heavy spending back in 2008. It was obviously backed by big money despite the lack of disclosure. The writing was on the wall from the beginning:
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The American Future Fund (AFF), operating out of Des Moines, is sponsoring advocacy advertisements in closely contested congressional races from New York to Louisiana to Minnesota and Colorado. It is one of the most ambitious conservative independent expenditure groups to emerge in 2008. Most observers expect AFF to begin increasing its role in elections around the country, stoking speculation that it will spend heavily to prop up lightly funded Republican campaign committees.
...
So the American Future Fund was clearly a tool of the Iowan Republican establishment when it was set up in 2008 and was already working closely with people involved with the Rove-connected DCI group by 2009, during Nicole Schlinger’s tenure as AFF’s president and “principal officer”. The AFF was literally a right-wing ‘social welfare nonprofit’-for-hire in the pre-Citizen’s United era.
Citizens United: More Steroids for 501(c)(4)s That Were Already on Steroids
But as we’re going to see, it was 2010 when the AFF’s ability to influence US politics exploded. More so. 2010 is of course the year when the potential influence of all 501(c)(4)s ‘social welfare nonprofit’ entities exploded in the US thanks, of course, to the Citizens United Supreme Court ruling. But as we saw from the above review of the AFF’s pre-Citizens United days, the situation for 501(c)(4) organizations was already absured. Corporate mercenary entities like the AFF could already claim ‘social welfare nonprofit’ status and their donors didn’t need to be disclosed.
So what do 501(4)©s need to do in order maintain that “social nonprofit” pretense? Don’t spend a majority of their money on open advocacy for or against a candidate. But spending 49.9999% of their money on attack ads is fine. As long as they spend the rest of their money on “social welfare”. And issue ads that don’t talk about a candidate (like an ad that extolls the virtues of low taxes on billionaires) count as “social welfare” spending. So as long as an entity like the AFF spends 50% + 1 dollars on issue ads instead of attack ads, it can claim to be a social welfare nonprofit with full secrecy protections for donors with no caps on the donations.
In other words, when the Kochs give $10 million to one of their 501(c)(4) groups like the AFF or Americans For Prosperity, that’s seen as basically charity under the tax code and unlimited funds can be poured into them without disclosure. And what makes an entity like the AFF so notable in this landscape is that a group like Americans For Prosperity is obviously backed by the Kochs. They started it and fund it. The AFF, on the other hand, is much more mercenary in nature than Americans for Prosperity. Maybe the Kochs and their network are primarily financing the AFF’s activities at some point. Or maybe it’s Karl Rove and his non-Koch ‘establishment’ network. Or perhaps the DCI Group is sub-contracting AFF’s services. It’s a for-hire entity of choice for a number of different clients. And that ambiguity is part of why mercenary groups like the AFF are potentially so useful for how mega-donors influence politics with big donations in secret. Even when they have to disclose how much they’ve spent, they don’t have to say who paid for it and it’s not always obvious who their clients are because they have lots lf different clients.
The following article also describes one of the key loopholes 501(c)(4)s must jump through in order to maintain the pretense that their “issue ads” aren’t actually political ads designed to influence an election which is all part of the “social welfare” facade. It all goes back to the 1976 Supreme Court decision of Buckley v. Valeo, where the court speculated in a footnote that there were certain phrases that would make it clear that an ad was a campaign ad (designed to influence the outcome of an election) and not an issue ad. Those phrases — “vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject” — became known as the “magic words” that 501(c)(4)s needed to avoid in their ‘issue ads’ being declared campaign ads. Don’t forget that 501(c)(4)s can’t get caught spending a majority of their funds on campaign ads (but 49.999% is fine). So the “magic words” became an important guideline that helped keep “social welfare” sham of secret unlimited campaign spending going in US politics for the past four decades.
As the article notes, the IRS still has the power to revoke a 501(c)(4) entity’s nonprofit status if it determines the entity is primarily engaged in campaigning even if the entity avoids those “magic words”. The IRS now says it looks at the “the facts and circumstances” of a 501(c)(4)‘s ad. But in practice that rarely happens because IRS audits of 501(4)©s almost never happen in the first place. So explosion of ‘dark money’ in US politics is simultaneously rooted in an absurd set of rules that, if followed, make regulator scrutiny much less likely coupled with the reality that the regulators are barely scrutinizing anything in the first place. It’s a full-spectrum sham:
Frontline
The Rules That Govern 501(c)(4)s
October 30, 2012
by Emma SchwartzNearly a century ago, Congress created the complicated legal framework that governs these tax-exempt nonprofits, also known as 501(c)(4)s for the part of the tax code they fall under. That rule said they were supposed to operate “exclusively for the promotion of social welfare” — a definition that includes groups ranging from local fire departments to the Sierra Club to the National Right to Life Committee.
While these nonprofits have always been allowed to lobby for change, in 1959, regulators opened the door to political activity by interpreting “exclusively” to mean that groups had to be “primarily” engaged in social welfare and helping the community.
But regulators never defined exactly how they would measure this balance. Part of the reason, said Marcus Owens, a former head of the IRS division overseeing nonprofits, is because the IRS didn’t want to limit what it could evaluate in deciding what was political activity.
However, the lack of clarity has created a unique type of organization when it comes to politics — chief among those differences being what the public must be told about these nonprofits’ donors.
Why Don’t 501(c)(4)s Have to Disclose Their Donors?
Social welfare nonprofits don’t fall under the Federal Election Commission’s standard definition of a political committee, which, under FEC guidelines, must disclose its donors. Because 501(c)(4)s say their primary purpose is social welfare, they can keep their donors secret. The only exception is if someone gives them money and specifically states the funds are for a political ad.
And unlike political committees, social welfare nonprofits have a legal right to keep their donors secret. That stems from the landmark 1958 Supreme Court case, NAACP v. Alabama, which held the NAACP didn’t have to identify its members because disclosure could lead to harassment.
Fast forward to the post-Citizens United world of campaign finance where outside groups can now spend unlimited amounts of money to influence elections so long as they are independent of candidates. Seeing the advantages offered by groups that can engage in political activity while keeping their donors secret, both Democrats and Republicans have seized onto this opening in the tax code.
That’s why in recent years, many new 501(c)(4)s have popped up right before the election season, focusing heavily on television advertising, usually attacking, though sometimes promoting, candidates running for office.
These nonprofits do have to report some of their activities to the FEC. When they run ads directly advocating for the election or defeat of a candidate, they have to tell regulators how much and what they spend money on — but not where the money comes from.
Since they can’t make these types of ads their sole activity, many 501(c)(4)s focus on so-called issue ads, which they only have to report to the FEC in defined windows before an election.
The Debate Over “Issue Ads”
But what exactly defines an issue ad?
The key starting point is a 1976 Supreme Court case, Buckley v. Valeo, in which the court speculated in a footnote that if certain words were used in an ad, it was clearly a campaign ad. The eight phrases listed in the footnote –“vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject” — became known as the “magic words” and for decades served as a bright line test between an issue ad and a campaign ad.
But many campaign finance reformers saw that distinction as a sham, especially as increasing amounts of federal campaign dollars headed to political parties where the soft money loophole allowed unlimited money to be spent on issue ads. While avoiding the magic words, these issue ads typically focused on one candidate running for office and ran just before an election. In other words, the reformers argued, they were clearly trying to influence elections.
The reformers tried to address this loophole in the Bipartisan Campaign Finance Reform Act of 2002, otherwise known as the McCain-Feingold bill. In a 2003 case, McConnell v. FEC, the Supreme Court appeared to agree, saying that the magic words were “functionally meaningless.”
But the decision didn’t bar states from using the magic words and the court has since backed away from its earlier stance. And so legal debate continues. For instance, earlier this year, the Colorado Supreme Court upheld the magic words test as the bright line between issue ads and direct campaign ads.
Today, both the FEC and the IRS use tests broader than just the magic words to determine what counts as an issue ad. The FEC says that any ad that mentions a candidate during defined windows before an election must be disclosed, even if it doesn’t include the magic words. The IRS looks at what it calls “the facts and circumstances” surrounding an ad. Tax experts say that many of the issue ads that fall outside FEC reporting windows would be considered political by the IRS.
But the reality on the ground for groups like 501(c)(4)s is less clear: Because three of the FEC commissioners sympathize with the magic words test they have “refused to apply the broader test in recent years,” says Paul Ryan, senior counsel at the Campaign Legal Center, a group that pushes for more campaign finance reforms.
...
What that means for 501(c)(4)s is this: by avoiding the magic words, social welfare nonprofits have a better chance of convincing regulators they are focused on issues and not politics.
Of course, the IRS could revoke a nonprofit’s tax-exempt status if it engages in too much political activity. In practice, that hasn’t happened much. But the IRS has indicated it is starting to look into some of these groups and recently sent a letter (pdf) to Congress saying it had more than 70 “ongoing examinations” of 501(c)(4)s.
Whatever it does, the IRS remains limited in what it can do to watch over these groups. As a recent ProPublica investigation found: “One reason the IRS struggles is that it can’t match the speed of politics.” In other words, by the time these groups submit tax returns, they have often stopped operating or created new groups under new names.
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“The Rules That Govern 501(c)(4)s” by Emma Schwartz; Frontline; 10/30/2012
“Nearly a century ago, Congress created the complicated legal framework that governs these tax-exempt nonprofits, also known as 501(c)(4)s for the part of the tax code they fall under. That rule said they were supposed to operate “exclusively for the promotion of social welfare” — a definition that includes groups ranging from local fire departments to the Sierra Club to the National Right to Life Committee.”
Yes, it was nearly a century ago when Congress set up the legal framework for 501(c)(4)s to be treated as nonprofits. But, crucially, it was only if they operated exclusively for the promotion of social welfare. It was in 1959 that the rules got loosened by regulators to simply require that 501(c)(4)s operate primarily on ‘social welfare’. But the definition of what it meant to be “primarily” on social welfare was never defined:
...
While these nonprofits have always been allowed to lobby for change, in 1959, regulators opened the door to political activity by interpreting “exclusively” to mean that groups had to be “primarily” engaged in social welfare and helping the community.But regulators never defined exactly how they would measure this balance. Part of the reason, said Marcus Owens, a former head of the IRS division overseeing nonprofits, is because the IRS didn’t want to limit what it could evaluate in deciding what was political activity.
However, the lack of clarity has created a unique type of organization when it comes to politics — chief among those differences being what the public must be told about these nonprofits’ donors.
...
And it was one year earlier, in 1958, that the Supreme Court ruled in NAACP v. Alabama that 501(c)(4)s can keep their donors secret specifically because they maintain that their primary purpose is social welfare. Ironically, it was a case brought forward by the NAACP — a group that really was fighting for social welfare and really did have members who had legitimate reasons to want their identities to remain secret — that created the legal precedent that today allows individuals like the Koch brothers and Karl Rove to hide behind ‘social welfare’ secrecy. It a reminder of how immensely challenging it is to write laws that won’t be abused by the unscrupulously powerful, which is one of the meta-challenges facing humanity:
...
Why Don’t 501(c)(4)s Have to Disclose Their Donors?Social welfare nonprofits don’t fall under the Federal Election Commission’s standard definition of a political committee, which, under FEC guidelines, must disclose its donors. Because 501(c)(4)s say their primary purpose is social welfare, they can keep their donors secret. The only exception is if someone gives them money and specifically states the funds are for a political ad.
And unlike political committees, social welfare nonprofits have a legal right to keep their donors secret. That stems from the landmark 1958 Supreme Court case, NAACP v. Alabama, which held the NAACP didn’t have to identify its members because disclosure could lead to harassment.
Fast forward to the post-Citizens United world of campaign finance where outside groups can now spend unlimited amounts of money to influence elections so long as they are independent of candidates. Seeing the advantages offered by groups that can engage in political activity while keeping their donors secret, both Democrats and Republicans have seized onto this opening in the tax code.
That’s why in recent years, many new 501(c)(4)s have popped up right before the election season, focusing heavily on television advertising, usually attacking, though sometimes promoting, candidates running for office.
...
And even when 501(c)(4)s like the American Future Fund or Americans For Prosperity do engage in open political activities (i.e. using the “magic words” in their ads), they only have to report the amount spent. But not report who paid for them. Which, again, is why mercenary entities with numerous clients like the American Future Fund are so useful for maintaining secrecy. If the AFF spends $1 million on attack ads it only needs to say it spent $1 million on attack ads. It doesn’t need to say if it the ‘donors’ (clients) were Rove’s network or the Kochs’ network, or maybe RJ Reynolds. We only get to know some entity paid for the ads, not which entity:
...
These nonprofits do have to report some of their activities to the FEC. When they run ads directly advocating for the election or defeat of a candidate, they have to tell regulators how much and what they spend money on — but not where the money comes from.
...
But 501(c)(4)s still have to limit their spending on open political ads to less than 50% of their expenditures, all of the rest of their ad spending needs to be on “issue ads”. Which are basically campaign ads without the “magic words” laid out by the 1976 Buckley v. Valeo Supreme Court decision. As long as these groups to spend 49.999% of their funds on open campaign advocacy (i.e. campaign ads that include the “magic words”) and the rest of their funds on ‘issue ads’ (i.e. campaign ads that don’t include the “magic words”) they are highly unlikely to face any IRS scrutiny and can maintain their donors’ secrecy:
...
Since they can’t make these types of ads their sole activity, many 501(c)(4)s focus on so-called issue ads, which they only have to report to the FEC in defined windows before an election.The Debate Over “Issue Ads”
But what exactly defines an issue ad?
The key starting point is a 1976 Supreme Court case, Buckley v. Valeo, in which the court speculated in a footnote that if certain words were used in an ad, it was clearly a campaign ad. The eight phrases listed in the footnote –“vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject” — became known as the “magic words” and for decades served as a bright line test between an issue ad and a campaign ad.
...
And despite the fact that the “magic words” criteria for distinguishing between political ads and issue ads has been recognized as a sham, it’s still a significant loophole to be exploited. Congress addressed it in the 2002 ‘McCain-Feingold’ campaign finance bill and the Supreme Court in 2003 with McConnell v. FEC. But state regulators could still choose to rely on the “magic word” criteria and the Supreme Court basically reaffirmed the “magic words” criteria in 2004 in FEC v. Wisconsin Right to Life. In other words, the “magic words” have had a seemingly magical ability remain in place for decades despite being a blatantly absurd loophole. The enduring nature of teh blatantly absurd is one of the big themes of the history of US campaign finance law:
...
But many campaign finance reformers saw that distinction as a sham, especially as increasing amounts of federal campaign dollars headed to political parties where the soft money loophole allowed unlimited money to be spent on issue ads. While avoiding the magic words, these issue ads typically focused on one candidate running for office and ran just before an election. In other words, the reformers argued, they were clearly trying to influence elections.The reformers tried to address this loophole in the Bipartisan Campaign Finance Reform Act of 2002, otherwise known as the McCain-Feingold bill. In a 2003 case, McConnell v. FEC, the Supreme Court appeared to agree, saying that the magic words were “functionally meaningless.”
But the decision didn’t bar states from using the magic words and the court has since backed away from its earlier stance. And so legal debate continues. For instance, earlier this year, the Colorado Supreme Court upheld the magic words test as the bright line between issue ads and direct campaign ads.
...
Flash forward to the post-Citizens United landscape, and we have both the FEC and IRS declaring that they will go beyond simply applying the “magic words” criteria. But despite that, three of the FEC commissioners themselves continued to sympathize with the “magic words” standard and refused to apply a broader test. Keep in mind that article was from 2012, so the structure of the FEC is going to change. But it points to the fact that whether or not the “magic words” gets used as the sole criteria is still going to remain up to the FEC commissioners and, in turn, the political makeup of the FEC board. So if you have a Republican-dominated FEC it’s likely going to revert back to exclusively relying on the “magic words” sham. Similarly, the IRS could applying a broader test than the “magic words” test. But in practice that rarely happens. It underscores the importance of the ideological makeup of the FEC’s board in cleaning up the American campaign finance system:
...
Today, both the FEC and the IRS use tests broader than just the magic words to determine what counts as an issue ad. The FEC says that any ad that mentions a candidate during defined windows before an election must be disclosed, even if it doesn’t include the magic words. The IRS looks at what it calls “the facts and circumstances” surrounding an ad. Tax experts say that many of the issue ads that fall outside FEC reporting windows would be considered political by the IRS.But the reality on the ground for groups like 501(c)(4)s is less clear: Because three of the FEC commissioners sympathize with the magic words test they have “refused to apply the broader test in recent years,” says Paul Ryan, senior counsel at the Campaign Legal Center, a group that pushes for more campaign finance reforms.
And some outside groups are trying to keep it that way.
What that means for 501(c)(4)s is this: by avoiding the magic words, social welfare nonprofits have a better chance of convincing regulators they are focused on issues and not politics.
Of course, the IRS could revoke a nonprofit’s tax-exempt status if it engages in too much political activity. In practice, that hasn’t happened much. But the IRS has indicated it is starting to look into some of these groups and recently sent a letter (pdf) to Congress saying it had more than 70 “ongoing examinations” of 501(c)(4)s.
Whatever it does, the IRS remains limited in what it can do to watch over these groups. As a recent ProPublica investigation found: “One reason the IRS struggles is that it can’t match the speed of politics.” In other words, by the time these groups submit tax returns, they have often stopped operating or created new groups under new names.
...
Also noted that when you read “But the IRS has indicated it is starting to look into some of these groups and recently sent a letter (pdf) to Congress saying it had more than 70 “ongoing examinations” of 501(c)(4)s,” that’s actually an early reference to the IRS investigations that eventually exploded into the fake ‘IRS targeting conservative groups’ scandal. When the IRS actually did what it was supposed to do in 2010–2012 and investigated whether or not the many 501(c)(4) groups that popped up in the 2012 election where actually “social welfare” organization, that was contorted by the right-wing noise machine into some sort of IRS attack on conservatives, which makes sense given how much the right-wing noise machine depends on the lack of campaign finance law enforcement.
501(c)(4)s: The Gift That Keeps On Giving. To Itself. As Charity. Because That’s How the Scam Works
So we just saw how the 501(c)(4) system started off with a Congressional act that allowed these groups to count as social welfare organizations for tax purposes as long as they are exclusively dedicated to social welfare. Congress made the massive change to that rule in 1959 when it ruled that organizations only had to be primarily focused on social welfare in order to keep their tax treatment, allowing for up to half of a 501(c)(4)‘s spending on political advocacy like attack ads. That congressional move followed the 1958 NAACP v. Alabama ruling that allowed 501(c)(4)s to keep their donors secret from the public, which is a very reasonable request for an organization like the NAACP but the billionaires get to stay secret too.
501(c)(4)s still have to report to the IRS how much they spend on political ads, which can be up to half their spending. And they still have to report their donors to the IRS. But their donor names were redacted from the public tax filings of these organizations. The right to donor secrecy to the public is one of the key things that differentiates 501(c)(4)s from their “super PAC” counterparts.
Then, in 1976, Buckley v. Valeo created the “magic words” standard for determining whether or not an ad is considered an “issue ad” or a political ad, thus create a set of rules that could be easily overcome to allow for the creation of ‘issue ads’ that are clearly political ads in reality.
Flash forward to the 2010 Citizens United Supreme Court and we find that it basically just expanded to corporations and unions the luxury of unlimited undisclosed use of the 501(c)(4)s system that had been used by wealthy donors and organizations for decades. The ruling took an absurdly broken system and made it more absurdly broken.
In the following article, we’ll look at how allied networks of 501(c)(4)s can simply donate money to each other in a manner substantially raises the 50% cap for spending on political ads. How so? Because imagine a 501(c)(4) with $10 million spending $5 million on political ads and then donating the remaining $5 million to a different allied 501(c)(4). Now half of that donated $5 million gets to be spent on political ads too. So instead of a 50% cap on political spending it effectively becomes at 75% cap and the process can be repeated over and over, effectively raising the cap each time.
The article also notes how the reported money flowing into 501(c)(4) between 2006 and 2012 jumped from $5.2 million to $310.8 million. And as the article also notes, of the $310.8 million that flowed into these organizations in 2012, $34.7 million was spent by self-declared liberal groups compared to $265.2 million spent by self-described conservative organizations. So almost all of that explosion in money flowing into 501(c)(4)s in the years following Citizens United was flowing into right-wing organizations:
The New York Times
Op-EdDark Money Politics
By Thomas B. Edsall
June 12, 2013 9:39 pmIn the world of nonprofit dark money” groups, nothing is as it seems: political committees, through the magic of the internal revenue code, become tax-exempt “social welfare” organizations; a partisan campaign ad becomes principled “issue advocacy”; and federal election law that requires public disclosure of donors is rendered toothless by regulatory loopholes.
The flow of cash through organizations asserting tax-exempt status under section 501(c)(4) of the federal tax code has been rising exponentially, from just $5.2 million in 2006 to $310.8 million in 2012.
There is one reason for this growth: 501(c)(4) groups do not have to reveal their donors.
Two pie charts — Figure 1 and Figure 2 — drawn up by the Center for Responsive Politics demonstrate the crucial role of conservative non-profits in driving this increase in spending.
[see Center for Responsive Politics pie chart that shows spending in 2006 by self-described liberal ($639.1k), conservative ($542.2k), and non-ideological ($4.1M) groups]
[see Center for Responsive Politics pie chart that shows spending in 2012 by self-described liberal ($34.7M), conservative ($265.2M), and non-ideological ($10.9M) groups]The Center, which has dug deeply into this submerged area of American politics, has gathered a lot of the relevant data about the influence of money on American politics at OpenSecrets.org. It makes for instructive reading.
The controversy over the revelation that organizations whose names include the words “Tea Party” were targeted by the I.R.S. for review has provided new cover for politically active conservative organizations, allowing them to charge that investigations of the legitimacy of their tax-exempt status are politically motivated. Many of these groups have, in fact, been explicitly involved in federal election campaigns, as reported upon by The New York Times and Politico.
Sheila Krumholz, the Center’s executive director, told me that despite the denials coming from conservative non-profits her organization has found increasing evidence of practices designed to evade I.R.S. rules governing tax-exempt status and donor disclosure.
The actual I.R.S. rule is worth examining closely:
The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f).
The phrase “not its primary activity” has been interpreted by campaign finance lawyers to mean that a 501(c)(4) organization can spend no more that 49.9% of its money on political activity, according to Krumholz.
In a process she refers to as “money churning,” a hypothetical tax-exempt organization, let’s call it the Good Government Coalition, has $10 million in revenues. The G.G.C. fulfills its obligation to spend just over half its money on non-political activity by giving $5 million plus $1 to another tax-exempt social welfare organization with an ambiguous name, the Liberty Bell Alliance. G.G.C. can now spend what it has left, $4,999,999 on political activity. The Liberty Bell Alliance, which now has $5 million plus $1, can spend just under half, $2,499,999, on political activity. The net result is that of the original $10 million, instead of only $4,999,999 going to political activity, $7,499,998, or 75 percent of the original $10 million, can be spent on politics.
Your eyes glaze over trying to follow money trail between organizations with names like TC4 Trust, the Center for the Protection of Patients’ Rights, Americans for Job Security, American Future Fund and American Commitment – not to mention the difficulty for a layperson, or even for a political professional, of keeping track of the differences between 501(c)(4)s, 501(c)(3)s, super PACs, Political Action Committees, independent expenditure groups, and political party committees — or God forbid 501(c)(6)s.
Let’s look at just one “social welfare” 501(c)(4) organization, the 60 Plus Association. The purpose of 60 Plus is to serve as a conservative counter to the A.A.R.P., which many Republicans believe to be a subsidiary of the Democratic Party.
60 Plus claims to be “a non-partisan seniors advocacy group.” Nonpartisanship is crucial for an organization seeking to get and maintain 501(c)(4) tax exempt status as a social welfare organization, which confers the magic right to conceal the identity of donors.
Generously interpreting the 49.9 percent guideline covering political activity, 60 Plus has pushed the non-partisanship rule beyond the limit. Its web site features items like these: “Shameful Democrats Rush to Defense of Their I.R.S. Political Partners”; “House Votes to Repeal Obamacare as Democrats Stand by Corrupt I.R.S.”; “Seniors Overwhelming Support for Romney Could Spell Trouble for Democrats Nationally”; “Democrat Deceptions on Full Display with Paul Ryan Joining GOP Ticket.”
James Martin, the chairman of 60 Plus, demonstrated his “nonpartisanship” just before the 2012 election thus:
Senior citizens better than any other group understand how devastating President Obama’s policies have been to every generation. They won’t sit idly by as he continues to squander our nation’s greatness, and liquidate our future under trillions more in debt.
Martin continued in the same vein:
Never forget, America’s seniors fought in wars and bled to defend freedom and make this country everything it is today. For four long years we’ve watched as this President has trampled on everything that defines us as a nation, and now tramples on his opponent, his predecessor and the truth itself in a desperate plea for four more years. Seniors know a great leader when they see one, regardless of party, and this President falls far short of deserving our consideration or our vote.
In the past two elections, 60 Plus has invested heavily in overtly partisan independent expenditures. In 2012, the tax-exempt organization doled out $4.62 million, $3.19 million of which was spent in support of Republicans, with the remaining $1.43 million spent to defeat Democratic candidates for federal office, including $321,933 to defeat Obama.
In the 2010 elections, 60 Plus spent even more money, $6.72 million, almost all of which, $6.67 million, was allocated to defeat Democratic candidates.
60 Plus is one of the major beneficiaries of the recent surge in the investment of conservative money in 501(c)(4) organizations.
In the two years from July 1, 2007 to June 30, 2009, the organization’s annual budgets were a modest $1.89 million and $1.81 million, according to 990 forms filed with the I.R.S. and available through the Guidestar web site. In 2009-10, 60 Plus receipts abruptly rose to $16.01 million, and then to $18.58 million in 2010-11. In 2011-12, the total fell to $11.8 million, which was still 650 percent larger than in 2008-09.
This burst of cash was in part the result of multi-million dollar grants to 60 Plus from two of the other “social welfare” groups I mentioned above, TC4 Trust and the Center for the Protection of Patient Rights. The Center for the Protection of Patient Rights has been the subject of investigations by the Center for Responsive Politics, by the California Fair Political Practices Commission, the web-based Republic Report and the Los Angeles Times.
The L.A. Times reported that Charles and David Koch, the conservative billionaire brothers who own Koch Industries, “have several ties” to the Center for the Protection of Patient Rights:
It is run by Sean Noble, a Phoenix-based GOP consultant who is a key operative in the Kochs’ political activities, as noted by the investigative blog Republic Report. One of the center’s original directors, Heather Higgins, is chairwoman of the Independent Women’s Forum, which has received funding from a Koch-controlled foundation. And Cheryl Hillen, a Connecticut-based consultant who raised $2.6 million for the center, was director of fundraising for the Koch-backed Citizens for a Sound Economy.
The Center for Responsive Politics found that the Center to Protect Patient Rights gave 60 Plus a total of $11.39 million, TC4 Trust gave $4.06 million, and other groups gave smaller amounts, including Karl Rove’s Crossroads GPS ($50,000) and the American Petroleum Institute ($25,000).
This year, 60 Plus reported in lobbying disclosure forms that in addition to issues affecting seniors, it is supporting off-shore drilling legislation and a measure to permit online gambling. Past issues it has supported have included opposition to the federal telephone excise tax and to legislation allowing drug imports, as well as support for Arctic drilling and the storage of nuclear waste at Yucca Mountain in Nevada.
60 Plus has been the subject of a number of attempts to restrain its activities, but it remains undaunted. In July 2012, for example, the Democratic Senatorial Campaign Committee filed a complaint with the Federal Election Commission charging that 60 Plus, Crossroads GPS and Americans for Prosperity “are ‘political committees’ who have failed to register and disclose with the F.E.C.” The D.S.C.C. dismissed the organizations’ claims of 501(c)(4) status as “spurious” and “risible on their face.” The complaint is still pending before the F.E.C.
In July, 2012, well before the current I.R.S. controversy, Senator Carl Levin, Democrat of Michigan, called on the I.R.S to investigate the political activities of a dozen 501(c)(4)s, including 60 Plus. Levin’s list included both Republican and Democratic-leaning 501(c)(4)s: Crossroads Grassroots Policy Strategies, Priorities U.S.A., Americans Elect, American Action Network, Americans for Prosperity, American Future Fund, Americans for Tax Reform, Patriot Majority USA, Club for Growth, Citizens for a Working America Inc. and the Susan B. Anthony List.
60 Plus was not cowed. It is pulling out the stops to capitalize on the controversy regarding the I.R.S. focus on Tea Party groups. In one of his many denunciations of Democrats and the I.R.S., James Martin declared:
The shades of Watergate continue to hover over this scandal. We recall Nixon’s defenders dismissed that as a “3rd rate burglary.” With new revelations coming out by the day and more I.R.S. employees tucking tail, this disgraceful escapade is making Watergate look like a bad hair day by comparison.
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The current political activities of large numbers of 501© organizations in no way constitute the kind of charitable work for which the public would grant favorable tax status as a reward. One of the reasons the people involved with political nonprofits — operatives and donors alike — love secrecy is that they fear public repercussions if their activities have to be conducted in the open. It is by now abundantly clear that abuse of the 501(c)(4) loophole corrupts and corrodes a campaign-finance system that was hardly a model of rectitude to begin with.
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“Dark Money Politics” by Thomas B. Edsall; The New York Times; 06/12/2013
“The flow of cash through organizations asserting tax-exempt status under section 501(c)(4) of the federal tax code has been rising exponentially, from just $5.2 million in 2006 to $310.8 million in 2012.”
From $5.2 million in 2006 to $310.8 million in 2012. A nearly 60-fold increase in money flowing into 501(c)(4). Although that’s not quite a fair comparison since 2006 was a mid-term election and 2012 was a presidential election. A better comparison is 2008 and 2012. And in 2008 we find $57.5 million going to conservative groups, $33.2 million going to liberal groups, and $11.7 to independent groups ($102.4 million in total). So it’s more like a tripling of spending between the pre- and post-Citizens United 501(c)(4) spending volumes in presidential years.
And note how the 2012 spending on liberal groups was $34.7 million, compared to $33.2 million in 2008. Which means the tripling in spending was due almost entirely to more spending by conservative groups:
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There is one reason for this growth: 501(c)(4) groups do not have to reveal their donors.Two pie charts — Figure 1 and Figure 2 — drawn up by the Center for Responsive Politics demonstrate the crucial role of conservative non-profits in driving this increase in spending.
[see Center for Responsive Politics pie chart that shows spending in 2006 by self-described liberal ($639.1k), conservative ($542.2k), and non-ideological ($4.1M) groups]
[see Center for Responsive Politics pie chart that shows spending in 2012 by self-described liberal ($34.7M), conservative ($265.2M), and non-ideological ($10.9M) groups]
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The article also points out the right-wing outcry over the IRS ‘scandal’ — the IRS investigation of the numerous ‘Tea Party’ organizations (in addition to numerous left-leaning groups) to determine whether or not they were truly ‘social welfare’ organizations — was completely bogus since so many of those organizations really were explicitly and obviously involved in elections and not simply focused on ‘social welfare’:
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The Center, which has dug deeply into this submerged area of American politics, has gathered a lot of the relevant data about the influence of money on American politics at OpenSecrets.org. It makes for instructive reading.The controversy over the revelation that organizations whose names include the words “Tea Party” were targeted by the I.R.S. for review has provided new cover for politically active conservative organizations, allowing them to charge that investigations of the legitimacy of their tax-exempt status are politically motivated. Many of these groups have, in fact, been explicitly involved in federal election campaigns, as reported upon by The New York Times and Politico.
Sheila Krumholz, the Center’s executive director, told me that despite the denials coming from conservative non-profits her organization has found increasing evidence of practices designed to evade I.R.S. rules governing tax-exempt status and donor disclosure.
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“Sheila Krumholz, the Center’s executive director, told me that despite the denials coming from conservative non-profits her organization has found increasing evidence of practices designed to evade I.R.S. rules governing tax-exempt status and donor disclosure.”
Keep in mind that the fact that so many ostensibly ‘grass-roots’ Tea Party organizations were engaged in practices designed to evade IRS rules governing donor disclosure should be a clue about the ‘grass-roots’ nature of a lot of these organizations.
And then there’s the “money churning”. That’s the practice of one ‘social welfare’ organization making a donation to another ‘social welfare’ group for the purpose of effectively raising the 50% cap on the amount these grounds can spend on direct political advocacy ads. A group with $10 million to spend can only spend 50% , or $5 million ($4,999,999 really), on direct political ads. But if they hand the other $5 million to an allied group, that allied group can now spend just under half of that $5 million on direct political ads too, raising the effective political spending cap on that original $10 million from 50% to 75%. And there’s nothing stopping the process from repeating itself, each time effectively lifting the cap even more:
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The actual I.R.S. rule is worth examining closely:The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f).
The phrase “not its primary activity” has been interpreted by campaign finance lawyers to mean that a 501(c)(4) organization can spend no more that 49.9% of its money on political activity, according to Krumholz.
In a process she refers to as “money churning,” a hypothetical tax-exempt organization, let’s call it the Good Government Coalition, has $10 million in revenues. The G.G.C. fulfills its obligation to spend just over half its money on non-political activity by giving $5 million plus $1 to another tax-exempt social welfare organization with an ambiguous name, the Liberty Bell Alliance. G.G.C. can now spend what it has left, $4,999,999 on political activity. The Liberty Bell Alliance, which now has $5 million plus $1, can spend just under half, $2,499,999, on political activity. The net result is that of the original $10 million, instead of only $4,999,999 going to political activity, $7,499,998, or 75 percent of the original $10 million, can be spent on politics.
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And note how the article refers to the American Future Fund when listing the organizations with confusing money flows between them. The AFF isn’t just a random 501(4)©. It’s both a major conduit and destination of right-wing dark money:
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Your eyes glaze over trying to follow money trail between organizations with names like TC4 Trust, the Center for the Protection of Patients’ Rights, Americans for Job Security, American Future Fund and American Commitment – not to mention the difficulty for a layperson, or even for a political professional, of keeping track of the differences between 501(c)(4)s, 501(c)(3)s, super PACs, Political Action Committees, independent expenditure groups, and political party committees — or God forbid 501(c)(6)s.
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Finally, the article covers focuses in on the “60 Plus Association” organization. It pretends to be a “a non-partisan seniors advocacy group.” A non-partisan group that coincidentally exclusively promotes Republicans and bashes Democrats. In 2010, 60 Plus spent $6.72 million on overtly partisan activities. $6.67 million of that was spent on defeating Democrats:
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Let’s look at just one “social welfare” 501(c)(4) organization, the 60 Plus Association. The purpose of 60 Plus is to serve as a conservative counter to the A.A.R.P., which many Republicans believe to be a subsidiary of the Democratic Party.60 Plus claims to be “a non-partisan seniors advocacy group.” Nonpartisanship is crucial for an organization seeking to get and maintain 501(c)(4) tax exempt status as a social welfare organization, which confers the magic right to conceal the identity of donors.
Generously interpreting the 49.9 percent guideline covering political activity, 60 Plus has pushed the non-partisanship rule beyond the limit. Its web site features items like these: “Shameful Democrats Rush to Defense of Their I.R.S. Political Partners”; “House Votes to Repeal Obamacare as Democrats Stand by Corrupt I.R.S.”; “Seniors Overwhelming Support for Romney Could Spell Trouble for Democrats Nationally”; “Democrat Deceptions on Full Display with Paul Ryan Joining GOP Ticket.”
James Martin, the chairman of 60 Plus, demonstrated his “nonpartisanship” just before the 2012 election thus:
Senior citizens better than any other group understand how devastating President Obama’s policies have been to every generation. They won’t sit idly by as he continues to squander our nation’s greatness, and liquidate our future under trillions more in debt.
Martin continued in the same vein:
Never forget, America’s seniors fought in wars and bled to defend freedom and make this country everything it is today. For four long years we’ve watched as this President has trampled on everything that defines us as a nation, and now tramples on his opponent, his predecessor and the truth itself in a desperate plea for four more years. Seniors know a great leader when they see one, regardless of party, and this President falls far short of deserving our consideration or our vote.
In the past two elections, 60 Plus has invested heavily in overtly partisan independent expenditures. In 2012, the tax-exempt organization doled out $4.62 million, $3.19 million of which was spent in support of Republicans, with the remaining $1.43 million spent to defeat Democratic candidates for federal office, including $321,933 to defeat Obama.
In the 2010 elections, 60 Plus spent even more money, $6.72 million, almost all of which, $6.67 million, was allocated to defeat Democratic candidates.
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And 60 Plus, of course, is also a major beneficiary of donations from other 501(c)(4) entities. It’s how the ‘money churning’ works. Specifically, donation from Koch-financed groups like TC4 Trust ($4.06 million) and the Center for the Protection of Patient Rights ($11.39 million), along with other entities like Karl Rove’s Crossroads GPS superPAC ($50,000) and the American Petroleum Institute ($25,000):
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60 Plus is one of the major beneficiaries of the recent surge in the investment of conservative money in 501(c)(4) organizations.In the two years from July 1, 2007 to June 30, 2009, the organization’s annual budgets were a modest $1.89 million and $1.81 million, according to 990 forms filed with the I.R.S. and available through the Guidestar web site. In 2009-10, 60 Plus receipts abruptly rose to $16.01 million, and then to $18.58 million in 2010-11. In 2011-12, the total fell to $11.8 million, which was still 650 percent larger than in 2008-09.
This burst of cash was in part the result of multi-million dollar grants to 60 Plus from two of the other “social welfare” groups I mentioned above, TC4 Trust and the Center for the Protection of Patient Rights. The Center for the Protection of Patient Rights has been the subject of investigations by the Center for Responsive Politics, by the California Fair Political Practices Commission, the web-based Republic Report and the Los Angeles Times.
The L.A. Times reported that Charles and David Koch, the conservative billionaire brothers who own Koch Industries, “have several ties” to the Center for the Protection of Patient Rights:
It is run by Sean Noble, a Phoenix-based GOP consultant who is a key operative in the Kochs’ political activities, as noted by the investigative blog Republic Report. One of the center’s original directors, Heather Higgins, is chairwoman of the Independent Women’s Forum, which has received funding from a Koch-controlled foundation. And Cheryl Hillen, a Connecticut-based consultant who raised $2.6 million for the center, was director of fundraising for the Koch-backed Citizens for a Sound Economy.
The Center for Responsive Politics found that the Center to Protect Patient Rights gave 60 Plus a total of $11.39 million, TC4 Trust gave $4.06 million, and other groups gave smaller amounts, including Karl Rove’s Crossroads GPS ($50,000) and the American Petroleum Institute ($25,000).
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And as we should probably expect given the range of interests donating to 60 Plus, the group’s lobbying efforts included topics like supporting off-shore drilling legislation, Arctic drilling, online gambling, and nuclear waste storage. This from a group that peddles itself as a non-partisan senior advocacy organization:
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This year, 60 Plus reported in lobbying disclosure forms that in addition to issues affecting seniors, it is supporting off-shore drilling legislation and a measure to permit online gambling. Past issues it has supported have included opposition to the federal telephone excise tax and to legislation allowing drug imports, as well as support for Arctic drilling and the storage of nuclear waste at Yucca Mountain in Nevada.
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And as we should also expect, 60 Plus was loudly complaining about unfair IRS scrutiny during the fake ‘IRS targeting the Tea Party’ scandal. A scandal that was particularly opportune for the organization given that it was facing calls for investigations before the ‘scandal’ even started:
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60 Plus has been the subject of a number of attempts to restrain its activities, but it remains undaunted. In July 2012, for example, the Democratic Senatorial Campaign Committee filed a complaint with the Federal Election Commission charging that 60 Plus, Crossroads GPS and Americans for Prosperity “are ‘political committees’ who have failed to register and disclose with the F.E.C.” The D.S.C.C. dismissed the organizations’ claims of 501(c)(4) status as “spurious” and “risible on their face.” The complaint is still pending before the F.E.C.In July, 2012, well before the current I.R.S. controversy, Senator Carl Levin, Democrat of Michigan, called on the I.R.S to investigate the political activities of a dozen 501(c)(4)s, including 60 Plus. Levin’s list included both Republican and Democratic-leaning 501(c)(4)s: Crossroads Grassroots Policy Strategies, Priorities U.S.A., Americans Elect, American Action Network, Americans for Prosperity, American Future Fund, Americans for Tax Reform, Patriot Majority USA, Club for Growth, Citizens for a Working America Inc. and the Susan B. Anthony List.
60 Plus was not cowed. It is pulling out the stops to capitalize on the controversy regarding the I.R.S. focus on Tea Party groups. In one of his many denunciations of Democrats and the I.R.S., James Martin declared:
The shades of Watergate continue to hover over this scandal. We recall Nixon’s defenders dismissed that as a “3rd rate burglary.” With new revelations coming out by the day and more I.R.S. employees tucking tail, this disgraceful escapade is making Watergate look like a bad hair day by comparison.
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“60 Plus was not cowed. It is pulling out the stops to capitalize on the controversy regarding the I.R.S. focus on Tea Party groups.”
Yep, a group that was emblematic of how the “money churning” scam operates jumped at the opportunity to complain loudly about unfair targeting by the IRS. Because that’s how the system works. A system powered by cunning, gall, and endless reserves of shamelessness. Should billionaire-funded groups like AFF and 60 Plus be allowed to legitimately claim non-partisan ‘social welfare’ status? That’s the real question at the heart of the ‘IRS targeting conservatives’ fake scandal.
The TC4 Trust and the Center to Protect Patient Rights: The Koch Brothers’ Temporary “Shadow Money Mailbox” 501(c)(4)s Filled With “Disregardable Entities”
And 60 Plus was just one element node in the network of 501(c)(4) organizations used by the Koch donor network. Next, we’re going to take a closer look at how this larger network operates including some of the tricks used to obscure the money-trails. And keep in mind that, until around 2013, AFF was a significant component of the Koch network and it was only kicked out after it was caught breaking the 501(c)(4) rules.
Also keep in mind that the Kochs were a major influential force in American politics for decades before they became a household name around 2010. Long before their ‘coming out’ moment for with the 2010 rise of the Tea Party in 2010, the Kochs were financing major right-wing organizations like the Cato Institute and American Enterprise Institute. And they did a remarkable job staying off the public’s radar all those years. Staying hidden was apparently no long possible with hundreds of millions of the Koch networks dollars flowing into US elections. But even after it’s become clear that the Kochs are spending fortunes on influencing the US electorate in election after election, the specifics of how they’re spending that money still remain heavily hidden. We know that money is out there, we just don’t know how it’s being spent. It’s one of the ways ‘dark money’ is a lot like ‘dark matter’: we know it’s there even if we can’t see it.
Yet every once in a while, we get a snapshot of how these dark money networks operate and that’s what happened in 2013 when some of the entities in the Koch network shutdown and publicly issued termination reports. And those termination reports included the recipients of these shut down groups’ donations, recipients that included other 501(c)(4) entities, yielding a number of fascinating insights into the techniques used by how these networks.
So let’s take a closer look at the two big funders of 60 Plus mentioned above, TC4 and the Center to Protect Patient Rights (CPPR), to get a better idea of how the system actually works. As we’re going to see, the two groups weren’t just generous donors to 60 Plus. They acted as “Shadow Money Mailboxes” that did little other than collect donations and disburse the money to other entities. TC4 was actually a very big donor to the CPPR too. Yes, even the Shadow Money Mailboxes donate to each other. Because, again, that’s how this system works.
But TC4 didn’t give directly to CPPR. TC4 reported giving $27.9 million in grants to other groups between July 1, 2011 and June 30, 2012 and $14.3 million of that was sent to a group called Corner Table LLC. Corner Table, of course, turns out to be a “disregardable entity” of CPPR. That’s a sub-unit that is ‘disregarded’ for tax purposes and treated as part of the parent entity.
TC4 reported that $27.9 million in spending in its 2013 termination report, which was its final report before shutting down. So who was behind Corner Table? Well, that only became clear two days after TC4 filed its termination report when CPPR filed some amendments to its 2010–2011 IRS filings. Those filings revealed that Corner Table was previously called Eleventh Edition which received $4.3 million from TC4 sometime between July 1, 2010 and June 30, 2011. This amendment by CPPR also contradicted its initial 2010–2012 filings with the IRS that stated it had no disregardable entities at all.
That points out one of the basic techniques 501(c)(4)s can use to obscure their money flow trails: change the name of the disregarded entity and then neglect to report donations up front and report them a year later as amendments so there’s a lag in what the public knows about what your 501(c)(4) spent. A lag that gives enough time to change names and obfuscate the public record even more. TC4 reports on its 2010–2011 that it gave $4.3 million to an entity called Eleventh Edition. But CPPR, the owner of Eleventh Edition, didn’t disclose receiving that money until its 2013 amendment. And this effectively hid from the public in 2012, an election year, the knowledge that TC4 gave $4.3 million to CPPR in 2010–2011. And then TC4 disbands in 2013, presumably to be replaced by a new Koch-backed front. And in its termination report it reveals that it donated $14.3 million to Corner Table LLC in 2011–2012, and the only public information that indicates that Corner Table is a CPPR sub-unit is the CPPR amendment to its 2010–2011 filings that belatedly reveal that Eleventh Edition exists and changed its name to Corner Table. So it order to trace the $4.3 million and $14.3 million donations made by TC4 back to CPPR in 2010–2012 you would have needed to view publicly disclosed tax information for both TC4 and the CPPR and connect the dots.
And Eleventh Edition/Corner Table wasn’t the only ‘disregardable entity’ CPPR disclosed in a 2013 amendment to its previous tax returns. CPPR also belatedly revealed in a 2013 amendment the existence of Meridian Edition LLC. The amendment also revealed that Meridian Edition had previously used the name American Committment, a name that has apparently been used by a number of other 501(c)(4)s, highlighting another way the dark money system obscures money flows: the temporary disregarable entities don’t just change their names. They share names too, making the IRS filings of these entities ambiguous. The CPPR 2013 amendment showed a $9.3 million donation to American Committment from TC4 in 2010–2011. And TC4 presumably disclose that donation in its initial filings. But it wasn’t until CPPR filed that amendment that it was publicly revealed that American Committment was a CPPR sub-unit.
The article also notes that an earlier donation from TC4 to American Committment was obscured because of a smudge on TC4’s tax filings. A smudge. That’s apparently also one of the obfuscation techniques. And it apparently worked.
There were a number of other Koch-affiliated entities getting grants from TC4. TC4 also gave $891,000 to PRDIST LLC, a disregarded entity of Americans for Prosperity, one of the Kochs’ primary political organizations. TC4 donated an additional $500,000 in its 2013 termination report.
One entity that received about $9 million in grants TC4 gave to POFN LLC, a sub-unit of SGC4 Trust, which does business under the name Public Notice. The executive director of Public Notice happens to be Gretchen Hamel, one of the founding members of TC4. It’s a small world in the world of 501(c)(4)s.
One of the biggest recipients of TC4’s $64 million in grants was Themis Trust, a conservative voter database project started in 2010 by the Koch brothers. And this, of course, also involved the use of disregarded entities to hide the money trail. TC4 gave $2.5 million to Themis under its own name, but then gave another $5.6 million to a Themis sub-unit called STN LLC and another $1.8 million to Themis sub-unit DAS MGR. In all, TC4 gave Themis Trust $9.9 million, and 75% of those grants were effectively hidden from the public using disregarded entities.
Themis Trust, in turn, made grants to some non-Koch entities. For example, TC4 donated $750,000 to an entity called ORRA LLC, a disregarded entity of Evangchr4 LLC. It turns out Evangchr4 is formally a related organization of Themis Trust. Evangchr4, in turn, donated $1.2 million to CitizenLink, a 501(c)(4) entity of the right-wing evangelical christian organization Focus on the Family. And CitizenLink ended up spending $2.6 million in 2012, largely in support of Mitt Romney. So we have TC4 giving money to a disregarded entity of Evangchr4, which itself is formally a related organization of Themis Trust. And Evangchr4 — a name that sounds like it was set up by evangelical Christians — gave money to Focus on the Family’s 501(c)(4) CitizenLink. Finally, CitizenLink spent millions promoting Mitt Romney in 2012. And this was all done under the pretense of these all being non-political social welfare organizations.
And as the following article notes, there were a number of entities listed as recipients of TC4’s donations in its termination report where Open Secrets couldn’t identify who was behind them. And that highlights one of the key aspects of this to keep in mind: even when these groups reveal in their public IRS reports how much money they gave and the recipients of that money, there’s still no guarantee that even investigative journalists like the people at Open Secrets will have the information they need to determine who is actually behind these groups. Because that’s how the system is currently designed. To be investigative-journalist-proof:
Open Secrets
Exclusive: Largest Dark Money Donor Groups Share Funds, Hide Links
By Robert Maguire and Viveca Novak
September 10, 2013There’s a new dark money game in town, one meant to further cover the tracks of tax-exempt groups that have provided major sums to help Republican causes in the 2010 and 2012 elections.
Recent tax filings by the two largest “shadow money mailboxes” — groups that do virtually nothing but pass grants through to other politically active 501(c)(4) organizations, many of which have been big spenders on election ads benefiting the GOP — show their financial ties run far deeper than previously known.
The groups, TC4 Trust and the Center to Protect Patient Rights — both of which have connections to the billionaire industrialist Koch brothers — have been playing a high-stakes game of hide-the-ball, disguising transfers of millions of dollars from one to the other behind a veil of Delaware limited liability corporations.
All covered up
Already, under tax law, 501(c)(4) groups — like TC4, CPPR and nearly all the groups to which they’ve given money through the years — don’t have to disclose their donors. By further shrouding the recipient groups behind entities with different names (and, usually, different employer identification numbers), the donors are attempting to make it even more difficult to find out how the money is flowing.
TC4 is now out of business. But in its termination report, signed on May 14, 2013 and sent to the IRS, TC4 reported giving $27.9 million in grants to other groups between July 1, 2011 and June 30, 2012. The report was included in data posted yesterday Resource.org.
The largest grant by far — $14.3 million — was sent to a group called Corner Table LLC. That’s a big chunk of change to a folksy-sounding but unknown — in the political or any other realm — organization.
But two days after TC4’s trustee finalized its termination report, the Center to Protect Patient Rights — the other big shadow money pass-through — signed off on amendments to its 2010 and 2011 tax filings that help solve the mystery.
The amendments say that, contrary to CPPR’s earlier representations on IRS filings that it had no connected entities operating under a different name, it actually did.
One of them, according to one of the amendments, was called Eleventh Edition, which received $4.3 million from TC4 sometime between July 1, 2010 and June 30, 2011. And not only was Eleventh Edition the same as CPPR, but it had taken on a new name: Corner Table LLC.
And CPPR’s other amendment indicates it has another of these units: Meridian Edition LLC — which, the documents say, was originally called American Commitment LLC. American Committment had received a total of $9.3 million from TC4 in 2010 and 2011 (its earlier grant was unclear at first because the recipient’s name was smudged on TC4’s 990 return).
American Commitment is a name that has been used for several nonprofits. The incarnation that received the TC4 money (a group that seemed to disappear, along with its millions from TC4) — is the one that shows up in CPPR’s amended filing.
The image below shows TC4’s contributions to CPPR:
[See image showing TC4 Trust using different middle-men organizations 2009, 2010, and 2011 to funnel millions to the Center to Protect Patient Rights]
The upshot: Now we know that CPPR — through its previously unknown sub-units — received a total of nearly $28 million from TC4 from August 2009 through June 2012. That’s a big chunk of CPPR’s overall $95 million revenue. The source of most of the rest of its funds remains publicly unknown.Disregarded no more
These wholly-owned sub-units of larger groups have a particular designation under the law: They’re known as “disregarded entities” — meaning their different names and separate identification numbers are disregarded by the IRS for income tax purposes, and they must be reported on the same forms with their parent groups. Officially, they are “disregarded as an entity separate from its owner.” They are almost always single-member LLCs.
CPPR has given out more than $70 million in grants from its inception in 2009 through the end of 2011. And we don’t yet know — because of lag time in IRS filing schedules — what it spent in 2012, which could have been a big year for the organization.
TC4, which began operating the same year as CPPR, has made $64.7 million in grants. One of its main recipients has been a conservative voter database project, Themis Trust, started in early 2010 by David and Charles Koch, the billionaire industrialists who are major funders of the right.
Themis Trust, too, has hidden some of the grants it has received from TC4 by using disregarded entities. Under its own name, Themis received $2.5 million from TC4. But the donor group also gave $5.6 million to a Themis unit called STN LLC, and sent $1.8 million to yet another Themis LLC, DAS MGR. The grants from TC4 to Themis total $9.9 million.
In addition, TC4’s final filing shows it gave a grant of $725,000 to something called ORRA LLC, which is a disregarded entity of Evangchr4 Trust.
The latter group is formally a “related organization” of Themis, according to Themis’ 990. And Evangchr4 gave out $1.2 million in grants, almost all of which went to something called CitizenLink, the c4 arm of the social conservative group Focus on the Family. The last link in that particular daisy chain of grants, CitizenLink reported to the FEC that it spent $2.6 million on independent expenditures in 2012, most of it on behalf of Republican presidential nominee Mitt Romney.
CitizenLink is just one of the tax-exempt, nondisclosing organizations that reported spending more than $250 million in the 2012 elections, according to filings made with the FEC.
TC4 has in the past given grants to several other disregarded entities of other groups, such as $891,000 it sent to PRDIST LLC — a unit of the much better-known Americans for Prosperity. In its termination report, TC4 reported sending PRDIST another $500,000.
Then there was the $7.3 million TC4 sent to POFN LLC, a subsidiary of SGC4 Trust, which does business under the name Public Notice. TC4’s final report notes another $1.7 million contribution to POFN.
There are still grantees whose true identities OpenSecrets Blog hasn’t yet been able to learn: Something called TRGN LLC had earlier received $1.5 million from TC4, but the latest report shows another grant of $2.1 million. Three other groups appear on the termination report for the first time, receiving a total of a little less than $5 million: SLAH LLC, TDNA LLC and TOHE LLC. It’s not clear what these groups do or whether they are related to more well-known organizations.
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Things go better with Kochs
The connections between these groups and the Koch brothers, generous funders of conservative causes, are evident in their personnel as well as in grants.
Gretchen Hamel, the executive director of Public Notice, the recipient (through its sub-units) of $9 million from TC4, gave a presentation during at least one of the Kochs’ annual conservative strategy sessions. But that’s not all: Hamel was also a founding member of TC4, which from its earliest days gave to the Kochs’ voter database project Themis.
Another presenter at that same conference was Sean Noble, a political consultant known for being closely connected to the Kochs’ operations. He founded CPPR, and is still its president and executive director. Noble knows his way around the world of politically focused 501(c)(4)s: He also founded all three versions of American Commitment — the most recent of which is now run by Phil Kerpen, who’s on the board of the Kochs’ large ©(4), Americans for Prosperity.
Americans for Prosperity — which spent more than $36 million in the 2012 election cycle, almost all of used for ads opposing President Obama’s re-election, according to reports filed with the FEC — has received a total of nearly $1.4 million from TC4, and at least another $4.3 million from Noble’s CPPR.
CPPR figured in a scheme last year in which a Americans for Responsible Leadership, a group founded by one of Noble’s clients, funneled $11 million to advocates mobilizing against a California ballot initiative (a temporary tax increase for education) and on behalf of another one (to ban unions from using dues for political purposes).
When California’s election watchdog won a court order to force ARL to disclose its donors, it revealed little: ARL got its money from CPPR, which had received it from another dark money group called Americans for Job Security. The money, then, had passed through a triple-layered curtain of nondisclosing groups, and its original source was still unknown. The state agency called it a plain case of “money laundering.” The Daily Beast has reported that a grand jury has been empaneled to investigate the transactions.
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“Recent tax filings by the two largest “shadow money mailboxes” — groups that do virtually nothing but pass grants through to other politically active 501(c)(4) organizations, many of which have been big spenders on election ads benefiting the GOP — show their financial ties run far deeper than previously known.”
“Shadow money mailboxes”: It’s an apt label for groups like TC4 and CPPR that exist solely to take contributions and pass that money along to other 501(c)(4)s.
And while these ‘shadow money mailboxes’ already have the legal right to not disclose their donors to the public, they still use sub-‘shadow money mailboxes’ operating under different names (usually with different employer identification numbers) to make it as difficult as possible for the public to track the money flows that get publicly disclosed:
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All covered upAlready, under tax law, 501(c)(4) groups — like TC4, CPPR and nearly all the groups to which they’ve given money through the years — don’t have to disclose their donors. By further shrouding the recipient groups behind entities with different names (and, usually, different employer identification numbers), the donors are attempting to make it even more difficult to find out how the money is flowing.
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These sub-units are technically known as “disregarded entities”, which refers to how their separate identification numbers are are disregarded by the IRS for income tax purposes, and they must be reported on the same forms with their parent groups. But as the short-lived life four-year lives of the disregarded entities used by TC4 and CPPR make clear, they could also be described as discardable entities because they are clearly used as temporary organizations that get created, maybe change their names, and then disappear in a few years to be replaced by a new disregarded entity. They’re disposable entities used to obscure money-trails:
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Disregarded no moreThese wholly-owned sub-units of larger groups have a particular designation under the law: They’re known as “disregarded entities” — meaning their different names and separate identification numbers are disregarded by the IRS for income tax purposes, and they must be reported on the same forms with their parent groups. Officially, they are “disregarded as an entity separate from its owner.” They are almost always single-member LLCs.
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And as the article makes clear, the largest donations to come out of these shadow money mailboxes were donations from TC4 to CPPR. Large donations that were obscured with the use of sub-units: of the $27.9 million in grants TC4 made in the one year period of from July 1 2011 to June 30, 2012, over half of that went to CPPR. But it actually sent to a CPPR sub-unit called Corner Table LLC:
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TC4 is now out of business. But in its termination report, signed on May 14, 2013 and sent to the IRS, TC4 reported giving $27.9 million in grants to other groups between July 1, 2011 and June 30, 2012. The report was included in data posted yesterday Resource.org.The largest grant by far — $14.3 million — was sent to a group called Corner Table LLC. That’s a big chunk of change to a folksy-sounding but unknown — in the political or any other realm — organization.
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And it just happens to be the case that CPPR hid from the IRS the fact that Corner Table LLC — originally named Eleventh Edition — was one of its sub-units. This wasn’t disclosed until two days after TC4’s 2013 termination report when CPPR filed amendments to its 2010–2011 taxes. It was only after those amendments were filed in 2013 that researchers at Open Secrets were able to discover that TC4 was a major fund of CPPR:
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But two days after TC4’s trustee finalized its termination report, the Center to Protect Patient Rights — the other big shadow money pass-through — signed off on amendments to its 2010 and 2011 tax filings that help solve the mystery.The amendments say that, contrary to CPPR’s earlier representations on IRS filings that it had no connected entities operating under a different name, it actually did.
One of them, according to one of the amendments, was called Eleventh Edition, which received $4.3 million from TC4 sometime between July 1, 2010 and June 30, 2011. And not only was Eleventh Edition the same as CPPR, but it had taken on a new name: Corner Table LLC.
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And Corner Table/Eleventh Edition was just one of the CPPR sub-units used for these money flows between TC4 and CPPR. There was also Meridian Edition LLC — originally named American Committment LLC, which is a name apparently used by multiple nonprofits — which received almost $10 million from TC4 also in 2010–2011. This sub-unit was also only belatedly disclosed to the IRS in CPPR’s 2013 amendments:
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And CPPR’s other amendment indicates it has another of these units: Meridian Edition LLC — which, the documents say, was originally called American Commitment LLC. American Committment had received a total of $9.3 million from TC4 in 2010 and 2011 (its earlier grant was unclear at first because the recipient’s name was smudged on TC4’s 990 return).American Commitment is a name that has been used for several nonprofits. The incarnation that received the TC4 money (a group that seemed to disappear, along with its millions from TC4) — is the one that shows up in CPPR’s amended filing.
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So between 2009–2012, these two sub-units of CPPR received $28 million from TC4. And each of which changed their name during this period. And CPPR didn’t disclose its relationship to them to the IRS until 2013. That’s how much work these Koch-backed entities did to obscure the money flows between these two key ‘shadow money mailboxes’. That $28 million was over a quarter of the $98 million CPPR took in from 2009–2012. And CPPR turned around and basically gave almost that same amount in grants of its own:
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The upshot: Now we know that CPPR — through its previously unknown sub-units — received a total of nearly $28 million from TC4 from August 2009 through June 2012. That’s a big chunk of CPPR’s overall $95 million revenue. The source of most of the rest of its funds remains publicly unknown....
CPPR has given out more than $70 million in grants from its inception in 2009 through the end of 2011. And we don’t yet know — because of lag time in IRS filing schedules — what it spent in 2012, which could have been a big year for the organization.
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And that’s why entities like TC4 and CPPR are shadow money mailboxes. They just act as middle-men in chains of donations across networks of organizations. The Koch network of mega-donors give to organizations like TC4 that, in turn, give to sub-units of other money mailboxes like CPPR which gives the money out again. Or given to entities like AFF that might spend the money on actual campaigning or further donate to another 501(c)(4). And the tax filings are delayed and sub-unit names are changed to further obscure the trail of what’s publicly disclosed. In other words, the mega-donors aren’t just shielded by the fact that 501(c)(4)s don’t have to disclose their donors. They’re also obscured by convoluted delayed tax disclosures and a money flow across networks of organizations donating money to each other using temporary sub-organizations that pop-up, change their names in a few years, and disappear.
And then there’s Themis Trust, a Koch-backed entity that appears to be a hyrid between shadow money mailboxes and a conservative voter database project. Themis received $9.9 million from TC4 using a series of disregarded entites:
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TC4, which began operating the same year as CPPR, has made $64.7 million in grants. One of its main recipients has been a conservative voter database project, Themis Trust, started in early 2010 by David and Charles Koch, the billionaire industrialists who are major funders of the right.Themis Trust, too, has hidden some of the grants it has received from TC4 by using disregarded entities. Under its own name, Themis received $2.5 million from TC4. But the donor group also gave $5.6 million to a Themis unit called STN LLC, and sent $1.8 million to yet another Themis LLC, DAS MGR. The grants from TC4 to Themis total $9.9 million.
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But in addition to its voter database project, Themis also gave $750,000 to Evangchr4 Trust, which appears to be focused on giving money to Focus on the Family. In that sense, Themis and its “related organization” Evangchr4 Trust were acting as a shadow money mailbox. One more mailbox in the chain to further obscure money flows:
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In addition, TC4’s final filing shows it gave a grant of $725,000 to something called ORRA LLC, which is a disregarded entity of Evangchr4 Trust.The latter group is formally a “related organization” of Themis, according to Themis’ 990. And Evangchr4 gave out $1.2 million in grants, almost all of which went to something called CitizenLink, the c4 arm of the social conservative group Focus on the Family. The last link in that particular daisy chain of grants, CitizenLink reported to the FEC that it spent $2.6 million on independent expenditures in 2012, most of it on behalf of Republican presidential nominee Mitt Romney.
CitizenLink is just one of the tax-exempt, nondisclosing organizations that reported spending more than $250 million in the 2012 elections, according to filings made with the FEC.
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If you think about it, TC4, CPPR, Themis Trust, and the rest of these Koch-financed entities, they really should all be declaring themselves “related organizations” because that’s exactly what they are. One big network of highly related Koch-financed organizations set up to maintain the pretense of being ‘social welfare’ organizations so they can get preferable tax treatment avoid disclosing their donors. It’s so Koch-centric that TC4 even gave to a disregarded entity of Americans for Prosperity, one of the Koch’s primary political organizations:
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TC4 has in the past given grants to several other disregarded entities of other groups, such as $891,000 it sent to PRDIST LLC — a unit of the much better-known Americans for Prosperity. In its termination report, TC4 reported sending PRDIST another $500,000.
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$9 million was given by TC4 to an entity called Public Notice. The executive director of Public Notice was a founding member of TC4 Trust:
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Then there was the $7.3 million TC4 sent to POFN LLC, a subsidiary of SGC4 Trust, which does business under the name Public Notice. TC4’s final report notes another $1.7 million contribution to POFN....
Things go better with Kochs
The connections between these groups and the Koch brothers, generous funders of conservative causes, are evident in their personnel as well as in grants.
Gretchen Hamel, the executive director of Public Notice, the recipient (through its sub-units) of $9 million from TC4, gave a presentation during at least one of the Kochs’ annual conservative strategy sessions. But that’s not all: Hamel was also a founding member of TC4, which from its earliest days gave to the Kochs’ voter database project Themis.
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Sean Noble, the founder of CPPR, is also a known Koch operative:
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Another presenter at that same conference was Sean Noble, a political consultant known for being closely connected to the Kochs’ operations. He founded CPPR, and is still its president and executive director. Noble knows his way around the world of politically focused 501(c)(4)s: He also founded all three versions of American Commitment — the most recent of which is now run by Phil Kerpen, who’s on the board of the Kochs’ large ©(4), Americans for Prosperity.
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It’s one big happy family because this whole network is really all one big distributed organization — the political influence operations of the Koch network — manifested as a network of separate organizations, giving money back and forth to each other’s sub-organizations. One big happy family of Koch network organizations masquerading as a collection of social welfare organizations and acting as one giant organization. Americans for Prosperity spent more than $36 million in the 2012 election cycle, almost $6 million of which came from TC4 and CPPR. And who knows how much of the rest of that $36 million was donated through other Koch entities. But it’s clear that when we’re looking at TC4 and CPPR and all the affiliated organizations like Themis Trust and Public Notice, we’re looking at a Koch-created network of ‘social welfare’ organizations set up for the purpose of laundering Koch donor network money and keeping the identities of those donors secret:
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Americans for Prosperity — which spent more than $36 million in the 2012 election cycle, almost all of used for ads opposing President Obama’s re-election, according to reports filed with the FEC — has received a total of nearly $1.4 million from TC4, and at least another $4.3 million from Noble’s CPPR.
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Note the case of money laundering involving CPPR and California ballot initiative and how CPPR was receiving money from Americans for Job Security and passing it along to a group called Americans for Responsible Leadership. We’ll be looking more closely at the in the next article below:
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CPPR figured in a scheme last year in which a Americans for Responsible Leadership, a group founded by one of Noble’s clients, funneled $11 million to advocates mobilizing against a California ballot initiative (a temporary tax increase for education) and on behalf of another one (to ban unions from using dues for political purposes).When California’s election watchdog won a court order to force ARL to disclose its donors, it revealed little: ARL got its money from CPPR, which had received it from another dark money group called Americans for Job Security. The money, then, had passed through a triple-layered curtain of nondisclosing groups, and its original source was still unknown. The state agency called it a plain case of “money laundering.” The Daily Beast has reported that a grand jury has been empaneled to investigate the transactions.
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And as the Open Secret’s team noted, four of the recipients of TC4 grants in its termination report were organizations where it’s not clear whether they’re a disregarded entity or related organization of a more well known organization. And also not clear what they even do. And that lack of transparency more or less tells us what they do: act as shadow money mailboxes and/or hide the spending of that money in ways to influence the political process:
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There are still grantees whose true identities OpenSecrets Blog hasn’t yet been able to learn: Something called TRGN LLC had earlier received $1.5 million from TC4, but the latest report shows another grant of $2.1 million. Three other groups appear on the termination report for the first time, receiving a total of a little less than $5 million: SLAH LLC, TDNA LLC and TOHE LLC. It’s not clear what these groups do or whether they are related to more well-known organizations.
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So TC4 and CPPR are created in 2009, with TC4 giving millions to CPPR’s disregarded entities like Eleventh Edition and Meridian Edition. Then in 2010 we have Citizens United, opening the floodgates to unlimited corporate political donations. Eleventh Edition and Meridian Edition change their names to Corner Table and American Committment. TC4 continues giving millions to CPPR’s renamed disregarded entities. And in 2013 TC4 folds up — acting as a disposable shadow money mailbox — and CPPR belated informs the IRS that it has these disregarded entities, finally revealing to the IRS the fact that TC4 has been giving millions to CPPR from 2009–2012. And that’s just one thread of a story about how the Koch donor obscured itself by splitting up into multiple temporary sham social welfare entities.
The American Future Fund and Its Koch-backed Peers Get Exposed and Kicked Out of the Koch Orbit.
As we just saw, one of the Koch brothers’ major ‘shadow money mailboxes’ from 2009–2012 just suddenly folded up and disappeared in 2013. It was a temporary shadow money mailbox, which makes perfect sense given the clear purpose of entities like TC4 and CPPR of making the money flows for political expenses as unclear to the public as possible while simultaneously maintaining the guise of being a ‘social welfare’ organization.
And as we’ll see in the following 2014 article, TC4 wasn’t the only entity in this Koch-backed network of 501(c)(4)s to pull a disappearing act following the 2012 elections. By the time the 2014 elections came around there was almost no Koch money flowing into The American Future Fund (AFF). Funds flowing into 60 Plus, the Koch-backed ‘alternative to the AARP’ we looked at above, also dried up. Flows into Americans for Job Security, which we saw in the previous article was involved with a scheme the state of California described as campaign money laundering sending, also dried in the 2014 mid-terms. Even Grover Norquist’s Americans for Tax Reform saw its funds suddenly dry up in 2014.
So what caused all of these entities that were seen as key dark money funding vehicles in previous elections to suddenly get shunned? They all got caught cheating. And that points to one of the key features of this system: the 501(c)(4)s are disposable so when they get caught cheating they can just fade away and get replaced by a new ambiguously named entity.
60 Plus saw its funds dry up when it was caught cheating its funders. Specifically, 60 Plus’s founder, Sean Noble (who we looked at in the above article excerpt), was found to have charged exorbitant fees for an underwhelming 2012 ad campaign and this ended up getting him, and 60 Plus, exiled from the Koch network.
In the case of the AFF, it got caught in the same money laundering scandal that caused Americans for Job Security to fall out of favor: the laundering of millions of dollars into 2012 California ballot initiatives, where Americans for Job Security gave $24 million to CPPR, which, in turn, gave $7 million to the AFF and $13 million to Americans for Responsible Leadership, both a which passed the money along to ballot initiative purposes. This violated California law and was exposed, hence, these groups suddenly became a liability and their disposable nature was revealed when the money flows dried up in 2014.
Norquist’s Americans for Tax Reform got caught in a similar money laundering scandal. Karl Rove’s Crossroads GPS gave the group $26.4 million in 2012 and over half of it was spent on election ads, while it only reported to the IRS spending a third of the money on election ads. So in addition to breaching the 501(c)(4) rule of not spending over half of its money on political activity, Americans for Tax Reform also lied to the IRS. So Grover Norquist’s signature group got caught flagrantly making a mockery of the US campaign finance system in 2012 and ended up getting shut out in 2014 as punishment.
But unlike TC4, which folded up entirely after the 2012 elections, these other groups didn’t disappear entirely. Instead, they simply offered their services to other clients. Recall what we saw above in the AFF’s history: it was basically a right-wing mercenary outfit with a variety of clients and did work for the DCI Group and clients like the Burmese Junta. It’s a political mercenary outfit. So when the Koch money dried up, AFF found new clients. They didn’t have nearly as much money to spend, but they remained active.
Americans for Job Security and Americans for Tax Reform both went back to promoting a generic anti-tax, anti-union and pro-business agenda with much smaller budgets. And 60 Plus — cut off from that sweet, sweet Koch sugar — found work attacking the primary opponents of Arizona gubernatorial candidate Doug Ducey. So unlike TC4, which folded up entirely in 2013 after four yeras of serving its shadow money mailbox function, these other entities just kind of quietly hung around as they searched for new clients:
The Huffington Post
Dark Money Groups That Spent Millions In 2012 Vanish In 2014
By Paul Blumenthal
09/12/2014 07:31 am ET Updated Sep 12, 2014WASHINGTON — The Iowa-based conservative nonprofit group American Future Fund released new advertisements nearly every week from the spring of 2012 through Election Day that year, hitting President Barack Obama or Democratic Senate candidates in competitive races. By mid-September, the group had spent $9.5 million. It went on to spend north of $30 million on federal races after receiving massive funding from the network operated by the network operated by the billionaire brothers Charles and David Koch.
This year, with eight weeks before the 2014 midterm elections, American Future Fund advertising is nowhere to be seen on the air. The nonprofit, which does not disclose donors, has spent less than $250,000 in federal campaigns and has announced little in the way of issue advocacy targeting candidates.
The American Future Fund is not the only nonprofit disappearing act. The conservative nonprofits 60 Plus Association, Americans for Tax Reform, and Americans for Job Security also have largely evaporated from the federal election scene after spending millions in both 2010 and 2012.
The disappearances show how nonprofit political networks use groups with the capability for electoral action as fronts for their own campaigns and, when they are no longer useful or become a distraction, how easily they can be cut loose.
Nonprofit groups have been a major feature of political campaigns since the Supreme Court’s 2007 Wisconsin right to life ruling, and they proliferated after the 2010 Citizens United decision. The groups can raise unlimited sums from corporations, unions and individuals, with the added bonus of keeping donors’ identities secret — so long as they abide by barely enforced rules requiring them to spend the majority of their time and money on the purpose they claimed to obtain tax-exempt status. Collectively, nonprofits have spent more than $142 million on campaigns targeting federal candidates in 2014.
Running afoul of federal and state laws and regulations, or the desires of their funders, appears to be a prime reason for this year’s lack of spending from these nonprofits.
The disappearance of American Future Fund and Americans for Job Security, responsible for more than $15 million in reported 2012 election advertising, came after they were caught laundering campaign contributions into two California ballot initiative campaigns. This revelation by California’s Fair Political Practices Commission led to a record settlement requiring the groups to disgorge improperly donated funds and to release a donor list that revealed identities of some secret funders. Neither group responded to inquiries.
American Future Fund was almost entirely funded by the Koch political network. The group raised $68 million in 2012, with more than $60 million from Freedom Partners Chamber of Commerce and the Center to Protect Patient Rights. This total included $7 million passed from Americans for Job Security through the Center to Protect Patient Rights. Of that amount, $4 million landed in a California ballot campaign committee.
The Center to Protect Patient Rights, run by then-Koch point man Sean Noble, was used by Americans for Job Security to funnel money into the California ballot campaigns. The Virginia-based group sent $24 million through the Center to Protect Patient Rights. This contribution was split into the $7 million to the American Future Fund and $13 million to Americans for Responsible Leadership, both of which then passed contributions onto California groups.
Another disappearing group, the 60 Plus Association, formed in the early 1990s as a conservative counter to the AARP, was largely funded by the Koch network. The organization received more than $18 million from Freedom Partners and the Center to Protect Patient Rights in 2012, and spent $13 million on election and issue ads attacking federal candidates.
In 2014, the 60 Plus Association has spent $525,000 on advertising that targets members of Congress and other congressional candidates. The group’s big advertising campaign opposing a mortgage reform bill sponsored by Sens. Mike Crapo (R‑Idaho) and Tim Johnson (D‑S.D.) led to a rebuke by its funders. According to The Associated Press, political advisers in the Koch network were “frustrated” by the advertisements. The 60 Plus Association didn’t respond to a request for comment.
Anti-tax advocate Grover Norquist’s Americans for Tax Reform, meanwhile, has gone from spending $15.8 million in the 2012 election to less than $40,000 on the 2014 midterms. Crossroads GPS, a nonprofit founded by Karl Rove, provided $26.4 million to Americans for Tax Reform in what was supposed to be non-political spending. Norquist’s group, however, spent more than half of its funds on electoral advertisements, while claiming on tax filings to the Internal Revenue Service to have spent less than one-third of its funds on election ads.
The controversial spending by Americans for Tax Reform has seemingly led to the end of its role as a dark money front. The group didn’t answer an inquiry from The Huffington Post. In an email conversation with New York Times reporter Tom Edsall, Crossroads spokesman Paul Lindsay wrote that the group has “implemented stricter due diligence” in determining which groups to fund.
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While American Future Fund, Americans for Job Security, Americans for Tax Reform and 60 Plus Association appear to have stopped being conduits for big sources of undisclosed money in federal elections, they remain a useful resource for other sources of money.
For Americans for Job Security and Americans for Tax Reform, the plan has been to simply go back to engaging in their declared social welfare purpose: Advancing a conservative anti-tax, anti-union and pro-business agenda.
Americans for Job Security is registered as a business trade association and has a long history of serving as a hired gun for corporations. Americans for Tax Reform has its staple of anti-tax policies to promote, including Norquist’s Taxpayer Protection Pledge, and has also done work for industry lobbying campaigns, including tobacco companies.
The two pro-business groups have, however, found themselves on opposite ends of business lobbying battles in Washington. Americans for Job Security, a routine ally of the retail industry, supported rules limiting swipe fees imposed on stores for customer debit card purchases in 2011, and backs the current proposal to allow states to impose a sales tax on online purchases. Americans for Tax Reform took opposite positions on both issues.
The 60 Plus Association appears to have maintained a place in the orbit of Noble, who was excommunicated from the Koch network following his involvement in the California investigation and his exorbitant consulting fees. The seniors group ran ads in the Arizona Republican gubernatorial primary attacking opponents of the eventual nominee Doug Ducey. What remains of Noble’s nonprofit network had mobilized outside support for Ducey.
In Iowa, the American Future Fund continues to operate as a front for whomever has the funds. It received $750,000 from the Judicial Crisis Network, a conservative group promoting a right-wing judiciary and supporting Republican candidates in state attorney general races, and promptly gave $670,000 to the Republican Attorneys General Association, according to IRS documents.
After pro-gun control groups ran ads blasting Sen. Kelly Ayotte (R‑N.H.) for opposing background check legislation, the American Future Fund launched an advertising blitz on her behalf. Prior to and during the ad campaign, the nonprofit received $125,000 from the leadership PACs of Ayotte’s Senate Republican colleagues.
The group spent $287,000 to boost Nebraska state Sen. Beau McCoy’s campaign for the Republican gubernatorial nomination — likely at the behest of McCoy’s sole donor: Nebraska businessman Charles Herbster. When asked by the Omaha World-Herald whether he funded the American Future Fund ads, Herbster said, “That’s one of the questions I’m going to take the Fifth Amendment on, OK?” McCoy ultimately lost the GOP nomination to Pete Ricketts.
American Future Fund’s most recent advertising campaign is a far cry from its history of backing conservative candidates. For the past three months, the nonprofit has run ads in newspapers including Politico and The Wall Street Journal as part of a lobbying campaign by Doral Financial Corp., a Puerto Rican bank. The bank is in a spat with the commonwealth government over a refund for overpaid tax bills it says it is due, and hired the DCI Group, a PR firm with longstanding ties to the American Future Fund, to pressure Congress to intervene on its behalf.
And so the world of dark money nonprofits turns.
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“This year, with eight weeks before the 2014 midterm elections, American Future Fund advertising is nowhere to be seen on the air. The nonprofit, which does not disclose donors, has spent less than $250,000 in federal campaigns and has announced little in the way of issue advocacy targeting candidates.”
After spending millions of dollars in Koch funds from 2009–2012 ($60 million from the CPPR in 2012 alone) on ads and other political influence operations, American Future Fund’s spending dried up to just $250,000 as of September of 2014:
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American Future Fund was almost entirely funded by the Koch political network. The group raised $68 million in 2012, with more than $60 million from Freedom Partners Chamber of Commerce and the Center to Protect Patient Rights. This total included $7 million passed from Americans for Job Security through the Center to Protect Patient Rights. Of that amount, $4 million landed in a California ballot campaign committee.The Center to Protect Patient Rights, run by then-Koch point man Sean Noble, was used by Americans for Job Security to funnel money into the California ballot campaigns. The Virginia-based group sent $24 million through the Center to Protect Patient Rights. This contribution was split into the $7 million to the American Future Fund and $13 million to Americans for Responsible Leadership, both of which then passed contributions onto California groups.
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And the AFF was just one of the prominent 501(c)(4)s acting as a shadow money mailbox that saw their millions in donations suddenly dry up. Did this reflect a dip in political spending by the Kochs and other right-wing mega-donors? Of course not. It reflected the bad press the AFF and other prominent shadow money mailboxes received when they got caught breaking the 501(c)(4) rules and/or cheating the donors:
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The American Future Fund is not the only nonprofit disappearing act. The conservative nonprofits 60 Plus Association, Americans for Tax Reform, and Americans for Job Security also have largely evaporated from the federal election scene after spending millions in both 2010 and 2012.The disappearances show how nonprofit political networks use groups with the capability for electoral action as fronts for their own campaigns and, when they are no longer useful or become a distraction, how easily they can be cut loose.
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Running afoul of federal and state laws and regulations, or the desires of their funders, appears to be a prime reason for this year’s lack of spending from these nonprofits.
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American Future Fund and Americans for Job Security both got kicked out of the Koch network after getting caught money laundering donations into two California ballot iniatives. In other words, they became real-world examples of the Kochs making a mockery of the ‘non-political social welfare’ pretense that 501(c)(4)s have to maintain:
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The disappearance of American Future Fund and Americans for Job Security, responsible for more than $15 million in reported 2012 election advertising, came after they were caught laundering campaign contributions into two California ballot initiative campaigns. This revelation by California’s Fair Political Practices Commission led to a record settlement requiring the groups to disgorge improperly donated funds and to release a donor list that revealed identities of some secret funders. Neither group responded to inquiries.
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Grover Norquist’s Americans for Tax Reform (ATR) also got caught breaking 501(c)(4) rules in 2012 by allocating more than half of its spending on election ads. So its donations dried up too in 2014:
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Anti-tax advocate Grover Norquist’s Americans for Tax Reform, meanwhile, has gone from spending $15.8 million in the 2012 election to less than $40,000 on the 2014 midterms. Crossroads GPS, a nonprofit founded by Karl Rove, provided $26.4 million to Americans for Tax Reform in what was supposed to be non-political spending. Norquist’s group, however, spent more than half of its funds on electoral advertisements, while claiming on tax filings to the Internal Revenue Service to have spent less than one-third of its funds on election ads.The controversial spending by Americans for Tax Reform has seemingly led to the end of its role as a dark money front. Tie group didn’t answer an inquiry from The Huffington Post. In an email conversation with New York Times reporter Tom Edsall, Crossroads spokesman Paul Lindsay wrote that the group has “implemented stricter due diligence” in determining which groups to fund.
Lindsay provided a statement to The Huffington Post: “Like labor unions, we invest in a number of organizations that have complementary missions that help us advance our issue agenda. Our grants to other 501c4’s, which are made public in our 990, are predicated on a review of their financial records and a stipulation that the funds only be used for their exempt activity and not for political purposes.”
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Then there’s the 60 Plus Association, another major recipient of CPPR money. 60 Plus got kicked out of the Koch network — which consisted of 17 groups and raise $407 million in 2012 — for paying the head of 60 Plus, long-time Koch operative Sean Noble, exorbitant fees while yielding questionable results. That was apparently the last straw for Noble. But 60 Plus found some new congressional clients. And 60 Plus was still pissing off the Koch network again in 2014 when its biggest ad campaign opposed a bipartisan mortgage reform bill that would have replaced Fannie Mae and Freddie Mac (that the Koch network apparently supported too). Presumably a new client determined 60 Plus’s stance. It’s an example of how even 501(c)(4)s that get caught scamming their donors, like 60 Plus, will still be kept alive by the right-wing billionaire network. There’s that much money and that much demand for the kinds of fake 501©(04) services groups like 60 Plus offers:
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Another disappearing group, the 60 Plus Association, formed in the early 1990s as a conservative counter to the AARP, was largely funded by the Koch network. The organization received more than $18 million from Freedom Partners and the Center to Protect Patient Rights in 2012, and spent $13 million on election and issue ads attacking federal candidates.In 2014, the 60 Plus Association has spent $525,000 on advertising that targets members of Congress and other congressional candidates. The group’s big advertising campaign opposing a mortgage reform bill sponsored by Sens. Mike Crapo (R‑Idaho) and Tim Johnson (D‑S.D.) led to a rebuke by its funders. According to The Associated Press, political advisers in the Koch network were “frustrated” by the advertisements. The 60 Plus Association didn’t respond to a request for comment.
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The 60 Plus Association appears to have maintained a place in the orbit of Noble, who was excommunicated from the Koch network following his involvement in the California investigation and his exorbitant consulting fees. The seniors group ran ads in the Arizona Republican gubernatorial primary attacking opponents of the eventual nominee Doug Ducey. What remains of Noble’s nonprofit network had mobilized outside support for Ducey.
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The American Future Fund also responded to the loss of the Kochs by finding new clients like Republican candidates and the Judicial Crisis Network and lobbying for Doral Financial Corp., a Puerto Rican bank that hired DCI Group to lobby Congress to force Puerto Rico over its claims of an overpaid tax bill:
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In Iowa, the American Future Fund continues to operate as a front for whomever has the funds. It received $750,000 from the Judicial Crisis Network, a conservative group promoting a right-wing judiciary and supporting Republican candidates in state attorney general races, and promptly gave $670,000 to the Republican Attorneys General Association, according to IRS documents.After pro-gun control groups ran ads blasting Sen. Kelly Ayotte (R‑N.H.) for opposing background check legislation, the American Future Fund launched an advertising blitz on her behalf. Prior to and during the ad campaign, the nonprofit received $125,000 from the leadership PACs of Ayotte’s Senate Republican colleagues.
The group spent $287,000 to boost Nebraska state Sen. Beau McCoy’s campaign for the Republican gubernatorial nomination — likely at the behest of McCoy’s sole donor: Nebraska businessman Charles Herbster. When asked by the Omaha World-Herald whether he funded the American Future Fund ads, Herbster said, “That’s one of the questions I’m going to take the Fifth Amendment on, OK?” McCoy ultimately lost the GOP nomination to Pete Ricketts.
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American Future Fund’s most recent advertising campaign is a far cry from its history of backing conservative candidates. For the past three months, the nonprofit has run ads in newspapers including Politico and The Wall Street Journal as part of a lobbying campaign by Doral Financial Corp., a Puerto Rican bank. The bank is in a spat with the commonwealth government over a refund for overpaid tax bills it says it is due, and hired the DCI Group, a PR firm with longstanding ties to the American Future Fund, to pressure Congress to intervene on its behalf.
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It’s worth noting that the Judicial crisis Network was one of the leading dark money groups promoting the confirmation of Brett Kavanaugh on the Supreme Court, pouring millions of dollars into pro-Kavanaugh ads and political bribes.
It’s also worth noting that the Judicial Crisis Network donors overlaps with members of the Koch donor network. So while the Kochs may have kick out American Future Fund out of the Koch donor network in 2014, money from those Koch network donors was still flowing to the AFF.
Also note that Doral Financial was shut down by the government in 2017 and the investigation into the 2011 execution-style shooting of a Doral executive who was hired to clean up the bank remains unsolved. It was that kind of bank. So of course they hired both DCI Group and AFF to lobby for them. DCI Group claimed at the time that it wasn’t coordinating with AFF, although many were skeptical.
For Americans for Job Security and Americans for Tax Reform, they simply returned to generic anti-tax, anti-union and pro-big business agenda:
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While American Future Fund, Americans for Job Security, Americans for Tax Reform and 60 Plus Association appear to have stopped being conduits for big sources of undisclosed money in federal elections, they remain a useful resource for other sources of money.For Americans for Job Security and Americans for Tax Reform, the plan has been to simply go back to engaging in their declared social welfare purpose: Advancing a conservative anti-tax, anti-union and pro-business agenda.
Americans for Job Security is registered as a business trade association and has a long history of serving as a hired gun for corporations. Americans for Tax Reform has its staple of anti-tax policies to promote, including Norquist’s Taxpayer Protection Pledge, and has also done work for industry lobbying campaigns, including tobacco companies.
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So as we can see, these ‘social welfare’ groups might lose their existing donor base after they get caught breaking the rules or cheating their clients. But that doesn’t shut them down. They just quietly find new donors and carry on. There’s plenty of non-Koch right-wing and corporate dark money floating around out there.
From the Kochs to Karl Rove’s ‘Establishment’ Network: Meet the New Boss. Basically the Same as the Old Boss.
And then there’s Karl Rove donor network. Like the Koch network (and like dark matter), we know it exists. We just don’t necessarily know what it’s up to. And as the following 2016 OpenSecrets.org article makes clear, we should definitely want to know what Karl Rove’s donor network is up to because they are likely up to no good, as evidenced by the task Rove’s group hired the AFF to carry out in 2014 after the AFF got mostly cut off from the Koch network.
Specifically, it was Karl Rove’s “Crossroads GPS” super-PAC in 2014 that hired AFF’s services. For a particular dirty trick. Crossroads GPS was heavily involved in the North Carolina senate race that year, so it gave $2 million to AFF and AFF got involved in that race. But AFF didn’t back the Republican candidate. Nope, AFF backed Sean Haugh, a Libertarian candidate who supported marijuana legalization. AFF created a series of web ads near the end of the campaign with slogans like “More weed, Less War”. AFF spent $420k on that ad campaign (which is almost like trolling the FEC). So Karl Rove hired AFF to promote a Libertarian candidate as a means of siphoning off youth voters from the Democratic candidate by emphasizing his marijuana legalization stance. It seems like there’s a lesson there. Because that’s the kind of dirty trick that could be employed in all sorts of races. In that sense, it’s a dirty trick that also shares something in common with dark matter and dark money: we know it’s there, we just don’t know where.
By 2016, AFF appeared to be acting as basically a tool of the GOP establishment heading into the GOP primary, implicitly backing Marco Rubio with a string of attack ads against all of the major GOP candidates. Rubio was widely seen as the establishment’s preferred candidate in the 2016 GOP primaries. It was so obvious that AFF favored Rubio that when it ran a negative ad about a Trump University lawsuit in March of 2016, Trump tweeted back “Phony Rubio commercial. I could have settled, but won”. His campaign went on to clarify its charge, asserting that AFF illegally coordinated with Rubio’s campaign. And while Trump’s campaign didn’t provide evidence of this charge, the behavior of AFF in 2016 (only leaving Rubio alone) is evidence itself.
And as the article also points out, it was AFF who was helping with the right-wing propaganda campaign of 2016 to promote the idea that the GOP shouldn’t allow any Supreme Court nominee submitted by the Obama administration to fill the late Associate Justice Antonin Scalia’s seat. This was part of their work for the Judicial Crisis Network. So the lack of public outrage over Senate Majority Leader Mitch McConnel’s decision to not consider any Obama Supreme Court nominee in the Senate — thus hyper-politicizing all Supreme Court openings in the fourth year of a presidential term — is thanks in part to AFF.
And that range of sleazy campaigns, from corporate lobbying campaigns to Karl Rove and the Kochs, is basically what AFF is all about: a right-wing shadow mercenary entity that specializes in offering the kinds of political services clients don’t want to be publicly associates with:
OpenSecrets.org
Exiled from Koch orbit, American Future Fund turns to GOP establishment for cash
By Robert Maguire
March 7, 2016Last week, real estate mogul and current GOP presidential front-runner Donald Trump tweeted to his 6.6 million Twitter followers about a “phony Rubio commercial” that was making hay out of Trump’s ongoing legal troubles with the now-defuct Trump University.
Phony Rubio commercial. I could have settled, but won’t out of principle! See student surveys. https://t.co/KKHiBH554d
— Donald J. Trump (@realDonaldTrump) February 29, 2016
The tweet links to a press release demanding “the immediate retraction of the ads.”
The spots weren’t sponsored by Sen. Marco Rubio’s campaign, however, but by a group called the American Future Fund, a 501(c)(4) social welfare organization with a long history that runs from its days as a core beneficiary of the Koch donor network to its newer ties with GOP establishment groups.
New tax filings obtained by OpenSecrets Blog suggest that, of all the still-existing groups that have been exiled from the Koch network, American Future Fund has been the most successful at surviving — mostly, it appears, as a ©(4)-for-hire, functioning as a conduit for establishment-leaning groups like Crossroads GPS, the granddaddy of politically active nonprofit groups that don’t disclose their donors.
Make American Future Fund Great Again
The Trump campaign’s statement alleges that American Future Fund “unlawfully coordinated with lightweight Senator Marco Rubio on these misleading commercials.” The release doesn’t offer evidence to back up the charge, and the Trump campaign didn’t respond to requests from OpenSecrets Blog to elaborate. If true, the coordination of strategy between the Florida senator’s campaign operation and AFF would be a violation of federal election laws, which require groups like AFF to act independently of candidates.
Coordinated or not, AFF’s pattern of ad buys does lend some credence to the idea that the group is at least acting as ground support for the Rubio campaign. AFF has spent more than any other nondisclosing “dark money” group in the election so far, $4.9 million, and often on targets other than Trump. Days before the Iowa caucuses, AFF put $1.5 million into ads attacking Gov John Kasich of Ohio, another GOP White House hopeful, as a supporter of Common Core and a “cheerleader for Medicaid expansion” under the Affordable Care Act.
About two weeks later, in the run-up to the New Hampshire primaries, AFF spent another $1.5 million accusing Texas Sen. Ted Cruz for being weak on national security.
And with outlays of $1.9 million on a series of ads hitting Trump, Rubio is the only one of the remaining GOP presidential contenders who hasn’t been attacked by AFF. He also happens to be the establishment’s favored candidate to lead the party into the November election.
Moving Closer to the Establishment
American Future Fund was one of the first politically active nonprofits on the scene after the Supreme Court’s 2007 decision in FEC v. Wisconsin Right to Life, which freed up 501© organizations to make electioneering communications — so-called “issue ads” run shortly before an election that often look like outright political ads. In the four elections from 2008 to 2014, AFF — and groups to which it funneled money via grants — spent more than $40 million bolstering Republican candidates.
Until late 2012, the vast majority of the group’s receipts — more than $77 million — flowed from donor hubs in the Koch network.
That changed after AFF was called out, with two other Koch network groups, in a cash shuffle that California regulators labeled “campaign money laundering.” Higher-ups in the Koch network — even more hush-hush then than it is now — weren’t pleased with all the attention the legal proceedings in California brought to their operations, and AFF and the two other groups involved were in effect thrown out in the cold.
Of the three organizations, though, AFF appears to have been the most successful in finding new sources of funds to keep its doors open. Revenues are less than they were in the days when Koch money was plentiful — about $6.9 million in 2014 — but the group managed to bring in about twice as much in 2013 and 2014 as American Encore, previously known as the Center to Protect Patient Rights; that organization, once the hub of Planet Koch, boasted receipts of more than $247 million over four years.
American Encore has found a second life as a sort of public relations outfit supporting Arizona Governor Doug Ducey.
But AFF — which has no employees and just two board members who each, according to the group’s filing, spend three hours per week on AFF business — appears to have become something of a dark money mercenary, a vehicle for political ads on behalf of donors who don’t want their involvement to be public.
North Carolina’s highs…
In the final days of the 2014 midterms, a series of web ads came out supporting longshot Libertarian Senate candidate Sean Haugh. The ads played on the sound of Haugh’s last name — which sounds remotely like the word “high” if you are, indeed, high. The ad showed young people holding signs saying, “Get High, Get Haugh,” with slogans like “More weed, Less War.” FEC documents show that the campaign cost $420,000 — get it? — and AFF was footing the bill.
Haugh himself wasn’t too happy, tweeting “While I appreciate the support, I now have a whole new reason to despise Koch brothers & their dark money.” Haugh could be excused for associating AFF with the Kochs, given that the only available information at the time — past tax filings from AFF and other Koch groups — showed overwhelming linkage.
It turns out that none of the core Koch organizations funded AFF in 2014. But another group with a big stake in the outcome of the Senate election in North Carolina did. Crossroads GPS, a politically active nonprofit linked to the GOP establishment, gave $2 million to American Future Fund, tax documents filed last year show.
Crossroads GPS was heavily invested in the Carolina race to unseat incumbent Democratic Sen. Kay Hagan. The group ultimately spent $4.9 million supporting her opponent Thom Tillis, and the OpenSecrets Blog found last fall that GPS had provided nearly the entire budget of another nonprofit, Carolina Rising — which effectively spent close to 100 percent of that money supporting Tillis.
While Haugh wasn’t right about AFF being a Koch group anymore, he was right about one thing. GPS and AFF were probably using him to draw younger, more liberal voters away from Hagan.
“It’s all kind of surreal, frankly,” Haugh told NPR. “Obviously they want to try to use me to siphon votes away from Kay Hagan and maybe swing the election to Thom Tillis.”
GPS, then, funded two groups, including AFF, that mounted campaigns benefiting Tillis. GPS’ multifarious show of force ushered Tillis into the winners circle in 2014, helping swing the Senate into GOP control.
While GPS was its largest single supporter in 2014, AFF received more than $1 million apiece from two other donors; those three contributions made up 64 percent of AFFs revenue in 2014, according to the group’s latest tax filing.
One of those other donors, providing $1.35 million, was the Judicial Crisis Network (JCN), as OpenSecrets Blog has reported — which itself is entirely funded by another shadowy group called the Wellspring Committee. JCN and AFF, along with an AFF subsidiary called The Progress Project, then put $1.8 million into the Republican Attorneys General Association.
But, while electing conservative attorneys general around the country has been a focus of JCN’s efforts, it hasn’t been the only one. The group has spent heavily in judicial races over the last two cycles — including more than $600,000 in the lead-up to Arkansas’ court elections last week, in which JCN’s favored candidate was the victor. After the voting was done, Arkansas Gov. Asa Hutchinson ® said that, “regrettably, a winner in yesterday’s campaign was dark money.” The group has also launched a “seven figure television, radio and digital advertising campaign” praising several Republican senators in tight re-election battles for promising to block consideration of any Supreme Court nominee submitted by the Obama administration to fill the late Associate Justice Antonin Scalia’s seat.
…and Puerto Rico’s lows
Back in 2014, AFF rounded out its year with an ad campaign that had nothing to do with attorneys general or the congressional midterms, paying for a series of ads in Politico and the Wall Street Journal accusing the Democratic governor of Puerto Rico, Alejandro Garcia Padilla, of being a part of a “Culture of Corruption.” The ads were conspicuously timed to run just before a lawsuit brought by Doral Financial Group was to go to court, OpenSecrets Blog reported last year. Doral Financial Group won its suit, receiving a $230 million tax refund from the struggling Puerto Rican government, which is teetering on the brink of bankruptcy.
When AFF reported all of this spending to the IRS, it counted $3.4 million as “political expenditures” — just shy of the 49 percent limit the agency imposes on the political activity of social welfare groups. That’s assuming that AFF’s other expenditures on things like “production/writing” or “survey research” was for actual social welfare programs rather than supporting the group’s political agenda. And a larger question is whether the group provides an excessive private benefit to a candidate or party, in this case the Republican party.
Its unlikely that the IRS will ever answer that question, though, as it only audits seven out of each 1,000 returns filed every year.
The picture that has emerged of American Future Fund, post Koch, is one of a group that is something of a hired gun, where AFF — in the mold of other groups like Americans for Job Security — does the dirty work of others, particularly if it helps the GOP establishment.
...
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“New tax filings obtained by OpenSecrets Blog suggest that, of all the still-existing groups that have been exiled from the Koch network, American Future Fund has been the most successful at surviving — mostly, it appears, as a ©(4)-for-hire, functioning as a conduit for establishment-leaning groups like Crossroads GPS, the granddaddy of politically active nonprofit groups that don’t disclose their donors.”
When one checkbook closes, another opens. That’s how things have worked out for the American Future Fund after it got largely shut out of the Koch network’s lucrative money flows. The rest of the GOP establishment had plenty of work for the them. And in the 2016 GOP primaries that work included acting as a shadow money attack dog for the establishment-preferred Marco Rubio. Granted, the AFF and its secret clients never explicitly said they were backing Marco Rubio. But the fact that the AFF was attacking every Republican candidate in the 2016 except for Marco Rubio eventually made that obvious. So obvious that then-candidate Donald Trump pointed out the obvious when it was his turn to get attacked by the AFF:
...
Last week, real estate mogul and current GOP presidential front-runner Donald Trump tweeted to his 6.6 million Twitter followers about a “phony Rubio commercial” that was making hay out of Trump’s ongoing legal troubles with the now-defuct Trump University.Phony Rubio commercial. I could have settled, but won’t out of principle! See student surveys. https://t.co/KKHiBH554d
— Donald J. Trump (@realDonaldTrump) February 29, 2016
The tweet links to a press release demanding “the immediate retraction of the ads.”
The spots weren’t sponsored by Sen. Marco Rubio’s campaign, however, but by a group called the American Future Fund, a 501(c)(4) social welfare organization with a long history that runs from its days as a core beneficiary of the Koch donor network to its newer ties with GOP establishment groups.
...
Trump went as far as claiming that AFF was illegally coordinating with the Rubio campaign, which would be a violation of the 501(c)(4) rules. And while the Trump campaign couldn’t provide actual evidence of this, it was pretty obvious. And that’s how this system works: even when it’s obvious that a 501(c)(4) is working to benefit a particular candidate, it can’t be easily proven:
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Make American Future Fund Great AgainThe Trump campaign’s statement alleges that American Future Fund “unlawfully coordinated with lightweight Senator Marco Rubio on these misleading commercials.” The release doesn’t offer evidence to back up the charge, and the Trump campaign didn’t respond to requests from OpenSecrets Blog to elaborate. If true, the coordination of strategy between the Florida senator’s campaign operation and AFF would be a violation of federal election laws, which require groups like AFF to act independently of candidates.
Coordinated or not, AFF’s pattern of ad buys does lend some credence to the idea that the group is at least acting as ground support for the Rubio campaign. AFF has spent more than any other nondisclosing “dark money” group in the election so far, $4.9 million, and often on targets other than Trump. Days before the Iowa caucuses, AFF put $1.5 million into ads attacking Gov John Kasich of Ohio, another GOP White House hopeful, as a supporter of Common Core and a “cheerleader for Medicaid expansion” under the Affordable Care Act.
About two weeks later, in the run-up to the New Hampshire primaries, AFF spent another $1.5 million accusing Texas Sen. Ted Cruz for being weak on national security.
And with outlays of $1.9 million on a series of ads hitting Trump, Rubio is the only one of the remaining GOP presidential contenders who hasn’t been attacked by AFF. He also happens to be the establishment’s favored candidate to lead the party into the November election.
...
So who ultimately hired AFF to go after all of Marco Rubio’s 2016 primary opponents? That’s not entirely clear, but based on the sleazy job AFF was hired to do by Karl Rove’s Crossroads GPS 501(c)(4) in 2014, it seems like Crossroads GPS should be considered the likeliest suspect: Rove hired AFF to support a Libertarian candidate in the 2014 Senate race to siphon votes away from the Democrat. What was the logic here? Well, the Libertarian candidate, Sean Haugh, happened to be a big marijuana legalization proponent, and that made Haugh the kind of candidate that Karl Rove assumed would result in a net loss for the Democrats:
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North Carolina’s highs…In the final days of the 2014 midterms, a series of web ads came out supporting longshot Libertarian Senate candidate Sean Haugh. The ads played on the sound of Haugh’s last name — which sounds remotely like the word “high” if you are, indeed, high. The ad showed young people holding signs saying, “Get High, Get Haugh,” with slogans like “More weed, Less War.” FEC documents show that the campaign cost $420,000 — get it? — and AFF was footing the bill.
Haugh himself wasn’t too happy, tweeting “While I appreciate the support, I now have a whole new reason to despise Koch brothers & their dark money.” Haugh could be excused for associating AFF with the Kochs, given that the only available information at the time — past tax filings from AFF and other Koch groups — showed overwhelming linkage.
It turns out that none of the core Koch organizations funded AFF in 2014. But another group with a big stake in the outcome of the Senate election in North Carolina did. Crossroads GPS, a politically active nonprofit linked to the GOP establishment, gave $2 million to American Future Fund, tax documents filed last year show.
Crossroads GPS was heavily invested in the Carolina race to unseat incumbent Democratic Sen. Kay Hagan. The group ultimately spent $4.9 million supporting her opponent Thom Tillis, and the OpenSecrets Blog found last fall that GPS had provided nearly the entire budget of another nonprofit, Carolina Rising — which effectively spent close to 100 percent of that money supporting Tillis.
While Haugh wasn’t right about AFF being a Koch group anymore, he was right about one thing. GPS and AFF were probably using him to draw younger, more liberal voters away from Hagan.
“It’s all kind of surreal, frankly,” Haugh told NPR. “Obviously they want to try to use me to siphon votes away from Kay Hagan and maybe swing the election to Thom Tillis.”
GPS, then, funded two groups, including AFF, that mounted campaigns benefiting Tillis. GPS’ multifarious show of force ushered Tillis into the winners circle in 2014, helping swing the Senate into GOP control.
...
Note that the final results of that race was 47.3% for the Democrats, 48.8% fro the Republican, and 3.7% for Sean Haugh. So assuming Rove’s calculus was correct and Haugh was drew more votes from the Democrats than the Republican, it really does look like Haugh cost the Democrats that seat and handed the Republicans control of the Senate that year. AFF’s third-party vote-draining dirty trick worked!
But as we saw in the above article, Rove’s GPS Crossroads wasn’t the only big client of AFF in 2014. There was also the Judicial Crisis Network. And in 2016, the Judicial Crisis Network hired the AFF again. This time it was an ad campaign to support Republican senators who promised to block consideration for any of President Obama’s Supreme Court nominees following the death of Antonin Scalia:
...
While GPS was its largest single supporter in 2014, AFF received more than $1 million apiece from two other donors; those three contributions made up 64 percent of AFF’s revenue in 2014, according to the group’s latest tax filing.One of those other donors, providing $1.35 million, was the Judicial Crisis Network (JCN), as OpenSecrets Blog has reported — which itself is entirely funded by another shadowy group called the Wellspring Committee. JCN and AFF, along with an AFF subsidiary called The Progress Project, then put $1.8 million into the Republican Attorneys General Association.
But, while electing conservative attorneys general around the country has been a focus of JCN’s efforts, it hasn’t been the only one. The group has spent heavily in judicial races over the last two cycles — including more than $600,000 in the lead-up to Arkansas’ court elections last week, in which JCN’s favored candidate was the victor. After the voting was done, Arkansas Gov. Asa Hutchinson ® said that, “regrettably, a winner in yesterday’s campaign was dark money.” The group has also launched a “seven figure television, radio and digital advertising campaign” praising several Republican senators in tight re-election battles for promising to block consideration of any Supreme Court nominee submitted by the Obama administration to fill the late Associate Justice Antonin Scalia’s seat.
...
So as the above 2016 piece by OpenSecrets.org makes clear, while the American Future Fund may have seen its finances shrink significantly after getting mostly cut off from the Koch network following the bad press it got in 2012 for violating the 501(c)(4) rules, there was still plenty of right-wing shadow money looking in search of the kinds of services the AFF offers. GOP ‘establishment’ money in search of services like Karl Rove’s dirty tricks. Or services like the corporate lobbying for companies like Dorral Financial Group or one of DCGI Group’s clients.
So how much in total did American Future Fund raise in 2016 with its establishment backers compared to 2012 when it was suckling the Koch teet? As the following OpenSecrets.org article from 2018 informs us, AFF managed to raise more than $29.4 million in 2016. That’s a little less than half of the $68 million in raised from the Koch network in 2012, which is still a substantial sum, especially when you consider that AFF got kicked out the Koch network for getting caught breaking the 501(c)(4) rules. Bouncing back in four years with $29 million after that is actually quite an accomplishment. An accomplishment that happens to signify the flood of dark money sloshing around in America’s political system
Another notable expenditure by AFF in 2016 was a $3 million donation to the National Rifle Association. Keep in mind that one of AFF’s clients presumably gave the money to AFF for the explicit purpose of having the AFF turn around and hand that money to groups like the NRA. It’s an example the AFF acting as a ‘shadow money mailbox’ in order to obscure the origins of these donations.
Amusingly, the following OpenSecrets.org piece also clarifies the relationship of the AFF with Marco Rubio. As we saw in the previous article, AFF appeared to be working on behalf of Rubio during the 2016 GOP presidential primary, but this was never proven. Well, by 2018 there was enough information publicly available for OpenSecrets.org to conclude that Rubio did indeed hire the AFF, but he actually hired them to help him win his senate race, after the presidential primary was over and after Rubio dropped out of the presidential race. So it’s still ambiguous who was paying AFF to attack all of Rubio’s primary opponent, but it’s clear that Rubio did hire the AFF for services later in 2016 to attack his Democratic senate opponent. Which, again, is an example of how much demand there is for an entity offering the kinds of political services AFF can provide:
OpenSecrets.org
Secret donors come back to boost former-Koch group
By Robert Maguire
January 25, 2018A secretive political group that is little more than a mailbox full of money in a Des Moines UPS Store raised more than $29.4 million in 2016, most of which was funneled into ads aimed at electing Republicans.
Tax documents obtained by the Center for Responsive Politics show that American Future Fund (AFF), a 501(c)(4) social welfare organization that doesn’t have to disclose its donors, had a banner year in 2016.
The $29.4 million haul marks the group’s highest revenues since it was cut from the constellation of political organizations linked to billionaire industrialists Charles and David Koch amidst a campaign money laundering scandal in 2012. In 2015, the dark money group raised just a little over $350,000.
Bringing in such a considerable sum is no small feat for an organization that boasts no employees nor any measurable social welfare beyond its robust political spending. But in the world of secretive political groups, it’s not an anomaly.
A combination of unclear rules and lax oversight from both the IRS and the FEC has made it easy for nominally apolitical groups like AFF to become vehicles for secret political money, allowing wealthy corporate and individual donors to spend in elections without any public fingerprints.
Nearly 90 percent of American Future Fund’s revenue in 2016 came from donors giving between $1 million and $8 million. But because groups like AFF are not technically political organizations, and therefore not subject to the same disclosure requirements as political action committees (PACs), the entities fueling AFF with seven-figure checks will remain far from the public eye.
Stealth Rubio Group
...
Tax documents for a group called Conservative Solutions Project obtained by the Center for Responsive Politics show the group — which was set up by Rubio allies to boost his campaign with money raised from anonymous donors — gave $1 million to AFF.
The CSP grant came after Rubio had dropped out of the presidential race. In the final weeks of the election, however, when Rubio was fighting to keep his Senate seat, AFF spent $2.8 million against his opponent, Patrick Murphy (D‑Fla), and Rubio clenched the victory.
AFF’s largest outlays — beyond its direct political spending — came in the form of more than $4.7 million in grants, the largest of which went to other dark money groups active in the 2016 elections.
Groups like AFF often disperse grants as a way to get around IRS limits on political spending because they can count the grants to other 501© organizations as “social welfare” spending, even when the recipient groups are also spending the money on politics.
AFF gave $3 million to the National Rifle Association, boosting the gun rights group’s historic spending in support of Donald Trump’s successful campaign.
It gave another $750,000 to Ending Spending and $708,500 to The Progress Project, it’s sister organization. Both groups were active in helping Republicans keep their majorities in the House and Senate in 2016.
...
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“Secret donors come back to boost former-Koch group” by Robert Maguire; OpenSecrets.org; 01/25/2018
“Tax documents obtained by the Center for Responsive Politics show that American Future Fund (AFF), a 501(c)(4) social welfare organization that doesn’t have to disclose its donors, had a banner year in 2016.”
2016 was a banner year for American Future Fund. That’s the picture that emerged from its tax documents. Sure, that’s less than half of the $68 million AFF received in 2012 from the Koch network, but it’s still a remarkable rebound just four years later:
...
The $29.4 million haul marks the group’s highest revenues since it was cut from the constellation of political organizations linked to billionaire industrialists Charles and David Koch amidst a campaign money laundering scandal in 2012. In 2015, the dark money group raised just a little over $350,000.
...
And as OpenSecrets.org points out, while that $29.4 million might appear extra impressive for an entity like AFF which has almost no employees or any real ‘social welfare’ activity, it’s not at all anomalous. This is how the right-wing billionaire 501(c)(4) game is played and the only real service AFF provides is its ability to obscure donors as money is passed through it. You don’t need a lot of employees to do that:
...
Bringing in such a considerable sum is no small feat for an organization that boasts no employees nor any measurable social welfare beyond its robust political spending. But in the world of secretive political groups, it’s not an anomaly.A combination of unclear rules and lax oversight from both the IRS and the FEC has made it easy for nominally apolitical groups like AFF to become vehicles for secret political money, allowing wealthy corporate and individual donors to spend in elections without any public fingerprints.
Nearly 90 percent of American Future Fund’s revenue in 2016 came from donors giving between $1 million and $8 million. But because groups like AFF are not technically political organizations, and therefore not subject to the same disclosure requirements as political action committees (PACs), the entities fueling AFF with seven-figure checks will remain far from the public eye.
...
Keep in mind that with $29.4 million in revenues, AFF presumably spent half of that on direct political ads since that’s what the 501(c)(4) rules allow. The other half, ($14.7 million) was then presumably spent on ‘social welfare’. ‘Social welfare’ that can include simply giving the money to other groups like the NRA:
...
AFF’s largest outlays — beyond its direct political spending — came in the form of more than $4.7 million in grants, the largest of which went to other dark money groups active in the 2016 elections.Groups like AFF often disperse grants as a way to get around IRS limits on political spending because they can count the grants to other 501© organizations as “social welfare” spending, even when the recipient groups are also spending the money on politics.
AFF gave $3 million to the National Rifle Association, boosting the gun rights group’s historic spending in support of Donald Trump’s successful campaign.
It gave another $750,000 to Ending Spending and $708,500 to The Progress Project, it’s sister organization. Both groups were active in helping Republicans keep their majorities in the House and Senate in 2016.
...
Also discovered in the tax filings was that a group of anonymous Marco Rubio supporters did indeed give AFF $1 million in 2016, but it was during the general election after the GOP primaries when AFF was attacking all of Rubio’s primary opponents. So it seems very possible that it was the same group of Rubio backers that paid for that AFF’s services during the primaries and the general election, but we don’t get to know. That’s the point of the law:
...
Stealth Rubio Group...
Tax documents for a group called Conservative Solutions Project obtained by the Center for Responsive Politics show the group — which was set up by Rubio allies to boost his campaign with money raised from anonymous donors — gave $1 million to AFF.
The CSP grant came after Rubio had dropped out of the presidential race. In the final weeks of the election, however, when Rubio was fighting to keep his Senate seat, AFF spent $2.8 million against his opponent, Patrick Murphy (D‑Fla), and Rubio clenched the victory.
...
So as we can see, AFF started off 2016 as a secret weapon of the GOP ‘Establishment’ (at least the non-Koch wing of the GOP establishment) in the primaries in favor or Marco Rubio. It eventually turned into a not-so-secret weapon when it became clear that AFF was attacking everyone but Rubio. Then Rubio drops out of the presidential primary, goes on to his Senate race (breaking his earlier pledge not to run for the Senate even if he lost the presidential primary), and a bunch of his wealthy backers funnel millions of pro-Rubio ad spending through the AFF.
AFF in 2018: The Establishment’s Secret Weapon...For Meddling in GOP Primaries. And Mailers. And Door Knocking. It’s a Full Service ‘Social Welfare’ Entity
Flash forward to 2018 and we find out that secret meddling in GOP primaries is becoming an AFF specialty apparently. We also find out that AFF is working in California races again. Recall that it was getting caught breaking 501(c)(4) rules that in California races in 2012 that prompted the Kochs to cut off AFF from the Koch network.
So it’s going to be interesting to see if AFF breaks the rules again in California. As the following articles demonstrate, AFF is probably going to have plenty of opportunities to break those rules because it provides a very convenient service. A service specifically for GOP leadership: secretly picking favorites in primaries.
In 2016, AFF was the vehicle the GOP ‘Establishment’ (i.e. Karl Rove’s donor network) used to pick Marco Rubio as a favorite in the presidential primary. But in 2018, AFF was the vehicle for the actual Republican Party leadership secretly playing favorites. Specifically, House Speaker Paul Ryan’s Congressional Leadership Fund threw $1.5 million at several California “Jungle” primaries.
California adopted a “Jungle primary” system back in 2010, where all candidates from all parties run in one giant primary and the top two candidates head for a run off in the general election. It was seen as a way of creating competitive races in Democrat-dominated California where a race between a Democrat and a Republican at a statewide-level is a foregone conclusion.
So California’s Jungle primary system created the real possibility that a party could get shut out of the general election. And not just shut out because its a very unpopular in a particular area. It’s also possible a party could field so many candidates that it dilutes the vote and none of them make it into the top two slots. It’s one of the unintended consequences of the Jungle primary system. The Jungle primaries do indeed make for more meaningful contests in the general election, but at the cost of the risk that the popular party loses on a technicality.
It’s worth keeping in mind that losing on a technicality has become a sadly common feature in American politics at the presidential level thanks to the electoral college. Both George W. Bush and Donald Trump won on electoral college technicalities. Technical losses happen. To Democrats. But in the case of the Jungle primary, where the party that fields the most candidates runs the risk of shutting itself out of the general election, that’s a technicality that both Democrats and Republicans. And for Republicans, making sure that didn’t happen to them and trying to do it to Democrats became the tasks House Speaker Paul Ryan hired American Future Fund to do. Secretly.
Specifically, the Congressional Leadership Fund superPAC, which is closely tied to Paul Ryan, pumped in $1.5 million into multiple California primaries in April. Six GOPers were assisted in all, some of them running in the same primary (in order to try and lock out the Democrats). And AFF didn’t just buy ads. AFF also sent out mailers and door-knockers across three districts. They claimed over 400,000 doors were knocked on.. That’s an aggressive full spectrum ad campaign, all provided by AFF.
But Paul Ryan and the House leadership did this quietly, as we can see in the following TPM piece from May 23, 2018, discussing the sudden set of ad buys by AFF a week earlier into three California primaries. It’s clear in the article that that no one knows the House GOP leadership hired AFF to get involved in these races a month earlier because there are lots of quotes from Republicans about their frustration with the national Republican party not getting involved in the new Jungle primaries to try and avoid a lock out disaster. The National Republican Campaign Committee (NRCC) takes the official position of not choosing candidates in primaries and this was clearly frustrating a number of party members.
As we’ll see in the next article, when AFF ran its ads they never mentioned the Congressional Leadership Fund was paying for them. This was at the request of the House Republican leadership, who didn’t want AFF to mention that the Congressional Leadership Fund was behind its activity because they didn’t want to anger the GOP primary candidates and conservative activists who didn’t get the AFF’s backing.
So AFF provided a way for the national Republicans get involved in California’s Jungle primaries secretly. While AFF couldn’t hide the fact that it was paying for these campaigns across California, the 501(c)(4) was still able to hide who was paying for it. And that’s what AFF did by not indicating at all who paid for their work. Who knows, when Republicans saw the reports of AFF getting involved in these primaries they probably assumed it was Karl Rove’s donor network behind it. It’s a reminder of how the more clients a group like AFF gets, the better it is at obscuring who is paying for a particular activity:
Talking Points Memo
DCGOP Group Launches Bid To Shut Dems Out Of Key California House Races
By Cameron Joseph
May 23, 2018 5:06 pmA Republican super PAC is launching a last-minute effort to boost a handful of House GOP candidates in southern California. The goal is to block Democrats from getting a candidate into the general election in some key House races.
The American Future Fund, an Iowa-based GOP group, has dropped almost $700,000 to boost four GOP candidates in three districts, according to documents filed with the Federal Election Commission on Wednesday.
Their goals are to elevate some flagging Republicans and try to help them make the November ballot in districts that are key to Democrats’ hopes of winning the House this fall.
California’s “jungle” primary system allows the top two vote-getters to advance to the general election, regardless of party. That’s led to concerns among Democrats that their candidates could split the Democratic vote, allowing Republicans to finish in the top two spots in some congressional races and immediately costing them chances at a handful of winnable seats in the state.
National Democrats have been spending heavily to try to avoid that scenario.
Republicans had been surprisingly quiet in their response, considering how with some effort now they could guarantee victory in a few key House battles — as well as save themselves a lot of money in November in the expensive districts. But this buy suggests things may be starting to shift.
The GOP super-PAC’s buy includes almost $500,000 on advertising, direct mail and door-to-door voter outreach to boost Rocky Chavez and Diane Harkey, a pair of Republican candidates running for the seat currently held by Rep. Darrell Issa (R‑CA), who is retiring. That race is one in which both parties worry they might get shut out and fail to get a candidate through to the November election, though Democrats are more alarmed at the prospect.
The group is also spending $100,000 to boost Scott Baugh, a Republican running against controversial Rep. Dana Rohrabacher (R‑CA). That district is the one where Democratic concerns about being shut out, given their own crowded field, are most acute.
The GOP group is also chipping in about $100,000 to boost Young Kim, the GOP front-runner in the crowded race to replace retiring Rep. Ed Royce (R‑CA).
The efforts for Kim and Harkey began last week, but this is the first evidence that the group’s push is to block Democrats out in some of these districts, rather than help out particular GOP candidates. The group didn’t respond to requests for an explanation of their strategy.
Republicans had expressed growing frustration that their party wasn’t doing more to meddle in these primaries to ensure the best results. Democrats already have spent millions on the races.
Issa told TPM on Tuesday, before these ads had become public, that House Minority Leader Nancy Pelosi’s Democrats were doing a better job organizing in the state, even in traditionally conservative enclaves like his district.
“Pelosi naturally gets us better. That’s not to say anything against Steve,” Issa said, referring to National Republican Congressional Committee Chairman Steve Stivers (R‑OH). “It’s just that the observation in my district is the Democrats are playing a game that could well get one of their candidates in that otherwise wouldn’t if both sides were playing.”
Other Republicans have also griped about the lack of national intervention to help them.
“You wish the party would recognize this opportunity and lift us up,” GOP strategist John Thomas, who’s working with candidate Shawn Nelson in Royce’s district, told TPM. “They just don’t understand the top-two dynamic.”
Democrats have been spending heavily against Nelson and Bob Huff to avoid them getting into the runoff with Kim, the GOP front-runner, and Republicans still have done little in response to help them.
...
———-
“The American Future Fund, an Iowa-based GOP group, has dropped almost $700,000 to boost four GOP candidates in three districts, according to documents filed with the Federal Election Commission on Wednesday.”
So in mid-May of this year, AFF revealed to the FEC that it spent $700,000 on three California primary races. Races where the national Democratic party was already spending heavily but the national Republican party had been surprisingly uninvolved in given the risk of getting shut out entirely. Or at least that’s how it seemed:
...
National Democrats have been spending heavily to try to avoid that scenario.Republicans had been surprisingly quiet in their response, considering how with some effort now they could guarantee victory in a few key House battles — as well as save themselves a lot of money in November in the expensive districts. But this buy suggests things may be starting to shift.
...
Republicans had expressed growing frustration that their party wasn’t doing more to meddle in these primaries to ensure the best results. Democrats already have spent millions on the races.
Issa told TPM on Tuesday, before these ads had become public, that House Minority Leader Nancy Pelosi’s Democrats were doing a better job organizing in the state, even in traditionally conservative enclaves like his district.
“Pelosi naturally gets us better. That’s not to say anything against Steve,” Issa said, referring to National Republican Congressional Committee Chairman Steve Stivers (R‑OH). “It’s just that the observation in my district is the Democrats are playing a game that could well get one of their candidates in that otherwise wouldn’t if both sides were playing.”
Other Republicans have also griped about the lack of national intervention to help them.
“You wish the party would recognize this opportunity and lift us up,” GOP strategist John Thomas, who’s working with candidate Shawn Nelson in Royce’s district, told TPM. “They just don’t understand the top-two dynamic.”
...
So California Republicans were both worried and angry about a lack of national Republican party intervention in these Jungle primaries where the risk of getting shut out was very real. But as the follow article from June of this year reveals, the national Republicans were indeed already involved in these races. It was Paul Ryan’s Congressional Leadership Fund that had actually hired AFF back in April to get involved in these races. But they didn’t want to show their hand out of fear of angering conservative activists:
Politico
Republican super PAC secretly promoted candidates in California
By ALEX ISENSTADT and ELENA SCHNEIDER
06/05/2018 02:00 PM EDT
A House GOP leadership-backed super PAC secretly picked favorites in three high-profile California primaries to be decided Tuesday that could help to decide control of the chamber.
Republican leadership typically stays out of contested primaries where incumbents are not seeking reelection. But in April, Congressional Leadership Fund, a group closely aligned with House Speaker Paul Ryan, funneled about $1.5 million to American Future Fund, an Iowa-based outside Republican organization, according to a CLF official.
American Future Fund, which is overseen by longtime GOP strategist Nick Ryan, then aired TV commercials, sent out mailers, and dispatched door-knockers across three sprawling Orange County-based districts. Over 400,000 doors were knocked on.
The advertising onslaught was aimed at boosting six Republicans competing in Tuesday’s “jungle primary,“ in which the top two vote-getters advance to the general election regardless of party affiliation.
None of the commercials identified Congressional Leadership Fund as a sponsor. The super PAC was concerned that if their meddling was known it could have unintended consequences by inviting blowback from conservative activists.
...
The strategy was borne in April, when Congressional Leadership Fund conducted surveys in the districts left vacant by the upcoming retirements of GOP Reps. Ed Royce and Darrell Issa. The polls, the CLF official said, found that Republicans were at risk of being locked out of the November general election in both races, a potentially disastrous scenario for the party, which is struggling to hold onto their 23-seat House majority.
In California’s 39th District, seven Republicans are running, but the Congressional Leadership Fund opted to elevate only two of them: Assemblywoman Young Kim and former state Senate Minority Leader Bob Huff.
The National Republican Campaign Committee stays out of open primaries, but it has added several California Republicans to its “Young Guns” program, which provides fundraising and infrastructure support to candidates. Some Young Guns did not receive help from Congressional Leadership Fund, including Gaspar.
But the NRCC did spend six-figures on digital ads in all three districts, aiming to amp up GOP turnout without naming any specific candidate.
House Democrats are also at risk of a top-two lockout in the three districts. It has led the Democratic Congressional Campaign Committee to endorse candidates in two of the races. The DCCC has also spent millions of dollars on TV ads to drive turnout.
———-
“Republican leadership typically stays out of contested primaries where incumbents are not seeking reelection. But in April, Congressional Leadership Fund, a group closely aligned with House Speaker Paul Ryan, funneled about $1.5 million to American Future Fund, an Iowa-based outside Republican organization, according to a CLF official.”
So back in April, the Republican leadership, which doesn’t normally get involved in contested primaries, did exactly that when it quietly dumped $1.5 million into AFF hat went to TV commercials, mailers, and even door-knockers.
...
A House GOP leadership-backed super PAC secretly picked favorites in three high-profile California primaries to be decided Tuesday that could help to decide control of the chamber....
American Future Fund, which is overseen by longtime GOP strategist Nick Ryan, then aired TV commercials, sent out mailers, and dispatched door-knockers across three sprawling Orange County-based districts. Over 400,000 doors were knocked on.
The advertising onslaught was aimed at boosting six Republicans competing in Tuesday’s “jungle primary,“ in which the top two vote-getters advance to the general election regardless of party affiliation.
...
The strategy was borne in April, when Congressional Leadership Fund conducted surveys in the districts left vacant by the upcoming retirements of GOP Reps. Ed Royce and Darrell Issa. The polls, the CLF official said, found that Republicans were at risk of being locked out of the November general election in both races, a potentially disastrous scenario for the party, which is struggling to hold onto their 23-seat House majority.
...
But AFF specifically did not identify Ryan’s Congressional Leadership Fund as the sponsor for these ads because it Republican leadership was concerned it could court blowback from the conservative base:
...
None of the commercials identified Congressional Leadership Fund as a sponsor. The super PAC was concerned that if their meddling was known it could have unintended consequences by inviting blowback from conservative activists.
...
And that’s just what AFF was up to earlier this year during the mid-term primaries for one client. A prominent client, but no doubt just one AFF’s many clients. It’s also undoubtedly the case that AFF has been engaged in all sorts of mercenary ‘social welfare’ activities during the mid-term general election too. We’ll presumably find out about that activity at some point, although we still won’t know who paid for it.
A Light at the End of the Dark Money Tunnel? Yes, But It’s a Dim Light That’s Easy to Turn Off
Or will we? That tantalizing possibility — that the donor secrecy rules and loopholes that make 501(c)(4)s so popular as ‘dark money’ tool of choice for secretly financing potentially unlimited amounts of political activities would finally be closed — suddenly became a reality less than two months ago thanks to a quiet Supreme Court decision that quietly took place in September.
The ruling has to do with 501(c)(4) spending on attack ads, as opposed to “issue ads” that don’t advocated for or against a candidate. Recall how 501(c)(4)s have to disclose the amounts spent on attack ads, but not the donor identities. Thanks to the new ruling, those attack ad donor identities might have to be revealed for all donors who give more than $200 for that attack ad spending.
Part of the lack of fanfare is due to the fact that the Supreme Court didn’t hear arguments and issue a new ruling. They merely reversed a stay on a lower court ruling. A stay on a lower court ruling that was initially provided by Chief Justice John Roberts. Crossroads GPS filed an emergency motion for a stay directly to Roberts following the decisions by a district court and appeals court not to grant Crossroads GPS’s stay request after a federal court ruled against them in a lawsuit.
The lower court ruling against Crossroads GPS addressed a loophole that was rooted in the FEC using a 1980 FEC ruling to avoid legal disclosure requirements that were made into law after the 1980 FEC ruling. The 1980 FEC ruling introduced a loophole in the disclosure of donor for “independent expenditures” — communications that explicitly call on voters to support or oppose certain candidates (i.e. attack ads). That 1980 FEC regulation ruled that 501©s could avoid disclosing their donors for political attack ads that if the donors’ contributions were not earmarked for specific advertisements.
So Roberts tried to keep the 1980 FEC loophole in place and the rest of the Supreme Court all ruled to reverse Roberts’s decision. It was a remarkable move. The Supreme Court may have just provided a significant correction to the current system of unlimited political spending by secret donors under the guise of ‘social welfare’. As we saw above, a number of different laws, court rulings, and regulatory actions over the past 50+ years all went into creating the US campaign finance system today. There isn’t a single campaign finance law, ruling, or regulation that could be reversed to ‘fix’ the problem. Numerous significant fixes are required, which can happen one fix at a time or all at once. So reversing that 1980 FEC ruling is just one of the many rules that needs fixing. But it’s a significant one.
The lawsuit against Crossroads GPS emerged from a complaint filed by Citizens for Responsibility and Ethics in Washington (CREW) with the FEC following the 2012 elections. CREW argued in the complaint that the laws required Crossroads GPS to disclose donors associated with its political attack ads. And while CREW was correct that the campaign finance laws required were written in a way that should have required Crossroads GPS to disclose its political ad donors, the FEC was choosing not to require this based on that 1980 FEC ruling. The FEC responded to the CREW complaint in 2015 with a 3–3 ruling that resulted in an FEC decision to not follow through with CREW’s complaint and not force Crossroads GPS to disclose its political ad donors. So CREW sued in 2016, and in August of 2018, a lower court ruled that CREW was correct and it was clearly spelled out in the law that the FEC had to required the disclosure of the donors for “independent expenditures” (political attack ads). Crossroads GPS sued for a temporary stay and the district and appeals courts denied the stay. Crossroads GPS followed with the direct emergency stay appeal to Roberts, who complied. And a few days later the rest of the court overturned him. The final Supreme Court resolution to that entire case with potentially significant ramifications to US campaign finance laws all quietly just happened.
But another reason there hasn’t been much fanfare about this ruling is that that new rules still contains a significant loophole. And it’s exactly the kind of loophole that the ‘shadow money mailboxes’ like AFF or all the other entities we’ve looked at (TC4, CPPR, 60 Plus, etc) is designed to exploit. The new loophole is that it is still possible to avoid disclosing donors under the new ruling simply by having donor give their money to a middle-man organization first and having that organization make the donation to the 501(c)(4) that ultimately runs the political ads. For example, the Kochs might give $10 million to TC4 for generic advocacy purposes. TC4 then gives the money to AFF for more specific political advocacy purposes. Recall that this is basically the scheme that AFF was caught being involved in 2012 with California’s ballot initiatives that got AFF kicked out of the Koch network.
So when AFF is forced to disclose their donors for that advocacy under this new ruling, they only have to reveal that it was TC4 who made the donations but TC4 won’t have to reveal that it was the Kochs who ultimately made the donation. And as we’ve seen, that’s how things are already done because that’s how they maximize the amounts that can be spent on political ads. Remember the “money laundering” scenario that allowed the 50 percent cap on political spending rise with each successive middle-man entity? That behavior is perfectly situation to make this new Supreme Court ruling moot. So the potentially history Supreme Court ruling that could shake up the status quo is made moot by the status quo, which doesn’t mean this was an insignificant reform, but in order to see the benefits of this reform more fixes of this nature are needed:
The Atlantic
Supreme Court Lets Stand a Decision Requiring ‘Dark Money’ Disclosure
Advocates for greater campaign-finance disclosure said the high court’s move would enable voters to find out who’s paying for the campaign ads they’re seeing on television.
Dave Levinthal and Sarah Kleiner
Sep 18, 2018Secret money in politics will soon be a lot less secret. The Supreme Court on Tuesday let stand a lower-court ruling forcing politically active nonprofit groups to disclose the identity of any donor giving more than $200 when those groups advertise for or against political candidates.
Until now, such nonprofit organizations—generally those of the 501(c)(4) “social welfare” and 501(c)(6) “business league” varieties—could keep their donors secret under most circumstances.
It wasn’t immediately clear whether nonprofit groups that advocate for and against political candidates must retroactively disclose their funders or only do so going forward, contingent on their future political spending.
Nevertheless, disclosure advocates hailed the Supreme Court’s “dark money” decision.
“This is a real victory for transparency,” said Ellen Weintraub, the vice chairwoman of the Federal Election Commission. “As a result, the American people will be better informed about who’s paying for the ads they’re seeing this election season.”
Representative John Sarbanes, a Democrat from Maryland who has called for overhauling the way money is spent in politics, concurred: “Now we’ll see how much comes down and how quickly in this particular case, but its broader implication can’t be denied. It’s a hugely positive step forward in terms of transparency.”
Others believe voters will wind up with less information before they cast their ballot in November. David Keating, the president of the Institute for Free Speech, which supports the deregulation of campaign finance, said the decision will almost certainly throw a wet blanket on independent expenditures from now to the November 6 midterm elections.
“We think that’s a real prospect—that a number of groups are going to choose silence rather than speech—and there are good reasons why they would do that,” Keating said. “Certainly not all but most of these groups may come to the conclusion this is too risky: ‘Our donors gave us money under the assumption they would remain confidential, and we don’t want to do things that would make them not give us money anymore.’”
Weintraub said it wouldn’t be surprising to see some groups “come up with clever ways of getting around the rules.” She expects FEC commissioners to come together soon in an effort to clarify which donors need to be disclosed. But that could be difficult, given that the FEC’s four remaining commissioners are often at ideological odds with one another.
Today’s decision is six years in the making. It stems from a complaint filed by Citizens for Responsibility and Ethics in Washington (CREW), a campaign-finance-reform group, with the FEC against Crossroads GPS, a conservative nonprofit organization that has spent tens of millions of dollars to boost Republican political candidates. CREW alleged that Crossroads GPS was violating federal law by keeping its donors secret.
The FEC in 2015 deadlocked 3–3 on whether to investigate Crossroads GPS. In 2016, CREW then sued the FEC. Last month, U.S. District Court Chief Judge Beryl A. Howell ruled for CREW. She gave the FEC 45 days to issue a new regulation that would require donor disclosure in accordance with the law.
Crossroads GPS sought an emergency stay from the D.C. Circuit, which declined to grant it. Supreme Court Chief Justice John Roberts stayed the lower court’s decision on Saturday, but the stay was brief: The full Supreme Court vacated Roberts’s stay, allowing Howell’s ruling to stand.
The high court’s action is tempered by two considerations. The decision appears to leave a loophole: Some super PACs, which must disclose their donors publicly, accept money from nonprofit groups. Conceivably, a super PAC could take money from a nonprofit group that doesn’t itself advocate for or against political candidates—meaning the super PAC could continue hiding the flesh-and-blood source of the cash funding its efforts, several election lawyers told the Center for Public Integrity. Also, the original case that prompted today’s action, Citizens for Responsibility and Ethics in Washington v. Federal Election Commission and Crossroads GPS, remains under appeal, meaning today’s decision could be temporary—or not.
Thus, at least for the time being, Crossroads GPS and all other similarly politically active nonprofit groups, such as the Republican-leaning U.S. Chamber of Commerce, must begin reporting their donors to the FEC. That includes a growing number of Democrat-backing organizations that trade in secret money, such as Majority Forward.
...
The Supreme Court’s 2010 decision in Citizens United v. FEC first allowed nonprofit organizations such as Crossroads GPS to spend unlimited amounts of money to directly advocate for or against political candidates. But while the Citizens United decision did note that “transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages,” it did not require that politically active nonprofits disclose their funders publicly, including to the FEC, which regulates and enforces federal campaign-finance laws.
Not all of Crossroads GPS’s money is secret. Issue One, a nonpartisan organization that advocates for stricter campaign-finance regulations, revealed this month that Crossroads GPS has been funded by the Republican Jewish Coalition ($4 million), the Alliance for Quality Nursing Home Care ($500,000) and the American Health Care Association ($450,000), among others. But it’s not always clear who, in turn, funds these groups.
———-
“Secret money in politics will soon be a lot less secret. The Supreme Court on Tuesday let stand a lower-court ruling forcing politically active nonprofit groups to disclose the identity of any donor giving more than $200 when those groups advertise for or against political candidates.”
It’s a tantalizing prospect: politically active 501(c)(4)s will have to disclose any donors who give more than $200 when those 501(c)(4)s. There could still be unlimited political spending, but at least the people financing that unlimited spending couldn’t do so in secret. That’s the kind of consequence to this new ruling that campaign finance advocates are hoping for.
And there’s even the possibility that this disclosure ruling will be enforced retroactively:
...
Until now, such nonprofit organizations—generally those of the 501(c)(4) “social welfare” and 501(c)(6) “business league” varieties—could keep their donors secret under most circumstances.It wasn’t immediately clear whether nonprofit groups that advocate for and against political candidates must retroactively disclose their funders or only do so going forward, contingent on their future political spending.
...
But despite the fact that this ruling is unambiguously a step in the right direction, it remains highly ambiguous as to how big of a step it is. And a big reason for that ambiguity centers around the fact that there doesn’t appear to be anything preventing donors from remaining hidden by simply donating to a middle-man 501(c)(4) which will in-turn donate to another 501(c)(4) to do the actual political activity, so when the time comes to disclose the donors the only name disclosed is the name of the middle-man organization. Despite this ruling being a big step in the right direction, massive loopholes remain:
...
Nevertheless, disclosure advocates hailed the Supreme Court’s “dark money” decision.“This is a real victory for transparency,” said Ellen Weintraub, the vice chairwoman of the Federal Election Commission. “As a result, the American people will be better informed about who’s paying for the ads they’re seeing this election season.”
...
Weintraub said it wouldn’t be surprising to see some groups “come up with clever ways of getting around the rules.” She expects FEC commissioners to come together soon in an effort to clarify which donors need to be disclosed. But that could be difficult, given that the FEC’s four remaining commissioners are often at ideological odds with one another.
...
The high court’s action is tempered by two considerations. The decision appears to leave a loophole: Some super PACs, which must disclose their donors publicly, accept money from nonprofit groups. Conceivably, a super PAC could take money from a nonprofit group that doesn’t itself advocate for or against political candidates—meaning the super PAC could continue hiding the flesh-and-blood source of the cash funding its efforts, several election lawyers told the Center for Public Integrity. Also, the original case that prompted today’s action, Citizens for Responsibility and Ethics in Washington v. Federal Election Commission and Crossroads GPS, remains under appeal, meaning today’s decision could be temporary—or not.
...
The effectiveness of this loophole is highlighted by the fact that when Crossroads GPS has disclosed its donors in the past for some activities, the only names disclosed in many cases are the names of other groups. Not the names of the actual donors:
...
Not all of Crossroads GPS’s money is secret. Issue One, a nonpartisan organization that advocates for stricter campaign-finance regulations, revealed this month that Crossroads GPS has been funded by the Republican Jewish Coalition ($4 million), the Alliance for Quality Nursing Home Care ($500,000) and the American Health Care Association ($450,000), among others. But it’s not always clear who, in turn, funds these groups.
...
And, again, this is exactly what we saw above when AFF was part of the Koch network, receiving funds from ‘shadow money mailboxes’ like TC4. So when Crossroads GPS became one of AFF’s major clients, AFF would presumably just have to disclose the name Crossroad GPS for that political activity. Not the names of Crossroads GPS’s actual donors. And this ability to run ‘donations’ through networks of ‘social welfare’ 501(c)(4) organizations is why campaign finance experts are predicting that this Supreme Court decision probably isn’t going to shine nearly as much light on the identities of big dark money donors as many are hoping:
The Washington Post
Political nonprofits seek answers after court decision targeting ‘dark money’
By Michelle Ye Hee Lee
September 21, 2018As politically active nonprofits scramble to figure out the implications of a recent court decision requiring them to disclose some of their donors, experts said one thing is clear: There will be ways around the new rules.
Groups could accept money through shell corporations, said campaign finance lawyers and advocates of more regulation of money in politics. They could shift money to allied super PACs. They could adjust their ads so they come right up against the line that would trigger disclosure.
Such jockeying has become commonplace as advocates push for more transparency about political contributions, particularly the giving from undisclosed donors they call “dark money.”
“It’s always been kind of a cat-and-mouse game about disclosure,” said Richard Hasen, an election law expert at the University of California at Irvine. “I don’t think people who are heralding the end of ‘dark money’ are going to be satisfied with what we end up seeing.”
Some of the biggest players in politics are nonprofits that don’t disclose their donors, including Americans for Prosperity on the right and the Sierra Club on the left. They typically influence elections by raising millions of dollars and running independent political ads urging voters to contact their lawmakers, or calling for the election or defeat of a specific candidate.
These groups have proliferated since the Supreme Court’s landmark 2010 Citizens United decision, which allowed corporations, including nonprofits, to spend unlimited money on political activity separate from candidates.
Nonprofit advocacy groups historically have not been required to publicly disclose their donors, as political committees must. But last month, in response to a long-running lawsuit from transparency advocates, a federal judge threw out a decades-old rule that allowed the groups to withhold donors’ identities, broadening the type of donors who would now be subject to disclosure.
The Supreme Court on Tuesday declined to intervene in the case and did not grant an emergency request to stay the ruling by Chief U.S. District Judge Beryl A. Howell. The ruling is under appeal, but Howell’s decision went into effect immediately.
...
Despite the expected efforts to protect donors’ identities, the decision will no doubt shed more light on the contributors to politically active nonprofits, although exactly how much is uncertain as groups and federal officials take stock of the decision.
“The bottom line is, we do not know yet how much disclosure we’re going to get,” said Fred Wertheimer, president of Democracy 21, a group that advocates for reducing the role of big money in politics. “What we know here is that this is a breakthrough decision, because the court clearly recognized that Congress wanted the donors disclosed who were funding election activities. But we are going to have a ways to go.”
In the absence of new regulation, nonprofit groups are left in a gray area, which could lead to new methods of avoiding disclosure and maintaining donor privacy, lawyers and advocates said.
One way groups could avoid disclosure is by having their donors give money through limited liability companies, or LLCs. It is almost impossible to figure out who finances LLCs or who set them up.
Another technique could be to accept donations and then give them to a connected super PAC. Such a transfer may not be considered a direct political expenditure, allowing the nonprofit to avoid disclosing its financiers.
It is unclear what will ultimately be permitted. The Federal Election Commission must now write a new rule, which will take at least several months. With a bare-minimum quorum, the FEC frequently deadlocks, which may lead to further delays in crafting the rule.
Still, some groups have begun shifting more activity to allied super PACs in anticipation of the ruling. Others are suggesting that donors give instead to an affiliated super PAC so that there is less confusion about the rules, even though it means their names will be publicly disclosed.
Donors are starting to ask how closely the public will follow their contributions and how often super PACs will be reporting their names, according to one GOP strategist who raises money for nonprofits and super PACs, and requested anonymity to speak about private donor conversations.
Some nonprofits expect that they will still be able to raise money for certain nonpolitical purposes — such as education programs — without disclosing donor identities, while separately carrying out political advertising campaigns.
But Wertheimer said such a strategy could push the envelope on what a “political purpose” is.
Similarly, some groups may begin using donors’ money for ads that do not specifically call for the election or defeat of a candidate — which triggers disclosure — but come as close to it as possible by attacking a candidate’s stance on a particular issue, or by urging voters to call lawmakers to tell them they support or oppose their position on an issue.
...
———-
“As politically active nonprofits scramble to figure out the implications of a recent court decision requiring them to disclose some of their donors, experts said one thing is clear: There will be ways around the new rules.”
We don’t know what the new disclosure rules are ultimately going to be as a result of this Supreme Court ruling. But we can be confident that there’s going to be ways around the new rules. That’s the state of America’s campaign finance nightmare. Even when there’s a big win it’s still largely a symbolic win until more big wins are accrued.
As we saw above, there’s the obvious technique of donating to a middle-man 501©(4) which will, in turn, make the actual donation to another 501(c)(4) for the purpose of political activities. But another approach involves using shell corporations as the middle-man. Specifically, limited liability corporations that have the benefit of limiting knowledge of who is behind them:
...
“The bottom line is, we do not know yet how much disclosure we’re going to get,” said Fred Wertheimer, president of Democracy 21, a group that advocates for reducing the role of big money in politics. “What we know here is that this is a breakthrough decision, because the court clearly recognized that Congress wanted the donors disclosed who were funding election activities. But we are going to have a ways to go.”In the absence of new regulation, nonprofit groups are left in a gray area, which could lead to new methods of avoiding disclosure and maintaining donor privacy, lawyers and advocates said.
One way groups could avoid disclosure is by having their donors give money through limited liability companies, or LLCs. It is almost impossible to figure out who finances LLCs or who set them up.
Another technique could be to accept donations and then give them to a connected super PAC. Such a transfer may not be considered a direct political expenditure, allowing the nonprofit to avoid disclosing its financiers.
...
The other obvious technique for getting around the new rules is for the 501(c)(4) to avoid having its political activity explicitly advocate for or against a particular candidate. A tactic of reframing political ads targeting particular candidates in the form of ads supporting or opposing a policy that can be effectively associated with those candidates. That’s a gimmick that could easily be employed to get around disclosure rules as long as the rule that disclosure only needs to be done in the case of ads that explicitly advocate for or against a candidate remain in place:
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Some nonprofits expect that they will still be able to raise money for certain nonpolitical purposes — such as education programs — without disclosing donor identities, while separately carrying out political advertising campaigns.But Wertheimer said such a strategy could push the envelope on what a “political purpose” is.
Similarly, some groups may begin using donors’ money for ads that do not specifically call for the election or defeat of a candidate — which triggers disclosure — but come as close to it as possible by attacking a candidate’s stance on a particular issue, or by urging voters to call lawmakers to tell them they support or oppose their position on an issue.
...
So going forward in America, when you see an ads saying “call your representative and tell them you’re upset about [insert issue here]”, that’s probably going to be an ad from a 501(c)(4) trying to skirt these new disclosure rules.
But at this point we still don’t know what those new rules will be. And as the 3–3 FEC deadlock in 2015 over this CREW vs Crossroads complaint reminds us, it’s entirely possible we’re going to see more deadlocks on the creation of new disclosure rules:
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It is unclear what will ultimately be permitted. The Federal Election Commission must now write a new rule, which will take at least several months. With a bare-minimum quorum, the FEC frequently deadlocks, which may lead to further delays in crafting the rule.
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So we don’t know what the new FEC rules are going to be and we don’t know when the FEC will issue them. But it’s going to happen at some point. And 501(c)(4)s are going to find a way around it.
And as the history of AFF reveals, there’s going to be minimum changes needed to the existing procedures to get around new rules for entities like the Koch network or Karl Rove’s network. Because they’re already operating with webs of 501(c)(4)s all donating to each other in a manner clearly intended to obscure their activities. These networks are already set up to allow each organization in the network to act as a middle-man between other entities in the network. And they’re already creating temporary ‘disregarded entities’ of sub-units operating under different names that are temporarily formed, used for a while, and thrown away. As we saw with TC 4 and CPPR above, incorrect IRS filings that are only belated updated can also be used to obscure the money trail. The infrastructure for evading meaningful disclosure is already a well oiled machine.
Also recall how AFF ads an extra layer of protection for its donors simply be being a mercenary ‘social welfare’ outfit with lots of different clients. Including corporate clients. If an organization is exclusively financed by the Koch network or Kark Rove’s network, simply naming that organization as the donor more or less reveals who is behind it. But if AFF is listed as the donor for a political ad we don’t really know which of AFF’s clients ultimately paid for it. Maybe it was Crossroads GPS. Maybe a politician like Marco Rubio. Or perhaps the DCI Group hired AFF on behalf of a corporate client. Or a foreign government (like the Burmese Junta). AFF has a lot of paymasters and that feature actually helps it conduct its work because a big part of AFF’s work is doing things in secret.
And if it turns out that the Koch network and Rove network prove to be resistant to new disclosure rules, it seems reasonable to assume that everyone is going to start emulating that model to the extent they can. Small donors that go over the $200 threshold will be the most likely to be disclosed. But the big donors will just set up lots of dummy middle-men organizations and LLCs and do what the GOP mega-donors are already doing. And if that happens and there’s an explosion of new networks of sham ‘social welfare’ entities like AFF to get around new disclosure requires, we can be sure that AFF will probably participate in those new networks to help muddy the paper trail waters ever more. A galaxy of sham ‘social welfare’ organizations and LLCs that all receive money and effectively launder away the identity of the original donor by passing it along through the network. That’s probably what we have to look forward to as a consequence of new disclosure requirements. Which is not to say that this campaign finance reform isn’t a net positive. It’s an important step. But just a step and the people pouring dark money into politics are going to respond to those steps with steps of their own.
The Other Recent Big Change to Campaign Finance Laws: Trump’s IRS Makes a ‘See No Tax-Frauds, Hear No Tax-Frauds, Audit No Tax-Frauds’ Rule Change
So while we should indeed applaud this recent change in US campaign finance laws, it’s important to keep in mind that the US has been increasingly eroding its campaign finance laws for decades and it’s going to probably take decades to really fix it. Sadly, a lot of steps in the right direction are going to be required.
Some of those future steps in the right direction will have to come from the courts. Some from lawmakers. And some from the regulatory agencies that enforce campaign finance laws. And as the following article from July of this year makes clear, some of those future steps in the right direction are going to have correct future steps in the wrong direction. Because, back in July, the IRS took a BIG step in the wrong direction when it ruled that 501(c)(4)s no longer need to even report to the IRS the names and addresses of major donors. Up until this decision, the IRS required all nonprofits, including 501(c)(4)s, to report the IRS the names and addresses of each major donor and the dollar amounts contributed that year. Starting next year, nonprofits will no longer have that reporting requirement to the IRS.
What was the IRS’s justification for this move? In part, they argued that enforcement of nonprofit status is the domain of the FEC and Treasury Department. Well, the IRS has the option of overriding this reporting requirement in certain cases when it determines that the information is “not necessary for the efficient administration of the internal revenue laws.” So they simply declared that this information isn’t necessarily in all cases. According to Treasury Secretary Steve Mnuchin, “The IRS simply does not need tax returns with donor names and addresses to do its job in this area.”
And what was the IRS’s justification for determining that this information is no longer necessary to do its job? That’s where things get extra sad. First, the IRS pointed out that the major donors themselves are no longer required to report on their own tax return their nonprofit donations thanks to a 2015 change to the tax code that exempted many gifts or contributions to nonprofits from taxation. This is in reference to a tax code change that was slipped into the omnibus spending bill at the end of 2015. Omnibus bills are notorious for having all sorts of highly questionable provisions because it’s of those areas where both parties have to come to an agreement or the government shuts down. And in December of 2015, a government shutdown was indeed looming. So the GOP successfully leveraged the outrage over the fake ‘IRS was unfairly targeting conservative organizations applying for 501(c)(4) status’ scandal that erupted in 2013 and used that as a reason to formally make donations to 501(c)(4)s tax deductible. Yep, the fake ‘IRS targeted conservatives’ scandal of 2013 was used to make all those donations to the Koch network of fake ‘social welfare’ groups tax deductible in 2015.
But the fake ‘IRS is targeting conservatives’ scandal wasn’t the only fake scandal used to justify expempting donations to 501(c)(4)s from the gift tax. Technically, when Congress made this change to the gift tax in the tax code in 2015 it really just formalized a long-time unofficial IRS practice. Until that 2015 change, the actual tax code required 35 percent gift taxes to be paid on donations to 501(c)(4)s over $13,000 annually. Gifts to other types of nonprofits — like charities or gifts to 527 political action committees — aren’t subject to the gift tax. But the IRS did rule in the 1980’s that gifts to 501(c0(4) nonprofits are subject to the gift tax. However, the IRS never consistently enforced the gift tax on 501(c)(4)s and many wealthy donors simply left it off of their tax returns and didn’t pay the gift tax. So the gift tax officially applied to 501(c)(4) donations but unofficially didn’t really apply.
That lack of gift tax enforcement on donations to 501(c)(4)s briefly changed in 2011, the year following Citizens United, when the IRS decided to audit five big donors going back to their 2008 donations to see if they were indeed paying the gift tax.
This move by the IRS in 2011 infuriated the Republicans in Congress and the Republican chairman of the House ways and means committee sent a letter to then-IRS commissioner Doug Shulman demanding the names and titles of IRS staffers involved in the gift tax probe, and the criteria used to pick which donors to scrutinize. Much like with the ‘IRS targeted conservatives’ fake scandal, the Republicans portrayed this as a partisan attack by the IRS on conservative mega-donors and demanded that the IRS halt the audits. The IRS complied with those demands. The IRS never released the names of those five mega-donors they decided to audit, but it’s worth noting that both David Koch and George Soros (a major contributor to left-wing groups) refused to comment on whether or not they paid the gift tax on their 501(c)(4) donations and whether they were among the five facing this IRS audit. In other words, it doesn’t look like the five mega donors selected by the IRS for this audit were all conservative mega donors which is unfortunately important point out given the right-wing strategy of demanding policy changes and new laws by portraying the IRS as partisan.
So in addition to the whipped up outrage over the ‘IRS targeting conservatives’ that whole episode from 2011 was also part of the justification for removing the gift tax for 501(c)(4)s when Republican lawmakers slipped the provision into the 2015 omnibus bill. Flash forward to 2018 and we find the IRS citing the 2015 lifting of the gift tax on donations to 501(c)(4)s as one of the primary reasons for the IRS lifting the requirement that 501(c)(4) report the names or their donors IRS. Yep, the IRS used the fact that the givers of donations no longer need to report their donations as an excuse for no longer requiring the receivers of those donations to report too.
But as bad as this move by the IRS sounds, it’s actually worse. Worse in the sense that it doesn’t appear to really matter that the IRS just removed the donor reporting requirements. That’s the assessment by a number of campaign finance experts in the following ProPublic article.
Why don’t experts think it will matter that the IRS is limiting its access to exactly the kind of information it needs to audit 501(c)(4)s and ensure they’re actually acting as ‘social welfare’ organizations? Because the IRS was almost never auditing 501(c)(4)s anyway, so access to donor information is already moot:
ProPublica
Why the IRS’ Recent Dark Money Decision May Be Less Dire Than It Seems
With the tax agency already “toothless” on political cases, how much difference does it make if it’s now “deaf and blind,” too?by Ian MacDougall
July 25, 2018 1:20 p.m. EDTStarting next year, the Internal Revenue Service will no longer collect the names of major donors to thousands of nonprofit organizations, from the National Rifle Association to the American Civil Liberties Union to the AARP. Democratic members of Congress and critics of money in politics blasted the move, announced last week by the Treasury Department, the IRS’ parent agency. The Democrats claim the new policy will expand the flow of so-called dark money — contributions from undisclosed donors used to fund election activities — in American politics. For their part, Republicans and conservative groups praised the decision as a much-needed step to avoid chilling the First Amendment rights of private citizens.
The Supreme Court’s decision in Citizens United unleashed these groups, typically organized as 501(c)(4) nonprofits, to spend unlimited amounts of money on campaign ads. Their role in American politics has grown increasingly central. In theory, the new IRS policy could have a significant impact on the tax agency’s ability to detect improper contributions — and thereby curb illegal campaign spending.
But in practice, even critics acknowledge that the IRS very rarely audits nonprofits. In other words, the IRS will no longer receive information that it was seemingly making little use of. And the information in question was already shielded from the public’s view.
Up to now, IRS regulations have required all types of nonprofits to report the names and addresses of each major donor, as well as the dollar amount the donor contributed that year, on their tax returns. But the IRS can override this reporting requirement in certain cases when it finds that the information is “not necessary for the efficient administration of the internal revenue laws.”
That’s what the IRS did last week — relieving most nonprofits, excluding 501(c)(3) charities and foundations, of the need to report the names and addresses of major donors. “The IRS simply does not need tax returns with donor names and addresses to do its job in this area,” Treasury Secretary Steven Mnuchin said in a press release.
The Treasury Department pointed to 2015 changes to the tax code that exempted from taxation many gifts or contributions to nonprofits. Without the need to ensure that donors were paying taxes on their contributions, the department reasoned, there was no need for the identities of the donors.
Critics of the move, however, question the sincerity of that rationale. They note that a number of largely conservative organizations, like those affiliated with billionaire brothers Charles and David Koch, have lobbied Congress and the Trump administration to eliminate this reporting requirement since 2017. Treasury’s “narrow argument that the gift tax has been eliminated so they don’t need this for the specific purpose of enforcing tax law — given the timing, that’s problematic,” said Brendan Fischer of the watchdog group Campaign Legal Center.
The Treasury also cited a more partisan reason for the decision: “Conservative tax-exempt groups were disproportionately impacted by improper screening in the previous Administration.” Allegations during the Obama administration that IRS officials had subjected Tea Party groups seeking tax-exempt status to improper scrutiny touched off a political firestorm that led several senior IRS officials to resign.
But a Treasury Department inspector general report ultimately found that both conservative and liberal groups had been subject to such IRS scrutiny and that it had occurred during both the Bush and Obama administrations.
It remains unclear the extent to which the IRS’ decision will reduce oversight of election spending. As ProPublica and others have documented, nonprofits have become a common vehicle for election spending while shielding their donors from public view.
What the IRS makes public about donors to nonprofits, including those involved in political activities, however, has always been fairly limited. The public sees only the number of major contributors and how much each gave in a year. The identities of the donors are redacted. Still, journalists and groups like the Center for Responsive Politics have used the specific quantities contributed by individual donors — even without knowing who the donor is — to guide research on money in politics.
Under the new IRS policy, the public will still have access to this information, according to the Treasury Department. “The same information about tax-exempt organizations that was previously available to the public will continue to be available,” Mnuchin said.
Critics of the new policy have also argued that the IRS decision will limit the agency’s ability to detect illegal political contributions by foreign nationals. It’s legal for foreign nationals to donate to nonprofits, though federal election law bars them from spending money to influence American elections. Press reports suggest federal investigators are probing whether Russian nationals funneled campaign contributions through the NRA. (The NRA has denied the allegation.)
These critics note that, even though staffing and budget shortfalls have led the IRS to do little policing of nonprofit contributions, that doesn’t excuse further hampering its potential to do so. “The IRS was already a toothless watchdog,” said Robert Maguire, who investigates politically active nonprofit groups at the Center for Responsive Politics. “Now it will also become a deaf and blind watchdog.”
Supporters of the new policy counter that it’s not the IRS’ job to enforce campaign finance laws and that there are limits on sharing tax information with government agencies responsible for enforcing those laws, the Federal Election Commission and the Justice Department. Where there is suspicion of an improper donation, they say, the IRS still has the ability to investigate by requesting information from the nonprofit.
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Still, the change means it’s one step more difficult for the IRS to take action, in those rare cases when it’s inclined to do so.
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“Starting next year, the Internal Revenue Service will no longer collect the names of major donors to thousands of nonprofit organizations, from the National Rifle Association to the American Civil Liberties Union to the AARP. Democratic members of Congress and critics of money in politics blasted the move, announced last week by the Treasury Department, the IRS’ parent agency. The Democrats claim the new policy will expand the flow of so-called dark money — contributions from undisclosed donors used to fund election activities — in American politics. For their part, Republicans and conservative groups praised the decision as a much-needed step to avoid chilling the First Amendment rights of private citizens.”
It’s the end of an IRS era! Sort of: Starting in 2019, the IRS will no longer even bother collecting the names of major donors to nonprofits. Sure, this information was already blocked from the public, but now it’s going to be blocked from the IRS too for all nonprofits. And that includes 501(c)(4) ‘nonprofits’ like Karl Rove’s Crossroads GPS or mercenary ‘nonprofits’ like AFF that will perform ‘social welfare’ political services to the highest right-wing bidder. The IRS officially no longer cares about knowing who is making large donations to these kinds of entities. All pretense has been dropped.
Sadly, as the various campaign finance experts pointed out, the IRS has unofficially not cared about knowing who is donating to these entities for years:
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The Supreme Court’s decision in Citizens United unleashed these groups, typically organized as 501(c)(4) nonprofits, to spend unlimited amounts of money on campaign ads. Their role in American politics has grown increasingly central. In theory, the new IRS policy could have a significant impact on the tax agency’s ability to detect improper contributions — and thereby curb illegal campaign spending.But in practice, even critics acknowledge that the IRS very rarely audits nonprofits. In other words, the IRS will no longer receive information that it was seemingly making little use of. And the information in question was already shielded from the public’s view.
...
Still, we are assured that the IRS will still be able to get all of that donor information on the off chance that the IRS actually audits a nonprofit. Which may be be true, but that’s also assuming that the IRS never needs access to donor ids in the first place in order to determine whether or not an audit is required. Like keeping an eye out for foreign donations to politically active 501(c)(4)s. Plus, time has a way of making documents disappear:
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Supporters of the new policy counter that it’s not the IRS’ job to enforce campaign finance laws and that there are limits on sharing tax information with government agencies responsible for enforcing those laws, the Federal Election Commission and the Justice Department. Where there is suspicion of an improper donation, they say, the IRS still has the ability to investigate by requesting information from the nonprofit....
Still, the change means it’s one step more difficult for the IRS to take action, in those rare cases when it’s inclined to do so.
...
Critics of the new policy have also argued that the IRS decision will limit the agency’s ability to detect illegal political contributions by foreign nationals. It’s legal for foreign nationals to donate to nonprofits, though federal election law bars them from spending money to influence American elections. Press reports suggest federal investigators are probing whether Russian nationals funneled campaign contributions through the NRA. (The NRA has denied the allegation.)
These critics note that, even though staffing and budget shortfalls have led the IRS to do little policing of nonprofit contributions, that doesn’t excuse further hampering its potential to do so. “The IRS was already a toothless watchdog,” said Robert Maguire, who investigates politically active nonprofit groups at the Center for Responsive Politics. “Now it will also become a deaf and blind watchdog.”
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But this move by the IRS isn’t just cynically justified by pointing out that the IRS almost never audits nonprofits anyway, including ‘nonprofits’ like AFF or Crossroads GPS. It was also cynically justified by pointing to the 2015 change to the tax laws snuck into the omnibus bill that made donations to 501(c)(4)s no longer subject to the gift tax. Again, it’s an example of how the weakening of campaign finance laws are used to justify further weakening campaign finance laws:
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The Treasury Department pointed to 2015 changes to the tax code that exempted from taxation many gifts or contributions to nonprofits. Without the need to ensure that donors were paying taxes on their contributions, the department reasoned, there was no need for the identities of the donors.Critics of the move, however, question the sincerity of that rationale. They note that a number of largely conservative organizations, like those affiliated with billionaire brothers Charles and David Koch, have lobbied Congress and the Trump administration to eliminate this reporting requirement since 2017. Treasury’s “narrow argument that the gift tax has been eliminated so they don’t need this for the specific purpose of enforcing tax law — given the timing, that’s problematic,” said Brendan Fischer of the watchdog group Campaign Legal Center.
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The Treasury Department went on to cite the faux ‘IRS targeting conservative 501(c)(4)s’ scandal of 2013, highlighting how whipped up outrage and fake scandals can continue to inflict damage years after they take place:
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The Treasury also cited a more partisan reason for the decision: “Conservative tax-exempt groups were disproportionately impacted by improper screening in the previous Administration.” Allegations during the Obama administration that IRS officials had subjected Tea Party groups seeking tax-exempt status to improper scrutiny touched off a political firestorm that led several senior IRS officials to resign.But a Treasury Department inspector general report ultimately found that both conservative and liberal groups had been subject to such IRS scrutiny and that it had occurred during both the Bush and Obama administrations.
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And let’s not forget that eliminating donor information makes is substantially harder to determine if there’s a money laundering network of ‘dark money mailboxes’ — like TC4 and CPPR in the Koch networks — giving donations to each other ‘social welfare’ entities like AFF in order to effectively raise the amount they spend on political activities well above the 501(c)(4) 50 percent cap on political spending. Sure, the IRS clearly wasn’t looking into that anyway, but it’s going to be a lot harder to investigate such activities if the IRS does decide to look into this at some point in the future.
Let’s also note forget that the Supreme Court ruling this September that donors need to be publicly disclosed only applies when teh 501(c)(4) is engaged in overt political attack ads that explicitly advocate for or against a candidate. It doesn’t appear to apply to “issue ads”. So the controversy over whether or not the definition of an issue ad should come down to the use of the FEC’s “magic words” is going to be even more important going forward. The political makeup of the FEC board is also going to be more important.
The Future of the American Future Fund: More Useful Now Than Ever (Which is Probably a Reason the Murder of Mollie Tibbetts Became a Non-Story)
But let’s also not forget that, as we saw above, two months after the IRS declared that 501(c)(4)s no longer need to report the identities of major donors the Supreme Court rules that politically active 501(c)(4)s do need to publicly report the identities of donors who donated more than $200 dollars for attack ad campaigns. So does the Supreme Court decision forcing the disclosure of the major donors more or negate the IRS’s decision to no longer collect that information? At least when it comes to attack ads? After all, if 501(c)(4)s have to publicly disclose donor identities for political 501(c)(4)s that makes that information available to IRS agents too.
Well, as we also saw above, the expectation from campaign finance experts about the impact of that Supreme Court decision is that big money donors like the Koch network will find ways around that new disclosure requirement. And one of the likely techniques for getting around those new disclosure requirements is the utilization of networks of 501(c)(4)s and LLCs acting as middle-man organizations separating the original donors from the final political ad expenditures. Which, again, is exactly what the AFF is ideal for, especially because its mercenary nature results in numerous different clients. This period following that Supreme Court decision is arguably the time when an organization like the AFF, with its long history of different clients, is one of the most useful political dark money entities in existence.
So, returning to the interesting question of how it was that the story of the murder of Mollie Tibbetts — a story the right-wing media complex and Republican Party initially pounced on because almost perfectly situated to be used by the Republican Party during a time when hysteria of undocumented immigrants is a key political cudgel — just fell off the news radar two months before the mid-term elections, it seems pretty obvious that the story of AFF and the profound lessons that story has for the American public is a big reason the Republican Party and right-wing media suddenly dropped the story of Mollie’s murder. There are other likely reasons Schlinger’s ties to the story were extremely inconvient for the Republican Party’s plans to politicize Mollie’s murder. like the fact that Trump and the GOP quietly shelved the push for mandating E‑Verify for US employers earlier this year. But the story of AFF is surely a story the America’s right-wing billionaires would prefer not be told.
Sure, even if Schlinger wasn’t closely tied to AFF, the general awkwardness of having the murderer be employed and housed by a top Republican fundraiser would alone be awkward enough to prompt the Republican Party and President Trump to rapidly drop this story. But there’s no avoiding the fact that the housing and employing of undocumented immigrants for years that Nicole Schlinger and her husband Eric Lang engaged in was exactly the kind of thing that will enrage a huge portion of the American electorate, especially Trump’s voting base. So it was very possible a lot of public attention would have been paid to the history of Nicole Schlinger and AFF if the GOP and President Trump and the right-wing media complex had indeed continued making Mollie’s murder a gruesome daily talking point. And it’s hard to imagine that the Republican party’s mega-donors (the people who the party actually works for) weren’t perturbed by the risk of the story of AFF becoming a public topic with its highly instructive history as a right-wing billionaire ‘social welfare’ political organization that covers almost the full spectrum of dark money activity in American politics. The Republican Party’s mega-donors were/are American Future Fund’s primary clients, after all.
So the GOP has decided to deal with the emergence of story of AFF as possible topic of public focus by getting very quiet about it and anything associated with it. But what should the American public’s response be? Given the Citizens United ruling of 2010 there’s going to be a limit to what the public can do. Obviously, one of the first things the public should do is elect representatives (i.e. not Republicans) who will pass sensible campaign finance laws and confirm Supreme Court justices who won’t strike down those new laws. Another approach is to make it much hard for primarily political organizations to get 501(c)(4) status in the first place. The leadership of the FEC and IRS will need to play a role in that. The benefits of public financing of campaigns and spending caps is another option that should clearly be examined as a long-term post-Citizens United goal.
But there’s one thing the America public can do right now in response to dark money nightmare situation in American politics that doesn’t require any government action: recognize that almost all of that dark money is being spent on some form of advertising because propaganda works. That’s part of the solution. Simply recognizing that propaganda works. Propaganda in a variety of forms work on you and everyone else. That’s why so much money is spent on advertising. All advertising. Not just political. Because we really are suggestible creatures. And being aware of that vulnerabilty is the starting point of addressing it.
The story of AFF is a story of the business of modern propaganda. That’s the ultimate goal of all this dark money. Persuading people. Changing minds. And because AFF’s story is specifically a story of modern right-wing propaganda, it’s a story of propaganda designed to persuade people to vote against their best interesting and peddle right-wing misinformation. Don’t forget that AFF and its DCI Group allied firm weren’t just known as Republican public relations firms. They are also known as peddlers of dirty politics and misinformation. So the story of AFF is really a story of bad propaganda. There can be positive propaganda, like public awareness campaigns that encourage wearing your seat belt. One can easily see the ‘social welfare’ that would come from a pro-seat belt advertising campaign. It’s positive propaganda. AFF and its 501(c)(4) peers in the Koch and Rove network aren’t putting out that kind of positive propaganda. They’re pumping out right-wing billionaire propaganda. Which is almost always bad propaganda.
This is a story of bad right-wing billionaire propaganda. Which is tragically the overwhelming aspect of the overall story of propaganda in America today. Americans live is a sea of propaganda. Much of it commercial propaganda like ads. Some governmental or nonprofit (where you’ll potentially find real social welfare positive propaganda). But a outsized portion of the modern American sea of propaganda is bad right-wing billionaire garbage propaganda. The kind that’s designed to inflame the public with stories like outrage over the murder of an Iowan college student by an undocumented immigrant. Really, really bad propaganda.
And that’s part of how the tragic murder of Mollie Tibbetts became tragically intertwined with the world of dark money politics the modern downfall of America: the murder of Mollie was in the process of being turned into exactly the kind of bad right-wing propaganda that entities like AFF specialize in shoving at the American public in order to get them to vote for the politicians backed by the right-wing billionaires. The murder of Mollie was the process of being turned into a propaganda and the only thing that stopped it was the discover of that murderer’s long-time employer and houser was a key right-wing propaganda player.
So as the story of the investigation and prosecution of Mollie Tibbetts’s murder plays out, let’s hope the tangentially connected story of the vast right-wing billionaire funded bad propaganda network that was in the middle of propagandizing Mollie’s murder before it became tangentially connected to the murder also gets told. It really is the story of the downfall of America. The kind of downfall that definitely can’t be blamed on illegal immigrants.
There appears to be a new official tool in the Republican Party’s political dirty tricks toolkit: lame duck session power-grabs right after an election where the Republican loses a key state office like governor or attorney general.
The dirty trick is very straight forward: pass a bunch of laws very quickly during the lame duck session that strips the incoming democrat of existing powers. This tool is, of course, only an option in states where the GOP controls the state legislature and governor’s office. But in states across the US where the GOP’s ability to pass new legislation is unchecked the GOP does indeed appear to be willing to use that option of just passing laws to strip powers from incoming Democrats. That the GOP has found a new low is no longer remarkable, although this is a remarkable low new low.
We got a preview of this tactic after the 2016 elections when the GOP state legislature stripped incoming Democratic governor Roy Cooper of powers and now the GOP is trying it again in Wisconsin following Scott Walker’s loss. These blatant power grabs are ironically framed by the GOP as a ‘improving checks and balances’. It’s a power grab that doubles as a power clinging lunge, making it both anti-Democratic and profoundly anti-democratic.
And it’s not limited to Wisconsin and North Carolina. Michigan’s GOP introduced bills last week to limit the powers of the incoming Democratic governor, attorney general, and secretary of state. Michigan’s GOP legislature is even scaling back a ballot initiatives on sick pay Michigan voters just passed in the 2018 elections during the lame duck session. Again, it’s a profoundly anti-democratic new low for the GOP.
It’s also highly emblematic of the fact that the GOP really is just the play thing of right-wing billionaires in the modern era. Whatever spirit of democracy it may have had in the past was sold a long time ago. It’s a mercenary party right now and its billionaire paymasters want the GOP to do whatever it takes to cling to power no matter how ridiculously spiteful and undemocratic it looks.
So it’s urgently important to note that the GOP-controlled Michigan Senate passed on Thursday that would make it a crime for public officials to demand that nonprofits, including 501(c)(4)s, disclose their donors to the public or the government. Unless there’s a warrant and a government agency can demonstrate “a compelling need” by providing clear and convincing evidence to the court.
The Michigan GOP’s Senate bill also bans state agencies from requiring government contractors to disclose contributions they have made to nonprofits. And that, of course, includes 501(c)(4) ‘nonprofits’ that are purely political entities. So state contractors paying off state politicians is about to get a lot easier in Michigan. Government officials who violate the rules would potentially face imprisonment for up to 90 days and/or a fine.
Yep, the GOP wants to make it a crime punishable with jail time if Michigan state government employees ever requests information about nonprofit donor identities unless they can prove “a compelling need” to courts. Making it effectively impossible for Michigan to investigate the use of charities as front groups. And since the GOP clearly does the bidding for its right-wing billionaire mega-donors who make copious use of 501(c)(4) ‘social welfare’ entities for dark money politics, it seems like a pretty reasonable assumption that the Michigan GOP is doing a lame duck power grab to make it easier for those billionaires to increase their grip on power. That’s the logical consequence of making the dark money system darker. The system becomes ever more beholden to the dark money masters.
The restriction on state officials demanding donor identities also means it’s less consequential for right-wing billionaires if their 501(c)(4)s get in trouble. And that means we should expect some seriously sleazy right-wing 501(c)(4) activity coming up in Michigan’s political scene, even by GOP standards.
It has yet to pass the Michigan House, but that vote is scheduled for Tuesday, so it’s presumably on the verge of being passed by the House since the GOP controls it. Then outgoing governor Rick Snyder will make it law. It appears to be a foregone conclusion that this is going to happen because the GOP is operating super-extra shameless mode. Elections are a couple years away so they presumably assume voters will forget.
Oh, and it turns out the incoming Democratic secretary of state ran on a platform of greater transparency of political money in Michigan. Surprise!:
“Under the bill, which is sponsored by Republican Sen. Mike Shirkey, state and local agencies would no longer be allowed to request donor details from any 501© nonprofit without a warrant. In order to get a warrant, agencies would have to demonstrate “a compelling need” by providing clear and convincing evidence to the court. It would also ban agencies from requiring government contractors to disclose contributions they have made to nonprofits. Violations of the bill would be punishable by imprisonment for up to 90 days and/or a fine.”
In order to get a warrant, agencies would have to demonstrate “a compelling need” by providing clear and convincing evidence to the court. It would also ban agencies from requiring government contractors to disclose contributions they have made to nonprofits. The future investigations of state contractors paying political bribes is going to be interesting.
And this bill that’s blatantly designed to make it easier for Republican donors to use 501(c)(4)s to inject dark money into Michigan’s politics (which is largely spent on poisonous propaganda) was introduced in the Michigan Senate just two days after the victory of the incoming secretary of state who campaign on increasing the transparency of political money in Michigan. Secretary of State-elect Jocelyn Benson even called for requiring instant disclosure of all money spent to influence elected officials, which is basically the opposite of the GOP is working work:
And the incoming Democratic attorney general is pointing out that this move to shield dark money is going to also make it easier to pull off charity scams on the public. The scammed are presumably seen as just acceptable collateral damage the war to making money as dark as possible in Michigan:
And note how the list of likely abusers of 501(c)(4)s in Michigan’s near future includes the Michigan Republican Party itself, which ran it’s own dark money 501(c)(4) under the name Michigan Citizens for Fiscal Responsibility:
Recall how the national Republican Party leadership in the House did the same thing this year when Paul Ryan and the House leadership hired American Future Fund to intervene the California primaries.
And this ‘dark money’-darkening GOP bill is poised pass the Michigan House potentially on Tuesday and get signed into law by the outgoing governor Rick Snyder:
It’s looking like this really will happen in Michigan. Very soon. Because that’s how the GOP’s lame duck power grabs work. They’re both premeditated and all of a sudden.
So if you’re wondering if the blatantly corrupt nature of the Michigan GOP’s lame duck power grab has the GOP concerned that this will cost them politically in the eyes of Michigan voters, don’t forget that dark money is basically used to buy propaganda to change voters minds. That’s the ‘social welfare’ they’re supposedly engaged. Changing minds with right-wing propaganda. So while the Michigan GOP is probably somewhat concerned about the damage they could be doing with their image with this power grab, the party is also probably pretty excited about all that extra new mind-changing dark money its about to get as a result of this move.
Here’s a set of stories that highlights how central the network of people who run the American Future Fund (AFF) are to the larger Republican dark money fundraising machinery: First, note that we have multiple reports that the Trump inauguration committee is facing legal scrutiny for illegal activities. The Wall Street Journal reported that federal prosecutors at the Manhattan office are looking into whether or not the Trump inaugural committee, which raised unprecedented amounts of money (over $100 million) for the relatively low key Trump inauguration parties, was accepting money from donors in exchange for access (a ‘pay-to-play’ scenario) and the New York Times reported that Robert Mueller’s probe is looking into the possibility that foreign donors, in particular from the Middle East, were donating to inaugural committee.
And now we’re learning that the Trump-owned hotel where many of the inaugural festivities took place may have heavily overcharged the inaugural committee (effectively laundering the money) and Rick Gates tried to avoid reporting donations by requesting that donors skip making donations to the inaugural committee and directly make donations to the vendors providing the inaugural celebration services. The vendors felts this was unusual and concerning according to some sources.
So the question of who donated to the Trump inaugural committee and how that money was spend has suddenly been added to President Trump’s lists of legal woes. And as we’re going to see, it appears that a big chunk of that inaugural money came from a dark money Republican donor network. But it’s not the better known Koch brothers or Karl Rove donor networks. At least not exactly. It’s the donor network operated by far right billionaires Ann and Neil Corkery, although it sounds like there’s a heavy overlap with the Koch and Rove networks.
The Corkery’s donor network is the primary funder of Wellspring Committee, which appears to be their main dark money 501(c)(4) used to distribute tens of millions of dollars to other politically active entities. In that sense, it Wellspring sounds very similar to groups like TC4 Trust and Center for the Protection of Patient Rights in the Koch network which, as we’ve seen, acted largely as ‘shadow money mailbox’ middle-man 501(c)(4) entities that received money and then handed that money out to other entities in the Koch network like AFF. For example, Wellspring gave $14.8 million to Judicial Crisis Network (JCN) last year. As we’ve seen, JCN was one of the key dark money groups backing the confirmation of Supreme Court Justice nominee Brett Kavanaugh. In 2016, JCN also financed an ad campaign advocating that the Republican controlled Senate NOT confirm Barack Obama’s Supreme Court Justice nominee Merrick Garland.
Wellspring is the primary donor to JCN, having donated for than $54 million to JCN since 2010. Wellspring itself appears to be almost exclusively financed by a handful of donors, with a single mystery donor providing almost all the funding pre-2017. In 2017, three mystery donors provided the bulk of Wellspring’s funds.
Here’s where Wellspring enters the mystery around the Trump inauguration funds: there was only one contractor by by Wellspring in 2017, a mysterious LLC called BH Group. BH Group made a $1 million donation to the Trump inaugural committee on Dec. 22, 2016. It was created on August 22, 2016. BH Group’s contracting work for Wellspring got it a $750,000 payment in 2016. The work was “public relations”. Wellspring doesn’t even have a website. So the question of what that $750,000 was for is a question that raises the possibility of tax law violations by Wellspring’s network.
BH Group also received a $947,000 payment from JCN around the time BH Group made its Trump inaugural donation. And in 2017, Judicial Education Project, JCN’s sister 501(c)(3) nonprofit organization, paid BH Group $1.3 million.
Not surprisingly, BH Group appears to have deep ties to the Federalist Society, the far right legal group that largely controls Republican judicial nominees. It turns out Leonard Leo, the executive vice president at the Federalist Society, listed “BH Group” as his employer in a campaign finance filing. Leo is the only known employee. Leo and another Federalist Society vice president were involved in a nonprofit called the BH Fund. BH Fund was set up to enforce a donor agreement between an anonymous $20 million donor and the Antonin Scalia Law School at George Mason University. Recall how George Mason University is a major recipient of Koch brothers donations.
And here’s where the figures associated with AFF becomes directly involved: BH Group’s address in its incorporation records list a virtual office in Arlington, Va. and the only identified point of contact is Donna Smith, whose name matches that of a longtime paralegal at Holtzman Vogel Josefiak Torchinsky, the law firm that shared a Warrenton, Va. office with the address the Trump inaugural committee on its tax return.
Recall how, as we’ve already seen, AFF was set up in 2008 by a group of prominent Iowa Republican fundraisers. This included Nicole Schlinger, the owner of the farm that employed and housed the alleged killer of Mollie Tibbetts. But it also included Jason Torchinsky, a lawyer for an AFF political action group that was carrying out robo calls for clients. Torchinsky was one of the architects of the American Center for Voting Rights (ACVR), a faux “voting-rights” outfit that was set up by GOP operatives in 2005 to “give ‘think tank’ academic cachet to the unproven idea that voter fraud is a major problem in elections.” Torchinsky worked at the time for a law firm run by Alex Vogel and his wife, Virginia State Senator Jill Holtzman Vogel. Alex Vogel was ACVR’s executive director and a former RNC lawyer. His wife Jill had a track record of hardball tactics, including having her babysitter level a campaign finance irregularity allegations against her primary opponent and a local prosecutor who was a supporter investigate it. She won the primary and the charges were dropped.
It’s also important to note that Torchinsky has continued working as AFF’s lawyer. In 2015, Torchinsky was representing AFF when AFF decided to sue a superPAC started by Bobby Jindal called “American Future Project”, arguing that its name was confusingly similar to AFF’s. So Torchinsky, Alex Vogel, and Jill Holtzman Vogel all have a law firm, Holtzman Vogel Josefiak Torchinsky, and now we’re learning that BH Group’s only point of contact is a paralegal at this firm and it shared an office with the address of the Trump inaugural committee on its tax returns and that likely mean the Trump inaugural committee is using the services of Holtzman Vogel Josefiak Torchinsky:
“Despite operating behind the scenes with a name unknown to most of the American public, Wellspring is at the crux of Ann and Neil Corkery’s network of politically active dark money groups, funneling millions from anonymous financiers to political causes they don’t want their names attached to — and doing ostensibly little else.”
Accepting shadow money and handing it right back out. That’s a pretty much the only thing Wellspring does. Because that’s the only thing ‘shadow money mailboxes’ like Wellspring do. Accept money for donors and hand it back out, obscuring the money-trail in the process.
And in the case of Wellspring, it appears to get almost all of its money from just a handful of these secret donors:
Keep in mind that we don’t know if those secret donors are, themselves, wealthy individuals or instead other 501(c)(4)s. It’s a mystery.
One of the biggest recipients of Wellspring’s generosity is the Judicial Crisis Network (JCN), which receives the bulk of its funds from Wellspring. In 2016, Wellspring received a $28.5 million anonymous donation and handed $23 million to JCN. So it appears that one of Wellspring’s key functions is to provide extra-anonymous financing to JCN:
And then we get to BH Group, the mysterious LLC created in August of 2016 that donated $1 million to the Trump inaugural committee and appears to share an address with the inaugural committee. BH Group was paid $750,00 for “public relations” work by Wellspring and $1.3 million on donations from JCN’s sister 501(c)(3) entity in 2017. In 2016, BH Group also received $947,000 from JCN around the time of its $1 million donation. So when BH Group donated $1 million to the Trump inauguration fund, it was basically acting as conduit for JCN which was in turn acting as a conduit for Wellspring which was acting as a conduit for Wellspring’s wealthy anonymous donors:
Adding to the evidence that BH Group, JCN, and Wellspring are also working in concert with the Federalist Society and all operating as part of the same network, we learn that Federalist Society executive vice president Leonard Leo listed BH Group as his employer and Leo has been directly involved in raising much of the anonymous money for Wellspring each year:
Finally, we learn that BH Group’s only identified point of contact in a paralegal at Holtzman Vogel Josefiak Torchinsky, the law firm that shared an office with the address of the Trump inaugural committee on its tax returns:
So if the Trump inaugural fund was using Holtzman Vogel Josefiak Torchinsky as its address, it’s probably using the law services of Holtzman Vogel Josefiak Torchinsky for a lot of other stuff. Making this law firm, the same one used by AFF, as critical dark money entity.
And it appears that the Wellspring network and the Corkery’s have another key tie to the Trump administration’s approach to legal matters: the Foundation for Accountability and Civic Trust (FACT), a nonprofit run by acting Attorney General Matthew Whitaker before he became Jeff Sessions’ chief of staff, is part of the Corkery’s dark money network:
Whitaker was on the Corkery dark money gravy train. That seems notable.
And as the article also notes, we shouldn’t forget that Wellspring is just one of the 501(c)(4) dark money groups that were set up to promote the Trump adminstration’s policies and sell the American public an ideas like the nomination of Brett Kavanaugh to the Supreme Court or refusing the nomination of Merrick Garland. There’s also groups like America First Policies, a recipient of large amounts of corporate money for entities like Reynolds American (the tobacco company) and Big Pharma:
So as we can see, if there’s going to be a serious investigation of the financing and activities of the Trump inaugural committee, that’s an investigation that had better include Wellspring, BH Group, and the various figures behind these dark money entities. And, in particular, the figures at Holtzman Vogel Josefiak Torchinsky.
Given the way Holtzman Vogel Josefiak Torchinsky is clearly acting against the public interest by acting as a specialist in keeping billionaire dark money in the dark, it raises the question of what the managing partner at Holtzman Vogel Josefiak Torchinsky, Virginia state Senator Jill Holtzman Vogel, answers when asked about the activities of her law firm. She is an elected official, after all. An elected official who ran for Virginia’s lieutenant governor in 2017. So how does she respond to questions about her firm? Well, as the following article makes clear, her answer is to avoid answering such questions as much as possible and, when pressed, present herself as an ethics lawyer who works as an advocate for charities and nonprofits exercising her first amendment rights. So as questions about the role Holtzman Vogel Josefiak Torchinsky played in the Trump inauguaration fund mysteries start getting asked more earnestly as this potential scandal unfolds, get ready for lots of attempts to equate these dark money manaeuverings as a defense of charity:
“Between 2005 and 2016, PACs and nonprofits that have hired Vogel’s firm spent close to $1 billion on federal elections, representing nearly a quarter of all outside spending over that period, according to data compiled by the Center for Responsive Politics. For the 2016 cycle alone, those organizations accounted for more than $234 million of $1.4 billion in total outside spending.”
Yep, Jill Holtzman Vogel’s lawfirm, Holtzman Vogel Josefiak Torchinsky, has represented the PACs and nonprofits that spent nearly a quarter of all outside spending on American elections between 2005 and 2016. So this isn’t just any law firm. It is the dark money law firm. And that includes Jason Torchinsky’s long-time work representing American Future Fund. Representation that led to AFF and other Koch network entities violating California’s campaign finance laws in 2012, resulting in multiple fines (but no criminal charges). Recall how it was this scandal that ended up getting AFF booted out of the Koch donor network, effectively pushing AFF into work for Karl Rove’s network and direct work for the Republican Party. Also recall how Jason Torchinsky was representing AFF in 2015. So the fact that Holtzman Vogel Josefiak Torchinsky gave AFF advice that broke California law and got it kicked out of the Koch donor network didn’t result in AFF find new legal representation:
Then there’s the work done by Holtzman Vogel Josefiak Torchinsky in 2016 for North Carolina governor Pat McCrory during an exceptionally tight reelection effort. It was Holtzman Vogel Josefiak Torchinsky that filed protests against 600 voters, alleging they were either dead or felons or people who voted in multipe states. This turned out to be simply propaganda, resulting in a lawsuit by those voters and the filing of a grievance against four lawyers at Vogel’s firm and the firm itself was added as a defendent to a class action lawsuit:
Beyond questionable legal advice, there’s another service Holtzman Vogel Josefiak Torchinsky offer: letting organizations use the firms Warrenton address as their own and list Holtzman Vogel Josefiak Torchinsky’s lawyers and their officials. In other words, Holtzman Vogel Josefiak Torchinsky doesn’t just help dark money entities execute their dark money strategies. The firm literally helps clients obscure their locations and key employees, which is exactly what it appears to have done for the Trump inauguration committee:
So as we can see, as federal investigators start examining the inner workings of the Trump inauguration committee, they’re going to have to deal with the fact that this committee is apparently using the services of Holtzman Vogel Josefiak Torchinsky to hide information about itself like its address.
And since BH Group’s only identifiable officer is a Holtzman Vogel Josefiak Torchinsky paralegal it would appear that the same services are being used by BH Group to hide its own operations. And yet Leonard Leo of the Federalist Society listed BH Group has his employer on his tax filings and its known that Leo helps raise funds for Wellspring. So while we don’t yet know what exactly the relationship is between Wellspring, BH Group, and the Trump inaugural committee, we do know that it’s a tight relationship and Holtzman Vogel Josefiak Torchinsky is playing a major role in facilitating it.
And as the following article notes, it’s unclear if that relationship actually ended with Trump’s inauguration. Why? Because it’s very unclear if that $750,000 payment from Wellspring to BH Group in 2017 for “public relations” work was actually for public relations because BH Group didn’t appear to engage in any public relations and Wellspring itself has no public face. $750,000 for public relations for an entity without a public face. That’s literally the claim Wellspring made about that contractor payment to BH Group. Recall how we saw above that BH Group was Wellspring’s only contractor that yera. And according to tax experts, if it turns out that $750,000 filing wasn’t actually for public relations, that’s an illegal misrepresentation that might raise perjury concerns. As these tax experts also point out, the IRS rarely audits nonprofits, so those perjury concerns might not actually be very concerning to the IRS or Wellspring.
One obvious possibility is that the $750,000 was paying back the BH Group people for that $1 million donation to Trump’s inaugural committee in December. But it’s worth keeping in mind the news about Rick Gates trying to get donors to directly pay vendors to avoid having to report ALL the donations as inaugural donations because they were taking in so much money. So it’s possible that the $750,000 was one chunk of the 2017 (early January) indirect donations to Trump’s inaugural. That’s also where the foreign donations are most likely.
So when you consider that the underlying investigation into the Trump inauguration funds is the question of whether or not there was a ‘pay-to-play’ situation going on, where donors pay into the fund for political influence, it’s hard to ignore the following:
1. BH Group appears to be set up for maximum anonymity for its donors.
2. Leonard Leo, BH Group’s only known employee, appears to be a skilled fund raiser, including his work raising funds for Wellspring.
3. Wellspring is the major funder of BH Group.
4. BH Group’s only known activity in 2016 was giving $1 million to the Trump inauguration fund.
5. BH Group’s only known activity in 2017 is $750,000 in “public relations” for Wellspring, an entity with no public face.
6. This is all perfect for the purpose of faciliting pay-to-play political influence peddling transactions.
7. If the $750,000 to BH Group for “public relations” was secretly passed along to the Trump administration through an indirect channel, like what Rick Gates suggested, that kind of secret indirect payment scheme could be used after the inaugural. It’s just a generically useful avenue for secret political donations.
And that all raises the question of whether or not the $750,000 to BH Fund for “public relations” in 2017 paid for off the books payments to the Trump administration, pre-and-post inauguration:
“The $1 million inaugural gift came from a Northern Virginia company called BH Group, LLC. Unlike other generous corporate inaugural donors, like Bank of America and Dow Chemical, though, BH Group was a cipher, and likely was set up solely to prevent disclosure of the actual donor’s name.”
BH Group was a cipher, and likely was set up solely to prevent disclosure of the actual donor’s name. It’s a key fact to keep to mind. BH Group was like one more layer of anonymity beyond the anonymity Wellspring provides. That extra anonymity was presumably imposed for a reason.
And these questions of what exactly that $750,000 was actually used for were quietly staring everyone in the face with the fact that BH Group didn’t appear to do any public relations work and Wellspring has a public relations strategy of having no public face:
And if it turns out that $750,000 was for something other than “public relations”, that’s potentially perjury issue for Wellspring because it will have “intentionally misrepresented the payment” on its tax filing. Keep in mind that a lot of the inaugural donations were probably made in early January 2017, so if this $750,00 in public relations work reflected off the books donations to Trump, like what Rick Gates wanted, that’s probably the kind of thing that happens a lot in the dark money world. So it will be interesting to see if that’s the case:
And the fact that BH Group’s only known employee, Leonard Leo, has a history of fund raising for the Corkery family’s Wellspring, makes it appear that the only thing BH Group is set up to do is add extra anonymity for the Corkery/leo donor network. A network, again, with heavy overlap with the Koch and Rove networks:
And we know Leo has a parallel group, BH Fund, which was used by the Koch network to funnel funds to George Mason University. Donations that the university’s president acknowledged “fall short of the standards of academic independence”:
And while these donors might be anonymous to the public, they are almost certainly not anonymous to Trump:
Is $750,000 for ‘public relations’ work just a scheme for covering a secret cash donation? Or just payback for the $1 million Decembr 2016 BH Group donation to Trump? If the $750,000 was sent to Trump, we might be looking at a pay-to-play dark money ‘back channel’ between the Corkery/Leo donor network and the Trump administration? How big or small is that network? Might it involve foreign donors? These are all the kinds of questions the federal investigators looking into Trump’s inauguration are reportedly asking themselves right about now. And as we can see, the Wellspring/BH Group landscape of ‘nonprofit’ 501(c)(4)s and LLCs that are set up enable exactly those kinds of influence peddling transactions.
And regardless of what the $750,000 was used for, the $1 million to the Trump inaugural fund in 2016 merely an example of the flood of dark money flowing into the Trump inaugural fund. It was officially $107 million. How much unofficially? We’ll see.
So it’s going to be worth keeping in mind that these questions about whether or not BH Group and Wellspring were running a post-inaugural pay-to-play dark money back channel with the Trump administration are the kinds of questions all American adults should be asking. Not just federal investigators. Because it’s hard to think of a story that better illustrates what the American public hates about money corrupting American politics than this story. It’s like big money corruption distilled. The kind of flagrant corruption that would actually require extensive public relations services for a lot of powerful interests and corporations if it was exposed. It was clearly a pay-for-play bonanza.
And keep in mind that what Rick Gates was proposing, making the donations unofficial and directly to vendors, is the kind of thing any dark money groups could probably do any time to give an unofficial cash donation to a politician. Buy a service like ‘public relations’ that involves nothing from a company owned by the recipient of your donations. It probably happens all the time. The kinds of services dark money firms employ, like public relations services, are the kinds of services it’s relatively easy to fake. So the kind of work dark money firms do to execute their trade is the kind of work that lends itself to service-laundering. It’s tragically fitting. And the Trump inauguration is the ultimate example of that, which is also tragically fitting.
Mick Mulvaney further solidified his role as the Trump administration’s MVP with a new administration job: Mulvaney, the current chief of the Office of Budget Management, is once again working multiple jobs. He’s no longer also the acting head of the Consumer Financial Protection Board and back to just one job. But that’s about to change as Mulvaney takes the role as Trump’s new acting Chief of Staff, while he remains acting head of OMB. At this point it’s hard to think of someone more irrereplacable to Trump than Mick Mulvaney. The guy can undermine multiple government agencies simultaneously.
Is Mulvaney just that amazing a Trump administration lackey that he keeps getting picked for more and more roles? Well, in this case it turns out that Mulvaney had one key qualification that made him the perfect candidate: he was willing to take the job. It’s a qualification that’s becoming more and more crucial for Trump administration hires as the pile of scandals and legal threats continues to grow. And it’s also why it should come as no surprise to learn that Trump only selected Mulvaney after his first choice turned him down and no one else expressed interest.
Trump’s first choice for Chief of Staff was Nick Ayers, the current Chief of Staff for Vice President Mike Pence. As we’re going to see, much like Nicole Schlinger, Ayers is a dark money Sith lord and makes a lot of money doing it. And that’s the world he wants to return to instead of becoming Trump’s chief of staff. Specifically, Ayers wants to go back to leading America First, a pro-Trump 501(c)(4) co-founded by Ayers and a series of close Trump campaign officials. And who knows what else. The world of dark money services allows for all sorts of different clients. And Ayers wants to return to that world and make a ton of money:
“Put it all together and you see that Ayers is a guy who has already accumulated a staggering personal fortune on political work. Given the inherently lucrative nature of that kind of work and the nose-bleed high tolerance for corruption in the Trump world, running the big unregulated money stream for the President’s reelection campaign is an opportunity to rake in an almost unimaginable amount of money. In perfectly Trumpian fashion, Ayers appears to have stiffed his boss in a richly humiliating way so that he could cash in big time on his name and political movement.”
Ayers had to say ‘no’ to Trump because he couldn’t say ‘no’ to the millions he could make running the pro-Trump American First ‘social welfare’ organization:
Yep, Ayers is already a multi-millionaire at the age of 36, and the only explanation is that he’s already gotten really rich from his work in the lucrative world of right-wing dark money politics. And that world is only going to get more and more lucrative as the scope of right-wing dark money continues to explode.
And as the following article notes, America First is looking like it could be a particularly influential, and therefore lucrative pro-Trump 501(c)(4). Why? Because of who is involved: in addition to Ayers, America First was founded by figures like Rick Gates — who was recently discovered to have attempted to arrange for secret donations to Trumps inaugural fund — and Brad Parscale, the head of Trump’s digital campaign team. Trump deputy campaign manager David Bossie is also a founding member.
Back when American First was first forming in January of 2017m Parscale claimed the group aims to “build something unique, just like we did with the campaign.” Recall how one of the ‘unique’ things Parscale led the 2016 Trump campaign in doing was extensive use of Cambridge Analytica-style micro-targeted ads and disinformation. And as the article also notes, both Ayers and Bossie are close to Robert and Rebekah Mercer, who were key investors in Cambridge Analytica. So when you factor in that America First appears to be poised to be one of the major recipients of outside dark money and capable of executing sophisticated Cambridge Analytica-style advertising campaigns heading into 2020, it’s not hard to see why Nick Ayers had to turn down the Chief of Staff job:
“The group includes Trump’s digital and data director Brad Parscale, onetime deputy campaign manager Rick Gates and two campaign advisers to Vice President Mike Pence, Nick Ayers and Marty Obst.”
Brad Parscale, Rick Gates, and Nick Ayers want to “build something unique, just like we did with the campaign.” Ominous words:
Ominous words from ominous people. People with close ties to Robert and Rebekah Mercer:
So it’s looking like America First is going to be very well funded and staffed with the people who know how to execute wide scale media manipulation campaigns from mass media advertising to micro-targeted personalized disinformation. And the Mercers will probably be playing at least some sort of role in this.
And as the following article reminds us, if it turns out that the Mercers do decide to throw millions of dollars at America First, we probably won’t know. Because that’s the whole point of the 501(c)(4) dark money system America has constructed for itself: the donors can remain complete secret as long as you have someone like Nick Ayers who knows the rules of the dark money system. It’s a lesson Ayers reminded us of when he was charged with breaking Missouri’s campaign finance laws while working for former Missouri governor Eric Greitens. Recall how Greitens resign in March after it was revealed that he was having an affair with a woman he was blackmailing after he bound her in leather, photographed her, and threatened her with exposure of the photos if she ever told anyone.
It turns out that Nick Ayers was Greiten’s top political consultant in his 2016 race, and Ayers may have broken Missouri’s campaign finance laws as part of that work. Specifically, state laws on the disclosure of political donors. In this case, it was a donor who shouldn’t be donating to Greitens because the donor “manages money for the state of Missouri.” This was revealed in a series of emails between Ayers and Greiten’s lead fundraiser that repeatedly refer to the restricted donor and the use of 501(c)(4)s. Two days after a June 2016 email talking about how the donor “manages money for the state of Missouri” and the use of 501(c)(4)s, a $500,000 donation from a Texas-based nonprofit, Freedom Frontiers group, came in to Kansas-based political action committee, LG PAC, that carried out the attacks on Greitens’s opponents. It was the first of over $4 million in payments from Freedom Frontier to LG PAC in 2016. Freedom Frontier spent $5.9 million in 2016 and $4.4 of that went to LG PAC, the Kansas-based PAC that carried out the attacks, so Freedom Frontier appears to have largely been set up to funnel money to LG PAC. In other words, it’s a shell nonprofit set up to help hide donor identities.
And as Citizens for Responsibility and Ethics (CREW) pointed out recently, the fact that almost all of Freedom Frontier’s spending went to attack ads supporting Greitens means Freedom Frontier was probably breaking the 50 percent spending cap on political attack ads that’s allowed for 501(c)(4)s to maintain their nonprofit status. So Freedom Frontier could be facing legal troubles meaning we might learn more about who is behind it.
And as the following article reveals, Nick Ayers listed Freedom Frontier as one of the entities that paid him in 2016 on his tax filings. Specifically, Ayers’s company, Clark Fork Group, was paid $354,000 for “consulting”. So that’s probably Ayers’s payment for whatever he did to facilitate this transaction. This is presumably how he got super rich so fast.
So Nick Ayers appeared to be paid by the nonprofit entity that sent the $4.4 million in donations to the Kansas PAC that attacked Greiten’s opponent and these payments followed discussion of how to use 501(c)(4)s to facilitate donations from a “restricted donor” who handled money for the state Missouri.
So when we’re wondering about who might be financing American First’s dark money propaganda activities heading into 2020, the story of Ayers’s extensive work arranging for this hidden donation to Greitens’s election efforts make it clear that American First is going to be well versed in the practice of using 501(c)(4)s for secret donations when the donor definitely doesn’t want to be revealed:
“Nick Ayers served as Greitens’ top political consultant in 2016 and was later paid by Greitens’ nonprofit, A New Missouri Inc. His protégé, Austin Chambers, was Greitens’ top adviser during his 17 months as governor.”
Nick Ayers is a busy guy. And a highly experienced guy in the dark arts of politics, which is probably a big reason he was talked about as a replacement for John Kelly in this article from July. He’s deeply connected to the world of Republican sleaze operations so he’s the perfect for recruiting:
But Nick’s valuable skills are needed elsewhere, in more lucrative areas. Like arranging secret donors to pro-Trump entities like America First. That’s definitely going to be needed and Ayers definitely knows how to do it as his emails about a “restricted donor” from 2015 and 2016 show:
And Ayers literally got paid by “Freedom Frontiers” ($354,000 for “consulting”) in 2016, giving us a sense of how Ayers got really rich really fast and why he wants to return to this kind of “consulting”:
So as the America First pro-Trump political campaign for 2020 unfolds, keep in mind that if any “restricted donors” decide they want to make an indirect donation to Trump’s reelection efforts they’ll have Nick Ayers’s expertise to make that happen. For a hefty “consulting” fee.
And that’s all why Nick Ayers is so rich. He’s a full service dark money operative, including services for “restricted donors”. He was actually a remarkably appropriate sleaze merchant choice for Trump’s Chief of Staff. He could have staffed the administration with dark money network industry people and donors, taking the political ‘pay-to-play’ system to the next level.
But Ayers wants to chase that sweet sweet dark money cash instead. And he’s probably not interested in the legal dangers that comes with being Trumps Chief of Staff. And no one else will take the job. Hence, Mick Mulvaney, Trump’s living Plan B, gets the job. And that’s why Mick Mulvaney really is Trump’s MVP. He’s like the staff and chief of staff in one person.
Although, in related news, video of Mick Mulvaney calling Trump a terrible person in 2016 just surfaced. So don’t be super surprised if the White House has some severe staffing issues in the near future.
Here’s an quick followup on the story of the Wellspring Committee, the 501(c)(4) at the heart of a growing scandal involving the Trump inauguration fund. A network with close ties to the Federalist Society and includes a number organizations that were heavily involved in the propaganda pushes to sell the American public on Donald Trump’s Supreme Court picks and sell the public on the idea of refusing Barack Obama’s Supreme Court pick in 2016.
And as we saw, Wellspring is was set up and is largely financed by the Corkery family. So here’s an article from back in 2016, when the Corkerys’ 501(c)(4)s like the Judicial Crisis Network (JCN) were busy promoting the idea that Barack Obama shouldn’t be allowed to appoint a Supreme Court justice because it was his last year in office. Not only was Wellspring the primary funder of the JCN, giving it $7 million a year, but Niel Corkery is JCN’s treasurer.
As the article describes, when Wellspring was first set up in 2008, it it was actually founded by the Koch brothers. The group also raised $10 million from the Koch donor network right after its founding and proceeded to give out $7.8 million that year to groups that included Koch network organizations like Americans for Prosperity. So it was either handed off to the Corkerys or is still being secretly run by the Kochs.
Wellspring worked closely with the Republican establishment too. In that sense Wellspring followed a path similar to American Future Fund, which also started off in 2008 as a Koch entity until it was caught violating the 501(c)(4) rules in 2012 and was kicked out of the Koch network and forced to find new clients like Karl Rove and the Republican Party and candidates.
But unlike AFF, which saw its Koch network funds go down to a relative trickle in 2013, it’s unclear to what extent Wellspring ever really stopped operating as an arm of the ‘Kochtopus’. Following the 2008 elections, the Kochs focused on building their known Koch entities like Americans for Prosperity and Center to Protect Patient Rights (CPPR). On the surface, Wellspring appeared to have left the Koch orbit following the 2008 elections, raising $24 million from 2008–2011 from unknown donors. Might those unknown donors have been the Koch donor network? Who knows, but it turns out 10 of the recipients of Wellspring’s donations during that period also received money from CPPR. Recall how CPPR was one of the Kochs’ major ‘shadow money mailboxes’ that operated on dark money repositories that did little else other than receive donations and hand them out to other Koch network entities. Also, Wellspring works with consultants who used to work with Koch Industries. So based on circumstantial evidence, it seems likely that Wellspring is effectively operating as a stealth arm of the Koch network. In other words, Wellspring may be primary a creature of the Corkerys, but it should still be seen as an arm of the Kochtopus too.
The article also points out that all of that money spent by JCN on propagandizing the public about Supreme Court nominees doesn’t count towards the 50 percent cap on political spending that 501(c)(4)s. It’s not “political activity”, allowing JCN to effectively spend 100 percent of its money on political ads.
Oh, and it turns out the Corkerys are associated with Opus Dei. So the organization that was acting as a lead 501(c)(4) dark money entity in Supreme Court political battles of recent years is run by a billionaire couple associated with a far right fascist Catholic sect.
In addition, Ann Corkery is former director of Bill Donohue’s Catholic League and a board member of Hobby Lobby’s law firm. So she’s probably really good at raising money from hard-right Catholics.
And that’s all part of why the story of Wellspring, like the story of AFF, is one of those stories that tells us a lot about what has gone wrong with American politics. When you ‘follow the money’, it usually goes back to dark money entities working for right-wing billionaires all working together to secretly propagandize the hell out of the American public. And some of those billionaires network with both the Kochs and Opus Dei:
“Case in point: the “Judicial Crisis Network,” the right-wing front organization doing ad buys across the country to oppose Judge Garland getting a hearing. JCN is one of many 501(c)(4) “social welfare” organizations on the right and the left, and C4s don’t have to disclose their donors.That is the major reason that political spending by C4s increased more than 8,000 percent between 2004 and 2012.”
Thanks to donor secrecy rules for 501(c)(4)s we saw an 8,000 percent explosion in 501(c)(4) political spending between 2004 and 2012. But in the spirit of freedom, it’s worth reminding ourselves that it wasn’t just those rule changes that caused this flood of money. It was also the fact that right-wing billionaires like the Kochs and Corkerys got organized and exercised their freedoms to flood the political system with dark money for propaganda and political pay offs (like dark money payments to the Trump inaugural fund). They got organized to a greater extent than before and created a dark money right-wing billionaire union that works together to keep their activities as anonymous as possible. They had the freedom to do that and they are currently abusing the hell out of that freedom. That decision to abuse the hell out of the system and create a massive dark money political propaganda network designed to circumvent political finance laws and give donors maximum secrecy played a major role in the 8,000 percent explosion of 501(c)(4) political spending from 2004–2012 in US election and the ongoing explosion. Right-wing billionaires abusing their freedoms is playing a big role in what is going wrong in American politics.
But despite the anonymity that the donors to these billionaire shadow money networks get, we still know something about who is running these networks. The Kochs, Karl Rove, and more obscure people like Nicole Schlinger of AFF. What we know about the people who can’t hide their identities (because someone has to be the public face of these groups) is largely what we get to know about the kinds of donors they’re going to court. In the case of Wellspring and JCN, we know the Corkerys are playing a major role so the friends and associates of the Corkerys are likely to be the major funders. And that’s going to include a lot of people associated with Opus Dei and other far right Catholic organizations. So in addition to people associated with the Federalist Society, the JCN’s donors are likely to include a lot of very right-wing Catholic wealthy donors. It’s a noteworthy fun fact about the dark money networks behind the public messaging campaigns America’s Supreme Court fights:
But the Opus Dei/Catholic League/Hobby Lobby ties are just one aspect of Wellspring. There’s also it’s apparent role as an arm of the Koch network. Wellspring was started by the Kochs, and appears to be coordinating frequently with the Kochs. Wellspring also works with the Republican Party and Sheldon Adelson’s Freedom’s Watch. Much like AFF, Wellspring appears to work across the spectrum of the ‘vast right-wing conspiracy’:
And as a reminder of the farcical nature of the 501(c)(4) rules when it comes to pretending that blatantly political activity by 501(c)(4)s are actually “social welfare” activity that doesn’t count towards the 50 percent limit rule on political activity (a rule that is absurd), we learn that all that spending on ads by JCN trying to convince the American public that no Obama Supreme Court nominees should be allowed for his last year in office didn’t count as political spending by JCN. It was “social welfare”:
So that’s all part of what we know about Wellspring and the Corkerys contribution to the dark money network. And because Wellspring is the entity that appeared to be behind the BH Group LLC that was used to donate $1 million to the Trump inaugural fund and may have been used to illegally hide donations to Trump under the direction of Rick Gates, the background of the Corkerys and the role they play in this dark money network is now part of that Trump inauguration foundation story. So it’s going to be worth observing how the Corkerys connect many of the various different major right-wing dark money networks: the Kochs, the Republican Party, and the hard-right Catholic mega-donors are all covered. And that makes this inauguration fund scandal a wonderfully teachable moment. A teachable moment that includes the rich history of the rise of the right-wing billionaire dark money empire and the fact that the Koch and Rove networks are going to have have a lot of smaller allied entities like the Corkery network to further help obfuscate the money flows and maximize donor anonymity. Wellspring’s ability to work with a broad spectrum of the right-wing mega-donor network make it perfect for the job of anonymously raising money for Trump’s record-breaking inauguration fund that’s now under criminal investigation. And that’s a very teachable moment kind of thing these days.
There’s a new scandal bubbling up in the Trump administration regarding the use and undocumented workers at one of President Trump’s golf courses. Specifically, there are allegations that the management at Trump’s Garden State golf in New Jersey was knowingly hiring undocumented immigrants for years, including for the workers who clean Trump’s private residence there. It’s an unfolding scandal and we don’t know the extent to which it could implicate Trump himself. But the evidence so far suggests that the Trump Organization was likely aware of this practice. Both of the employees bringing these charges forward cleaned Trump’s personal residence at the golf club.
In addition, it appears that Trump’s New Jersey club neglected to use the E‑Verify system for checking to see whether or not employee documents were fake, which makes sense given that it appears that managers at the club were not only knowingly hiring undocumented workers but actually helping to provide them with fake work documents. But as the New York Times article points out below, Trump’s golf clubs in states that require E‑Verify do actually use the system.
And while that’s certainly a bad look for Trump that his golf courses apparently only use E‑Verify when they’re legally mandated, it’s also a bad look for the rest of the GOP. And not just for the obvious hypocrisy of Trump employing undocumented workers. It’s also a bad look for the GOP because Trump campaigned on making E‑Verify a federally mandated rule, so states like New Jersey can’t leave E‑Verify as optional for employers, and as we’re going to see, one of the biggest obstacles standing in the way of a federal E‑Verify mandate is the Republican party. Specially, the wing of the Republican Party doing the bidding of the agricultural and restaurant/hotel industries. And if the US political debate over illegal hiring of illegal immigrants ever started focusing on the employers that knowingly hire them — employers like Trump Org, it would seem — that could become quite perilous for the GOP. It’s a lot harder for the GOP to make immigration a political cudgel when it involves putting employers at legal risk (especially if those employers include a lot of prominent Republicans).
Interestingly, when the GOP opposed E‑Verify back in 2011, it was the House ‘Freedom Caucus’ and the Tea Partiers that fought against E‑Verify mandates. Flash forward to 2018, the hardline faction of the GOP House caucus put forward an immigration bill that would have mandated E‑Verify, but that bill couldn’t get enough Republican support. When that hardline GOP bill failed, the Republican House leadership put forward a “compromise” immigration bill. The compromise bill didn’t initially include an E‑Verify mandate, but when it failed to get enough Republican support to pass, the Republican House leadership offered to add E‑Verify to the legislation to entice the hardline holdouts to support the bill. But when that offer to add E‑Verify was made, moderate Republicans from agricultural districts started suggesting that they might drop their support for the bill if a federal E‑Verify mandate was added. Ultimately, the “compromise” GOP immigration bill did not include the E‑Verify federal mandate. So the Republican Party has had a knack for finding reasons to oppose E‑Verify at the last minute when it actually has the power to pass legislation, making this a particularly politically dangerous topic for the GOP since it highlights how the party is only interested in demonizing illegal immigrants for political purposes. Solutions like focusing on the employers who knowingly hire undocumented workers ultimately fail because the Republican Party is ultimately the party of business interests and business interests in the United States like having access to cheap, exploitable labor.
And while that all obviously makes this a highly topical scandal in the context of the current Trump-led federal government shutdown showdown over funding for ‘the Wall’, it’s going to be worth keeping in mind the number of parallels to the scandal surrounding GOP prominent fundraisers Nicole Schlinger and Eric Lang, and their knowing employment of Cristhian Bahena Rivera, the alleged murderer of Mollie Tibbetts. The farm owned by Schlinger and Lang gave Rivera and 10 others housing rent free at the farm. And when they were asked if Rivera was working there legally, Schlinger and Lang’s farm first claimed they had used E‑Verify and confirmed he was a legal worker, but later backtracked and acknowledged they hadn’t used E‑Verify while insisting that Rivera had used fake documents and a fake name to gain employment there.
Also recall how Schlinger has been working as a consultant for some of the most anti-immigrant Republicans around like Ted Cruz and Corey Stewart.
So the fact that President Trump likely runs a business that was knowingly hiring undocumented immigrants and Trump still went to become one of the most anti-immigrant politicians in modern American history is the kind of scandal with explosive potential simply because it can effectively draw attention to all sorts of related GOP scandals that never got much public attention.
And as the following article points out, the lawyer for the two gold club employees who are making these allegations initially actually took his story to none other than Robert Mueller’s legal team, fearing that Trump’s justice department would dismiss the case. And Mueller’s team, in turn, referred the matter to the FBI, which sent agents to meet with the lawyer. So at the same time President Trump is waging a government shutdown over funding for ‘the Wall’, it’s possible the FBI might already be involved in the investigation in addition to the New Jersey state investigators:
“New Jersey prosecutors have collected evidence that supervisors at President Trump’s Garden State golf club may have committed federal immigration crimes — and the FBI as well as special counsel Robert Mueller have played part in the inquiry, the Daily News has learned.”
So the FBI and Robert Mueller’s investigation team are both already somewhat involved. The lawyer for two of the Trump National Golf Club employees, Anibal Romero, told reporters that he recently met with New Jersey state officials to hand over evidence of the fake work documents provided to his clients by the Trump club management, but before he was in touch with state investigators he got in contact with Mueller’s investigation which referred it to the FBI. And the FBI did meet with Romero:
Fascinatingly, a former assistant U.S. attorney points out that not only did the undocumented workers who use the fake documents to gain employment potentially commit a federal immigration fraud crime — which can result in imprisonment, large fines, and deportation — but any of the management and others at the Trump organization to facilitated this may have also committed federal crimes. And this for US attorney suspects prosecutors could even make an example out of these Trump club managers. It would be an incredible development:
The fact that the employers who facilitate immigration fraud crimes could face federal charges is worth keeping in mind regarding the GOP’s track record on federal E‑Verify mandates and the fact that high-profile GOP fundraisers like Nicole Schlinger and Eric Lang appear to be facing no consequences for appearing to knowingly hire and house undocumented workers with fake documents. The Republican Party is a hardline party when it comes to illegal immigrants but remarkably soft when it comes to the employers who hire and exploit these same people and this emerging Trump scandal could make this fact much more obvious to the American public.
Now let’s take a look at the New York Times article from earlier in December that initially made these charges public. As we’re going to see, the two women working illegally for Trump’s New Jersey golf club were both working in Trump’s personal residence at the club and both are charging that the club management knew they were undocumented and actually helped them get the fake documents:
“Mr. Trump has a long history of relying on immigrants at his golf and hotel properties. Though he signed a “Buy American, Hire American” executive order in 2017 tightening the conditions for visas for foreign workers, his companies have hired hundreds of foreigners on guest-worker visas.”
Yep, Trump has a long history of relying on immigrants at his golf and hotel properties. And as this story hint at, it’s a long history that likely involved relying on undocumented immigrants for that labor. Including work at the Trump personal residences at these properties. In this case, Trump has a two-story residence at the golf club, and both Ms. Dias and Ms. Morales were working there:
And in the case of Ms. Morales, she has attended to Trump’s private residence while Trump was there conducting business as the President of the United States:
And while there’s no evidence, yet, that Trump was aware of his club was employing undocumented immigrants, Diaz and Morales are very confident that at least two managers knew about it because these managements literally helped the two women with the process of faking their immigration documentation:
But it doesn’t look like it was just these two managers who were aware of the undocumented status of these employees. There was even a club employee that would drive Morales and other undocumented employees to work everyday because it’s recognized that they can’t legally obtain driver’s licenses:
And when Trump launched his presidential campaign in 2015, the golf club suddenly pulled the undocumented employees out of places like working in trump’s private residence and reduced their hours. It’s apparently how the organization decided to balance the political dangers of knowingly employing undocumented workers with the desire to continue exploiting them:
And when Trump won the presidency, the club management forced Ms. Morales to get new a green card and Social Security card. Then the management referred her to a maintenance employee to who provided her with new fake documents for a fee. So the practice of providing undocumented employees with the fake documentation they need continued even after Trump won on a platform of demonizing illegal immigrants:
And yet, despite the club management getting these women fake documents, it wasn’t very hard to determine they were fake. Even the New York Times could easily determine that the Social Security numbers used by these women weren’t valid. It’s an aspect of this story that makes the Republican party’s inability to get behind a national E‑Verify mandate is such a politically potent issue:
“During his campaign, Mr. Trump called for expanding the program to workplaces around the country. So far, that has not happened.”
The Republican Party had complete control of the federal government for two years after campaigning on a platform of demonizing immigrants and yet it couldn’t even meaningfully put forward legislation that would mandate employers use E‑Verify, let alone pass that legislation. And now we learn that the president’s gold clubs in states that don’t require E‑Verify are apparently providing their illegal workers with fake documents. At least that’s how it is at Trump’s club in New Jersey. Who knows what the situation is like at other Trump properties in states that don’t require E‑Verify. Hopefully investigators will look into that too.
Of course, one of the key things to also keep in mind in all of this is that the GOP shouldn’t actually be heavily criticized for not being able to unify behind an E‑Verify bill. Because, as the following article form January of 2018, when the Democrats and Republicans were in the middle of negotiating a compromise on the ‘Dreamers’ makes clear, mandating E‑Verify at the national level is a wildly complicated act that would have profound ramifications on the US economy. As the article also makes clear, the Republicans recognize how wildly complicated an issue it it. And that highlights one of the most important lessons to keep in mind during this government shutdown showdown over ‘the Wall’: the fact that GOP can’t easily pass an E‑Verify bill can’t be held against it. The fact that the GOP mindless sloganeers about immigration issues and uses it as a political cudgel to inflame passions and get votes when the party clearly knows that it’s actually a very complicated issue can be held against it:
““The next piece is what to do with adults who knowingly broke the law but haven’t violated other criminal laws,” Coffman said. “What I would like to see is the bargaining chip for them is interior enforcement, E‑Verify. I have a very conservative vision on what that ought to look like, but if you do it before you give them an opportunity to come out of the shadows, you just make those lives of those families just harder than they already are. ... You just push them underground further.””
That sentiment, pleading for compassion for people whose only crime has been being here illegally, and giving them a chance to come out of the shadows, remarkably came from a Republican congressman. It’s remarkable because you don’t normally hear that sentiment from Republicans. At least not on the campaign trail. Instead, on the campaign trail we heard almost every other Republican who was running for the White House in 2016 make E‑Verify one of their slogans on immigration issues. Kicking undocumented workers out of their jobs is popular to campaign on, not asking us to think about what happens to the people who are about to be kicked out of those jobs and driven potentially further underground:
And note how Republican Lamar Smith called E‑Verify “the most effective deterrent to illegal immigration because it shuts off the jobs magnet”:
It highlights something that makes this issue potentially quite interesting in the context of ‘the Wall’ and the shutdown showdown: if national enforcement of E‑Verify effectively made illegal workers much much rarer in America, the biggest justification for ‘the Wall’ would wither away. The justifications for ‘the Wall’ were always poor, but they would collapse completely if there was a working E‑Verify system in place that works.
But as the article made clear, national enforcement of E‑Verify basically requires addressing a host of other major immigration reforms. All of the different pieces have to shift at the same time or you end up with disasters like suddenly kicking millions of people out of their jobs in deeper underground without human compassion. And the ‘Dreamers’ would suddenly be at enhanced risk of deportation to countries they basically don’t know. E‑Verify requires comprehensive immigration reform. And that won’t be easy.
But with Democrats taking control of the House in January, comprehensive immigration reform is arguably easier than it was before. And comprehensive immigration reform has to happen eventually in the United States. The ‘Dreamer’ issue alone is making it increasingly pressing. And if comprehensive immigration reform can happen in a way that involves a national E‑Verify mandate, ‘the Wall’ suddenly becomes little more than a giant boondoggle and a symbol of the power of cynical political sloganeering and the poor policy-making that follows. And that all makes the current government shutdown showdown a massive symbol of the need to for Congress to pass some sort of comprehensive immigration reform bill. Comprehensive immigration reform that will hopefully finally put an end to demands for ‘the Wall’. And hopefully finally put an end to the President’s exploitative hiring practices.
Following up on the story of the undocumented workers employed at President Trump’s New Jersey golf club and the role the club management played in knowingly helping those workers obtain false documentation, here’s a story that should be echoed every time Trump proclaims that ‘the Wall’ is needed to keep out dangerous illegal immigrants who are coming to America to commit crimes: It turns out the management at Trump’s golf club was helping those undocumented workers avoid screening by the Secret Service. That’s the claim of Emma Torres, an undocumented worker who prepared food at the club.
This isn’t the first instance of one of the undocumented employees at this club claiming that the management went out of its way to avoid scrutiny by the Secret Service. As the article reminds us, the initial New York Times article about this story included a claim by Victorina Morales that she was directed to wear a pin with the Secret Service logo when Trump visited the property.
According to Torres, in 2016, when Trump was in the middle of the campaign, the club management request information like Social Security numbers from all of the club employees to be handed over to the Secret Service for review. Alarmed, Torres told her manager that she didn’t have legal documentation. The manager told her this was ok and simply crossed Torres off the list of employees who would be reviewed by the Secret Service. The manager also asked Torres for the names of other workers in the kitchen who used fake documentation.
It also turns out that Torres prepared food for Secret Service employees and Trump when he was at the property. So at the same time he was in the middle of a campaign that was rooted in the demonization of illegal immigrants, Trump had his food prepared by illegal immigrants his own company knowingly hired. It’s something to keep in mind when he’s maliciously fearmongering about the mortal dangers poor people from Latin America pose to the United States:
“In the latest revelation, Emma Torres, an undocumented immigrant from Ecuador who prepared food at the club, said that members of the kitchen staff were asked in 2016, as Donald J. Trump was in the midst of his campaign for the White House, to write their names, addresses and other details, including their Social Security numbers, on a list of employees that would be submitted to the Secret Service for clearance.”
So in the middle of the 2016 campaign the focused on the demonization of illegal immigrants, Trump’s New Jersey golf club was left in the awkward situation of having to hand over employee names for Secret Service review when many of those employees were illegally employed. So it apparently decided to just not have those employees reviewed while keeping them employed. It’s a sign of just how much the business valued these employees:
And Victorina Morales told the New York Times in its previous report, she was given a pin with the Secret Service logo when Trump was on the property. So that was apparently part of how they shielded these employees from scrutiny:
And these unscreened employees weren’t simply still working at the golf club when Trump was in town. Ms. Torres prepared food for the both the Secret Service agents and Trump. It’s a notable act of trust in these employees considered Trump was in the middle of a national campaign focused on painting people exactly like Morales and Torres as mortal dangers to Americans:
And don’t forget that this is a story just about one of Trump’s many properties. Properties in the hospitality industry that is notorious for hiring undocumented labor. So while we don’t know who widespread this was across Trump’s business empire, it seems like a very reasonable bet to assume that this is widespread. Especially since it sounds like the Trump Organization is only now reviewing the legal status of its many employees across all of the various properties:
It literally took these New York Times reports to prompt this review by the Trump. Trump campaign on an illegal immigrant campaign and then becoming president apparently wasn’t reason enough.
So it’s clear that Trump’s New Jersey gold club really, really, really wanted to keep its undocumented workers. And given the obvious political risk that business decision entailed, the fact that the golf club management went out of its way to keep these employees demonstrates a perceived need for these employees...presumably a perceived need to keep labor costs at a minimum. And that perceived need presumably permeates the entire Trump organization. Not just this one golf club.
And that all raises an interesting question about Trump’s fixation on ‘the Wall’: Given that ‘the Wall’ is likely to do very little to actually keep people out of the US — they can go around the wall, over the wall, under the wall in a tunnel, take a boat, take a plane, come in from Canada, etc — and given that Trump is treating ‘the Wall’ as the solution to illegal immigration in America, you have to wonder if Trump quietly views ‘the Wall’ as a means of politically addressing illegal immigration without actually cutting off the supply of undocumented people available for employment.
Don’t forget that Trump’s business is just one of many businesses in the US that is highly dependent at this point on undocumented labor, and it’s hard to imagine those other businesses aren’t quietly lobbying the hell out of Trump to not cut off their supply of exploitable cheap labor and it’s hard to imagine Trump isn’t listening. And it’s not like Democrats wouldn’t be willing to do some sort of comprehensive immigration reform that doesn’t involve ‘the Wall’ which would likely be politically popular. But Trump is making a wall the top priority to the point of shutting the government down over it. So who knows, perhaps fixating on ‘the Wall’ is Trump’s way to have a ‘fix’ for illegal immigration that doesn’t actually fix anything. Put another way, ‘the Wall’ could be a great way for Trump to ‘have his undocumented-worker-prepared cake and eat it too’.
Huzzah! The federal government shutdown showdown ended. For about three weeks if we take Trump’s threats of resuming the shutdown if he doesn’t get his wall funding seriously. And that means it’s back to work for all of those furloughed federal workers! For about three weeks. It’s unambiguously good-ish news for those federal workers.
For the many undocumented workers of President Trump’s golf courses, however, this shutdown period actually ended in their permanent firings. We’ve already heard reports about the firings of undocumented workers at the Trump National Golf Club in New Jersey following reports of the extensive use of undocumented workers from Latin America working there for years at the golf club with the the management not only being aware of their illegal status for helping them find fake documentation.
And now we’ve learned about a new wave of firings at a different Trump-owned golf club. This time it’s at a Trump golf club in New York: the Trump National Golf Club in Westchester County. The situation sound very similar to the New Jersey club. Undocumented workers from Latin America made up a large portion of the staff and the management was well aware of this. And similar to how the undocumented workers were maintaining the Trump private resident at the New Jersey club, they also maintain Eric Trump’s residence at the New York club. One of the people fired who was interview explained that he had worked there since 2005. So what percentage of the club’s staff was fired? It sounds like about half of the wintertime staff were just let go:
“Some were trusted enough to hold the keys to Eric Trump’s weekend home. They were experienced enough to know that when Donald Trump ordered chicken wings they were to serve him two orders on one plate.”
Just as we saw at the New Jersey club, the undocumented workers at the New York club in Westchester club were so trusted they were maintaining Eric Trump’s weekend home and would serve Donald Trump food while he was there. Recall how the management at the New Jersey club helped the undocumented workers about the secret service screenings after Trump got secret service protections and some of these workers served the secret service food when Trump there. That level of trust in these these workers appears to extend to the New York club.
So it should be no surprise to learn that some of them have been working there for almost 15 years:
It should also come as no surprise that this illegal worker purge appears to have eliminated about half of the club’s wintertime staff:
And it should obviously come as no surprise that, as we saw with the New Jersey club, the New York club also doesn’t use the E‑Verify system:
And as we saw with the New Jersey club, the management was fully aware these workers were giving them fake documentation and even requested better fake documentation at times to keep them employed:
As one former employee described it, the management took an attitude of “don’t ask, don’t tell”. That and “Get the cheapest labor possible.”:
Mass firings of workers so trusted that they maintained the Trump residences. That’s what just happened at the Trump New York and New Jersey golf clubs and it seems like a safe bet it’s happening across all of his properties. Given the political climate that demonizes these workers as dangerous criminals invading the US and committing all sorts of crimes, this story is a poignant reminder that these ‘illegals’ are by and large decent people in very tough circumstances trying to get by.
And as the following December 2016 piece by Lise Nelson — an academic who studied the role US employer demand for undocumented workers plays as a driving force behind the illegal immigration that transpired over the last two and a half decades — it’s been US employers, like Trump, who have found that the threat of deportation made these illegal workers become loyal “compliant workaholics” who provide cheap and flexible labor. And employers found this so seductive that they effectively recruited the millions of undocumented workers who flowed into the US from the mid-90’s until 2008. It was only the 2008 financial crisis that ended flow and levels have been largely neutral ever since. The many previous attempts by the US government to stem this flow by beefing up border security were useless given the demand US employers had for this labor, highlighting how a wall is unlikely to withstand the lure of employers like the Trump Org who are ready and willing to give these workers a job in exchange for loyal cheap ‘compliant workholism’:
“My research, like that of others, sheds light on the day-to-day incentives employers have for recruiting undocumented workers. The cumulative effect of these recruitment practices, which occur in nearly every geographic region of the country, is to invite large-scale migration across the U.S.-Mexico border. It is a draw that is highly resistant to our efforts to stop it. From this perspective, the origins of the current situation, in which 6.4 percent of our workforce lacks documentation, lie north of the border as much as south of it.”
As long as US employers like the Trump Org are actively recruiting an undocumented workforce it’s going to be very hard to imagine some sort of physical barrier stopping people from getting here to fill those jobs. It’s an important lesson about ‘the Wall’ that Trump’s golf clubs do a great job highlighting. Contrary to the fixation on ‘caravans’ of asylum seekers, Illegal immigration has long been a demand-driven US phenomena:
And for some industries, US employers effectively recruited as many undocumented workers as they could. That’s what Nelson and her colleagues investigated: how and why entrepreneurs in construction, landscaping and low-wage service industries began actively seeking to hire undocumented Latino immigrants starting in the mid-1990s even though immigrant workers were largely absent from these places prior to that time. And they found that what started as short-term hiring of undocumented workers in the 90’s turned into the mass recruiting after employers found that undocumented workers were actually extremely loyal and flexible and dedicated. Because their employers can have them deported:
So for about 20 years now, US business have relied much more heavily on undocumented workers than in prior decades. There was about 10 years, until 2008, when millions flowed into the US to fill that employer demand. Then the 2008 crisis happened and levels have largely remained neutral (people flow in and out). And now Trump is president and fanning the flames of xenophobia and demonizing illegal immigrants for political gain as the role US business played in this situation is systematically ignored. And these millions of workers have largely been loyal “compliant workaholics” the entire time. It highlights the importance of comprehensive immigration reform that includes a whole bunch of reforms at once. Because if the US is going to crack down on employers like Trump who knowingly recruit cheap undocumented labor by requiring systems like E‑Verify, it’s going to be critical to keep in mind that a millions of people who have largely been employer-captured “compliant workaholics” for decades are people who really don’t deserve to be screwed over with mass firings and deportations. Widespread abusive cheap employment should definitely be ended in the US, but there’s a twisted cruelty to not somehow finding either a path to citizenship or some sort of permanent residence status for the people who spent years being America’s cheapest, most exploited labor force:
And despite all the earlier attempts to put up physical barriers to stem the flow, it was the 2008 financial crisis, which dried up employer demand, that actually ended up, underscoring how it really is an employer-demand phenomena:
And while Trump and the GOP are routinely trying to drive a wedge between America’s poor citizens and the exploited undocumented labor force, it’s important to keep in mind that the part of the illegal worker phenomena that suppresses wages for poor US citizens is being driven by US employers actively recruiting undocumented workers. It’s not the fault of the undocumented workers who got recruited. In other words, the plight of US low wage workers is primarily a a consequence of US policy and the collective actions of US business owners, not the presence of the undocumented workers those employers demanded. So a comprehensive immigration reform package that includes something like a federal E‑Verify requirement combined with an amnesty and path to citizenship program for the millions of workers who have been compliant workaholics for employers like Trump Org for decades is net a very good deal for low wage US workers:
So while Trump threatens to shut the government down again in a few weeks if he doesn’t get funding for his wall, it’s going to be worth keeping in mind that the loyalty, dedication, and basic humanity of the workers that just got mass fired by Trump’s golf clubs highlights how this fight for ‘the Wall’ is actually a giant distraction from the responsibility of working out some sort of comprehensive immigration reform deal. A comprehensive immigration reform package that simultaneously stops employers like Trump from systematically exploiting cheap loyal “compliant workaholics” and treats the kind of people that Trump’s golf clubs just mass fired with actual compassion.
It looks like we found the one area where Trump is constructively helping the US immigration debate: by being a wonderfully illustrative example of what actually needs to be fixed and why it needs to be done with a sense of decency.
The topic of dirty politics and gerrymandering, redistricting, and reapportionment is suddenly in the news. And not just because the next round of redistricting, and reapportionment in the US is coming up after the 2020 elections. There’s a new GOP scandal that has it in the news, of course. The topic of the partisan drawing of congressional districts is one of those topics that should be regularly covered in US politics since it’s an issue that is both profoundly undemocratic and has a massive impact on how actual power in wielded in the country. So it’s always nice when topics like gerrymandering and redistricting suddenly become topical...except for the fact that it almost always becomes topical only after some sort of revelation about Republican dirty tricks.
This time the new topical GOP dirty trick centers around the push by the GOP to add a new question about citizenship to the upcoming 2020 census. According to the working of the US Constitution, the census is specifically intended to count the number of people, not just citizens, in a given area for determining that region’s population. In recent years, the Republican Party has been anxious about adding a question of citizenship (how many citizens or non-citizens are in this household?) to the 2020 census. Experts have understandably long suspected was designed to suppressed the number of Latinos and non-citizen immigrants from answering the census at all under the premise that households were non-citizens reside (whether legally in the US or not) are going to be less inclined to answer the census at all if there’s a citizenship question out of fear of attracting the government’s attention over possible undocumented people. And if immigrant and minority households are systematically discouraged from answering the census that will inevitably lead to a relative boost in representation for the Republican Party in Congress because congressional seats are reapportioned between the states and districts redrawn within each state every decade based on the responses to the census and the measured population levels from the census play a big role in that process. The Republican Party has consistently and laughably denied that this was the motive for the citizenship question drive.
And, lo and behold, it turns out the cynical experts were absolutely correct. Last week, the private documents of Thomas Hofeller, the Republican Party go-to expert on gerrymandering who died last year, were recently discovered by Hofeller’s estranged daughter on a hard drive. In the documents found on the hard drive, Hofeller explicitly describes how he viewed the addition of the citizenship question as “advantageous to Republicans and non-Hispanic Whites.” Hofeller had been commissioned by a GOP-mega donor to study the impact of adding the citizenship question to the census on elections. That’s the context of Hofeller predicting that adding the citizenship question would help Republicans. Hofeller also worked on the Trump transition team. It’s sort of a ‘case closed’ finding in terms of determining whether or not there was a partisan motive for the drive.
And it turns out there is an legal case brought the ACLU challenging the addition of the citizenship question to the census that had already reached the Supreme Court when these documents were discovered last week. The discovered documents also revealed that Hofeller gave his report to John Gore, the Justice Department official who played a key role in adding the citizenship question to the census. Gore had previously testified that he received no outside advise on that decision so the ACLU accused Gore of giving false testimony after these documents were released. The US Department of Justice, the defendant in the case, has dismissed Hofeller’s discovered hard drive as ‘11th hour evidence’ and is completely denying all of the ACLU’s new assertions about John Gore giving false testimony and continue to assert that Hofeller’s study played no role in Gore’s decision and he was unaware of the study...despite what the documents unambiguously make clear. The DOJ has subsequently declared that accusations stemming from the newly discovered documents are “meritless” and “inflammatory” and that any insinuation of similarities between Gore’s 2017 DOJ request to add the citizenship question and Hofeller’s study were false. Yep, don’t believe your lying eyes or basic pattern recognition skills. That’s the DOJ’s stance on the topic as of now.
So we appear to have what should be a gerrymandering dirty-tricks mega-scandal emerging thanks to Thomas Hofeller’s estranged daughter. And that’s what makes the following article extra topical: It’s about an old GOP gerrymandering dirty-tricks scandal. It’s not that old. It’s from 2010, when the last census and redistricting/gerrymandering bonanza took place. But it’s still topical because, as the article notes, when this was first reported on by Politico in 2014 it didn’t really get much attention so it’s largely unknown. It’s new-ish old news.
As the article also notes, it’s topical old news because Alabama just passed one of the most extreme abortion restriction bills in US history and something like that couldn’t have happened before the GOP’s wild success in taking controls of Alabama’s state government in 2010 and subsequent gerrymandering. The actual scandal wasn’t specifically related to gerrymandering. The scandal is that evidence strongly indicates that the Republican State Leadership Committee (RSLC) illegally funneled more than $1 million in dark money into Alabama’s state elections that year. What makes an illegal dark money contribution by the RSLC into Alabama’s elections that year gerrymandering related? Because the RSLC was home the Redistricting Majority Project (REDMAP), the GOP’s national redistricting project that took gerrymandering to a level never seen before. And the RSLC was spending more than $30 million that year on a handful of state legislature races intended to maximize the GOP’s redistricting options in as many states as possible. So if the RSLC was illegally pumping dark money into Alabama it was part of the larger story of REDMAP. That’s THE meta-story at work here. The story of the GOP taking gerrymandering and cheating to unprecedented levels at a national scale.
The particular dark money scheme involved raising money that was critical for financing an ad campaign that helped propel the Alabama GOP’s historic 2010 takeover of the Alabama state government from the Democrats for the first time in 135 years. Mike Hubbard, then the chairman of the Alabama GOP, was the architect behind the campaign and the financing behind it. Hubbard realized he could raise hundreds of thousands of dollars from the Porch Creek Native American tribe, who owned a casino but he couldn’t accept the money directly because casino money would be politically toxic in Alabama. This is where the dark money comes in. The REDMAP project hadn’t really be counting on the GOP taking control of Alabama that year but Hubbard was convinced it could be done. Hubbard approached the RSLC with his plan for raising the tribe money and running it through the RSLC to run his envisioned ad campaign. That’s exactly what happened. The Alabama donors gave the money to the RSLC and the RSLC gave the money, almost dollar-for-dollar, to candidates at Hubbard’s request. This is all according to documents provided by the RSLC’s own lawyers so much like Hofellers discovered hard drive this is all pretty undeniable.
The Alabama GOP won that 2010 election in an historic landslide and Hubbard was made speaker of the Alabama House and immediately veered the state’s politics to the hard-right. Later, the RSLC hired the lawfirm BakerHostetler to conduct an internal investigation of possible wrong-doing involved with this scheme. BakerHostetler concluded that this arrangement with Hubbard was possibly criminal and warned that the crimes could that could “ultimately threaten the organization’s continued existence”. No one was ever charged. Hubbard did later get convicted to four years in prison on 12 counts of ethics violations:
“It worked like this, according to a detailed timeline revealed by the RSLC’s own lawyers: Hubbard realized he could raise hundreds of thousands from the Poarch Creek Indians, an Alabama tribe with casino gaming interests, and a lobbyist with longstanding ties to the tribe. But that money, Hubbard also knew, would be politically toxic in Alabama, where gambling money is seen as deeply controversial, especially among religious conservatives. So he had his Alabama donors funnel that money to the RSLC. The RSLC, in turn, quietly gave that money back, almost dollar for dollar, to candidates supported by Hubbard or political action groups that he controlled.”
The scheme was pretty clear: Hubbard needed money for his planned ad campaign. He found his donors. But he couldn’t accept their money directly because Native American casino tribe money is apparently politically toxic in religious Alabama. So Hubbard, the chairman of the GOP, contacts the RSLC and lays out his plan for using the RSLC as the donor money middle-man and convinced them that Alabama is a viable target in the larger REDMAP project. They go with the plan and it’s a wild success. Hubbard becomes Alabama’s speaker of the house:
And just like with Hofeller’s recently discovered hard drive of incriminating documents, the evidence for this scheme from the RSLC itself after it hired BakerHostetler to conduct an investigation into alleged wrongdoing by RSLC officials with the scheme and the law firm concluded that the scheme may have violated Alabama’s campaign donation laws about accepting a contribution by one person in the name of a another and the crimes threatened the continued existence of the RSLC. Keep in mind that it appears that it was completely 100 percent obvious that they were breaking Alabama’s laws when they did this so that might be why the law firm concluded it could threaten the continued existence of the RSLC. It was blatantly illegal:
There was even a Jack Abramoff-connected PAC that received the laundered money from the RSLC. That’s how sleazy this was. And don’t forget it was Hubbard who was directing where the RSLC money went and he was chairman of the Alabama Republican Party at the time. It was Hubbard’s choice to include an Abramoff-linked PAC in this:
That’s the old news that was hidden from the public in 2010 and largely ignored in 2014 when it was first reported. Will Alabama’s voters care in 2019 now that it’s suddenly topical again? Let’s hope so. And let’s hope voters around the US hear about this story too. Because it does a great job of illustrating how dark money and projects like REDMAP are part of the larger story of the GOP’s strategic reliance on cheating and constantly taking the cheating to the next level to maintain its grip on power. That’s the kind of story that’s always topical, especially for people targeted by the GOP’s dirty tricks and wondering whether they should answer the census next year.
Here’s a rare bit of good news about US campaign finance laws: There’s a case making its way through the courts that could end up challenging Citizens United at the Supreme Court thanks to ruling in Alaska a few weeks ago that upheld Alaska’s state-level campaign finance limits on out of state donations.
The Alaskan lawsuit was brought by Equal Citizens, a group founded by Lawrence Lessig. The case centered on an Alaskan state law passed in 1996 that imposed a $500 contribution limit for out of state donors to “independent expenditure groups”, which function like super PACs in Alaska where they advocate and raise money for a candidate while remaining unaffiliated with the candidate. The law was passed by the Alaskan state legislature and upheld with 73 percent of the vote in a 2006 ballot measure. So the $500 contribution limit is a law that the voters of Alaskan overwhelming want in place.
But then the Supreme Court’s conservative majority made its 2010 Citizens United ruling, which put the legality of that Alaskan state law in question and in 2012 the The Alaska Public Offices Commission (APOC) advised that the $500 limit was likely unconstitutional. This APOC ruling led to legal challenges to get the $500 limit reinstated. A district court did end up ruling that the $500 limit should be reimposed and this ruling was upheld by the 9th Circuit court in 2016 in Thompson v. Hebdon. But the APOC ignored that ruling 9th Circuit ruling and refused to reinstate the $500 limit, which is what the current lawsuit by Equal Citizens is all about. So if the current case that Equal Citizens just won ends up going to the Supreme Court it’s going to effectively be a legal challenge to the unlimited campaign contributions enabled by Citizens United which is why this was potentially such a big deal:
“On Oct. 28, Anchorage Superior Court Judge William F. Morse sided with Equal Citizens, ruling that an annual per-person $500 contribution limit to independent expenditure groups that exists under Alaska statute should be reinstated.”
It was a potentially historic ruling because it really could go to the Supreme Court and force a revisiting of Citizens United. And note how the arguments used by the plaintiffs in both Thompson vs Hebdon and the current Equal Citizens case hinge on campaign finance limits as an anti-corruption tool. The corrupting influence of large sums of money in politics and the right of states to attempt to regulate it is at the heart of this case:
Of course, even if this case does manage to rise to the Supreme Court, it’s extremely possible the conservative majority will strike it down in the end. And with the Koch-funded Cato Institute petitioning the Supreme Court to reverse the 2016 Thompson v. Hebdon 9th circuit ruling that the current case is based on, it’s possible we’ll see the Supreme Court’s conservative majority effectively end this challenge before it reaches the Supreme Court:
So we’ll see if this case does actually make it to the Supreme Court. And if it does, we’ll see how the Supreme Court rules. It’s hard to see why we should necessarily be optimistic given the current makeup of the court.
But at least each legal challenge that gets struck down by the conservative majority serves as a powerful reminder to the public that the deeply corrupting influence of big money in politics is currently sanctioned in the US. One of the basic challenges facing the American public these days is the sheer volume of scandal and corruption emanating DC following the Republican Party’s transformation into a piratic mercenary force for the rich and powerful. So it’s easy for average Americans to forget that one of the biggest sources of corruption in the US political system is the massive role big money donations play in elections. There’s too many other scandals. Plus, The issue of campaign finance reform as an anti-corruption tool in US politics is a battle that appeared lost with the 2010 Citizens United ruling. Reminders of the importance of campaign finance law like this legal challenge really are important. It’s a meta issue when it comes to corruption and yet a largely forgotten issue.
So even if this lawsuit ultimately fails, this legal challenge at least serves to remind the public that bad campaign finance laws are a major source of systemic corruption in American politics and this could be addressed with campaign finance laws if the Supreme Court’s conservative majority hadn’t made them unconstitutional with Citizens United. Citizens United really should be a major political issue in 2020 and continue being a major issue until it’s fixed because it’s like a meta-issue when it comes to corruption in American politics. Unlimited anonymous donations makes buying politicians too obscenely easy and this legal challenge is going to force the conservative majority to make another absurd Citizens United-style ruling.
The legal challenge also serves as a reminder that the Supreme Court’s conservative majority is arguably a more corrupting force in American politics these days than all the political money it enabled. Which should also be a 2020 issue.
With impeachment proceedings over #UkraineGate now fully underway in the House of Representatives, it’s probably worth noting that this scandal — which centers around the Trump administration’s extorting the Ukrainian government into influencing the US 2020 election by publicly opening an investigation into Joe Biden — represents a great opportunity to point out to the American public that the conservative movements massive victory at the Supreme Court in 2010 with the Citizens United ruling was basically an open invitation for foreign influence of US elections. Especially secret foreign influence of US election. Perhaps that foreign influence is coming from a corporation. But as Justice John Paul Steven wrote in his scathing defense at the time, “If taken seriously, our colleagues’ assumption that the identity of a speaker has no relevance to the Government’s ability to regulate political speech would lead to some remarkable conclusions. Such an assumption would have accorded the propaganda broadcasts to our troops by ‘Tokyo Rose’ during World War II the same protection as speech by Allied commanders.” Yep, Tokyo Rose’s propaganda broadcasts would get that same protection of speech in US elections as Allied commanders under the Citizens United interpretation.
It’s a reminder that Citizens United wasn’t just a massive victory for US oligarchs like the Koch brothers (now just Koch brother). It was a massive victory for oligarchs anywhere in the world. Or foreign governments and pretty much anyone with a lot of money and resources anywhere given the donor secrecy the ruling allows. And the GOP and the right-wing majority on the Supreme Court is absolutely committed to ensuring that doesn’t change. So unless the GOP decides to renounce Citizens United and call for its repeal, the party implicitly backs foreign influence in US elections. Secret foreign influence in US elections:
“Justice Anthony Kennedy’s majority opinion suggests there could be an argument for “limiting foreign influence over our political process,” but he concludes that is not an adequate reason to allow the government to impose an across-the-board ban on direct expenditures by corporations in campaigns.”
That’s right, even Justice Kennedy, who ruled in favor of Citizens United, agreed that the ruling could open US elections for foreign influence, but he didn’t see that as a big enough concern to allow Congress to limit corporate donations. The US right-wing has been casually open to foreign influence in US elections for years. It’s especially ironic given the way the right-wing majority on the Supreme Court likes to fancy themselves as a group of Constitutional ‘originalists’. As Justice Stevens point out, one of the biggest issues the US Founding Fathers were concerned about was foreign influence in domestic politics:
So how much foreign money has been influencing US elections since that 2010 ruling? We don’t know. That’s the whole point of Citizens United. Donors can spend as much as they want and remain anonymous. That’s part of what made so absurd the dismissal of concerns about foreign spending by some of the people in the above article because foreign entities would fear the public backlash. There’s no backlash when it’s a secret. And while we don’t know precisely how much foreign spending has already taken place over the last decade of US elections, given the explosion of dark money spending we can be pretty sure that some of it is coming from outside the US. And given the nature of the #UkraineGate scandal we should probably suspect at leave some of that foreign money is be actively solicited by Republicans in an extortive ‘quid pro quo’ manner. Perhaps this #UkraineGate impeachment proceeding would be a good time to point all this out.
It might also be a good time to take another look at that whole ‘illegal foreign donations to Trump’s inaugural committee’ story.
Here’s a very interesting possibility that’s only going to become more and more possible as the US obsession with foreign interference in elections continues to play out: As was clear back in 2010 when the right-wing Supreme Court majority made its historic 5–4 Citizens United ruling, when unlimited dark money is allowed into elections that’s inevitably going to include foreign money. How much foreign money? We have no idea. That’s the point. So the current US focus on foreign influence really should include an updated examination of the impact of Citizens United on US politics and policy.
But any examination of Citizen United’s impact obviously shouldn’t just include the potential influence of foreign corporations and entities. The influence of domestic corporations and wealthy individuals is also clearly a huge issue even if it’s largely been forgotten in the post Citizens United era. It’s easy to forget that the influence of US corporations on domestic politics used to actually be a source of major public in US politics.
And as the following article reminds us, in the age of multinational corporations and extensive cross-border ownernship of stocks, it’s not actually easy to distinguish between foreign owned and domestic corporations anymore, at least for large corporations. And that’s where things get really interesting regarding possible policy solutions to address not just the ability of foreign corporations and entities to easily spend money in US election but also address the much larger problem of domestic corporations routinely and secretly spending wild sums of money in US elections. The left-leaning Center for American Progress (CAP) put forward a proposal last month designed to minimize foreign influence in US elections.
But the CAP proposal doesn’t target foreign corporations. Instead, it acknowledges that corporations can have domestic and foreign shareholders and sets a threshold of foreign ownership that would ban a corporation from election spending. They proposed three separate thresholds:
While a 1 percent threshold for a single shareholder might seem excessively low, keep in mind that 1 percent ownership is going to confer a large influence with the board of a large corporations that is heavily owned by the public and is effectively owned by millions of people. Being wealthy enough to own 1 percent of a large corporation is another way the ‘1 percent’ are the ‘1 percent’. That’s a lot of stock in big companies.
And if a 5 percent ownership for the total foreign ownership seems excessively low, keep in mind that the US Securities and Exchange Commission ruled in 2010 that any shareholding group with at least 3 percent of ownership for 3 years has the right to put their candidates up for shareholder votes. That’s a significant ability to influence corporate behavior. When it comes to large multinational corporations where no single entity owns a majority share, the people who own a few percent are among the largest and most influential shareholders.
So the the CAP proposal basically targets corporations where there’s a potentially significant foreign influence in the corporation boardroom. And it turns out that almost all Fortune 500 large corporations and a quarter of smaller companies exceed these thresholds according to the CAP’s estimates, making this it a way to remove almost all large corporate spending in US elections. Because you can’t have the globalization of corporate ownership and unlimited secret corporate spending in US elections without unlimited secret foreign owned/influenced corporate spending in US elections. That’s part of the CAP’s reasoning: the only way to minimize foreign influence in US elections through foreign influenced corporations in an age of unlimited secret political spending is to ban virtual all corporate spending. So, at a minimum, the proposal is useful for educating the public about how Citizens United opened up US elections to unlimited secret spending in US elections from anyone anywhere for any reason. Even awful reasons.
Elizabeth Warren has already come out in support of this proposal. So this isn’t just a left-wing pipe dream. One of the likeliest people at this point to be in the White House in 2021 already backed this proposal. A proposal that should be pretty popular.
Of course, as the article notes, there’s still going to be a handful of large corporations that don’t exceed these thresholds and will remain free to spend unlimited sums influencing US elections. So if the US public really does want to transition to a form of democracy that’s not dominated by big money, there really does be to be comprehensive campaign finance law that simply bans large corporate campaign spending and limits other big money sources. Foreign of domestic. But this CAP proposal that bans almost all large corporations certainly sounds like a great start:
“Just 5 percent of corporate stock in America was foreign-owned four decades ago, but that share has ballooned sevenfold to 35 percent as of 2017, CAP reports. For instance, Saudi Arabia owns about 10 percent of Uber, yet the ride-sharing company still spends millions to sway elections and ballot measures in every election.”
35 percent of corporate stock is America was foreign owned in 2017. It’s presumably higher now. Hmmm...might there be some foreign influence in the unlimited record-setting secret corporate spending on US elections? And that’s why any plan that’s designed to get big money out of politics, like Elizabeth Warren’s plan, really does need to just ban the unlimited secret corporate spending enabled by Citizens United:
So let’s hope a Warren presidency can involve some major genuinely populist systemic reforms that go a long ways to “getting big money out of politics”. It’s going to take a lot more than just a Warren administration to do that. The Reagan Revolution rot has been accelerating for decades and metastasized into this Trumpian orgy of corruption and dysfunction. Getting big money out of politics is a generational project. But the elimination of big corporate spending in US politics is a crucial first step towards address the big money rot and as Elizabether Warren reminds us, that’s a readily available option. We can just do things like ban major corporate spending in elections if that’s what the public wants. At least in theory. If a democracy can’t restrain ‘Big Money’, it’s not really a democracy. Which is why the American democracy is more theoretical these days.
Of course, the Supreme Court has ruled proposed like the CAP plan unconstitutional in Citizens United. That’s another part of the reason it’s going to take more than just a pair of Warren terms to address big money and foreign influences in elections. The Supreme Court needs to be shifted into a left-leaning majority for the first time in decades. So part of getting rid of the influence ‘Big Money’ (foreign and domestic) in politics involves voting for Democratic presidents for a long enough time just to give multiple Democratic administrations the opportunity to tip the courts back into a relatively sane balance because the right-wing justices of the Supreme Court are almost all young. This is going to take a while.
Also recall how the threat of foreign influence in domestic elections came up in Justice Kennedy’s 2010 majority opinion in the Citizens United case when he acknowledged that there is an argument for “limiting foreign influence over our political process,” but concluded that it wasn’t an adequate enough reason to allow the government to impose an across-the-board ban on direct campaign spending by corporations. Justice Stevens countered that existing federal law already banned foreign spending in US elections so it’s absurd to use the idea that separate foreign vs domestic speech regulations could be imposed by the government. That’s what already was happening. So Kennedy applied a somewhat confused example of foreign meddling in his majority Citizens United opinion. And yet here we are ten years later and and we have Elizabeth Warren getting behind the idea of a near across-the-board corporate spending ban that’s justified under the banner of limiting foreign influence and part of the justification is the impossibility of stopping foreign spending due to the unlimited corporate spending created by Citizens United. It’s kind of ironic. And stupid.
So let’s hope there’s more recognition that US elections are a dark money free for all where the best financed and/or sneakiest players can strategically change the minds of the American public. It might be spending by foreign governments. It might be far right billionaires like the Mercers running Cambridge Analytica operations to psychologically profile and micro-target millions. But it’s clear at this point that there’s a global demand for US election meddling and the authors of Citizens United explicitly accepted the consequence of all that spending in their decisions. Which is another reason Citizens United was such a sucky decision.
The Senate impeachment trial of Donald Trump is ready to get underway following the House handover of articles of impeachment over the #UkraineGate scandal last week. And that’s inevitably going to create an even greater focus on the whole sordid tale of how Rudy Giuliani hooked up with two unlikely partners like Lev Parnas and Igor Fruman to engage in an outlandishly corrupt scheme. A scheme that included corrupt national gas deals and a shakedown attempt to force a public Ukrainian announcement of an investigation of Joe and Hunter Biden. It’s such a sordid mess that one of the biggest risks is that the corruption is too messy for the the American public to keep track up and convoluted details of the corruption just end up making the public’s eyes glaze over.
So perhaps for the sake of making this convoluted story a bit simpler to understand, it’s going to be worth emphasizing to the public right off the bat how it was that Parnas and Fruman ingratiated themselves within Trump’s inner circle in the first place: political donations. That’s was pretty much it.
It started off with a $50,000 donation to Trump’s campaign in 2016, which appears to have resulted in Parnas meeting with then President-elect Trump in December of 2016. But it wasn’t that donation alone that placed Parnas and Fruman in Trump’s inner circle. There was also a $325,000 contribution by Parnas and Fruman to a Trump Super PAC, America First Action, in early 2018 that appears to have been what suddenly got these two involved in the #UkraineGate scheme. The contribution that got Parnas and Fruman an intimate dinner with President Trump in April of 2018, along with another dozen top donors. And it was at that dinner that Parnas allegedly brought up the topic of Trump firing then-US ambassador to Ukraine Marie Yovanovitch. According to prosecutors, Parnas and Fruman were pushing for Yovanovitch’s removal “to advance their personal financial interests and the political interests of at least one Ukrainian government official with whom they were working.”
And that’s what makes this story of #UkraineGate more than just the story about this particular corrupt scheme. It’s also a case study of America’s system of legalized bribery. Because that’s how it’s one in America today. Just give a bunch of a money to a superPAc and, who knows, you too might meet the president and end up shaking down a government with Giuliani while you wage a for-profit private foreign policy.
It was that $325,000 donation that led to the charges facing Parnas and Fruman. Because they funneled the contribution through an energy company they recently created (keep in mind getting contracts from Ukraine’s state-owned Naftgaz energy company was a major part of this fiasco) but prosecutors say that donation was actually from Parnas and Fruman paid for by a private loan Fruman took out against a Miami condo, not their company which had no business or revenues. And obscuring the identity of donation by using this company as a front was a violation of US campaign finance law. As the TPM piece below notes, if Parnas and Fruman had simply made the $325,000 donation in their own names everything would have been legal. So they managed to make a campaign finance violation under a system where unlimited political bribery is effectively legal as long as you stick to the rules. It’s another aspect of this story: Trump picked incompetent criminals to carry out his privatized secret foreign policy.
Oh, and as the following TPM article also notes, the fact that Parnas’s $325,000 donation to a pro-Trump super PAC earned him a dinner with Trump is also technically a violation of campaign finance law. Because as we’ve seen, part of the legal justification for super PACs spending unlimited amounts of money in US elections is the pretense that super PACs aren’t coordinating with the candidates they support. The behavior of a super PACs is supposed to be independent of a candidate’s campaign. That pretense was always a farcical joke justification but it’s still a necessary pretense to keep this form of legalized political bribery legal. And President Trump completely violated that rule by having a private dinner with Parnas and other big donors to the America First Action super PAC. It’s one of the crimes that’s been largely forgotten in the whirlwind of criminality around this story but it’s a crime that’s in many ways one of the most important because it gets at exactly the kind of thing that makes ‘the Swamp’ so swampy.
As the following Washington Post article describes, it was around the time of their $325,000 donation in early 2018 that they also made an effort to recruit Rudy Giuliani to work as the pitch man for their company Fraud Guarantee that promised to shield investors from financial fraud. Because in addition to being the president’s layer, Giuliani offers all sorts of other services to random clients like being a pitchman. Parnas arranged for Giuliani to be paid $500,000 from another Fraud Guarantee investor. Soon the found themselves swept up into Giuliani’s orbit, spending four to five nights a week hanging out with Giuliani late into the night at various exclusive restaurants and bars. Parnas claims he now suspects Giuliani was recruiting himself and Fruman for their Ukraine connections as part of Giuliani’s quest to create some sort of pro-Trump scandal out of the Ukraine situation and its proximity to the #RussiaGate mess.
So while getting private dinners with Trump for a $325,000 donation might be a regular aspect of this story of legalized bribery, getting recruited for an international corrupt fiasco that involves extorting a government is one of the highly irregular aspects of this story that has to do with Parnas and Fruman’s connections to Ukraine and the utility that had for Giuliani’s pre-existing schemes. Most big donors just get the private dinners were they explain what policy changes they want to see happen. That’s the normal ‘swamp’. Parnas and Fruman got sucked into Trump’s Stranger Things ‘swamp’, where Rudy Giuliani travels the world solving corrupt corruption allegations by committing much greater crimes. Most mega-donors don’t have to deal with that. They just get the normal pay-to-play corruption. In that sense, Parnas and Fruman are relatively sympathetic characters compared to the rest of the culprits in this story. They’re the closest thing to everymen in this story. Parnas and Fruman came for the regular swamp corruption and got swept up by Giuliani into Trump’s secret private presidential deep-corruption.
Now, it’s important to note that Parnas and Fruman apparently lobbied Trump to fire ambassador Yovanovitch during the April 2018 private dinner they got from the $325,000 donation and that highlights the fact that Parnas and Fruman were apparently already acting as emissaries for Ukrainian interests who became important in the Trump/Giuliani secret private foreign policy at that point in 2018. It’s unclear which Ukrainian interest may have ultimately wanted Yovanovitch fired, but we’re told by prosecutors that they wanted Yovanovitch fired to advance their own personal financial interests and Yovanovitch was seen as an obstacle to their Naftogaz scheme. We’re also told that they were advocating for Yovanovitch’s firing on behalf of at least one Ukrainian government official, so that’s probably Yuri Lutsenko, the former prosecutor general and ended up getting deeply involved with this scheme with Giuliani.
Parnas and Fruman were the middle-men for Ukrainian interests Trump and Giuliani wanted to collude with and that’s why Giuliani decided to suddenly become their best friend after they hired him to be a pitchman for Fraud Guarantee. So it’s not like they just happened to know the Ukrainian individuals Giuliani wanted to talk to in developing his schemes and got wrangled into this by Giuliani. They were acting as diplomats for those Ukrainian interests and that’s what put them in contact with Giuliani. At least that appears to be what’s going on here. Still, when Parnas and Fruman signed up to be the emissaries of some Ukrainian interest when they met with Trump and lobbied for Yovanovitch’s dismissal in April of 2018, they couldn’t possibly have suspected things would get as crazy as they did. The shakedown of Ukrainian oligarch Ihor Kolmoisky that Parnas and Fruman engaged in where they demanded $250,000 to get Mike Pence to show up to then-President-elect Zelensky’s inauguration was something the two probably weren’t expected to do when they first agreed to act as some Ukrainian interest’s representatives in the US to bribe Trump and the GOP. They just want wanted to grease some hands and whisper in ears. And then they became useful to Trump and Rudy and their worlds turned upside down. Trump and Giuliani are the the corrupting influences in this tale. Parnas and Fruman were small time corrupt and it was Trump and Giuliani who brought them into the the big leagues of corruption.
Ok, first, here’s the Talking Points Memo piece that describes the multiple campaign finances laws that were violated in by not just Parnas and Fruman but also Trump, who was rewarding big America First Action donors with private dinners. Trump was making the swamp swampier while breaking already super-lax campaign finance laws. And thats how he learned that Parnas and Fruman were friends with powerful Ukrainians who didn’t like ambassador Yovanovitch because that’s what they lobbied Trump about in April of 2018 when they met with Trump at the dinner. The dinner that violated campaign finance law because it demonstrated the super PAC wasn’t independent of Trump:
“In April of 2018, the two men, Lev Parnas and Igor Fruman, had an intimate dinner with President Donald Trump at the Trump International Hotel in Washington D.C. They turned the conversation to Ukraine, and urged the President to fire the U.S. ambassador to that country, Marie Yovanovitch.”
Parnas and Fruman pay $325,000 to get dinner with Trump and they talk about firing ambassador Marie Yovanovitch. All indications are that this has to do with Yovanovitch’s opposition their Naftogaz schemes, but it also appears to be at the behest of a Ukrainian government official. So Parnas and Fruman were part of a Ukrainian backchannel outreach to the Trump administration to get Yovanovitch fired. A backchannel that got turned into a conduit for a scandal that got the president impeached and continues to grow. Because that’s how corrupt Trump and Giuliani are: Their antics made Ukraine’s politics more corrupt:
And the very fact that Trump was at these dinners for big money super PAC donors highlights what a joke the pretense of independence is that’s used to justify Citizens United. The America First Action super PAC pretty obviously isn’t independent of the Trump campaign if Trump is doing dinner with the high donors but that’s just how it is in the swamp. The swamp knows the swamp is corrupt:
Ok, now here’s a WAshington Post article about Lev Parnas’s story for how he ended up in Trump’s inner circle and effectively became Rudy Giuliani’s sidekick as this Ukrainian scheme was playing out. As the article describes, Parnas made $50,000 in donations to the Trump campaign and Republican Party about a month before the 2016. That $50,000 appears to have gotten him a visit with then-President-elect Trump a couple of months later in December of 2016. A photo of that visit was released by Parnas’s lawyer in response to Trump’s assertions that he had never met Parnas. The article also mentions the $325,000 donation made in 2018. That’s the donation that led to the arrest and prosecution of Parnas because they did it through a shell company. And it was around this time that they met Rudy Giuliani. Soon, they were spending 4–5 nights a week with him and Parnas now feels like it was Rudy who recruited and used him:
“In his interview with The Post, Parnas said he was able to rise quickly in Trump’s world because he discovered a “kink in the system”: the super PAC, which, unlike a candidate committee, can accept unlimited funds.”
A kink in the system. That’s how Parnas described the ability to give unlimited political donations in the US. And that kink was what got Parnas the dinner with Trump in April of 2018 where he and Igor Fruman were allowed to lobby for the removal of Marie Yovanovitch on behalf of their own Naftogaz scheme and on behalf of the mystery Ukrainian government official who is probably Yuri Lutsenko:
And it was around this time that they had the mega-donor dinner with Trump that Parnas and Fruman also starting their relationship with Rudy Giuliani. A relationship that would soon turn them into Rudy’s close partners in crime. Crime that included extorting a government:
And while we don’t know which Ukrainian government official hired Parnas and Fruman to push for Yovanowitch’s removal, the newly released cache of documents indicate that Ukraine’s top prosecutor at the time, Yuri Lutsenko, explicitly offered to assist Trump in declaring an investigation into the Bidens, so if it was Lutsenko who was requesting the firing of Yovanovitch it’s important to keep in mind that he had a significant payment he could offer Trump for that in the form of the investigation into the Bidens:
And that’s all why the #UkraineGate scandal is, in part, a scandal about the legalized bribery built into the US campaign finance system. We have two figures, Parnas and Fruman, buying their way into dinners with the president to push a scheme involving getting the ambassador fired and they end up getting recruited by Giuliani and agents of a larger scheme being ultimately run by Trump. And that suggests we’ve hit a point in the US where the government no longer has to worry about the corrupting influence of lobbyists as much as the lobbyists need to worry about the corrupting influence of the government. Specifically Rudy. Don’t try to lobby Rudy even if he claims to be representing the government. Influence will be peddled in all directions. Innocence will be lost. A lot of innocence.
Senate Majority Leader Mitch McConnell did it again. He said something totally shocking and yet entirely predictable. When asked how or if the federal government should assist states facing economic catastrophes as a consequence of the COVID-19 economic lockdown Mitch McConnell made clear he has a particular solution in mind: Force the states into bankruptcy proceedings. Specifically, force the Democratic-run states into bankruptcy proceedings so public pensions can be gutted.
As the following piece by David Frum in the Atlantic points out, part of what makes this an utterly unsurprising stance by McConnell is that the GOP has been pushing for state bankruptcies for years. Don’t forget that Frum was a speechwriter for George W. Bush so he’s someone who would be pretty familiar with contemporary GOP thinking. In 2011, Jeb Bush and Newt Gingrich published a op-ed calling for bankruptcy as a solution for California’s budget woes. Gingrich further promoted the idea during his 2012 presidential run. In 2012, a Jeb + Newt combo backing a policy would have indicated it’s an idea with broad backing by the GOP mega-donor network.
So why are they so keen on bankruptcy for states? Because as Frum points out, state bankruptcies are a process that would be handled by federal courts and thanks to the GOP’s domination of the Senate the federal courts are dominated by right-wing judges. So forcing states into bankruptcy proceedings is a recipe for handing over the futures of these states to conservative federal judges who will be highly inclined to prioritize pension cuts over tax hikes to ensure bondholders are paid back.
Finally, as Frum crucially points out, while part of Mitch McConnell’s motive for pushing for state bankruptcies is simply that it is in keeping with the GOP’s long-standing desire to do whatever is required to destroy ‘Blue’ state public pensions, we also can’t rule out the possibility that Mitch McConnell and all sorts of other ‘Red state’ Republican Senators are quietly being directly bought off by ‘Blue state’ conservative billionaires who also want to see their states’ public pensions slashed because that’s the nature of the US campaign finance system: any billionaire can buy off any Senator. Anonymously. With unlimited dollars. Or not anonymously. It’s public knowledge that the biggest donors to Kentucky Senator Mitch McConnell’s 2020 reelection committee is a bunch of out of state PACs and corporations. But we know there’s an ocean of anonymous donations to McConnell and other elected officials that we don’t get to know about. It’s the kind of set up that makes donations to the GOP an even more tantalizing for, say, fascist billionaires in California or New York who want to see California’s state government hollowed out. It’s also the perfect formula for those same fascist billionaires in New York or California to want to see their states fall into bankruptcy. In other words, state bankruptcy is the ‘Blue state’ fascist millionaire and billionaire anti-democratic power play using the GOP’s anti-democratic capture of the federal government as the vehicle:
“Cuomo’s fervent rebuttal grabbed the cameras. It did not settle the issue. State bankruptcy is not some passing fancy. Republicans have been advancing the idea for more than a decade. Back in 2011, Jeb Bush and Newt Gingrich published a jointly bylined op-ed advocating state bankruptcy as a solution for the state of California. The Tea Party Congress elected in 2010 explored the idea of state bankruptcy in House hearings and Senate debates. Newt Gingrich promoted it it in his run for the 2012 Republican presidential nomination.”
State bankruptcy isn’t all of a sudden on Mitch McConnell’s mind as a result of the COVID mega-crisis. The GOP has been talking about this for over a decade. And it’s no mystery why. It’s the ultimate power play: using the GOP’s capture of the federal courts to impose far right policies on Democratic states:
And notice how this bankruptcy loophole for imposing far right policies on Democratic states makes it even more profitable for ‘Blue state’ mega-donors to investment in GOP Senate races nationally. There were already plenty of other incentives but if a wave ‘Blue state’ bankruptcies was something the GOP has been planning on for a while now that would make national inter-state large campaign contributions even more beneficial in the end for those Blue state mega-donors. But only if the Blue states do go bankrupt:
And since the ‘Blue states’ tend to be the wealthiest states you can be assured there’s going to be a concentration of fascist millionaires and billionaires in those states. That’s where the money is. So as the ‘Blue states’ face the prospects of COVID-induced state bankruptcies it’s going to be even more tempting for Blue state mega-donors to invest in GOP senate races nationally as the grand prize of overhauling their home state’s policies via in the federal bankruptcy courts looms large. The stars are aligned for far right grand plays like the gutting of state pensions and every other austerity policy that would be imposed on states in GOP-dominated federal courts.
It’s all a reminder that the Republican Party isn’t the party of the ‘Red States’. It’s the party of all the states...specifically the fascist billionaires in all the states. Each race is a national effort. Along with all the international fascists who are no doubt making dark money investments in all of these races too. Thanks to the dark money system the GOP gets to be an extra ‘big tent’ party, geographically. That’s long been the case and now there’s a new big reason for new reason for Blue state mega-donors to invest in Red state senate races: so they can cut their taxes by sending their states to federal bankruptcy court and gutting pensions and other programs.
It’s ‘Democracy in Action’ 2020-American oligarch style. Billionaire ‘Democracy in Action’ that strongly resembles a hostile takeover. And a shakedown. It’s a horrible style.
There was a recent article about the donations to pro-Trump and pro-Biden super PACs over the past couple of months that includes a fun fact that points to something generally overlooked in US politics: When Richard Mellon Scaife died in 2014 that didn’t mean there was an end to Mellon family patronage of right-wing politics. Billionaire Timothy Mellon, who owns a railroad empire with a history of sparring with Amtrak, has been making substantial contributions to the Republican party for years. Like Scaife, Timothy Mellon is frequently described as a “recluse”. But don’t call him that. He once sued a journalist for calling him reclusive but lost the case. And in April, it was Timothy Mellon’s donation that comprised almost all of the money raised by the pro-Trump super PAC, America First Action. America First Action technically isn’t run directly by Trump’s campaign but it’s closely algined.
As the following Washington Post article describes, of the $11.6 million in donations to the pro-Trump super PAC, America First Action, in April, $10 million of it came from Tim Mellon. It’s described as Mellon’s first major contribution to Trump’s reelection efforts. Recall how America First Action was involved with #UkraineGate because it was Lev Parnas’s and Igor Fruman’s $325,000 in donations to the super PAC that allowed them to meet Trump. Those dinners Trump had with America First large donors is part of what made the donations illegal because super PACs aren’t supposed to coordinate directly with the candidate’s campaign. Trump himself attending a dinner for donors to the PAC is a clear violation of those rules. And that’s where he met Parnas and Fruman. So if $325,000 in donations got Parnas and Fruman invited to a group dinner with Trump before becoming co-conspirators in shaking down Ukraine, you have to wonder what Mellon’s $10 million donation in April got him. $10 million during a month when almost no one else was contribution apparently. What kind of special event with Trump do you get out of that? Air Force One? What’s the quo on $10 million quid?
Interestingly, Mellon donated the maximum $2,800 to Tulsi Gabbard during the 2020 Democratic primary season. In 2018, Mellon donated $10 million to Republicans and $2,700 to Alexandria Ocasio-Cortez. It’s hard to know how to interpret making the maximum personal donations to Gabbard and AOC. At a minimum it’s trolling. The question is whether or not it’s the kind of trolling that indicates he’s the type of Republican mega-donor who likes to get involved in Democratic races or other sorts of dirty-tricks operations. Keep in mind that 2020 is bound to be one of the dirtiest in US history and Trump’s reelection campaign is largely going to rely on dirty trick. That’s part of what makes this $10 million donation by Mellon so noteworthy.
Another $1 million of that $11.6 million came from Jeffrey Sprecher, chairman of the New York Stock Exchange who happens to be married to Republican Senator Kelly Loeffler. Loeffler is, of course, one of the Republican Senators currently under scrutiny for insider-trading after it was discovered she started selling off her stock portfolio on the same day she and other senators were briefed by the White House on the state of the coronavirus pandemic. It’s a different kind of dirty trick. The article notes that Sprecher was on a conference call with Trump and Vice President Pence for some of Wall Streets leaders to discuss the impact of the pandemic of the virus in March. So the Loeffler/Sprecher household has had quite a few insider tips about the direction of the economy.
So of the $11.6 million taken in by one of he main pro-Trump super PACs in April, 9% came from the chairman of the New York Stock Exchange who also happens to be husband a GOP Senator under investigation for engaging in covid-related insider-trading and 86% came from Timothy Mellon. Are donations typically that concentrated in a handful of major donors each month or is this a reflection of the pandemic changing normal donor patterns? Biden’s campaign appears to have taken in much less in donations in April.
Finally, we’re also told that the super PAC paid an unusually large $1.3 million in legal fees in April associated with the investigation of the illegal donations made by Lev Parnas and Igor Fruman that bought their way into Trump’s orbit and paved the way for their involvement in #UkraineGate. Are new legal issues brewing on that front? Either way, America First Action clearly has the cash to spare on any future legal bills thanks to Republican mega-donor Tim Mellon:
“Federal investigators were exploring a wide range of potential crimes involving the pair’s interactions with the president’s personal lawyer and the super PAC, including wire fraud and failure to register as a foreign agent, The Washington Post reported in November.”
Yep, America First Action has a lot on its plate. Not only does it need to wage a dark money propaganda battle but it also needs to fight a legal defense related to the Parnas and Fruman donations. Donations that bought their way into Trump’s inner-circle and helped grease the corrupt wheels ended up merging the Trump administration’s shakedown of the Ukrainian government over investigating Joe Biden with Parnas and Fruman’s scheme to take over the Ukraine natural gas sector. It’s as if America First Action was running a corruption match-maker service for the Trump administration.
But that $1.3 million on legal defense spending was dwarfed by the $10 million from longtime GOP donor Timothy Mellon. It’s reportedly one of his first prominent contributions to Trump’s reelection effort which suggests the expectations are that he’s going making a lot more donations major donations. But it’s Mellon’s previous donations to Democrats Tulsi Gabbard and Alexandria Ocasio-Cortez that that are perhaps more interesting simply because it indicates an interest in spending on political dirty tricks. What type of dirty tricks spending has Mellon been up to? Well, thanks to America’s dark money system we don’t get to know. Just because we’ve learned about this $10 million donation to America First Action doesn’t mean we necessarily get to know about all all of Mellon’s political expenditures. There could be all sorts of donations to 501©4s organizations or super PACs that received money from Mellon for all sorts of reasons that he can keep hidden if he wants. Because that’s how America’s dark money system works:
So Timothy Mellon should clearly be recognized as a major Republican donor who is going to be playing a role in 2020. How big a role? Again, we don’t really ever get to know.
And then there’s $1 million from the husband of the GOP senator facing an investigation over insider-trading:
What’s the quo for that quid? Senator Loeffler has already had to hand over financial documents to Justice Department investigators so there’s no doubt plenty of stuff Sprecher would have to discuss with Trump if he ever got the opportunity. Did he get that opportunity? $1 million to America First Action should get you dinner with Trump, right? Lev Parnas and Igor Fruman became co-conspirators with Trump and Rudy Giuliani after making just $325,000 in donations in America First Action and getting to whisper in Trump’s ear over dinner. So $1 million would have you get you dinner with Trump too, right? At least assuming Trump is still blatantly coordinating with the super PAC by having dinner with large donors. Is he still doing that? Secret donor dinners? We don’t know but there were never any apparent consequences for Trump having those dinners with Parnas and Fruman that were clearly in violation of campaign finance law. So it’s hard to see what Trump would stop doing what he was already doing if he wasn’t forced to stop before. He’s Trump. There are no consequences to what he does so why would he stop? That’s why we should probably assume he’s still giving secret dinners with large America First Action donors. Maybe that super PAC is like the place you donate to if you want to talk with Trump in a private setting and the private dinners with Trump are just assumed for donors over a certain threshold. So, again, what does a $1 million or $10 million donation to this super PAC get you? Dinner and a movie at least, right?
What’s the quo for that quid? What’s the going rate for a Trump pardon? Senator Loeffler has already had to hand over financial documents to Justice Department investigators so there’s no doubt plenty of stuff Sprecher would have to discuss with Trump if he ever got the opportunity. Did he get that opportunity? $1 million to America First Action should get you dinner with Trump, right? Lev Parnas and Igor Fruman became co-conspirators with Trump and Rudy Giuliani after making just $325,000 in donations in America First Action and getting to whisper in Trump’s ear over dinner. So $1 million would have you get you dinner with Trump too, right? At least assuming Trump is still blatantly coordinating with the super PAC by having dinner with large donors. Is he still doing that? Secret donor dinners? We don’t know but there were never any apparent consequences for Trump having those dinners with Parnas and Fruman that were clearly in violation of campaign finance law. So it’s hard to see what Trump would stop doing what he was already doing if he wasn’t forced to stop before. He’s Trump. There are no consequences to what he does so why would he stop? That’s why we should probably assume he’s still giving secret dinners with large America First Action donors. Maybe that super PAC is like the place you donate to if you want to talk with Trump in a private setting and the private dinners with Trump are just assumed for donors over a certain threshold. So, again, what does a $1 million or $10 million donation to this super PAC get you? Dinner and a movie at least, right?
Whatever that quo happens to be, Timothy Mellon is clearly going to get a major version of it from the Trump White House in exchange for a donation of that size to this clearly Trump-connected super PAC. And that donation is likely just the first to Trump from Mellon this year. He’s making a big investment in Trump and he’s expecting a return on that investment. A return that’s presumably more than just dinner and a movie.
The Office of the Director of National Intelligence (ODNI) just issued a surprise announcement regarding foreign election interference. A not very surprising surprise announcement: The Director of National Intelligence John Ratcliffe will no longer be giving in-person briefings to Congress about foreign election interference.
Why the sudden move? Well, as the following article notes, one obvious reason would be that the White House wants to avoid subjecting ODNI staff to kind of direct back and forth scrutiny that led to the previous Directors of National Intelligence, notably Joseph Maguire, getting fired by Trump back in February following reports that Trump became livid with Maguire after ODNI staffers informed House lawmakers that Russia was trying to fix the election to ensure Trump’s victory in November.
The Trump himself provided a different explanation: stopping leaks. Trump was apparently very upset about leaks from past ODNI Congressional briefings, telling reporters, “So, he wants to do it in a different form because you have leakers on the committee, obviously, leakers that are doing bad things, probably not even legal to leak, but we’ll look into that separately”. It’s not clear why providing written answers instead of in-person answers will help stop leaks. If anything, having written documents kinds of makes leaking easier. The documents are all ready for leaking. Although limiting the briefings to written reports would stop leaks in the sense that written answers slow down the process of asking questions and getting leak-worthy answers.
As the following article notes, the most to end in-person briefings also followed and intelligence report saying China, Russia, and Iran are seeking to interfere in the 2020 election. And of course there continues to be no mention at all of the actual established foreign election attempt from 2016 emanating from the UAE, Saudi Arabia, and likely Israel via the “PsyGroup” offer made to the Trump campaign on behalf of the Saudi and UAE governments by Erik Prince and George Nader. That entire established chapter of foreign election interference continues to be systematically ignored four years later and thanks to these new rules on congressional briefings it will be that much easier to ignore it:
““With a written release or a written report, you avoid the back-and-forth of questions, some of which could be quite probing. And I think, I think the DNI would like to avoid that and avoid the risk of saying something that might incur the wrath of the President,” Clapper said on Saturday.”
The move may not avoid leaks, but it does avoid back-and-forth questions. And that’s really the only thing the move prevents since written answers can obviously be leaked anyway. So there’s clearly some back-and-forth questions the White House would really like to avoid. Or rather, continue avoiding. Because as the following TPM piece from back in March reminds us, they ditched these in-person meetings after Joseph Maguire was fired, a firing that was prompted by Trump’s anger over the answers ODNI staffers gave during an in-person briefing. So the return of in-person meetings is clearly irking the White House once again, which raises the question of which congressional questions are doing the most irking:
“In fact, it’s what cost Grenell’s predecessor, Joseph Maguire, his job in February: The New York Times and Washington Post reported that Trump became livid with Maguire after ODNI staffers informed House lawmakers, including Intelligence Committee Chair Adam Schiff (D‑CA), that Russia was trying to fix the election to ensure Trump’s victory in November.”
So the word from unnamed sources back in March was that Grenell skipped the hearings specifically because he fear questions about alleged Russian interference efforts. Or rather, he feared Trump’s wrath over the answers he would have to give. Answers that would likely have to be rehashes of the US intelligence community’s ongoing assessment that Russia represents the greatest threat to electoral interference...an ongoing assessment that continues the charade of 2016 that systematically deflected attention away from the reality that the Republican Party and its global far right allies represent by far the greatest threat to US election interference and continues the charade the the vast majority of activities attributed to Russia could easily be carried out by a myriad of actors.
And that threat of foreign interference that extend far beyond the absurdist Russia-fixation of the US intelligence community is a big part of what makes the story about the ODNI’s sudden re-refusal to conduct in-person congressional briefings on foreign election interference: contrary to the US intelligence community’s strategic obsession on Russia and Russian interference, the reality is that bad actors all around the world can easily interfere in US elections and thanks to the open gross corruption of Trump and the Republican Party almost all of those bad actors are now heavily incentivized to assist Trump and the Republicans. If they’re enemies of the US they have an incentive to assist Trump and the GOP because that will help accelerate the devolution of the United States and if they’re just opportunistic bad actors they still have an incentive to assist Trump and the Republicans because that’s the power faction in the US most open to blatant corruption. It’s open season.
Open season that’s even more open thanks to a ruling made back in May by the Internal Revenue Service to cease collecting the on campaign finance spending that could have revealed secret foreign spending. Yes, under new rules published by the IRS and Treasury Department in May, nonprofit organizations — including 501©4 groups — are no longer required to report the names and addresses of their donors. This is a reversal of decades-old rules that required organizations to report the identities of their donors giving $5,000 or more to the agency on Schedule B of 990 forms. Donor names and addresses were redacted before the records were released to the public but they were at least known by the IRS so blatant foreign election interference could be identified. That policy quietly came to an end in May, which was effectively an open invitation for unlimited foreign spending in the 2020 election.
So what was the IRS’s justification for this move: They argue that the IRS wasn’t authorized to enforce campaign finance laws. Which is a lie, of course. As we’ll see in the final article excerpt below, the Federal Elections Commission (FEC) is the primary entity in charge of overseeing election finance laws but the Department of Justice (DOJ) and IRS are still part of the process. So the IRS basically invited unchecked foreign election spending and justified it by lying about its responsibilities:
“Dark money groups have been calling for the IRS to eliminate the Schedule B reporting requirement for several years. In 2016, Freedom Partners Chamber of Commerce, a 501(c)(6) that serves as a hub for the political network tied to Charles Koch, backed a bill to eliminate Schedule B reporting that was introduced in the House of Representatives by former Rep. Peter Roskam (R‑Ill.). The group’s chairman Mark Holden, who is also general counsel for Koch Industries, said in a statement that the bill was “an important first step toward reaffirming Americans’ right to free speech.” At the time, the Koch-affiliated nonprofit Americans for Prosperity was involved in a legal battle with California’s attorney general, Sen. Kamala Harris (D‑Calif.), who sought access to the group’s donors to ensure that it was complying with California laws.”
Score one more for the Kochtopus. They did it. After years of efforts they’ve finally gotten rid of those donor reporting requirements for donations over $5,000. That’s why it’s important to keep in mind that while this rule change may be a major boost to Trump’s reelection efforts in the short-run it also represents the culmination of a decades-long effort by the Koch mega-donor network to make US elections as vulnerable as possible to secret manipulation by the super-rich. And now that includes secret manipulation by the global super-rich. It’s a party and everyone is invited:
Also note how this really could become a campaign issue in 2020 because while the White House clearly has the power to gut these regulations Congress still has the option of passing laws that force the IRS to reverse these changes and the Democrat-controlled House has already passed a bill to do just that. A bill that has no hope of passing a Republican-control Senate:
Finally, here’s an article from back in February about a little-noticed report released by the Government Account Office (GAO) about the broken nature of the US campaign finance system. The report describes an oversight system with vaguely defined responsibilities shared by the FEC, DOJ, and IRS. It described a system ripe for foreign money making its way into US election using simple techniques like spreading money through multiple individuals, using their names wittingly or unwittingly. Yes, random Americans might get unwittingly listed as the donors as part of a foreign election finance scheme and these cases were almost impossible to detect because the victim would be highly unlikely to report it. And there was no evidence that the FEC or DOJ was engaging in any systematic effort to identify campaign finance fraud schemes like this. The IRS was the only one of the three entities involved in in campaign finance oversight that employed some sort of systematic search for violations. Did those systematic searches for fraud carried out by the IRS rely on donor names and address? It’s hard to imagine that information wouldn’t have been included and now it’s no longer going to be available thanks to the IRS rule change in May:
“The report covers the two-year period between Jan. 1, 2017 and Dec. 31, 2018 — accounting for $8.6 billion raised to influence federal elections. The report states: “With such large sums of money involved, concerns about limiting the potential for political corruption and providing transparency to voters, while protecting free speech, have been at the heart of campaign finance law.” It examines the oversight function of the Federal Election Commission (FEC), the Department of Justice (DOJ) and to a lesser extent the Internal Revenue Service (IRS) in their shared responsibility to enforce these campaign finance laws.”
Yes, contrary to the IRS’s claims about not actually being involved in campaign finance oversight, the GAO’s report described a system of shared oversight between the FEC, DOJ, and IRS. Shared vaguely defined oversight that no one seems to really understand. And anyone who understands this state of affairs will also known how to easily get around foreign campaign finance laws using techniques that would be highly unlikely to be discovered without some sort of data analytics approach to identifying fraud. But of the three agencies with this shared oversight, only the IRS actually engages in any sort of anti-fraud analytics:
How will those IRS anti-fraud analytics do without donor names and addresses? Probably not very well, which was presumably the point. And every foreign government or group with substantial resources is going to be well aware of these new rules. Rules set up to make the rules unenforceable. So if foreign election interference does become a significant election issue as looks likely, let’s hope that includes the utterly broken campaign finance laws that openly invite this foreign interference and the Republican refusal to fix them. #TheSwampWelcomesYourForeignDonations
There was a ‘better late than never’ type of story last month when Charles Koch gave an interview to the Wall Street Journal where he expressed regret for spending decades funding deeply partisan and divisive political movements and announced that he is turning his attention to issues like poverty, addiction, gang violence, homelessness and recidivism. Of course, there’s no meaningful indication that the Charles Koch is doing anything of the sort, which makes this the kind of ‘better late than never’ story that’s actually a ‘better late than never...assuming this isn’t just public relations white washing stunt which it probably is’ kind of story. The kind of story we’ll probably be hear a lot more of as Charles creeps closer to the grave, joining his brother David who died last year.
And that brings us to a pair of fascinating recent series of reports by the Center for Media and Democracy revealing some of the Dark Money activities of Donors Trust (DonorsTrust), one of the primary Dark Money funds that’s been of favorite of not just the Koch brothers but other major right-wing mega-donors like the Mercer and DeVos families. But unlike super PACs and other 501©4s, Donors Trust is a 501©3 charitable organization, which makes the contributions tax deductible but with higher public disclosure requirements. It’s part of what makes the following so scandalous: it was going to be public. It’s like dropping the mask.
As we’ll see, Donors Trust and its sister organization, Donors Capital Fund, distributed $165 million in 2019 alone. That’s how much money this group was handing out during a non-election year. As a result of that massive off-year spending. That’s why Donors Trust is known as the “The Dark Money ATM of the Conservative Movement”.
The Center for Media and Democracy’s initial report on Donor’s Trust, released on December 3rd, was followed up with the following two reports below about two revealing recipients of Donors Trust’s largesse. The kind of recipients that should, in theory, fill Charles Koch with much regret right now over their remarkable divisiveness and hyper-partisanship.
First, we’ve learned that Donors Trust gave ~249k to the Federalist right-wing online publication (not the Federalist Society) in 2019. The Federalist is the kind of garbage blind pro-Trump hyper-partisan outlet that is currently warping the minds of American conservatives. It actually had a “black crime” tag for articles until it was called out for it in 2017. If Koch had anything to do with its funding he really should be filled with regret. And sure enough we now learn that his donor network is subsidizing this outlet with $250k in in 2019 alone. We have no idea about past donations. The only reason we’re learning now is because, in March of 2019, the Federalist’s FDRLST Media Foundation was certified as a 501©3 charity by the IRS, which made contributions tax-deductible but with those extra disclosure requirements. So if any nonprofits, like Donors Trust, give to the Federalist now they have to disclose it.
Another major donor to the FDRLST Media Foundation discovered by the Center for Media and Democracy is billionaire shipping magnate and major GOP mega-donor Richard Uihlein, a shipping billionaire who also happens to be an heir to the Schlitz brewing fortune. In June of 2018, the New York Times ran an article describing the Uihleins as a couple seen on the right-wing as a potential replacement for the Mercers in terms of funding figures like Steve Bannon. And now we learn that Richard gave the Federalist around $400k in 2019. It’s a glimpse at the hidden subsidies that power the right-wing media mega-phone peddling the story that Trump and Republican Party are fighting the ‘elites’. Far right deeply anti-populist propaganda that masquerades as populism isn’t free. Right-wing garbage media doesn’t write itself (yet).
Here’s the incredibly scandalous part that’s almost like Donors Trust ‘dropping the mask’ because this was bound to become public: Donors Trust picked up two new charitable recipients in 2019. VDARE and American Renaissance. Yep, Donors Trust — one of the primary vehicles for Republican mega-donor activities — started making major donors to VDARE and American Renaissance, two of the most influential openly white nationalist organizations. Donors Trust gave $10,500 to the New Century Foundation, the nonprofit that finances American Renaissance. But far more significant was its donation to VDARE, which received $1.5 million in 2019. You have to wonder if David Koch’s death was somehow connected to the large donation.
Here’s where it gets absurdly scandalous: The $1.5 million VDARE donation nearly tripled VDARE’s entire 2018 budget. So this wasn’t just a donation to keep VDARE afloat. It was a donation clearly intended to expand VDARE’s operations, which is exactly what VDARE very did by using that $1.5 million donation to buy a castle. It’s a historic castle in Berkeley Springs, West Virginia, that VDARE bought for $1.4 million in February of 2020 without requiring a loan. As the following report notes, its location is quite convenient for networking with people in the DC area, so it’s like a white nationalist networking castle. Donors Trust literally bought VDARE a DC-area castle this year and this was bound to become public. Have fun with that symbolism.
Why are we learning this now? Well, part of this is based on the information in the public portion Donors Trust 2019 tax returns, which is part of the story here: Donors Trust made these large white nationalist donations apparently knowing full well it would be publicly revealed in its tax returns. For example, you can see the donation to the New Century Foundation, which handles donations to American Renaissance, by doing a search for “New Century Foundation” or “VDARE” in the Donors Trust 2019 tax returns available online. The Center for Media and Democracy reports are also partly based on a 2019 Donors Trust progress report that they somehow obtained. Finally, in March of 2019, the Federalist’s FDRLST Media Foundation made that change to become a 501©3 charity by the IRS so all of a sudden a ‘charity’ like Donors Trust was going to have to publicly report that $249k subsidy in garbage right-wing hyper-divisive media that’s designed to tear American society apart and radicalize conservative audiences.
And that’s why any genuine change of heart Charles Koch has had must have been very recent. Because within a few weeks of Charles Koch gives his ‘sorry for all the divisiveness I caused’ interview, we learn that one of the biggest channels for the Kochs’ political spending has not only been a funding the hyper-divisive Federalist website but also bought VDARE a real castle. Earlier this year. And this wasn’t even really hidden from the public:
“Two years after the conference, for the first time, a prominent conservative charity would fund both VDARE and the nonprofit behind American Renaissance. DonorsTrust, a donor-advised fund sponsor that manages and disperses wealthy conservatives’ charitable funds anonymously, gave over $1.5 million to the VDARE Foundation in 2019, according to tax records obtained by the Center for Media and Democracy (CMD). That amount is nearly three times larger than VDARE’s total 2018 revenue, meaning that, with DonorsTrust’s help, the hate group was poised to significantly expand its operations last year.”
The single $1.5 million Donors Trust 2019 donation was nearly three times VDARE’s entire 2018 budget. And it just happened to be a little more than the $1.4 million VDARE paid for an actual historic castle in 2020. A castle that gives them convenient access to the DC area and yet is remote enough that powerful people, like Trump’s economic adviser Larry Kudlow, can make discrete trips to network with white nationalists without attracting too much attention:
And note how, while Donors Trust acts a middle-man for its mega-donors that helps them hide their identities from the public, the donors still get to give a list of preferred groups and causes, withe Donors Trust board ultimately deciding where the money goes. And that just happens to be stacked with figures close to Kochs. It’s an example of how, while the Koch brothers aren’t the only mega-donors in their donor network and power is somewhat shared, they’re still the top mega-donors and really do have the most control over this network. At least until Charles dies:
And note the twist response Donors Trust’s president and CEO, Lawson Bader, gave in response to questions of their donation to VDARE. Bader appeared to take offense to the fact that Donors Trust’s donations were revealed at all and cited the 1958 Supreme Court court case, NAACP v. Alabama. As we’ll recall, that case was one of the earlier Supreme Court rulings that, taken together, created the collections of rules and loopholes that allowed for nearly unlimited anonymous Dark Money political spending in the US before Citizens United formalized it in 2010. And NAACP v. Alabama was a case that centered on the question of whether the identities of people who donated to the NAACP would be protected due given the obvious negative repercussions that revealing their identity could have and how that all plays into the idea of what is truly protecting ‘free speech’. So one of the most wealthy and powerful political network in the world was asked about its recent donations to multiple overly white nationalist organizations and in defense they cited a Supreme Court case about protecting the rights of oppressed Black NAACP political donors. In addition to being some major league trolling, it’s the kind of response that’s also a big reminder that protecting real ‘free speech’ is fundamentally about protecting the rights of powerless from the powerful:
But Donors Trust isn’t just buying white nationalists castles last year. The ‘charity’ was also financing much of the right-wing political infrastructure power and organizing the Republican Party and US conservative movement (although Trump now threatens to take control of that). And that includes financing hyper-divisive garbage sites like the Federalist. How many other garbage sites is Donors Trust subsidizing? We don’t necessarily get to know. We only get to know about this 2019 Federalist donation because Donors Trust is allegedly a nonprofit ‘charity’ and the Federalist decided in 2019 that it’s a charity too:
“The Federalist may have once had a “never Trump” image, but the conservative publication moved quickly rightward as President Donald Trump became president and took over the Republican Party. The outlet is now known for vigorously defending Trump, for its trolling and conspiracy-laden posts, and for attacking liberal media. Sometimes trafficking in racism, The Federalist had a “black crime” tag until someone exposed the tag on Twitter.”
Started in 2013, the Federalist is the kind of right-wing rag that was caught running a “black crime” tag in 2017, a year when flashing white nationalist symbolism was popular with right-wing media outlets. How much did Donors Trust give to the Federalist in 2017? We don’t get to know because such a disclosure wasn’t required until 2019 when the IRS granted the Federalist nonprofit status. It’s a fitting situation that both Donors Trust and the Federalist decided to pretend to be tax-deductible nonprofit entities acting in the public good and that’s the reason they have to publicly disclose this sleazy right-wing propaganda subsidy:
And it’s not just Donors Trust that got caught up in this. The Ed Uihlein Family Foundation, run by shipping billionaire Richard Uihlein who has become a major Republican donor and big Trump booster. $400k for the Federalist in 2019 is just a fraction of the $63 million he donated to super PACs alone in 2020. The Federalist is just one of the many right-wing media outlets that get that Uihlein ‘charity’:
Let’s hope Richard Uihlein is having the same kind of regrets over his financing of the hyper-partisan politics that Charles Koch is apparently now feeling a smidge guilty about. There’s no indication so far but we’ll have to keep our fingers crossed. Either way, it’s all a reminder that America’s obscene Dark Money hasn’t just polluted America’s politics would a flood of anonymous oligarch spending. Dark Money can pollute the media landscape too with anonymous oligarch propaganda.
It’s also a reminder that much of the giant right-wing media noise machine that has long dominated American politics is in large part an advertisement. A most regretful advertisement in the form of subsidized media outlets dedicated to peddling the idea that far right policies are good for the common man, paid for by some of the wealthiest and most powerful and influential people on the planet.
Here’s a story that’s easy to pass by in the midst of the Trump White House’s insurrectionary melt-down and a second impeachment hearing. But it’s the kind of story that could be a significant factor as the broader melt-down power-struggle taking place within the GOP right now plays out:
Republican mega-donor Sheldon Adelson just died. With the exception of Charles Koch, it’s hard to think of someone who consistently gave the kind of mega-bucks to the GOP in election after election like Adelson gave. He was a major mega donor for the GOP.
How much did Adelson give? Well, here’s a Guardian excerpt from February of 2020 about his plans to donate another $100 million to Trump and the Republicans. It gives a nice summary of Adelson’s past donations, including the fact that Adelson gave more than $100 million in the each of the last two presidential cycles (2012 and 2016). And as the article notes, these are just the publicly available donations that don’t include dark money contributions that are believed to be many millions more.
One source was speculating that Adelson was on track to spend more than $200 million in the 2020 cycle. Did he? We don’t really know. That’s the point of dark money. Although we do know that Politco reported in August that Trump was upset that Adelson wasn’t giving more money to his campaign and was focusing on congressional races instead. And in mid-October we got reports that Adelson and his wife gave another $75 million to a pro-Trump super PAC for a last-minute cash infusion.
Adelson was undeniably a GOP whale even by mega donor standards, which bought him real power in influencing Republican policy. And while he’s presumably left a foundation that will be making more GOP donations for years to come, Adelson’s foundations will also presumably not be the kind of shadow force within the GOP that Adelson was when alive.
So with talk of Senate Majority Leader Mitch McConnell supporting the idea of impeaching Trump at the same time support for Trump remains largely intact among the GOP base and the cult of personality around him, it’s actually a pretty notable event that one of the major behind-the-scenes GOP movers and shakers will no longer be moving and shaking. There’s a historic GOP power struggle underway and one of the chief shadow money king-makers just died:
“One source predicted that Adelson, who in tandem with his Israeli-born wife, Miriam, donated more than $100m to Super Pacs and dark money groups in each of the last two presidential cycles, could wind up contributing close to $200m in 2020 given their recent spending patterns and appreciation for Trump’s policies.”
A 2020 political splurge. That’s what was forecast for Sheldon Adelson by people close to him and familiar with his political spending patterns. And by all accounts he met those expectations. The mid-October $75 million last minute infusion into a pro-Trump super-PAC brought the combined publicly donations for Sheldon and his wife Miriam to $172.7, setting a new record for donations for individuals in a single election cycle. And that doesn’t include the dark money donations we don’t get to know about:
The GOP was already in the middle of a The Trump administration’s seditious death spasm has certainly triggered the kind of rolling earthquake within the GOP that threatens to engulf not just Trump but much of GOP establish too. A massive reshuffling of the deck could be in store for the GOP in coming years, and now Sheldon Adelson — himself an entire wing of the GOP ‘establishment’ — dies, setting off a massive reshuffling in the Republican mega-donor establishment too.
That’s part of why Adelson’s death is so significant: the party that sells its soul on principle is looking for investors again right in the middle of this history power struggle between a growing pro/anti-Trump divide. It doesn’t which side ends up winning. The GOP infrastructure will be there to collect money from donors and turn it into their desired policies. It could end up being new Trumpian donors or more traditional Koch-like donors. But someone needs to replace Sheldon’s deep pockets and whoever that is gets a big say in GOP policy. Any donor is fine as long as their checks cash. Billionaires need only apply.
Here’s a pair of articles that serve as a reminder of one of the key ways the ‘dark money’ rules of US politics facilitates bad government: By making it easier continue financing organizations doing your bidding even after these organizations, and your bidding, have become politically toxic.
There are reports that corporate America is increasing tepid about openly supporting Republican candidates following the January 6 insurrection at that Capitol. Already, more than a dozen corporate giants — including AT&T, Nike, Comcast, Dow, Marriott, Walmart and Verizon — have pledged to pull support for any Republican lawmakers who voted to reject the outcome of the election in Arizona or Pennsylvania. And yet one of the Republicans who did indeed vote to reject the votes of Arizona and Pennsylvania was Florida Senator Rick Scott, the newly selected chair of the National Republican Senatorial Committee (NRSC). And as chair of the NRSC, Scott is the public face of the Republicans fundraising in the Senate.
So is the GOP truly facing the risk of being cutoff from corporate America’s donations? Maybe in some cases. But it’s kind of hard to believe that corporate America is simply going to abandon the party that more or less exists for the purpose of increasing corporate power and profits. And with existing campaign finance laws, there’s nothing stopping these companies from simply making those future donations via ‘dark money’ vehicles that allow donors to keep their identities anonymous. It’s a big part of why these promises of responsible anti-insurrectionary corporate behavior in response to the Republican Party’s insurrectionary fervor are probably little more than just announcements that a lot more corporate dark money is going to used going forward:
“Recriminations were swift, with more than a dozen corporate giants — including AT&T, Nike, Comcast, Dow, Marriott, Walmart and Verizon — pledging to withhold donations to Republican lawmakers who voted to reject the outcome of the election in Arizona or Pennsylvania. One of those lawmakers, Florida Sen. Rick Scott, is the new chair of the National Republican Senatorial Committee, a post that makes him the public face of the Senate Republican fundraising efforts.”
Corporate America may love Republican tax cuts and deregulations, but they aren’t loving the insurrectionary taint. Will this all blow over or might we see corporate boardrooms steering their executives away from Republican donations? And note that, while industry groups are limited to $5,000 in contributions to candidates per year, that only applies to direct contribution. Contributions to dark money groups that end up helping those candidates can be unlimited and anonymous. In other words, the corporate pledges we’re hearing are really just pledges to avoid making publicly disclosed direct contributions to pro-insurrection Republicans that were capped at $5,000 anyway. So it’s really just a pledge by corporations to not publicly taint themselves. After all, should we really expect corporate America to abandon the party that exists to do corporate America’s bidding? Of course not. The GOP is corporate America’s puppet. So if there really is a big drop in corporate donations to right-wing groups don’t be surprised if there’s a surge in donations to new middman-man dark-money organizations that effect finance these same groups while laundering the taint:
Then there’s the warning from groups like the US Chamber of Commerce and groups tied to the Koch brothers (now just Charles Koch) donor network that they might not be as generous to Republicans in the future. Which, again, is a complete joke. The idea that the Koch network — which has spent decades pushing to minimize government oversight of business, which is really democratic oversight — is somehow concerned about the Republican Party’s latest assault on democracy is beyond absurd. But that’s the spin we’re getting at the moment:
So regarding the Koch network’s assertions that its donors were seriously perturbed by the Republican Party’s anti-democratic actions and would be scrutinizing its recipients, first, recall how we recently learned that Donors Trust — one of the key dark money ‘charities’ used by the Koch network — gave $1.5 million to VDARE, allowing the white nationalist group to be real castle in West Virginia last year. It’s not exactly the kind of donation that suggests the Koch network of mega-donors is very concerned about the state of US democracy. But as the following article also points out, Donors Trust gave a lot of money in 2019 to many of the same groups that today are aggressively pushing the idea that the election was stolen from Trump, so if they do stay true to their pledge to scrutinize their recipients they will have to cut ties with a lot of their current recipients.
Groups like Turning Point USA which received $850,000 from Donors Trust in 2019. The group’s founder, Charlie Kirk, has been one of the biggest right-wing promoters of idea that the election was stolen. For example, Kirk recently called Georgia’s Republican Secretary of State Brad Raffensperger a “national security threat” who “should immediately be investigated” over his refusal to go along with the voter fraud allegations. Kirk was at the Jan 6 rally, although he claims he didn’t participate in the storming of the Capitol. And he’s just one example of the many prominent right-wing figures who are both advocates of Trump’s stolen election Lost Cause and recipients of Koch network money. There’s also recipients like Project Veritas and Frank Gaffney’s Center for Security Policy that have been aggressively pushing the line of mass voter fraud. Donors Trust gave at least $20 million in 2019 to groups that have been pushing the ‘stolen election’ line.
And we have no idea yet which groups Donors Trust gave to in 2020. 2019 is the most recent year we have public information on so far. Did Donors Trust buy another white supremacist group a castle last year? We’ll find out later this year. Is Donors Trust going to continue making large contributions to Turning Point USA in 2021? We’ll find out in 2022. But it’s unclear why we should expect a group like Donors Trust, a ‘non-profit’ that exists for the anti-democratic purpose of secretly pooling the resources of the super-rich to build political power and influence, is honestly interested in see the right-wing fixation on stolen election claims go unfinanced. A big lie about a stolen election all seems roughly in line with values of Donors Trust. Again, they bought white nationalists a castle. And have been financing the decades-long right-ward lurch of the Republican Party and right-wing media that created the conditions that allowed for Trump to arise in the first place. And don’t forget how Cleta Mitchell, the right-wing attorney who was helping Trump when made his shake-down phone call to Raffensperger, was the feature speaker at FreedomWorks’s October 2020 Election Protection Summit. If anything, the Republican Party’s general embrace of the stolen election Big Lie should be seen as a Donors Trust long-term accomplishment. The culmination of the kind of lie-heavy poisoning of politics that right-wing mega-donor groups have been financing for years. Before Trump’s endless lies and weaponized misinformation we had the endless lies and misinformation pump out by the Donors Trust network of recipient organizations. Donors Trust represents the mega-donor network that built and continue to finance the US right-wing Big Lie machine. When it comes to pushing fake election fraud claims, the Donors Trust donors are likely either giving advice or taking notes. And that’s all why these attempts by Koch network to distance itself from the Republican politicians and groups currently championing Trump’s stolen valor are likely to be less about cutting off funding for the groups waging a war on democracy and more about making their financing of the destruction of democracy go ‘dark’:
“In 2019, the Donors Trust gave over $20 million to at least a dozen organizations that would go on to question the integrity of the election process, according to the group’s 990 tax return. They have supported many of these organizations in prior years, as well. The 2020 filings won’t be made available until later this year, so it is not yet clear whether Donors Trust gave money to these groups last year.”
How did Donors Trust give in 2020 to the groups pushing the stolen election message? We’ll see, but if it was $20 million in 2019 it was almost certainly more than $20 during an election year like 2020. Is Donors Trust going to cut off donations to the conservative various currently pushing stolen election claims? Perhaps for a short period at most. But it’s very hard to believe something like Donors Trust will actually stand by that. Then against, maybe Donors Trust really will cut off funds to groups like Turning Point USA. Because there’s nothing stopping them from setting up a different non-profit that didn’t make such a pledge and just have Donors Trust give to that non-profit instead or some other dark money trickery.
The simple fact of the matter is the GOP sold itself to Corporate America, Wall Street, and mega-donors a long time ago. The thing Trump took over was built by them. All of the Trumpian culture war stuff is just the window dressing for getting votes to ensure there’s enough Republicans to pass a mega-donor agenda. This has been one of America’s grim political realities for decades. Most of these groups, like Turning Point USA, touting stolen election claims financed by Donors Trust are the propaganda arm of the mega-donors that keep this marriage of big money and right-wing ‘populism’ intact. The mega-donors that built the right-wing political and media infrastructure that’s currently supporting the stolen election Big Lie aren’t going to abandon their creation now. It’s doing what they built it to do. But the mega-donors definitely might want to hide their support of this Big Lie machine and that’s likely what we’re seeing when we have these reports that the Koch network is going to be scrutinizing its recipients more. If anything they’re going to scrutinize the groups and give the ones shouting stolen election more money. More money in preparation for the 2022 ‘stolen election’ claims that the GOP mega-donors will be sure to tsk-tsk their many recipients about.
Here’s a typical story about US dark money spending with an atypical twist. It also relates to the growing evidence of Mercer family money helping to finance the planning and execution of the January 6 storming of the Capitol:
The Black Conservatives Fund PAC has been identified as one of the pro-Trump groups that was promoting the January 6 pro-Trump rally that morphed into what appears to be a planned insurrection. And since the question of who exactly did the planning and paid for that insurrection remains a somewhat open question, the question of who is behind the Black Conservatives Fund has become part of the investigation into the origins of a now month-old coup attempt.
So what do we know about the Black Conservatives Fund? Well, we know it received its largest donation in 2014, when Robert Mercer gave $150,000 to the group. We’re told that the rest of the donations to the group were small donations largely from retirees. And yet the groups has spent around $1 million since 2014. Was the rest of that money raised from small donors? Did the Mercer make additional secret donations?
We also know that the group didn’t report receiving or spending any money in 2020, although it was actively promoting Trump rallies. And that raises the question: did the Black Conservatives Fund actually not spend or receive any money in 2020? Did it report no spending and donations because it engaged in the kind of activities that the people behind it would rather nobody notice? Or were the donations from previous years large enough to guarantee the group was still going to be actively carrying out the bidding of the donors without further donations? That all remains an open question.
Along with the open question of who is actually running the group. Yes, the person running the group remains a mystery. But there is one person involved with running the group that is publicly known. The treasurer listed on the group’s website is Patrick Krason, a West Virginia political consultant. But when emailed, Krason claims he has no involvement in running the group and refused to disclose who is running it.
So we know Robert Mercer made a sizable donation in 2014, but that’s all we know other than the name of the treasurer. Did we hit a dead end? Not quite. Because it also turns out Krason set up a Stop the Steal PAC in November, following the 2020 election. The PAC was described at the time as a “scam PAC”, indicating that observers suspected it was more about raising and pocketing money than anything else. Krason contest the characterization of the group as a scam. At the same time, when asked about his relationship to Stop the Steal PAC, Krason told reporters that he wasn’t involved with running the group and refused to say who was actually behind it.
Finally, we’re going to see that the person who does appear to be behind both the Stop the Steal PAC and the Black Conservatives Fund is Ali Alexander, the Roger Stone acolyte and one of the central figures behind the organizing of the ‘Stop the Steal’ movement. But that still doesn’t answer the question of who has been funding the group. All we know is the major past donations came from the Mercers, but thanks to America’s dark money laws we can’t say for certain if that generous financial support continued. So there’s still a mystery here. But it’s not entirely a mystery. There are plenty of clues here. All pointing back to a Mercer role in the planning and financing of the Jan 6 insurrection:
“The PAC, called the Black Conservatives Fund, promotes itself as “committed to turning out the black vote and elect black conservatives at every level of government.” The PAC didn’t raise or spend any money in 2020, according to the nonpartisan Center for Responsive Politics. It has shifted primarily to encourage its followers to attend pro-Trump rallies, and it’s not clear who runs the group.”
Who runs the Black Conservatives Fund. It remained a mystery days after the Capitol insurrection, with the primary clue being a 2014 $150,000 donation from Robert Mercer. And yet we’re told the group has spent nealry $1 million since then. Was the other $850,000 spent over the last six years raised through small donations? Or did this group start off as an overt Mercer proxy group and eventually shift into the role of a covert Mercer organization tasked with obscuring further Mercer donations? We still don’t know:
Adding to the mystery is the refusal of the group to say who runs it. It’s not exactly an innocent look. But we do know that the treasurer, Patrick Krason, helped set up the Stop the Steal PAC in November, which is a pretty big clue since “Stop the Steal” is the slogan of the Roger Stone-founded movement that organized the January 6 rally that immediately preceded the storming of the Capitol:
And now here’s a piece in Salon published a week later that reveals the figure running the Black Conservatives Fund. It’s exactly who we should have expected based on the available evidence: Roger Stone’s acolyte Ali Alexander, who is currently in hiding from federal authorities over his role in the insurrection. As the piece also notes, the registered agent for Stop the Steal was Daniel Bostic, a long-time associate of Alexander who has working closely with him on a number of political scam projects over the years. Video shows Alexander and Bostic both climbing the steps of the Capitol on Jan 6 with Alex Jones. After the insurrection, Bostic tweeted, This could’ve all been avoided if we were shown signatures and allowed to audit our elections. You cannot expect elections to be conducted in secret without repercussions. I do not in any way endorse violence, but path has been traversed time and time again throughout history.” Two days later, Bostic’s name was removed entirely from the Stop the Steal website.
So the answer the to the question of why it is that the leadership of the Black Conservative Fund is kept a mystery appears to the same answer to the question of why it that the Stop the Steal PAC is keeping its leadership a mystery: it’s the same people behind both groups and these people are now worried about their legal liabilities over fomenting an insurrection:
“Alexander also still retains control over the Black Conservatives Fund, and the group regularly promoted Stop the Steal rallies to its more than 80,000 Facebook followers. One post ahead of the Jan. 6 riots read: “D.C. becomes FORT TRUMP starting today. Fight to #StopTheSteal with President Trump.” It then listed rally locations, including at the Capitol building. That post disappeared from the Facebook page after an inquiry from CNBC.”
Whether or not Ali Alexander is technically the leader of the Black Conservatives Fund, it sounds like he’s the guy actually running it. Which is entirely consistent with everything else we’ve seen regarding Alexander’s role in organizing the Stop the Steal movement and the role that movement played in insurrection.
And alongside Alexander we find Daniel Bostic, who befriended Alexander in 2013, the year before Alexander landed his job as a consultant for the newly founded Black Conservatives Fund:
In 2016, Alexander advises another PAC that received $60,000 from the Mercers. In 2018, Alexander starts working with Roger Stone on an earlier iteration of the Stop the Steal campaign. Flash forward to November 2020 and we find Bostic was listed as the designated agent for the Stop the Steal PAC in November and appeared alongside Alexander and Alex Jones on the Capitol steps right in the middle of the insurrection. Bostic’s name is removed from Stop the Steal two days later, at the same time Alexander removes himself from public and goes into hiding:
So while we still technically don’t know who has been funding the Black Conservatives Fund following the initial $150,000 donation by the Mercers in 2014, we can make a pretty educated guess based on the available evidence that the answer to that question is going to heavily overlap with the answer to the question of who organized the insurrection. Which, in turn, is going to heavily overlap with the answer the question of who has been paying Ali Alexander. We know he’s taken Mercer money in the past. And we know he’s been working with Roger Stone’s Stop the Steal operation in recent years. So answering the question of who is behind the Black Conservatives Fund also raises a question that’s been looming over American politics ever since the campaign of 2016: to what extent have Roger Stone’s contemporary political dirty tricks operations been a Mercer-financed operation? We know Stone started 2015 as a Trump backer while the Mercers initially backed Ted Cruz. But once Trump took the GOP nomination in 2016 and the Mercers fully threw their weight (and Steve Bannon and Cambridge Analytica) behind Trump, Stone and the Mercers were politically aligned in a way they hadn’t really been in the past. And while the Mercers public involvement in politics appeared to fade somewhat after 2016, Stone’s political activities have only increased, with an insurrectionary crescendo on Jan 6. And now we have all these hints of Mercer fingerprints on the insurrection plans. That’s why one of the the major question about that insurrection we still have yet to ask, let alone answer, is the question of whether or not Roger Stone’s dirty tricks operations of recent years have been primarily motivated by Stone himself or if he’s operating as a Mercer mercenary now. And as the mystery surrounding the finances of the Black Conservatives Fund makes clear, answering these questions is a lot harder than they should be thanks to America’s dark money laws.
With ‘election fraud’ the ‘Benghazi’ of 2021 for the GOP — a rhetorical Big Lie strategically chosen for non-stop repetition until it becomes right-wing gospel — here’s a pair of articles about a dark money phenomena involving real election fraud. It doesn’t appear to be a wide-spread phenomena. But as we’ll see, it’s not entirely clear this form of fraud is actually illegal and it can potentially be financed anonymously with dark money. So while the phenomena may not be wide-spread yet, the ingredients are there for much wider abuse in the future:
Florida Republican former state senator Frank Artiles was arrested on Thursday on charges of electoral fraud in a scheme that revolved around paying a friend, Alex Rodriguez, to run as an independent candidate in a closely contested state senate race. The idea behind the scheme is that Rodriguez shared the same last name with the Democratic candidate Jose Javier Rodriguez so a few percentage points could be shaved off the Democrat’s vote by running a same-last-name independent candidate. And the plan worked. Alex Rodgriguez received more than 6,000 votes despite not actually campaigning in the race, helping to push the Republican, Ileana Garcia, barely over the victory line.
And this scheme appears to be legal. Or at least potentially legal. The criminal charges appear to be rooted in the fact that Artiles paid off Rodriguez to run a false candidacy under the guise of making campaign contributions and those contributions exceeded limits. Artiles and Rodriguez were charged with making or receiving two or more campaign contributions in excess of limits, conspiracy to make or receive two or more campaign contributions in excess of limits and false swearing in connection with voting or elections, all third-degree felonies.
So it sounds like Artiles and Rodriguez could have potentially run a nuisance campaign intended to whittle off votes by confusing voters, but they just didn’t quite stick to the letter of the law. As the Miami-Date County state attorney Katherine Fernandez Rundle put it, “Running a ghost candidate” is not a crime. “Is it an attack on our democracy? Is it a dirty political trick? Absolutely,” she said. “What is a crime is making illegal campaign contributions to get a candidate to run. … Sadly, Frank Artiles knew he could manipulate Florida’s election system.” So sham candidates are legal but paying them to do it with campaign contributions is the illegal part. The part of this scheme involving super PACs anonymously buying advertising campaigns to promote these sham candidates is perfectly legal. As long as the groups behind these dirty tricks can figure out legal — or less detectable — means of paying their sham candidates to run, the rest is of the scam is legal and anonymous. Imagine how tempting this kind of tactic must be for the modern Republican Party, the party Roger Stone built.
And as we’ll see, Rodgriguez wasn’t the only sham candidate backed by this effort. On October 2, 2020, the Our Florida PC PAC, was created and someone donated $370,000 to it the following day. But it’s still unclear who made the contribution thanks to the US’s dark money laws. Initially, Our Florida listed an Atlanta-based LLC with no contact information as the donor. In December, Our Florida changed the source of the money to Colorado-based Grow United, Inc. As we’ll see, back in October, Politico reported Grow United donated $180,000 into a a newly formed PAC called The Truth, which backed a woman named Jestine Iannotti in her state Senate campaign against another sitting Democrat. Like Rodriguez, Iannotti made no effort to campaign while the PAC paid for ads clearly intended to appeal to Democrats and minority voters. Iannotti got 2 percent of the vote in a race the Republican won by 3 percent.
So how many nuisance candidates are being anonymously financed wotj dark money? We have no idea. That would require far more extensive investigations or minor candidates than is feasible. But the fact that the anonymous financing of of sham campaigns and nuisance candidates is entirely legal — if done correctly — is the kind of fun fact that suggests there’s a lot more sleaze under this sleazy rock. In particular Republican sleaze, because that’s how these things tend to go:
“State Attorney Katherine Fernandez Rundle accused Artiles — who was forced to resign from the Senate in 2017 —of paying Alex Rodriguez nearly $45,000 to run as an independent candidate and confuse voters in the race between Jose Javier Rodriguez and Garcia.”
$45,000 for a fake run. No work required. Just file the papers and let the anonymous super-PAC buy ads for your fake candidacy. There’s probably not a shortage of people willing to do that. The complication comes from accepting that $45,000 in the form of illegal campaign contributions that exceeds campaign contribution limits. It was a pretty big flaw with their scheme. Which, again, implicitly demonstrates how widespread schemes like this could be. They were careless:
And whether or not this dirty trick was widespread before, there’s bound to be more people looking at it how that everyone can see that it clearly worked. The Republican narrowly won as intended. Just as the Republican won in the other race where a sham candidate was paid to run by the very same people behind Alex Rodriguez’s sham campaign:
“Investigators still don’t know who is behind Grow United—its listed address is a UPS store—but Alex Rodriguez was not the only mysterious candidate supported by the company. Grow United poured $180,000 into a different newly formed PAC called The Truth, which backed a woman named Jestine Iannotti in her state Senate campaign against another sitting Democrat. Like Alex Rodriguez, Iannotti ran as an independent. She also had no prior political experience and took no steps to campaign, other than filing the paperwork to run. She won 2 percent of the vote in November; the Republican challenger prevailed in the race by a 3 percent margin. Though Iannotti is white, mailers sent by the PAC—and paid for with Grow United’s donation—used a stock image of a Black woman. Among other anodyne statements, the mailers said Iannotti would help get “special interest money out of politics.””
The Republican won by 3 percent in a race where the sham candidate snagged 2 percent. Of the two races where Grow United financed sham candidates, Republicans won in both races. How many Republican dirty tricksters are looking at replicating this?
And, again, it looks like this whole operation could have be run anonymously, had it not been for the fact that Alex Rodriguez was being paid to run the sham campaign in illegally-large campaign contributions by Frank Artiles. Had they not made that mistake this would remain another story about a mystery super PAC. For example, here’s a Politico piece from October 20, weeks before the 2020 election day, about the activities of Grow United and Our Florida propping up these sham candidates. But the donors are entirely a mystery as of the time of the article was written, with no mention of Frank Artiles. Even when the sham was exposed the people behind it were protected from exposure. Artiles only got caught because he was lazily paying off Rodriguez will illegally large campaign contributions and we still don’t know who else was paying for this:
“The mailers emerged from political committees that have become ubiquitous in Florida campaigns. The groups can accept unlimited contributions, be run directly by candidates, consultants or outside groups and serve as the primary means for funding campaigns, ads or simply as pass-throughs that obfuscate who is paying the bills.”
Anonymous super PACs have become ubiquitous in Florida’s political campaigns. Who knows who is paying for it all. The public doesn’t get to know and that’s by design. It’s the perfect system for fostering sham candidates. A system where, in theory, sham candidacies can be financed entirely anonymously. Sham candidacies of ‘independent’ candidates pushing progressive messages. And only a progressive message in the form of single large ad purchases by these anonymously funded super PACs:
It was all a story about a mystery donor. And all legal. It was only the fact that Rodriguez was paid in the form of an illegally large campaign contribution that turned this into a story where names were named. Frank Artiles could have remained a ‘mystery donor’ had he been less careless. And unlike the electoral fraud the GOP is constantly alleging is happening, this form of electoral fraud actually happens.
And that’s all why, if ‘electoral fraud’ is going to become to the ‘Benghazi’ for the foreseeable future, we might as well time to make some lemonade and point out that if people want to find real electoral fraud they can take a look at these the anonymous dark money-financed forms of electoral fraud that the US electoral system appears to be designed to encourage. Not that taking a look would necessarily tell us who is doing it unless they were careless. But it’s a start. A start that’s probably a dark money dead end.
Are the US’s dark money laws about to become even darker? While it might not seem possible that the US’s campaign finance system could become even less transparent than it already is, that’s the prospect facing US voters now that a Koch-backed Americans for Prosperity (AFP) lawsuit was recently heard by the Supreme Court a couple of weeks ago. In the case, Americans for Prosperity Foundation v. Bonta, the AFP argues that a California state law with stricter donor disclosure requirements than federal law violates the constitution. The suit centers around the argument that disclosure laws would make donors less likely to donate, thereby stifling their First Amendement-protected free speech. Recall how similar arguments about the chilling effects that donor disclosure laws have been made by civil rights groups like the NAACP and are part of legal foundation for the US’s dark money system. So we have the Koch mega-donor network — arguably the most powerful network in the entire US — using the same argument the NAACP relied on decades ago when there really were very real threats to civil rights donors. That how perversely cynical this lawsuit is.
Also note that California’s disclosure law doesn’t actually mandate that the donor identities be publicly disclosed. They only need to be disclosed to the state. So the AFP is basically arguing that non-public state disclosures has such a chilling effect on donors that it violates the First Amendment. In other words, it’s either a deeply disingenuous argument or these mega-donors are planning on some pretty wildly scandalous donations. So scandalous they would be overwhelmingly embarrassed to reveal them to state officials.
And while the Koch team lost in the last appeals court ruling, the odds of victory at at the Supreme Court are looking far more assured given the 6–3 far right majority that was secured in the final months of the Trump presidency with the ascension of far right zealot Amy Coney Barret to the bench following the death of Justice Ruth Bader-Ginsburg. It’s a case with a number of conflicts-of-interest given the reality that virtually all of the conservative justices on the court could almost be considered products of deep pocketed interests. Recall how Coney Barret was tapped as a likely future Supreme Court justice back while she was still in law school by a network of deeply conservative Catholic legal scholars, who proceeded to propel her career in a manner observers haven’t seen before. Also recall how virtually all of the lists of potential Supreme Court nominees of contemporary Republican White House’s are derived from a group called the “Judicial Crisis Network”, which, in turn, is effectively run by Leonard Leo at the Koch-backed Federalist Society.
It’s just a sad fact that in 2021, any case involving dark money at the Supreme Court will implicitly be heard by a majority of right-wing justices who arguably owe their legal careers and Supreme Court seats to the most organized and powerful dark money entities in the US. Which is a bit of a conflict of interest. The kind of conflict of interest that raises questions about whether or not any of these justices should be compelled to recuse themselves from the case. And if any justice should recuse herself it’s obviously Amy Coney Barrett, who got on the bench after Americans for Prosperity spent millions of dollars on a nationwide advertising campaign promoting her nomination. She has of course refused to recuse herself which is part of the reason the prospects for California’s disclosure laws are looking so dim. But not only has Barret refused to recuse herself, she’s also refused to even answer a written request from Senate Democrats for an explanation for why she shouldn’t have to do so. She literally ignored the requests to explain why this conflict of interest isn’t a conflict. And that’s all why it’s looking like America’s campaign finance laws are about to become an even bigger bought and paid for farce:
“This case — which could have a cascading impact on the proliferation of “dark money” in American politics — may come down to something decidedly unsexy: the standard of review the court uses when judging California’s regulation. After oral arguments, it appears likely that California’s regulation will be struck down. But if the court uses a strict standard of review, it could call into question whether the campaign disclosure laws the public relies on are even constitutional.”
It’s not looking good for California’s donor disclosure laws. That’s the assessment from observers after the oral arguments, which means the Koch brothers and their network of right-wing mega-donors are poised to score a major victory. A major victory that would be a lot less likely if the Supreme Court wasn’t stacked with a far right majority that owes its existences to the organized political muscle of the Koch network:
And that’s why this entire case doesn’t just have the appearance of a judicial farce. It has the appearance of being a political payback and mutual back-scratching:
“The case, Americans for Prosperity Foundation v. Bonta, was brought by the conservative political advocacy group Americans for Prosperity Foundation, which is arguing against the constitutionality of California law that would compel the group to produce a list of its donors for state officials, according to Forbes. Last year, the Koch-backed Americans for Prosperity Foundation launched a seven-figure ad campaign urging the Senate to quickly confirm Barrett following the death of the late Justice Ruth Bader Ginsburg.”
The AFP spent millions on a public messaging campaign to pave the way for Barrett (and Gorsuch and Kavanaugh) and now the AFP wants Barrett and the rest of its pet justices to ensure that the less-public components of the mega-donor networks can continue secretly spending hundreds of millions more in election-cycle after election-cycle. Because if billionaire mega-donors can’t secretly run large-scale propaganda campaigns without avoiding public backlash there is no real freedom of speech. The fact that the California law doesn’t even require public disclosure, but only disclosure to state officials, is apparently beside the point:
It’s that shoddy legal reasoning, and the fact that this shoddy legal reasoning is on the path to victory at the Supreme Court, that makes the questions about conflicts of interest paramount. Which is why Judge Barrett’s refusal to even acknowledge the questions about her potential conflicts of interest rings so loud: it’s the much feared judicial perfect storm of rank far right cronyism on open display:
And that open display of judicial cronyism is why we shouldn’t just expect the mega-donors to ultimately prevail in Americans for Prosperity Foundation v. Bonta. We should also expect any remaining financial disclosure laws to eventually be shot down under future Americans for Prosperity Foundation v. [insert target here] cases. And pretty much any other right-wing mega-donor donor pet issue. Because why not? Now is the time when the billionaire mega-donors who put this conservative majority in place can win virtually any case they bring before it. They didn’t spend billions of dollars building a political machine for charitable purposes. Well, ok, according to their legal arguments in Americans for Prosperity Foundation v. Bonta they did actually build this political machine for charitable purposes and that’s why they need to be allowed to continue to do so in secret. It’s a very special form of charity.
House Speaker Nancy Pelosi announced the formation of a House selection committee to investigate the January 6 Capitol insurrection this week. True to form, this is one month after the GOP blocked an effort to create an independent bipartisan commission in the Senate. So it’s an investigation that starts off with a GOP congressional cover up. And it’s no surprise why. As evidence continues to make clear, the GOP was deeply enmeshed in the insurrection plot. It wasn’t just a Trump Org operation. In other words, classic.
But as the following pair of articles that were published just days after the insurrection remind us, one of the big questions about what transpired is the question of the role played by the GOP mega-donor dark money complex. We know at least some billionaires played a direct role like Publix heiress Julie Jenkins Fancelli. But that still leaves open the question of that vast right-wing mega-donor dark money complex. What role did that play, direct or indirect? It’s got a lot to lose.
Recall how circumstantial evidence strongly points towards Roger Stone playing a significant role in coordinating the Women for America First’s post-election efforts. It was November 4, 2020, when the Stop the Steal Facebook group was launched by Amy Kremer, the chair of Women for America First. Kremer has previously started a super-PAC with Roger Stone’s ex-wife called Women Vote Trump. It was one of many strong hints that the entire post-election Big Lie about a stolen election was a Roger Stone-guided operation from the beginning. And why not. The guy has experience in these matters.
But there’s always been the open question about who else is financing what amounts to an anti-democracy coup. Dirty tricks aren’t free. And thanks to the US’s dark money laws, the anonymous financing of those dirty-tricks is easier than ever. It’s part of what makes this article from January 9, three days after the insurrection, still relavent today, over five months later after everything we’ve learned about the identities of the people involved with the planning and financing of that event. No matter how much we’ve learned, there’s still the reality that the US’s dark money rules allowed for the anonymous financing of much of the GOP’s pre-insurrection pro-insurrection activity:
“The rally, officially known as the “March to Save America,” was largely organized by a 501(c)(4) group known as Women for America First. The organization was certified by the Internal Revenue Service as a nonprofit that can engage in limited political activities. These groups are known as dark money organizations as they do not publicly disclose their donors.”
The “March to Save America” was largely organized by Women for America First, a 501©4 dark money group that doesn’t have to publicly disclose its donors. It’s one of the key fun facts about the January 6 Capitol insurrection. We still don’t know the identities of everyone who played a significant role in sponsoring that rally. But what we do know by now is that the rally was effectively the start of a the planned provocation. The plan was to march from the rally to the Capitol and demand an end to the certification of the vote. How exactly those demands for an end to the certification have always remained strategically vague, but that was the plan. March to the Capitol and somehow force Mike Pence and Congress to end the certification process. Somehow. Who knows how.
And what was also know is that Women for America First is the recipient of at least some money from major dark money PAC like America First Policies. We know that because America First Policies publicly disclosed in 2019 that they donated $25,000 to Women for America First during a year the PAC took in $30 million (or at least disclosed that much). How much did they donate to Women for America First and not publicly disclose in 2019? We have no idea. Just as we have no idea how much they may have donated in 2020. It’s up to them to disclose what they’re up to:
And note how Event Strategies founder To, Unes is credited with producing Trump’s 2015 “campaign announcement tour” and later joined the campaign as a deputy director of advance, was involved with the event. Trump’s announcement tour. Trump’s relationship with Event Strategies apparently goes back a ways:
But perhaps far more fascinating than anything involving Roger Stone or Steve Bannon is the involvement of the Republican Attorneys General Association (RAGA) and its Rule of Law Defense Fund (a dark money entity) in sending out robocalls encouraging people to attend the march on the Capital. Not just attend the Stop the Steal rally. Attend the march on the Capitol after the rally. Specifically, march at 1 p.m., which was when the rally was scheduled to end. Those were robocalls to march on the Capitol, sent out by the Republican Attorneys General Association’s political wing That’s scandalous even by the Trumpified debased standards of modern day DC. So of course the RAGA and even the head of the PAC itself is denying the it was doing what it was doing. Denial is what the GOP does best. Well, denial and projection. It’s intertwined:
And when we hear the RAGA denials that it was in any way aware that its PAC was robocalling people to march on the Capitol, notes that it’s not just that the RAGA dark money political wing was sending out robocalls for to people to march on the Capitol after the rally. As the following article notes, these robocalls were sent out literally the day before the march. It was very apparent on January 5 that it was going to be a giant Trumpian clusterf*ck the next day and the RAGA was still fueling those flames.
Beyond that, Alabama Attorney General Steve Marshall, the Republican Attorney General who actually runs the Rule of Law Defense Fund PAC on behalf of RAGA, assumed that role on November 10, 2020, a week after the election and right when it was clear the entire GOP was gearing up to overturn the election. So was are expected to believe that the guy who was made the new head of the RAGA PAC at the mo the GOP was collecting transitioning to coup-mode wasn’t aware of the robocalls made the day before the GOP’s coup attempt. That’s the story we are being asked to believe. Which is the kind of cover story that suggests there’s a very interesting real story beneath it:
“The calls, which did not advocate violence or suggest the building should be breached, was sent out by the Rule of Law Defense Fund, a fundraising arm of the Republican Attorneys General Association. The groups share funding, staff and office space in Washington, D.C.”
RAGA and its PAC share funding, staff, and office space. But RAGA had no idea its PAC was robocalling in support of the GOP’s Jan 6 ‘march’/coup. At least that’s what the guy who was put in charge of the PAC a week after the election wants us to believe. It was all an honest mistake:
And note one of the other reasons the RAGA’s role in the insurrection is so scandalous: Its a major recipient of corporate dark money. One of the default recipients of what has become the standard ‘cost of doing business’ in America for large companies. If you’re going to pay off politicians to get your law-related issues addressed by state governments, paying off entities like RAGA is a great way to make that happen. So A LOT of major corporations have donated to it. And that creates exactly the kind of situation that could make A LOT of those same corporations feel pressured to demand that money back now that it’s know it was used to foment a coup. It’s part of what makes this scandal so scandalous. Someday, belatedly, the consequences of the GOP’s gross public malfeasance could cascade to the point where corporations are just too embarrassed to donate to the party and its entities. It threatens a core foundation of the grift. You don’t give back the money:
How many other RAGA donors demanded a refund? It’s a relevant question. RAGA isn’t being tainted by its GOP association. It was a direct participant in the coup attempt, lending an air of legal credibility to the whole thing. An outlaw Attorneys General association. Do companies want to be associated with an entity like that?
So as the investigation into the insurrection plays out, it’s going to be important to keep in mind that a top priority for the right-wing political mega-donor infrastructure is going to be the protection of the still unrecognized dark money role played by that same right-wing political mega-donor infrastructure in the financing and organization of the January 6 Capitol insurrection. Which will also presumably be a higher priority than protecting Trump’s obvious role in the whole thing, which is part of what makes it all so interesting as the investigation plays out. Fingers have to point somewhere. And there are clearly a lot of fingers.
The issue of corporate donations to the GOP has become scandalously topical of late, with Toyota announcing last week that its political action committee would no long make donations to Republican members of Congress who objected to certifying the presidential election results in January following reports of substantial donations to exactly those lawmakers. And as we’ve seen, part of what makes this topic so touchy for the GOP is the danger that what Toyota just did could catch on. As the GOP increasingly acts like a pariah party, donating to the GOP is going to be an increasingly controversial act. Especially with the identities of the people who financed the insurrection still largely secret thanks to the US’s dark-money laws. And yet the need to make contributions to the GOP isn’t going away. The party is poised to cheat its way back into power in the House and maybe the Senate in 2022 and lock in another decade of stolen power after the next round of hyper-gerrymandered redistricting. Corporations are going to need to find a way to keep that campaign cash flowing to the GOP one way or another. The GOP is too powerful and corrupt not to bribe.
And too corporatist not to bribe. The contemporary GOP basically exists to execute a fascist corporatist agenda. As we all learned when the GOP passed its budget-busting 2017 tax cut for big corporations and the super-rich, the Trumpist nativism is still for the rubes from a policy perspective. Of course big corporations are going to have to find a way to keep donating. This is the cost of doing business. You can’t solely gerrymander your way to victory each election cycle. Keeping the GOP in power so it can execute that corporatist agenda requires propaganda and that isn’t free. The donations must continue. So here’s a quick reminder from back in March that Toyota is far the only corporation with a now-secret relationship with the GOP:
“In total, The Daily Beast identified four companies that appear to have gone back on their suspension of donations to GOP election objectors: AT&T, Cigna Health, Ford Motors, and Pfizer.”
So by the end of March, the Daily Beast was already able to find 4 out of 120 companies that had already backtracked on their public pledges to rebuke the GOP over its support for the insurrection and ongoing undermining of the validity of the 2020 election. How many of the remaining 116 of those companies have followed suit since then?
And note that the Daily Beast discovered these four companies making these donations because they were part of the company’s Federal Election Commission filings and made to various leadership PACs. Donations the companies had no reason to hide from the FEC since those PACs receiving the donations would have been forced to disclose their donors anyway. But superPACs aren’t 501©4s, which aren’t required to disclose their donors to the FEC. It’s a reminder that 501c4s could become even more important for the GOP as it becomes an increasingly scandalous party to donate to as hiding GOP donations from the public becomes more and more important for a company’s public image. Insurrection isn’t great for the brand. So whenever we get updates on the number of companies that have already reneged on their post-insurrection donation pledges (it’s up to 10 of them based on recent FEC filings), keep in mind that we’re only seeing the donations made in a manner that couldn’t be hidden from the public. There are presumably a lot more hidden donations from these companies going on.
So with all that in mind, remember when Amy Coney Barrett refused to recuse herself from the Americans for Prosperity Foundation v. Bonta case a few months ago, making it clear that the California state law requiring the disclosure — to the state and not the public — of the identities of major non-profit donors — the same information that was already required to be handed over to federal tax officials — was likely doomed? Well, we got the inevitable ruling and it turns out it didn’t matter if she recused herself. It was that lop-sided: In a 6–3 conservative vs liberal split, the court ruled that the state’s donor disclosure requirements posed an unconstitutional burden that stifles the free speech of those donors. Because of course that’s how they ruled. This is the contemporary Supreme Court under John Roberts. And if there’s one principle the Roberts Court values above all others, it is the principle that the constitutional rights of billionaire mega-donors are the most protected rights. Mega-donors über alles.
But part of what makes this recent ruling by the Supreme Court’s right-wing majority so significant is the relatively new and evolving political context that this this ruling was made in. That being the context of a growing right-wing movement to get former President Trump reinstated as president under the premise of the ‘stolen election’ Big Lie. And as we’ve seen, that growing right-wing movement happens to be heavily financed by a number of wealthy individuals and is also focused on getting individual states to overturn their election election results. So now that the Supreme Court has ruled that states effectively have no right to require non-profits operating in the state to privately disclose their donors, it’s going to be increasingly important to keep in mind that any investigations into the financing of groups involved with the efforts to foment past and future insurrections are going to be be heavily reliant on the federal government now that the Supreme Court just officially blinded the states:
“The high court split 6–3 along ideological lines in its decision on a pair of cases challenging that California requirement, which forced non-profits raising money in California to give the state copies of federal tax forms containing donor information.”
Disclosing to the states the exact same donor information they disclose to the IRS is an unconstitutional burden that stifles free speech. It’s the only ruling we could have realistically expected from the Roberts Court. Going forward, the federal government is the only entity with access to that donor information. States can just guess or something:
And while we still have no idea what the implications of this ruling could be on that remaining federal disclosure requirement. Except we can be pretty confident that this ruling is going to be encouraging future challenges to those remaining federal disclosure rules. In other words, it’s the kind of bad-faithed ruling that signals there’s plenty more bad-faith where that came from:
So let’s hope this latest attack by the Supreme Court’s right-wing majority on what little remains of the US’s campaign finance laws ended up instilling the federal investigators into the January 6 Capitol insurrection — and any ongoing plots for future insurrections — with a new sense of urgency. Because the people interested in financing America’s next coup attempt are presumably feeling a sense of optimism-based urgency right now. Bursting with it. They should be. Virtually the entire GOP rallied behind both covering up the insurrection and buttressing the stolen election Big Lie. The next coup attempt is just a matter of time now and next time it’s going to be a much more unified party affair. The GOP is a post-democracy party. The next right-wing coup attempt is in the ‘when’, not ‘if’, category at this point.
And thanks to the US’s dark money laws, the GOP’s corporate donation gravy train can continue unabated. The only political price the GOP paid so far in the January 6 Capitol insurrection is the opportunity cost of not succeeding. They could be living in a post-democracy fascist utopia right now run by King Trump. But it didn’t succeed to that didn’t get to happen. Yet. That’s the extent of the price paid by the top level coup plotters. Not getting what could have been. In the six months following the Jan 6 Capitol Insurrection, we’ve already discovered that no one but the militia-types who stormed the Capitol will face any repercussions. The Roger Stones and Donald Trumps will be fine. The people who financed it will be fine, and everything will return to ‘normal’. The GOP is poised to carry out the most extreme gerrymandering in history and probably retake the House next year. And then the right-wing Supreme Court super-majority blinds state governments to donor information while opening up disclosure laws to future attacks. It’s the kind of sequence of events that has undoubted filled the Koch network with an abundance of urgency. Because there’s nothing quite like secretly financing an insurrection with impunity for fostering urgent optimism.
What does Steve Bannon have to say for himself? It’s been a dark rhetorical question looming over US politics for the past half decade. But it’s no longer purely a rhetorical question following reports that Steve Bannon was one of four former Trump administration figures subpoenaed by the House committee investing the January 6th Capitol insurrection.
It was always clear Steve Bannon never really left the Trump White House in the fall of 2017 when Bannon exited the Trump administration in the wake of the Charlottesville ‘Unite the Right’ rally. But it’s hard to find a story that better encapsulates Bannon’s enduring influence than the new reports of the role Steve Bannon was playing in days and hours before the January 6 Capitol insurrection. That’s part of what makes this subpoena so interesting. Who knows how much we’re going to learn about Bannon’s strategic leadership role for the Trump 2020 reelection campaign, including all the preemptive preparations to wage the ‘stolen election’ post-election campaign that culminated in the insurrection.
Bannon really has proven himself to be the Trump-whisperer. And now we’re learning that included whispering to Trump about the need to kill the Biden presidency in the crib on January 6th. That was the picture painted by Bob Woodward’s and Robert Costa’s new book Peril and, remarkably, Steve Bannon appeared to confirm that reporting during a segment of his Warroom podcast where Bannon discussed Woodward and Costa’s new book and seemed to proudly confirm that, yes, he was egging Trump on to carry out the insurrection. “Yeah, because his legitimacy,” Bannon said of Biden. “42% of the American people think that Biden did not win the presidency legitimately.”
It’s also important to keep in mind the recent context of Bannon’s self-confirmation that, yes, he was advising that Trump carry out an insurrection: the recent reporting on the advice Trump was similarly getting from conservative constitutional lawyer John Eastman, who was recommending a tactic that would end up getting the election thrown to the House of Representatives where the president would be decided on a one-state-one-vote basis. And as we also saw, Eastman has subsequently been openly embraced and celebrated by the network of right-wing think-tanks like the Claremont Institute, where he was invited to sit on a panel on “Election Integrity and the Future of American Republican Government.” That’s the bigger picture context that any reports of Steve Bannon’s involvement in the insurrection needs to be viewed. Because Bannon is, after all, a creature of the radical billionaires who finance his activities. Steven Bannon’s agenda isn’t purely of his own creation. He’s a hired fascist. So if he was whispering in Trump’s ears about the need for an insurrection, we have to ask who was paying Bannon to give that advice.
And that brings us to the crucial piece published last month by Jane Mayer on the profound role played by conservative mainstream establishment think-tanks and foundations in both aggressively promoting the ‘mass voter fraud’ myths over the past decade. Mainstream groups like the Heritage Foundation, the Federalist Society, ALEC, FreedomWorks, and the Bradley Foundation. As the article makes clear, everything we are seeing today in the area of GOP efforts to subvert elections and rig the rules to ensure GOP victories are the fruits of the extensive efforts these groups. In particular, highly ‘mainstream’ and ‘respectable’ figures like Cleta Mitchell, Hans von Spakovsky, and John Eastman have been playing key roles in this effort. Unrepentant roles that continue to this day.
So when we read about Steve Bannon openly bragging about the role he played in encouraging Trump to wage that insurrection and then being subpoenaed the next day, it’s going to be important to keep in mind that Bannon was just one of the many GOP establishment figures who were whispering in Trump’s ear about how the election was stolen:
““You look at January 5th, we discovered that Steve Bannon, the former White House strategist, was there at the Willard Hotel blocks from the White House with Rudy Giuliani, having an almost war-room-type meeting with other Trump allies the eve before the January 6th insurrection,” Costa recently explained to MSNBC. “And Bannon had actually been in close touch with President Trump for days before January 6th. Based on our reporting, he privately told President Trump to have a reckoning on January 6th. And he said to the president, it’s time to kill the Biden presidency in the crib.””
It’s quite a confirmation. And in the context of all the reporting on the events that led up to the insurrection, it’s not simply a confirmation that Bannon himself was encouraging Trump to foment an insurrection. Because as the following crucial New Yorker piece by Jane Mayer describes, Bannon was far from alone in talking Trump into waging that insurrection. He had help in persuading Trump. A LOT of help. Help in the form of a ‘stolen election’ narrative the mainstream establishment conservative movement has been working on for the past decade:
“Back in Arizona, where the auditors are demanding still more time, Gates believes that the Big Lie has become a “grift” used to motivate Republican voters and donors to support conservative candidates and political groups. “The sad thing is that there are probably millions of people—hardworking, good Americans, maybe retired—who have paid their taxes, always followed the law, and they truly believe this, because of what they’ve been fed by their leaders,” he said. “And what’s so dispiriting is that the people who are pushing it from the top? They know better.” ”
An extremely well-financed campaign of mass deception paid for by people who know better. It’s one of the core themes of this whole story. One seemingly ‘respectable’ person speaking with authority, peddling one lie after another in gross bad faith in an unrelenting campaign to create the kind of public hysteria required to effectively dismantle the fundamental mechanisms of democracy. This is not a Steve Bannon project. This is a mainstream establishment Republican elite project. Only the rubes actually believe their garbage, but you don’t need true believers to foment a big lie. You just need enough people willing and able to operate in bad faith. People like Cleta Mitchell, Hans Spakovksy, and John Eastman. All thoroughly ‘establishment’ figures who have been laying the groundwork for the insurrection for nearly a decade now while working for ‘mainstream’ Republican think-tanks like FreedWorks, ALEC, and the Bradley Foundation. Steve Bannon has been working as an agent of the GOP establishment.
An increasingly openly fascist GOP establishment that includes figures like Leonard Leo of the ‘respectable’ Federalist Society. Recall how the Federalist Society recently had to apologize for trying to block the graduation of a Stanford law student who made a joke flyer highlighting how the Federalist Society continued to back high-profile GOP defenders of the insurrection like Josh Hawley. It was the kind of incident that underscores one of the most important aspects of this story to keep in mind: the wealth individuals financing this campaign to undercut the democratic social contract know what they are doing and don’t want to be caught doing it. There really is genuine high level malice at work here being perpetrated by some of the most powerful people on the planet. It’s a key point because it’s a reminder that the intentions of this group are probably far, far worse than merely destroying democracy. They have big plans:
And regarding the historical fun fact that Harry Bradley was a founding member of the John Birch Society, it’s worth recalling how Fred Koch was also a founding member. It’s kind of remarkable to think about just how much damage to future that organization has wrought:
Now, of all the establishment legal footsoldiers waging this war on voting, it’s Cleta Mitchell who seems to be doing the most aggressive work. Including giving direct advice to then-President Trump. Mitchell was literally sitting in on the phone call where Trump demanded Georgia ‘find’ the votes needed for him to win the state. And she continues to defend her allegations of mass voter fraud when approached by reporters. Mitchell is absolutely throwing herself into the role of gaslighter-in-chief. And, again, she was, until recently, considered quite respectable. Mitchell is thoroughly part of the GOP establishment and not some party rogue:
Highlighting the key role the Bradley Foundation has played in laying the foundations for the dismantlement of democracy, we find that Mitchell became the director of the Bradley Foundation in 2013
. This was three years after she began making allegations of mass Democratic voter fraud in 2010. What we are seeing today is the culmination of a decade of Mitchell’s work:
And it was shortly after Mitchell became director of the Bradley Foundation that she began urging the foundation to donate to ‘voting integrity’-related projects. The insurrection of 2020 really has been a decade-long active project, with ‘mainstream’ Mitchell leading the way:
Also note how Paul Clement also sits on the Bradley Foundation board. Recall how Clement was not only the lawyer who argued in favor of unrestricted hyper-partisan gerrymandering before the Supreme Court in Rucho v Common Cause, and won, but he’s also the legal counsel for Clearview, the odious company building giant quasi-legal facial recognition databases of everyone on the planet. That’s the kind of ‘respectable’ member of the legal community Clement happens to be:
Then there’s role of mainstream conservative lawyer John Eastman, who was actively pushing Trump and Pence to get the election throw to the House of Representatives. This seemingly respectable establishment figure really wanted to see this national disaster scenario play out. He was ready and willing to make those calls:
And we can’t leave out Hans von Spakovksy, the GOP’s voter fraud ‘guru’ who, like Mitchell, has spent the last decade trying to convince anyone who will listen that mass Democratic voter fraud is rampant. Again, you can’t call Spakovsky some far right fringe figure. This is the type of person who defines the ‘establishment’:
And at the center of this decade-long effort to lay the foundations for creating a system where the GOP can just overturn elections at will is the concept of the the Independent Legislature Doctrine: the idea that the constitution gives states the right to choose their own slates of electors for the presidency. It’s in Arizona where we might end up seeing this legal concept put into effect at the state level. In August 2019, Mitchell co-chaired a high-level working group convened by ALEC — another corporate-financed ‘mainstream’ conservative group — with Shawnna Bolick, a Republican state representative from Phoenix. This year, Bolick introduced legislation that would put the Independent Legislature Doctrine in effect, allowing Arizona’s state legislature to determine who the state votes for in presidential elections. This is a good time to recall that repealing the 17th Amendment, and returning the election of Senators to state legislators, is also a contemporary GOP pet project. State legislatures are going to have a lot of power once the GOP is done with its ‘election reform’:
Then there’s Jake Hoffman, the friend of Turning Point USA’s COO Tyler Bowers. After getting elected to the Arizona House, Hoffman was appointed him the vice-chair of the Committee on Government and Elections, where he has challenged the legitimacy of Biden’s victory, called for election audits, and, in coordination with the Heritage Foundation, used his position to push laws that make it harder to vote. Hoffman’s ascension to this position is entirely a GOP establishment affair:
It’s just pure bad faith. Not only is there no indication that figures like Mitchell or Spakovksy actually believe their claims, but we get stories like what Maricopa county board of Supervisors, Bill Gates, tells us about how Arizona Senate’s president confided in him that she didn’t believe the allegations but went along with them anyway. Beyond that, the Republican National Committee paid him a visit to inform him that the RNC itself was backing the Arizona voter fraud claims. You can’t get more ‘establishment’ than the RNC:
Finally, was have to point out not only the role Bush v Gore played in laying the judicial foundations for the Independent Legislature Doctrine power play we’re seeing today, but also the timing. Think about: in 2000, the right-wing oligarchs successfully stole an election in a Florida case that fundamentally hinged on the Independent Legislature Doctrine. The GOP wins the White House again in 2004, but in 2008 Barack Obama manages a victory. That was the point when the GOP establishment got invested in the Independent Legislature Doctrine because as we saw, by 2010–2012 Cleta Mitchell and Hans von Spakovksy were both out there pushing the ideas that today have completely taken over the GOP
The oligarchs got a taste of how lovely this kind of Independent Legislature Doctrine power would be in 2000 and want more. And as we can see, they’ve almost got it. The GOP as a party has been completely capture by these ideas. Changing election law to secure Republican victory is now the key animating issue of the party! And with gerrymandering and redistricting slated to granted the GOP control of Congress in 2022, that permanent lock on power is looking to be just an election cycle or two away. The logical conclusion of Bush v Gore has almost been achieved. Steve Bannon has a lot of fascist achievements to be proud of, no doubt. No wonder he’s bragging. But it would be a damn shame if Bannon end up being the only one to share in this fascist glory. It was a group effort. And ongoing group effort. Hopefully those House subpoenas end up shedding more light on this long-standing mainstream establishment ongoing fascist group effort. There’s undoubtedly more fascist glory to come and it would be a shame if Steve ended up hogging it all.
The US Federal Election Commission just issued a ruling that might sound a little shocking to most members of the public, but is apparently in keeping for federal campaign finance laws: in a 4–2 vote back in July, the FEC commissioners dismissed a complaint against a foreign mining company making donations to oppose a 2018 Montana ballot measure that would have increased state environmental protections. Yep, foreign companies have a right to make donations in US elections, as long as it’s a ballot measure and not an election involving an actual candidate. That’s apparently the legal loophole here.
Did the Montana ballot measure that would have increased environmental protections pass? Nope. It was defeated. So the lesson from this story isn’t just that foreign companies can intervene in US ballot measures. The message is also that it works. The foreign mining company won.
Another potentially important detail here is that it’s not just ballot measures that are open to foreign spending. State constitutions are open season too. Foreign spending on state constitutional amendments is legal according to the FEC.
It’s also worth noting that it was the three Republicans and one Democrat voted for the dismissal of the complaint. It’s not like this was a unified decision. It’s the kind of outcome that raises questions about how durable the ruling ultimately will be. At the same time, even one of the commissioners who voted in favor of the complaint, Ellen Weintraub, seemed to acknowledge that federal law ultimately does allow for foreign companies to make donations for or against ballot measures. Weintraub ultimately voted against the dismissal due to ongoing ambiguities regarding special cases, like a ballot measure that impacted how elections are conducted. But it doesn’t sound like she was taking issue with the general idea that foreign spending on non-candidate elections is backed by federal law. So overall, it does sound like this ruling was a validation of what really is US federal law. A law that says it’s perfectly fine for foreign companies to spend money in US elections as long as the election doesn’t involve an actual candidate. Surprise! Or not, for those familiar with federal election finance laws:
“Federal law prohibits foreign nationals from making contributions in connection with federal, state or local elections but is silent on spending related to ballot initiatives, which put proposed statutes and, in some instances, constitutional amendments up to popular vote, according to an FEC legal analysis sent last month to parties in the dispute and obtained by The Washington Post. Documents related to the case will be made public this week, according to a letter included with the analysis.”
It’s not just ballot initiatives. Constitutional amendments up to popular votes can be meddled with too. Isn’t that lovely. And this ruling was more or less what experts expected. That’s how open election spending is in the United States. Foreign companies can directly lobby voters. At least at the federal level:
And that just leaves it up to the states. Seven states already have law banning foreign spending on ballot measures. 43 to go:
Keep in mind that the long-standing Koch-backed scheme to trigger an Article V Constitutional Convention doesn’t actually rely on ballot initiatives. It’s the actions of state legislators that determine whether or not that happens. So at least that particular nightmare scenario isn’t being facilitated by this regulation. Just state constitutional amendments can potentially be pushed, or opposed with foreign corporate donors. A large number of lesser nightmares.
But as the following Esquire piece from Charlie Pierce from back in January 2018 reminds us, there is plenty of chaos that can be fomented with state constitutional amendments alone. Chaos like amendments to split up California into multiple states, or an obscure 2018 proposal by a state legislator in Nebraska. A proposal to define a low population area in the western part of the state, not exceeding 36 square miles, extra “sovereignty” that would allow the area to become a tax-free deregulated entity set up for perhaps a 99-year charter, outside the authority of the Nebraska state government and local. In other words, set up a mini-Kochistan. Federal law would still apply presumably, but nothing else. As Schumacher put it, “If I were a major business, I would not want Omaha or Lincoln or Des Moines (Iowa) telling me what to do”. State-level charter cities for Nebraska. That was the idea. And had Paul Schumacher’s proposed legislation passed the Nebraska state legislature, it would have been up for a popular vote.
As Pierce points out, this scheme is highly in line with the broader Koch Article V Constitutional Convention agenda. An agenda of permanently securing corporate privileges in the constitutional law. Yes, the federal constitution is the big prize. But state constitutional amendments are the other side of the coin:
“But the larger danger is that the idea of disunion, within states and generally throughout the country, has now become not only a viable topic of political discussion, but also a viable political strategy. The whole blue-red thing used to be an easy way to distinguish on television which geographical area voted for what candidate. Then, it became shorthand for all manner of political differences. It was inexact and shallow, but inexact and shallow people found it convenient, so everybody went along with it. Now, though, those divisions are driving policy in a way that they rarely have in the past, and when they have, the policies generally resulted in ghastly consequences.”
Disunion is a viable political strategy. That was obviously the case in January 2018 when Charlie Pierce made that observation. Three years before the GOP embraced the politics of insurrection. This is 2021. Political disunity isn’t just viable. It’s the GOP’s core message and strategy at this point. The decades-long Koch-backed project to overhaul the US constitution is coming to fruition at time when a deep and growing sense of disunity is the GOP’s unifying core belief. That and tax cuts for the rich and deregulations. The stars keep aligning for the Kochtopus and its fascist fellow travelers. And if any of those fascist fellow travelers happen to be foreign, even they will be potentially invited to participate in any sorts of future state-level constitutional amendments. Like the proposed independent “sovereign” territory a lawmaker wanted to carve out of western Nebraska. What are the odds the Koch network won’t be championing similar schemes in states across the US in the future. In other words, whether or not Schumacher was consciously acting as an agent of the Koch network when he floated this idea, he was effectively acting as a Koch agent floating a Koch trial balloon. Because he’s sovereign territory scheme is about as Koch-ish an idea as we’re going to find:
And as the original Lincoln Journal Star piece about Schumacher’s plan describes, the proposed constitutional amendment would grant the state legislature the right to delegate sovereignty for up to 99-years. Who does it delegate it to? That remains unclear. What is clear is that the area is out of the reach of democratic state and local authority for the next century. That was the plan. And has Nebraska’s legislature passed it, it would have been up for a vote. A popular votes open to foreign corporate money as we just had confirmed by the FEC:
“If the Legislature approves the resolution, voters would decide whether to adopt the constitutional amendment.”
It’s disturbing to ponder just how popular this idea would be today if put up to a vote. Granting the legislature the right to grant 36-square mile 99-year leases in remotely populated areas that would be exempt from local or state regulations. As Schumacher put it, it would be an opportunity to essentially “have your own state”:
Keep in mind that if the area is limited to 36 square miles, and a population density of up to 10 persons per square mile, that’s an area with up to 360 people. Why is that relevant? Because when Schumacher dangles the allure of having “your own state”, he conveniently leaves out who “your” individuals would be in this equation. Would it be those 360 people living in this sparsely populated area making up the rules for the next 99 years? It doesn’t sound like it. Instead, the proposal would give the legislature the power to delegate that sovereignty. That sounds exactly like a charter city. So it’s whatever entity that sovereignty is delegated to who would get to have their own state.
And while this scheme never came to fruition, don’t expect this to be the last time we hear about something like that. Again, whether or not Schumacher proposed this as part of a Koch-backed initiative, it’s about the most Koch-ish thing a state senator can do. It’s an idea that’s bound to pop up over and over.
So while the FEC rulings implications on foreign corporate spending flooding into ballot initiatives is certainly quite disturbing, it’s the potential implications for future state constitutional amendments that present perhaps the most alarming aspect of this story. Foreign corporate money can help finance the Koch network’s already well-financed endless drive to gut and capture the US constitution(s). Would any foreign corporations like to have access to 99-year charter city operations in the US? Hmmm...
On the plus side, thanks to the US’s absurd dark money system and the proven ability of foreign corporations to easily side-step election disclosure rules and secretly participate in US election battles anyway, it probably doesn’t actually matter if the FEC is granting foreign corporations the right to participate in US campaigns. It’s not actually a plus side, but a reminder that things are already so bad in the US’s campaign finance system that it’s unclear if things really can get worse. This is what a regulatory rock bottom looks like. Almost. A few more amendments and we’ll get there.
Remember the warped, trollish response Donor’s Trust gave us when people started asking questions about its $1.9 million donation to VDARE in 2019 that was apparently used to build a historic castle in West Virginia near DC. We have a trollish set of updates for all the 2020 white nationalist donations:
First, recall how, after its 2019 tax documents were published and the VDARE donations exposed exposed following an IRS request by the Center for Media and Democracy, Donors Trust president and CEO, Lawson Bader appeared to take offense to the fact that Donors Trust’s donations were revealed at all in response to direct questions about the VDARE donations. And then he cited the 1958 Supreme Court court case, NAACP v. Alabama. It was quite the trollish deflection. As we’ll recall, that case was one of the earlier Supreme Court rulings that, taken together, created the collections of rules and loopholes that allowed for nearly unlimited anonymous Dark Money political spending in the US before Citizens United formalized it in 2010. And NAACP v. Alabama was a case that centered on the question of whether the identities of people who donated to the NAACP would be protected due given the obvious negative repercussions that revealing their identity could have and how that all plays into the idea of what is truly protecting ‘free speech’. So one of the most wealthy and powerful political network in the world was asked about its recent donations to multiple overly white nationalist organizations and in defense they cited a Supreme Court case about protecting the rights of oppressed Black NAACP political donors. Total trolling.
Well, the Donors Trust 2020 IRS report just got published and more donations that seem to fall under the ‘white nationalist or extremist’ category has already been flagged. Roughly $2 million, although only $70,000 went to VDARE. The group doesn’t appear to be getting another GOP mega-donor sugar daddy castle yet. But, these flagged donations brought the question up again and the group was forced to answer more questions. Trollishly answer again. Lawson Bader provided a statement touting the fund’s financial success, claiming the organizations they support are “worthy causes” and that the donations “serve the public good.”
Bader told reporters, “2020 was a year of great uncertainty and change. Despite this, donors stepped up to support public charities, especially those embroiled in alleviating and addressing the vast economic and health challenges facing the country,” the statement said. “Many account holders held ‘rainy day’ charitable funds in their respective accounts, which made it possible for many to extend their generosity and serves as a reminder about the essential nature of donor-advised fund providers during times of crisis.” Bader statement went on to say the $186 million distributed last year was “to serve the public good.” He claimed the group has, since its 2001 inception, “distributed more than $1.5 billion to thousands of worthy causes and institutions focused on science, medicine, religion, public policy, the arts, civics and health.”
A public relations firm gave a slightly more defensive answer in response to questions about extremist donations, telling reporters that Donor’s Trust exists to give legitimate groups “a seat at the table” and “not to advance any cause,” including “those they may disagree with.”
So that’s are the official Donors Trust answer to the questions about the roughly $2 million in white nationalist 2020 donations: the group serves the good while also existing to give legitimate groups a seat at the table that they may or may not agree with. So the white nationalist recipients were just legitimate groups who deserve a seat at the table. That’s the answer Donors Trust is giving. For 2020 (And the foreseeable future if we’re honest with ourselves):
“The Donors Trust primarily funds right-leaning, libertarian, and free-market advocates. It describes itself as “a charitable savings account”—a go-between that allows wealthy donors to deposit money in lump sums, where it gets invested at tax-free growth. They can later direct contributions at any time while remaining anonymous.”
It’s a tax-sheltered dark-money machine. First you make an anonymous donation. Then you let the donation investments grow. Then you anonymously direct a donation with your investments. It’s all ‘charity’. And that 501©3 trust fund ended the year with over $600 million in assets. It’s an ever growing tax-sheltered dark-money machine:
And now how 75 percent of the total 2020 donations — $270 million out of $360 million — was from just 8 donors and $158 million of that was a single donor. The mega-donors. Mega-mega-donors. And at least one mega-mega-mega donor:
And then there’s the $2 million spent on white nationalist causes. VDARE only got $70,000 in 2020, compared to the $1.9 million donation to VDARE that was seemingly used to purchase a West Virginia Castle near DC, that was made in 2019. Perhaps for castle-upkeep?
And yet note how Donors Trust is not taking a stance of pure political neutrality as its excuse for these donations. When directly asked about the donations to open white supremacists and other extreme groups, the group’s CEO claimed the group supported “worthy causes” that “server the public good”. A public relations firm said the fun exists to give legitimate groups “a seat at the table” and “not to advance any cause”. So Donors Trust is now just openly offering a ‘seat at the table’ to groups like VDARE. This is going to be an open annual thing:
Then there’s Cleta Mitchell, the GOP lawyer who long worked with Hans von Spakovsky to devise the GOP’s voter suppression strategies and the legal and political myths those strategies would require. Recall how Mitchell was instrumental in orchestrating much of the Trump White House’s 2020 strategizing or how to stay in office through any means necessary. Also recall how Mitchell was the featured speaker at the FreedomWorks’s October 2020 Election Protection Summit and was concocting legal strategies for states to intervene on Trump’s behalf following his loss. Mitchell really is emblematic of how deeply the GOP establishment was involved with both the preparations for Trump’s challenge of the election results and the actual challenge. She was instrumental, and rewarded with a cushy FreedomWorks job. They must have loved her 2020 Election Protection Summit speech:
Finally, note how the Mercers are clearly still more than happy to throw millions dollars at Steve Bannon, with Bannon’s Government Accountability Institute getting $1.6 million from Rebekah Mercer, which was used to push fraudulent voter-fraud claims during the Trump administration:
The GOP establishment almost couldn’t be more culpable for Trump’s planning and real attempt to steal an election. And that includes the GOP mega-donor establishment. It’s just one of the tales told by the Donors Trust 2020 IRS report. Tales of insurrection, white nationalism, and paying off elite grifters like Cleta Mitchell. All legitimate and in keeping with the public good, apparently.
Here’s a story about a little-known area of dark money abuse that has unfortunately become a lot more topical in the era of the far right Supreme Court: It turns out you can use dark money to hire groups to submit ‘friends of the court’ amicus briefs and create a legal echo chamber that can’t be traced back to your side of the case. Like even the courts don’t know you paid for it. Because the disclosure rules only require that you disclose who paid for the actual preparation of the filing, which is a technicality that effectively means you can shield who ultimately paid for the ‘friendly’ efforts. A kind of judicial astroturfing of the courts and not just the public.
The most recent and prominent example of this came through an unexpected source: alleged Russian hackers associated with the Evil Corp ransomware group hit the National Rifle Association (NRA) and leaked some documents that included evidence of exactly this kind of judicial astroturfing. That case before the Supreme Court, New York State Rifle & Pistol Association Inc. (NYSRPA) v. Bruen, could radically expand the scope of the Second Amendment and deeply curtail the freedom of states to regulate firearms. And based on the comments the conservative justices gave during last month’s hearing, the conservative majority appears ready to rule in favor of the plaintiffs and expanding the Second Amendment. So this case that involve extensive astroturfing — at least 100 Koch funded dark-money groups filed briefs in favor of the plaintiffs — is poised for passage in the newly far right Supreme Court.
The hackers leaked documents indicating the NRA spent $500,000 for the services of David Kopel, of the Denver-base libertarian think tank The Independence Institute, who filed an amicus along with two other lawyers in July of this year in support of the plaintiffs in the case. The contract represented just one of the dozens of astroturfed amicus filings filed on behalf of the plaintiffs. That’s part of the significance of the story. That $500,000 contract was just one cog in a vast Koch-financed network of operatives that comprise this for-hire judicial astroturfing service.
Now, should we suspect that all this astroturfing actually persuaded any of the justices one way or another on the case? It’s hard to imagine since so much of it was probably rehashings of the same underlying arguments they heard. But the persuasive power of this form of astroturfing isn’t really all that relevant. It’s the cover that this astroturfing provides for bad rulings that don’t actually have much public support that’s the big problem here. The NRA can just hire an army of legal advocacy-for-hire lawyers and create the public perception of there being large numbers of parties who share the NRA’s views. Look at all the support the NRA has! One ‘friend’ after another! That’s what makes this kind of judicial astroturfing so toxic in the era of the corrupt Koch-ed up far right Supreme Court.
A Supreme Court era where special interest reigns supreme, but still needs a cover story:
“The news came from Russian hackers on the dark web. According to reporting by The Trace, the hackers unearthed a document suggesting that the NRA paid a lawyer more than $500,000 to advocate on its behalf through “the Independence Institute.” This included filing pro-gun rights “friend of the court,” or amicus, briefs in Supreme Court cases—including the one heard earlier this month—brought by the NRA’s New York affiliate. None of these payments were disclosed to the court or the public. In essence, the NRA cloned itself to amplify its voice before the court.”
Over $500,000 was paid out to a libertarian think tank, “the Independence Institute,” and an a friendly amicus was delivered. One of more than 100 Koch-fund organization involved in the effort. That’s organized power on display. Except it’s only on display for the fund managers at the dark money organizations issuing the ‘charitable donations’ that paid for these ‘non-partisan’ activities. The public doesn’t get to know about the mercenary nature of these ‘friend’ briefings and neither does the court, although the court can probably guess what’s going on. The public, on the other hand, only know that more than 100 organizations filed in favor of the plaintiffs. Money well-spent in the age of the corrupt far right rigged Roberts Court:
A code of ethics for the Supreme Court. With a 6–3 out of control far right court on the way, a code of ethics isn’t a bad idea. Yes, a code of ethics is always a great idea. But maybe like an official code would be a good idea right now given how there’s so much unethical behavior in the shadows leaking out in the open and this is like the new Supreme normal.
What type of GOP pawn was Kanye West operating as in 2020 when he announced his presidential campaign? A witting GOP pawn or an unwitting one? That’s one of the big questions raised by a new Daily Beast report on the role GOP dark money operatives were playing in West’s campaign efforts. Whether or not West knew about the role GOP dark money was playing remains ambiguous based on the available information, but it is now entirely unambiguous as to whether or not GOP dark money was involved. The GOP dark money networks were indeed so heavily involved with the financing and operations of the West campaign that the question is now the extent to which this wasn’t entirely a GOP operation. With with a witting, or perhaps unwitting, Kanye as the face.
In keeping the broken nature of the US dark money laws, while some of the Daily Beast report was based on FEC filings, it appears that the only reason we’re learning about some of GOP’s involvement in the West campaign is the fact that one of the subcontractors involved in setting up the campaign website, SeedX, are suing for $2 million after being offered just $20,000 for the website development work. And its in an email to SeedX, now supplied as evidence, that we learn that it was none other that Jill Holtzman Vogel who contacted SeedX and made the $20,000 offer. Vogel identified herself in the email as the West campaign’s lawyer.
Yes, that would be Republican Virginia State Senator Jill Holtzman Vogel. As we’ve seen, Vogel isn’t just an elected Republican official. Her law firm, Holtzman Vogel Josefiak Torchinsky, is a dark money powerhouse...because it knows the law and knows how to keep operations anonymous and in the shadows. Also recall how Jill Holtzman Vogel’s law firm, Holtzman Vogel Josefiak Torchinsky, appears to have been deeply involved in the shady fundraising associated with the 2017 Trump inaugural fund. Fundraising that had the appearance of money-laundering from foreign sources. That’s what made her name so significant when it showed up in those court documents. You almost couldn’t find a more representative person of the GOP dark money machine than Jill Holtzman Vogel. And she was acting as the lawyer of Kanye West’s campaign. Secretly.
But Jill Holtzman Vogel isn’t the only GOP dark money figure to have been revealed to be involved with the campaign. Nathan Sproul of Lincoln Strategy Group was also paid a significant amount from the West campaign. $4.8 million. But it wasn’t paid to Lincoln Strategy Group, which was helping GOP candidates at this very same time. The money was paid to “Fortified Consulting”, an entity that appears to have been set up for basically this purpose and nothing else.
Finally, there’s Grand Slam Finance, Inc. which appears to be the same an entity paid by the West campaign for “compliance” and “account”. But the West campaign’s FEC disclosure doesn’t list “Grand Slam Finance, Inc”. It lists “GSF, Inc”. It’s an example of how the dark money game is played. But also an example of why it would have been important for dark money professionals to be intimately involved with the West campaign’s operations: if you’re going to keep the Republican financing of the campaign a secret, you better make sure those dark money professionals are involved in the filing of the campaign’s paperwork. They know how to hide their own involvement. So having the West campaign basically hire the GOP dark money machine to run its campaign wasn’t just an effective means of giving the West campaign some professional help. It was also a great way to keep that help secret. The dark money machines knows how it hide itself. Barring the pesky lawsuits:
“At the heart of Kanye’s political operation was Holtzman Vogel, one of the most powerful and well-connected law firms serving major Republican political and nonprofit organizations today. And weaved throughout his campaign, whether the multi-platinum rapper realized it or not, were Republican operatives who may have been less interested in seeing a President West than in re-electing President Donald Trump.”
This clearly wasn’t a real political campaign. But it also wasn’t a complete joke either. It was a calculated strategic joke. And its not at all clear Kanye or his team even knew what was going on. It’s as if the GOP was basically treating Kanye like some sort of mind-controlled celebrity prop. And it was none other than Jill Holtzman Vogel, the living embodiment of the GOP’s dark money operations, pulling these strings. In secret and in violation of campaign finance laws. It’s the kind of story that has all the ingredients of a mega-scandal. At least it would if the public cared about political financial scandals:
But Jill Vogel wasn’t the only political operative playing a lead role in the West campaign. Nathan Sproul of Lincoln Strategy Group, appears to have set up “Fortified Consulting” for the sole purpose of financing West’s campaign. At the same time Lincoln Strategy Group was secretly helping West’s campaign, it was openly helping the campaigns of mainstream Republicans:
And then there’s Grand Slam Finance, Inc. (GSF), a firm run by Deanna Hayes with a history of working for the Crosby Ottenhoff Group. And you don’t get much more mainstream in the realm of Republican fundraising than the Crosby Ottenhoof Group. Both CSF and Crosby have done work for Karl Rove’s Super PAC American Crossroads, with Holtzman Vogel serving as Crossroads’s law firm. These firms are the Republican dark money mainstream. That’s who was behind the Kanye West campaign. It wasn’t just a single mainstream GOP dark money firm. It was a whole network of the biggest working together. All in secret:
And all of this could have potentially remained a secret had it not been for a lawsuit by one of the subcontractors, SeedX. Classic. Intriguingly, even though the lawsuit was tossed out, it was only tossed for technical reasons and the plaintiffs are intent on filing a new one. Considering that this lawsuit is basically the only potential source of new information on this dark money network, that could be a very important lawsuit to keep an eye on. It’s in one of the emails from this lawsuit that we learn that Jill Holtzman Vogel represented herself to SeedX as the West campaign’s lawyer. What else might we learn as this case plays out?
Good luck to SeedX. Who knows if they did $2 million worth of work, but $20k sounds rather cheap for a political campaign website, even a stunt campaign. Don’t forget, the West campaign paid $4.8 million “Fortified Consulting,” the fake front firm for Lincoln Strategy Group. They were throwing around millions of dollars to run this fake campaign. $20,000 for the website is just cheap given the size of the other campaign expenditures. It suggests that SeedX was a company run not by GOP insiders but is just some random company they found and then tried to cheat. And if keeping the GOP’s fingerprints off the campaign was a top priority, using a random firm with no detectable GOP connections might be the only option. Is that what happened here? They hired an outsider firm to develop the website, then cheated them because they weren’t part of the inner-circle-of-grift, and then got sued. Was that was happened?
And perhaps the biggest question here is just how many other secret dark money campaigns are being operated by this dark money machine? This isn’t just the latest weird chapter in Kanye West’s mental health journey. This was a template for how any campaign can be heavily supported by the GOP dark money machine in secret. A secret conduit between the mega-donors and the ‘independent’ campaigns that can provide money and invaluable expertise. With the most invaluable expertise offered being an expertise in keeping all of this help a secret. After all, that wouldn’t really have helped Kanye West’s campaign if everyone knew that it was secretly being financed and operated by GOP dark money powerbrokers. Not that it was really a secret in Kanye’s case. But still, in theory this kind of exposure wouldn’t help.
It’s that time again. With the 2022 US mid-term election cycle now getting underway as Democratic power in Congress hangs in the balance, it’s time for another onslaught of political ads targeting the US electorate. An onslaught of ads fueled by the unlimited anonymous political dark money that drive the US political system. So with that torrent of deceptive propaganda in mind, here’s a piece by Nathan J. Robinson in Current Affairs last year that reminds us about one of the aspects of this cyclical propaganda push that’s increasingly important to keep in mind: The billionaires who have largely captured control of the wealth of US economy don’t actually contribute anything themselves. They’re basically net extractors of wealth. They companies they buy and sell would have been created regardless of whether or not these billionaires were ever born. The people who own the economy don’t actually produce or innovate. It’s a fun fact that stabs the myth of the capitalist meritocracy right in the heart.
It’s by no means a new revelation, but instead something we’re constantly reminded of the more we learn about what it is the billionaire class actually does to earn its enormous wealth. Recall how Max Chafkin’s recent biography on Peter Thiel revealed how Thiel doesn’t actually have a very strong technical background. In other words, he lacks the technical and scientific knowledge base required to meaningfully contribute anything to the myriad of highly technical products created by companies he owns. Other people are doing all of the actual innovation. As Chafkin wrote, Thiel’s primary ‘innovation’ appeared to be a recognition that there were many business opportunities to exploit if one was willing to aggressively break the rules, with an end goal of securing a monopoly. Breaking rules and creating monopolies. That’s Thiel’s actual ‘contribution’ to society that he has made in exchange for the billions of dollars in wealth and power he wields. Wealth and power that continues to grow by the year as Thiel sticks to the tried and true strategy of breaking rules and securing monopolies. It’s hard to come up with an actual accomplishment the guy has made that isn’t ethnically compromised. Thiel is quietly one of the most influential people on the planet, shaping the future of human civilization. And as Robinson describes, Thiel is also rather typical for the billionaire class. A class that appears to have the specialized skill-set of capturing economic revenue streams by buying and selling businesses. Not actually innovating those businesses. Or even managing them. Just buying them and securing the profit streams for themselves, often to the detriment of the underlying companies. Whether we’re looking at Sam Zell’s destruction of the LA Times, Richard Branson’s opportunistic gatekeeping in the recording industry, or Stephen Schwartzman’s sociopathic exploitation of poor renters, the same story keeps emerging. The billionaires are a societal money pit that just keeps growing.
It’s a reality that underscores one of the primary functions of contemporary political propaganda in the US: obscuring the the public the reality that the most economically powerful class on the planet operates as parasitical net economic drain on civilization:
“Christianity has elaborate “theodicies:” attempts to account for the “problem of evil,” a.k.a. reconciling the existence of God with the fact the world is clearly unfair, since the most obvious other option is atheism. The rich have their own theodicies: attempts to account for the obvious unfairness of their own position and to find some explanation for the world being the way it is, because the most obvious other option is socialism.”
How does one justify an unjustifiable system when one is the overwhelming beneficiary of the system? Religion. Not an official religion in this case. It’s more the unofficial religion of capitalism: what happens in capitalism is what should have happened for the greater good. It hasn’t just been the billionaires who have benefited from the current system. Virtually everyone has been an overwhelming beneficiary. The way things are today are as good as they can get, and that’s all thanks to contemporary capitalism. Yes, these are absurd statements. But for an economy that’s as absurdly unfair as the US economy, the gospel of the billionaires is an absolute necessity just to ensure there’s no public backlash. Hence all the self-serving biographies. And yet even in these self-serving biographies we find one example after another of how the billionaire class is operating like bloated parasite that exists solely to extract value from businesses without ever really giving back:
It’s a system rooted in the absolute necessity of denying the undeniable for as long as possible. So it’s quite notable that the denials often include acknowledgements of the gross unfairness of the current paradigm. The billionaire biographies don’t try to push the ‘greed is good’ mantra that forms the core of the contemporary capitalist system. Instead, they attempt to redefine the rapacious business practices of these billionaires as not being driven by greed at all but instead by a deep desire to help others. It’s perhaps the most compelling evidence of how little there is to justify this system. The billionaires can only deny the undeniable by effectively rewriting their own histories:
But it’s not just the biographies of billionaires that require constant revisionism. It’s the public’s understanding of the whole of reality that needs to be systematically warped. Not that many people read these books after all. And that’s why this story of the delusions of billionaires — whether they’re genuine self-delusions or cynical deceptions — isn’t just about our general misunderstanding of how these great fortunes were achieved and sustained. Because this same group of delusion/deceptive billionaires also happens to heavily overlap with the billionaire class dominating the US’s dark money political system. A dark money system basically designed to anonymously funnel unlimited amounts of wealth into deceptive political propaganda. The kind of propaganda that serves to not just obscure reality but promote far right grievance narratives that pointing fingers in any direction other than the right-wing billionaires who have effectively secretly captured the US economy. Yes, it’s an open secret, but still effectively a secret. Mission accomplished.
The the US society still coming to grips with the New Supreme Normal of a far right Supreme Court majority, here’s a peek at another case with foundation-shattering potential that could come before the court. A shattering of the foundations of the US’s money-laundering laws in this case. And as we’re going to see, that legal challenge id predicated, in part, in the exact same kinds of political free speech arguments that brought us Citizen United. In other words, it’s the kind of legal argument that just might find majority agreement with the current court.
The case is based on a provision regarding the regulations of cryptocurrencies tucked in the November 2021 trillion-dollar infrastructure bill. Under long-stand US law, currency transactions involving more than $10,000 must be reported to the US. The bill expanded that regulation, 6050I, to include cryptocurrency transactions. So any cryptocurrency trade worth more than $10,000 needs to be reported to the IRS.
All in all, it’s the kind of regulation that, if anything, helps to formalize and normalize cryptocurrencies in the economy. But that’s not how the crypto-advocacy group Coin Center views it. Instead, Coin Center is suing over the new regulation, arguing that is impinges on constitutional rights to privacy. Coin Center bases its argument on 4th amendment protections against unwarranted search and seizure. But, crucial, they also claim the regulations violates the First Amendment right to free speech. In particular, they argue that the law could have a “chilling” effect on political speech. Why? Because of the public nature of the blockchain. Anyone can see any transaction between two ‘wallets’. But they don’t necessarily know who owns those wallets. That anonymous of wallet ownership is what gives cryptocurrency its ‘crypto’ characteristics. So if wallet owners have to report all transactions worth more than $10,000 to the IRS, all over transactions involving that wallet can also be determined by the IRS. This will apparently have a “chilling” effect on political contributions. As a result, 6050I could be overturned and the ALL reporting requirements to the IRS could end up being gutted should Coin Center win its case.
Keep in mind that the IRS regulations don’t require the owners of digital wallets to publicly disclose their identities. They just need to disclose it to the IRS. And yet that non-public disclosure is apparently going to have chilling effects on political speech. That’s the legal game being played here. A game we’ve seen before. Recall how this is more or less the same legal argument we’ve seen the Koch-backed Americans for Prosperity was arguing in Americans for Prosperity v Bonta last year, asserting that a California law that required the disclosure of large donor identities to the state, not the public, constituted a chilling effect on political free speech.
It’s also important to recall that this 1st Amendment ‘chilling’ argument is basically an extension of the 1958 Supreme Court case NAACP v. Alabama. Recall how that case was one of the earlier Supreme Court rulings that, taken together, created the collections of rules and loopholes that allowed for nearly unlimited anonymous Dark Money political spending in the US before Citizens United formalized it in 2010. The case centered on the question of whether the identities of people who donated to the NAACP would be protected given the obvious negative repercussions that revealing their identity could have had in 1950s America. Also recall how the CEO of DonorsTrust, Lawson Bader, literally cited NAACP v. Alabama a couple years ago when faced with questions about a $1.5 million donation made to VDARE and the identity of the donor. Yes, the Koch network’s chief Dark Money entity cited a case that revolved around potential intimidation that donors to the NAACP might have faced as part of an excuse to not reveal the identity of the individual or group how made a large donation to one of the US’s leading white nationalist organizations.
So when Coin Center argues that revealing the identities of wallet owners will stifle political giving, it’s piggy-bagging on the same legal argument Americans for Prosperity was making in Americans for Prosperity v Bonta last year. An argument rooted in NAACP v Alabama which formed part of the foundation for the legal reasoning behind Citizens United. That’s part of what makes this such an alarming story: it’s not at all hard to imagine the current court agreeing with this legal reasoning. It’s done it before. That’s how we got Citizens United.
But there’s another factor in this case that only adds to the ominousness: the Koch-backed Cato Foundation has already come out in favor of Coin Centers case. As Cato made clear in a recent blog post, the group is hoping the case could lead to an overturning of all sorts of other financial disclosure laws.
So it appears that can add one more item to the growing list of consequences from the mainstreaming of cryptocurrencies: no more money-laundering oversight. Because you can have a society that embraces cryptocurrencies. Or you can have a society that regulates money-laundering. But you can’t have both, and the far right Supreme Court is going to have to choose:
““The larger context is that the Supreme Court, as of now, has been much more willing to sort of strike down these sorts of disclosure rules than they have in the past,” Jellins says. “So if the ultimate goal was to take out this reporting requirement for all cash, then using cryptocurrency as a tool … might be a good way of getting there.””
As we can see, while it’s not a guarantee that Coin Center’s lawsuit will lead to the unraveling of all of the US’s financial disclosure laws, it’s a possibility. The kind of possibility that should feel much more possible in the wake of the Supreme Court’s historic far right turn this year. It’s not a stretch to imagine that The court that just ruled that EPA can’t regulate greenhouse gas emissions might also rule that the IRS can’t oversee money laundering.
But part of what should make this seem like a very real possibility has to do with the nature of Coin Center’s legal arguments: They’re not just basing their arguments on the 4th Amendment protections against unwarranted search and seizure. They’re also making a 1st Amendment argument that sure sounds a lot like a reference to the 1958 Supreme Court case NAACP v. Alabama. So it shouldn’t come as a surprise when Coin Center falls back on similar arguments. An argument that making anonymous political donations specifically using cryptocurrencies that rely on publicly-accessible blockchains are protected by the First Amendment. And if so, those First Amendment protections can only be ensured if the US’s large-dollar reporting requirements are gutted in order to ensure publicly accessible blockchains can remain effectively anonymous. Cryptocurrencies that rely on publicly accessible blockchains are only anonymous as long as the owners of the individuals ‘wallets’ never have to reveal their identities. And gutting reporting requirements is the only way to ensure that anonymity. That’s the logic at work here:
And if it seems like its just the cryptocurrency industry pushing for this, think again. When groups like the Cato Institute come out in favor of Coin Center’s position, that’s all you need to know: The same Koch-backed network of mega-donors that brought us Citizen United is now trying to use the US’s absurd dark money laws to gut what’s left of the country’s money-laundering oversight powers:
Even the left-leaning group Fight for the Future appears to have come out in favor of this. It’s an example of how these kinds of public relations schemes can sucker in all sorts of groups:
That’s the kind of momentum that’s behind this attempt to effectively blind the IRS of large financial transactions. Momentum that has an unstoppable feeling after the last couple of weeks of Supreme Court rulings. After all, the current court is almost the same one that brought us Citizens United, except WAY crazier. What a difference a few justices make.
But also note the absurdity of the situation: the whole reason this situation developed is because cryptocurrencies are designed in such a way that anytime anyone reveals their ownership of a ‘wallet’ everyone gets to see all transactions that have ever been conducted with that wallet. That’s just how these things work. Because people built them to work that way. The ‘crypto’ nature of the system is predicated on keeping the identities of the wallet owners secret. A new ‘financial tech’ is developed with this massive potential privacy vulnerability, asserts that its a valid form of currency, and now demands that cryptocurrencies either remain outside the money-laundering regulations or the regulations have to go entirely. That actually happened. And this stunt is probably going to work.
So if you happen to have any large money-laundering ambitions, it might be a good idea to put them on hold for the moment. The Supreme Court’s far right majority will be opening those flood gates and shutting off the lights soon enough.
Following up on reports about Leonard Leo’s Honest Election’s Project filing an amicus brief in support of the “Independent State Legislature” theory in the Harper v Moore Supreme Court case, it’s worth noting the recent reports on the record-breaking $1.6 billion donation Leo just received from an obscure right-wing billionaire. It sounds like Leo, and Leo alone, will be determining how the $1.6 billion is spent. At least for the rest of Leo’s life. The $1.6 billion behind the newly created Marble Freedom Trust will presumably long-outlive Leo.
It also sounds like the $1.6 billion donation doubled as an incredible tax dodge. The obscure billionaire, Barre Seid, transferred all of his shares in the privately-owned company Tripp Lite to Marble Freedom Trust. This was April 2020. Leonard Leo is both the trustee and chair of the trust. Then, in Feb 2021, Tripp Lite filed annual reports with the state of Illinois that had Seid’s name crossed out as the director and Leonard Leo’s name filled in. Tripp Lite’s Canadian subsidiary did the same thing the name month, and the whole company was sold off to Eaton for $1.65 billion later that month. That’s how Leonard Leo ended up with $1.6 billion. The move avoided both capital gains taxes and gift taxes by transferring those shares to the 501c4 ‘non-profit’ trust, saving Seid $400 million in taxes in the process.
As as result of these maneuvers, dark money shadow lord Leonard Leo is the sole individual who determines the use of this $1.6 fortune. That’s on top of all the other money he’s raised over the years. Don’t forget that while Leo is best known for his role in the Federalist Society, this Council for National Policy member does a lot more than that. Like dark money fundraising through entities like BG Group. And, of course, founding groups like the “Honest Elections Project” — a Council for National Policy front group dedicated to rigging electoral. Leonard Leo wears a lot of hats. Extremely well-financed hats going forward:
““I have a very simple rule, which is, I’m engaged in the battle of ideas, and I care very deeply about our Constitution and the role of courts in our society,” Leo told The Washington Post in 2019 when asked about his donors. “And I don’t waste my time on stories that involve money and politics because what I care about is ideas.””
“I don’t waste my time on stories that involve money and politics because what I care about is ideas”. LOL! spoken like a genuinely morally bankrupt individual. A morally bankrupt individual who just had $1.6 Billion gifted to him to carry on his about
raw power‘ideas’ crusade. A $1.6 billion gift that managed to save Barre Seid $400 million in taxes. This is how broken the US democracy is: gifting vast dark-money fortunes to political 501c4 ‘non-profits’ doubles as an incredible tax dodge:It was far from the only political donation by the obscure billionaire. Barre Seid had been using dark money vehicles like DonorsTrust to make anonymous political donations for years:
The fact that we even know Seid’s identity at all is rather remarkable. Most of Leo’s donors remain a 501c4 mystery:
And thanks to the way the Marble Freedom Trust is structured, with Leo as both the trustee and the chairman, it’s going to be Leo exclusively deciding how this vast fortune is spent for decades to come. It’s not a mystery where that money is going to be spent. It’s going to be spent trying to send the US back to the 18th century under the ‘originalist’ umbrella:
And as Leo himself warned the world back in 2020, he isn’t just interested in reshaping the judiciary branch. He’s out to remake all branches of government at all levels. So of course we find Leo’s groups promoting things like state-level pushes to ‘tighten’ voting laws:
And as we saw last week, it’s Leo’s Honest Elections Project that filed the amicus brief in support of the “Independent State Legislature” theory in the upcoming Harper v Moore Supreme Court case. A case that could remove state and federal courts from decisions involving election results. The “Independent State Legislature” theory has been given Leonard Leo’s “originalist” stamp of approval. But more importantly, it now has Leo’s $1.6 billion behind it.
But also keep in mind one of the other obvious uses for the Marble Freedom Trust’s enormous wealth: after Leo and the Supreme Court conservative majority are done enshrining the “Independent State Legislature” legal theory with the patina of an “originalist” right-wing Supreme Court ruling and state legislatures get to determine the outcomes of elections, someone needs to help those legislators determine who won all those elections. $1.6 billion in dark money can be pretty helpful when it comes to making those kinds of decisions.
As the US waits to find out how the conservative majority will rule on Harper v Moore and whether or not there are five justices willing to go ahead and imperil the basic functioning of the US’s democracy even more, here’s a pair of articles that are a reminder that this particular case isn’t necessarily the last word on the matter. Because if the plaintiffs lose they’re going to be back again and again. Because as the articles describe, it’s not just Leonard Leo’s “Honest Elections Project” filing amicus briefs with in this case supporting the Independent State Legislature Theory (ISLT) theory. It’s a slew of Council for National Policy (CNP)-led entities writing amicus briefs and there’s ten’s of millions of dollars in mega-donor money behind maintaining this effort. They aren’t giving up until this conservative court majority — which was largely hand picked by Leo — gives them their ISLT win. It’s a priority. A well-financed priority with major mega-donor buy-in:
““It’s obviously a fringe, extremist legal theory that’s being funded by these wealthy conservative donors, and these are people who know their extreme agenda isn’t popular,” said Kayla Hancock, director of power and influence at Accountable.US. “So they’re spending millions of dollars to stack the Supreme Court and chip away at our democratic rights and freedoms by influencing these institutions.” ”
A fringe legal theory backed by the usual suspects. The same ‘vast right-wing conspiracy’ network of Koch and CNP-affiliated wealthy mega-donors who have been financing all the other anti-democracy projects are behind the Independent State Legislature Theory (ISLT) too. And as we’ve seen, that mega-donor network is channeling those efforts through the Honest Elections Project, headed by key right-wing activist Leonard Leo. And Leo happens to be the same figure who led the decades-long efforts to stack the Supreme Court with its existing far right majority as well as various other anti-democracy projects like new voting restrictions or gerrymandering. That’s a huge part of this story here: Leo’s Honest Elections Project didn’t simply file an Amicus Brief in this case in support of the ISLT. Leo’s group has been heavily pushing the ISLT for the past couple of years thanks to large donations for this same mega-donor network. The Vast Right-Wing Mega-Donor Conspiracy decided to start pushing the ISLT with heavy donations to Leo and, two years later, we have a case before a Supreme Court that could end up granting these mega-donors their wish. It’s a case study in the incredible value these mega-donors get from their investments in Leonard Leo, who is now one of the most influential in the US and in a position to wield his profound influence before a Supreme Court majority he hand-picked for years to come:
And as the following piece from Sludge reminds us, the HEP wasn’t the only group to file amicus brief in favor of the ISLT. Other groups like the Claremont Institute, the Public Interest Legal Foundation (PILF), ALEC, and a non-profit called America’s Future. All of those headed by CNP members. The PILF was founded by CNP member Cleta Mitchell. The Claremont Institute’s Co-Founder Dr. Larry P. Arnn, and former Executive VP, Douglas A. Jeffrey, both show up on the CNP member list. ALEC’s CEO Ann Nelson also shows up on the CNP membership list. And Ed Martin, the president of America’s Future, is a CNP member with his own interesting ties to Jan 6: Recall how CNP member Ali Alexander — who played a key role in the Jan 6 plotting — tweeted out on November 4, 2020, the day after the election, how he was working on the #StoptheSteal efforts and included 15 names of people he was working with, including Ed Martin.
So as with all of these sprawling efforts, when we look at the organized effort to file amicus briefs in favor of the ISLT, we find a familiar pattern: a bunch of different groups all founded and led by the same people funded by the same secretive network of billionaires. And lots of CNP members:
“The ISLT is viewed by many as a fringe legal theory, one with a long history of being rejected by a majority of Supreme Court justices. In the views of legal experts, however, ISLT’s prospects changed over the past two years as a well-financed right-wing legal group called the Honest Elections Project (HEP) has dramatically stepped up its activities to promote the theory, eyeing an audience with the Supreme Court.”
What changed? The ISLT has long been viewed as a crank legal theory with a long history of being rejected before the Supreme Court. But all of a sudden its prospects got a lot better over the past two years, coinciding with the creation the extremely well-financed Honest Elections Project (HEP). It’s amazing what difference tens of millions of dollars given to Leonard Leo can make. Crank legal theories suddenly have a path to victory:
And note how the HEP is, itself, really just a rebranding of of 85 Fund, which itself was a rebranding of the Judicial Education Project. So when we observe that the HEP was founded in May of 2020, it’s important to recognize that the HEP is just the latest rebranding of the same ongoing agenda Leo-led legal activist group working on behalf of this mega-donor network for a decade before the HEP was formed in 2020. But while the agenda may have stayed the same, it sounds like the funding levels changed, with the HEP raking in remarkable donations since 2020. And it’s not a mystery why. Now is the time for the for the mega-donors to cash in on their investments. ‘Cash in’ in the form of favorable Supreme Court rulings that validate crank anti-democratic legal theories:
And as the article reminds us, the HEP’s Executive Director, Jason Snead, built an ‘election fraud’ database with conservative elections lawyer Hans von Spakovsky. As we’ve seen, Snead and Spakovsky are both part of a network of conservative activists who are spearheading another recently created very-well-financed ‘elections integrity’-related lobbying operation along with CNP members Cleta Mitchell, J Christian Adams, and Kenneth Blackwell. In other words, that ‘voter fraud’ database Snead created with Spakovsky is just one of many ‘election integrity’ efforts this same very well financed network has been up to over the last couple of years as the mega-donors decided to make ‘election integrity’ and other anti-democracy initiatives top priorities:
And while the HEP’s Amicus Brief in Harper v Moore is obviously very influential given personal role Leo played in nominations of four of the sitting justices, it’s not the only entity involved with this network that filed an Amicus Brief. There was the brief filed by Cleta Mitchell’s Public Interest Legal Foundation, along with the Claremont Institute. As we’ve seen, Mitchell was a central figure in the scheming that led up to the January 6 Capitol insurrection. Also recall the Claremont Institute was running the “79 Days report” election simulations in the final weeks of the 2020 election that ironically envisioned all sorts of scenarios involving leftist mobs occupying capitols. The Claremont Institute happens to have John Eastman, one of the central figures in developing legal justifications for the events that led up to the January 6 Capitol insurrection. And when we read that at the Bradley Foundation donated to Mitchell’s Public Interest Legal Foundation, don’t forget that Mitchell sits on the foundation’s board. This is a very well financed full-spectrum attack on democracy, orchestrated by a relatively small network of figures like Cleta Mitchell and Leonard Leo showered with mega-donor cash:
And while Leo and Mitchell are both well known CNP members, note the many other CNP we see pop up in this story. For example, there’s the $2 million from the National Christian Charitable Foundation donated to the 85 Fund (now the HEP). The president of the National Christian Foundation is CNP member David H. Willis. And when we see that the Koch-backed ALEC filed its own amicus brief in favor of the ISLT, don’t forget that ALEC’s CEO is CNP member Anne Nelson. And don’t forget that the Claremont Institute’s Co-Founder Dr. Larry P. Arnn, and former Executive VP, Douglas A. Jeffrey, both show up on the CNP member list.
And then there’s America’s Future’s president CNP member Ed Martin. First, there’s Martin’s own ties to Jan 6: CNP member Ali Alexander — who played a key role in the Jan 6 plotting — tweeted out on November 4, 2020, the day after the election, how he was working on the #StoptheSteal efforts and included 15 names of people he was working with, including Ed Martin. And who do we see as America’s Future chair but none other than central Jan 6 figure Michael Flynn. So of course we see Ed Martin as president of a group the files an amicus for something like the ISLT:
And when we see large donations for the HEP’s ongoing efforts coming from the Ed Uihlein Family Foundation, recall how the Uihlein made a large donation to Conservative Partnership Institute (CPI) in 2021, which went on to spawn a series of groups involved with both ‘election integrity’ and the Schedule F plot to sack federal government workers and replace them with ideologically-driven yes-men. The Uihlein’s are by now ‘usual suspects’ for anti-democracy efforts:
The ISLT effort isn’t just a pet project of a few cranky billionaires. It’s got a lot of cranky billionaires behind it and the CNP’s backing too. And that’s why we should expect it to return again and again if they fail to win this case. All the piece are in place. It’s just a matter of time. They just need to find the way to bring pro-ISLT legal challenges that thread that needle and give them a five justice majority. Maybe it will be Moore or maybe it will be the next challenge. But the underlying point is that the group that put that conservative majority on the court is the same group behind the ISLT. The court’s conservative conservative majority’s sponsors really really really want this and the justices know this.
And who knows how long the conservative majority on the court will last. A death or retirement here and there on the bench and this incredible window of opportunity for this mega-donor network to make good on their decades-long investment in the court might close. Which is a reminder that if this case doesn’t succeed, they’re going to have to bring the next cases as soon as possible. This is the modern golden age of cranky legal theories. Which means we should expect a lot of cranky legal successes. And even more failures while everyone is testing the court while the cranky getting is good.
How did Leonard Leo end up becoming one of the most powerful individuals in the US? It’s a question that isn’t going away any time soon thanks to the record $1.6 billion donation Leo received from mysterious billionaire Barre Seid last year. Leonard Leo is going to be a conservative kingmaker for decades to come thanks to that donation. A conservative kingmaker working at the behest of the reactionary theocratic groups like the Council for National Policy (CNP) and Opus Dei.
So why did Barre Seid, a secular Jew, decide to hand over a billion dollars to a radical Catholic extremist like Leonard Leo? It’s one of the questions raised in the following piece in the New Republic about Seid’s decades of quiet political philanthropy.
For starters, there’s the fact that Leo isn’t just a member of the CNP. He’s also long been the key individual at the Federalist Society for determining who was be selected for conservative judicial appointments. If you’re a conservative billionaire looking to influence the US judiciary, Leonard Leo is the guy to talk to and has long been that guy.
But it’s also hard to ignore the fact that 5 out of the 6 conservative Supreme Court justices are deeply conservative Catholics. Somehow, almost all of the Republican-appointed Supreme Court justices over the past generation have been conservative Catholics. With hard right Catholic Leonard Leo playing the lead role as the Federalist Society’s point man on making those Supreme Court recommendations. Leo didn’t just use his power to stack the Supreme Court with far right conservatives. He keeps picking conservative Catholics.
So is it Leo’s role as a board member of the Catholic Information Center, one of Opus Dei’s DC-based organizations, that has resulted his repeated selection of conservative Catholic Supreme Court nominees? It seems like a likely factor. Also recall how the financing for the Leo’s organizations was heavily financed by the billionaire Corkery family who are Opus Dei members.
And that brings us to another far right Catholic organizations that it turns out Leo has also long been a member of: the Knights of Malta. Yep, Leo is a member of the Knights of Malt too. On top of his CNP and Opus Dei memberships.
It’s worth recalling at this point another notable member of both the Federalist Society and the Knights of Malta: Joseph E. Schmitz, the Inspector General of the Department of Defense from 2002–2005. This is also a good time to recall that 2011 report by Sy Hersh on the surprisingly large number of Knights of Malta sitting on the US Joint Chiefs of Staff. Opus Dei isn’t the only reactionary Catholic entity with profound influence in DC.
So when we find that Leonard Leo has somehow become one of the most powerful individuals in the US through the profound influence he wields as the figure in charge of determining the Federal Society’s judicial recommendations, we have to ask: just how much is Leo acting as a vessel for wielding influence on behalf of these far right Catholic orders? How much influence do Opus Dei and the Knights of Malta have over the US judiciary? Is this why Barre Seid felt compelled to hand over their fortune to Leo? That’s all part of the context of this fascinating new report the origins of the remarkable relationship between Barre Seid and Leonard Leo. A relationship that has elevated Leo into a kind of right-wing sugar-daddy Pope for US conservatives:
“The gift from nonagenarian electronics magnate Barre Seid (pronounced Barry Side) is effective altruism in reverse: a fire hose of cash aimed at destroying American liberal culture through lawsuits and support for politicians challenging gay rights, unions, environmental protection, voting rights, and ppublic education. The money will last a good long while. Philanthropic recipients usually follow a 5 percent rule: They try not to spend more than 5 percent of the endowment per year. Seid’s pile is so large that it could return an average $136 million a year, or north of $230 million on a good year, to influence U.S. law and policy. Without ever having to touch the nut. For a sense of how enormous that is, consider this. The Heritage Foundation and its affiliates spent about $86 million in 2021. Heritage is a huge, and hugely influential, conservative think tank. Leo could create two Heritage Foundations and one more sizable organization on the side—all, again, without having to dip into the principal at all.”
It’s like the ‘chicken and egg’ paradox for dark money power politics: Why is Leonard Leo so wildly influential? Part of that answer today is obviously the fact that Leo exclusively controls a vast fortune bequested to him from Barre Seid. But that vast wealth transfer didn’t happen until 2020, long after Seid began relying on Leo as the primary individual through which to channel his political aspirations. It’s part of the ongoing mystery of Leonard Leo’s influence: how did he he become so deeply influential in this movement in the first place? Sure, Leo’s deep influence inside the Federalist Society — and the central role that group plays in selecting conservative Supreme Court justices — is part of the explanation. But that still doesn’t explain how Leo ended up with this profound Federalist Society influence in the first place. He isn’t independently super wealthy, and yet the super wealthy just seem to gravitate towards him. In fact, as we can see, the first public connection between Barre Seid and Leo came in 2011, when Leo joined the board of the Chicago Freedom Trust that Seid had founded. A move that we can reasonably assume was heavily rooted in Leo’s influence over the Federalist Society. But, again, where did they profound influence of the Federalist Society come from in the first place? How did Leonard Leo end up the avatar of right-wing billionaire mega-donors? It’s the question looming largest over this story:
Now, in terms of how Seid and Leo ended up connecting in the first place, that appears to be in part the result of Steven Baer’s political matchmaking efforts. And yet it doesn’t sound like Baer directly introduced Seid to Leo. Instead, Baer introduced Seid to the Koch network around 2004–2005. Intriguingly, it’s also during this time that Baer introduced Seid to American evangelical Christian Zionists. It was after introductions that Seid became a major backer of Israel-related causes. So it sounds like this network of Christian Zionists exerted a significant influence of Seid’s political giving. This is a good time to recall that Leonard Leo is a member of CNP and quite possibly one of those Christian Zionists himself:
And that Christian Zionist role in the evolution of Barre Seid’s political giving brings us to a potentially relevant fun fact about Leonard Leo. The kind of fun fact that might help explain why so many powerful people have decided to entrust Leo with administering the far right’s dark money influence empire: Leo isn’t just a CNP member and Opus Dei. He’s also a member of the Knights of Malta. How much of Leo’s influence is derived from his role as a vessel for realizing the goals of the CNP, Opus Dei, and the Knights of Malta?
As the article puts it, Medieval popes didn’t even have the kind of wealth and influence Leonard Leo is has been wielding. And will presumably continue to wield for decades to come. It’s not like he’s facing an election, after all. Or even a nomination. The sources of Leonard Leo’s power and influence are above all that. Or beneath all that.
So while we do indeed now know more about the mysterious billionaire who decided to entrust his fortune with Leo, and it’s pretty obvious why Seid saw Leo as the person best-positioned to translate Seid’s vast political fortune into political results, it’s still not clear how Leonard Leo ended up in this position as the Pope for US conservative mega-donors. It’s all part of
God’ssomeone’s mysterious grand design. It sure would be nice to know the identity of that mysterious someone.Who does Leonard Leo actually work for? It’s one of the many questions raised by last year’s historic $1.6 billion tax free donation from industrialist Barre Seid. And while the identities of secretive mega-donors is indeed a very interesting and relevant topic, it still doesn’t answer the question of who Leonard Leo is and how did he end up so deeply trusted by these mega-donors that one of them ended up handing Leo control of a $1.6 billion political war chest. How did Leo earn that level of both trust and influence among the mega-donor class?
Part of the answer is presumably due to the fact that, as one of the first paid employees of the Federalist Society, Leo is a dedicated true believer in the contemporary conservative project. A project that appears to be focused on ensuring private interests are allowed to accrue as much wealth and power and possible. And then there’s all of the elite clubs Leo has managed to become of member of, including the theocratic trifecta of Council for National Policy (CNP), Opus Dei, and the Knights of Malta.
But as the following 2019 Washington Post profile of Leo lays out, part of what makes the questions about the nature and origins of Leo’s influence so intriguing is that it’s very unclear how much he’s paid and by whom. That’s despite, or perhaps due to, Leo being a kind of conservative lord of dark money entities tasked with managing first the creation of dark money organizations and then channeling millions of dollars through them to ultimately finance the ads and other forms of right-wing propaganda. As we’re going to see in the following September 2019 article, one of Leo’s sole sources of income publicly disclosed over the past couple of decades has been the Federalist Society. And even there it’s murky. For example, Leo claimed to have stepped away from the Federal Society in 2005 and 2006 to work on the nomination of John Roberts and Samuel Alito. And yet records show his compensation from the Federalist Society jumped nearly 50 percent during those years.
The BH Group is the only other publicly disclosed source of income for Leo. Recall how the BH Group, and sister entity BH Fund were both formed in 2016 by an employee of the key dark money conservative law firm Holtzman Vogel Josefiak Torchinsky. As we’ve seen, that employee was Donna Smith and Holtzman Vogel Josefiak Torchinsky is the same law firm that shared a Warrenton, Va. office with the address the 2016 Trump inaugural committee on its tax return. BH Group’s only known activity in 2016 was giving $1 million to the Trump inauguration fund.. Also note that BH Fund was dissolved in January 2023, three days after a report by Politico inquired into whether or not it facilitated the sale of Kellyanne Conway’s polling company. In other words, BH Group and BH Funds aren’t just dark money entities. They’re particularly shady dark money entities. At least that’s what we can glean from the little public information we have on them. And BH Group is the only other publicly disclosed source of Leonard Leo’s income other than the Federalist Society. So is Leo just a relatively under-paid dark money shadow lord? Or is his take dark income?
And that highlights one of the other income-related details we’ve learned about Leo: back in 2018, Leo and his Sally paid off a 30 year mortgage issued in 2010. Two months later, they purchased a $3.3 million luxury home in Maine. Beyond raising more questions about shadow sources of income, it’s also eerily reminiscent of the story of billionaire mega-donor Harlan Crow purchasing Clarence Thomas’s mother’s home in an 2014 real estate transaction. A rather odd 2014 transaction that saw Thomas sell Crow his family home for $133k, which was apparently a net-loss for the Thomases, but with a provision that his mother can live there rent free for the rest of her life. That ‘net-loss’ sale price was, in turn, used by Thomas as an excuse to not disclose the deal since he apparently thought, incorrectly, that only profitable transactions needed to be reported. Which is a reminder not only of Leo’s longstanding friendship with the Thomases but also of the fact that, if there’s anyone comparable to Leo’s standing as a key dark money organizer for theocratic billionaires, it’s Ginni Thomas. The two have few peers.
Or at least that was the case before Barre Seid made Leo the executor of a $1.6 billion dark money war chest. Leo has no peers at this point. Which raises the grimly interesting question as to which particular oligarch he’s most ideologically aligned with today. Which brings us to a very important detail in terms of understanding who is shaping the next generation of right-wing mega-donors: In 2013, Leo joined forces with Rebekah Mercer and Steve Bannon on the board of the small charity Reclaim New York. Bannon and Mercer founded the charity that year. The Mercer family went on to become the leading benefactor of the Federalist Society, with $6 million in donations over the next two years. So it appears that 2013 was a year when the Mercers took over as leading benefactors of Leo’s longstanding core organization. A move that was kind of indirectly christened with Leo’s joining of a charity formed by Bannon and Mercer. So when we’re forced to ask which right-wing billionaire’s vision is most closely aligned with Leo’s today now that Leo has become ‘independently super-wealthy’ as a result of Barre Seid’s ‘charity’, it’s worth keeping in mind that it Rebekah and Robert Mercer have been making major Federalist Society investments over the past decade. It’s also worth keeping that in mind when it comes to speculating about the sources of any undisclosed income Leo may have been taking. Taking luxury home in Maine didn’t pay for itself.
This is also a good time to recall how 2013 was the same year Ginni Thomas co-founded the Groundswell Group meetings with fellow CNP member Steve Bannon back in 2013 as a competitor to Grover Norquist’s influential ‘Wednesday Morning Meetings’. Groundswell went on to play a major role in making staffing decisions for the Trump White House. Groundswell is now known as TC Group, in keeping with the propensity of these groups to keep changing their names. So in 2013, both Leo and Ginni Thomas cozied up to Steve Bannon, who was at this point already working closing with the Mercers. Leo then joins a Mercer charity and the Mercers becomes major Federalist Society donors. This seems like an important development in the structure of ‘kind of vast right-wing conspiracy’.
And that’s all part of what it’s increasingly important to try to understand how it is that Leonard Leo became one of the most powerful men on the planet. He’s so central to today’s dark money world that we can’t really understand that world without understanding Leonard Leo. And yet the more we look at Leo’s career, the more apparent it becomes the his power is derived from how effectively he holds and wields that power in a highly opaque manner. Billionaires go to Leonard Leo because he knows how to wield their influence anonymously. Which is also why his power and influence has only exploded in the post-Citizens United environment. He’s a dark money master who knows how to strategically channel hundreds of millions of dollars for campaigns that can shape public opinion while shielding the ultimate source of the funds. A role that’s only going to get easier now that he’s personally in control of a $1.6 billion war chest. It’s like Leonard Leo’s career became the demented love child of the American fantasy of a virtuous meritocracy and the reality of unlimited dark money influence: If you are highly skilled at shielding corrupt concentrations of power from scrutiny, you can become one of the most powerful people in the world:
“The story of Leo’s rise offers an inside look into the modern machinery of political persuasion. It shows how undisclosed interests outside of government are harnessing the nation’s nonprofit system to influence judicial appointments that will shape the nation for decades.”
Yes, it’s hard to get a more inside look into the modern machinery of political persuasion than an inside look at Leonard Leo’s career. A career in a rather unique role as the leading middle-man between the conservative legal establishment and the rest of world. A middle-man between the conservative legal world, conservative mega-donors, the political establishment. He’s got a lot of roles. Including, of course, his role on the CNP’s board of governors:
And then there’s Leonard Leo’s role as a kind of middle-man between the aforementioned ‘vast right-wing conspiracy’ network of entities and all of that and the rest of world when it comes to Leo’s role in setting up one ‘non-partisan’ dark money 501(c)(4) group after another dedicated to ‘social welfare’ in the form of propaganda. The kind of propaganda that will make this capture of the legal establishment as palatable to the public as possible. And fore whatever reason, nine of those ‘non-partisan charities’ chose Creative Response Concepts (CRC) to execute much of that propaganda. CRC is Leonard Leo’s media firm of choice it seems:
Amusingly, when pressed about this unique role in this ‘kind of vast right-wing conspiracy’ of billionaires, theocrats, and ultra-conservative attorneys and judges as the ‘money guy’ who can connect those billionaires to activists who will execute their vision, Leo insists that “I’m not particularly knowledgeable about a lot of it.” No, no, he cares about ideas. Not money. The fact that those hard right ideas all seem to accrue enormous money and power for these billionaires is incidental:
Beyond his role as the ‘moneyman’, Leo is also appears personally chummy with a number of the conservative Supreme Court justices too. In the case of Brett Kavanaugh, long before he became a justice. And as one of the first paid employees of the Federalist Society, it’s not hard to imagine why Leo might be extra popular among young conservative lawyers. Being friends with Leonard Leo has benefits and that’s long been the case:
But it’s not the personal relationship with Leo that ultimately gets someone onto the Supreme Court. It’s the public relationship and behind-the-scenes lobbying work done by entities like Judicial Confirmation Network (JCN) (previously known as the Judicial Crisis Network and now known as the Concord Fund). As we’ve seen, the biggest donor to JCN has been the Wellspring Committee, a 501(c)(4) backed by the donor network operated by billionaires Ann and Neil Corkery. When Wellspring was set up in 2008, it was actually founded by the Koch brothers, and only later handed off to the Corkerys. It underscores how Leo’s power and influence seems to emanate from the influence he has over all of these various groups like JCN/Concord Fund. Groups that are ultimately paid for by billionaires like the Corkery who happen to share Leo’s theocratic pro-oligarchy vision of a ‘free society’:
Also recall how the Corkerys are, like Leo, members of Opus Dei. But Opus Dei isn’t the only theocratic organization the leadership of the JCN belongs to. JCN board member and founder Gary Marx shows up on the CNP membership list. But in terms of entities influencing the JCN, it’s pretty obvious that the JCN is operating as an extension of the Federalist Society. They literally share DC offices in the same hallway. On top of that, JCN president Daniel Casey has been paid more than $1.5 million in fees from the Federalist Society over nine years for “media services” provided by a company based out of his home. It’s all one giant incestuous network manifesting as all these seemingly ‘independent’ organizations. Despite all of that, the ties between the JCN/Concord Fund and Leo are official opaque:
Notably, it appears that a big part of the rise of Leo’s influence has to do with the consequences of the history 2010 Supreme Court Citizens United ruling that effectively handed US elections over to sprawling dark money networks capable of producing opinion-shifting media campaigns. Leo experience managing the media campaigns run by this network of dark money entities and the ability to connect activists to billionaire donors became all the more valuable:
Interestingly, it’s in 2010 where we find Leo serving on the board of the Tea Party group Liberty Central, founded by Ginni Thomas. If there’s another figure in this movement who has the kind of ‘master insider networker’ role, it’s Ginni Thomas. Recall how Ginni started Liberty Central in 2010 with a $500k anonymous donation but ended up stepping away from the ostensibly ‘non-profit’ group November of that year over conflict of interest questions. She went on to form consulting group Liberty Consulting, a for-profit entity with fewer public reporting requirements. So when we see how the $120k salary Ginni took in as president of Liberty Central was the basis for a possible conflict-of-interest violation, it’s perhaps fitting to see Leonard Leo — longtime family friend of the Thomases — serving beside her in this conflicted role:
And then we get to this extremely interesting detail in the rise of Leonard Leo as the conservative movement’s lord of dark money: In 2013, Leo joined forces with Rebekah Mercer and Steve Bannon on the board of the small charity Reclaim New York. Bannon and Mercer founded the charity that year. The Mercer family went on to become the leading benefactor of the Federalist Society, with $6 million in donations over the next two years. This is also a good time to recall how 2013 was the same year Ginni Thomas co-founded the Groundswell Group meetings with fellow CNP member Steve Bannon back in 2013 as a competitor to Grover Norquist’s influential ‘Wednesday Morning Meetings’. Groundswell went on to play a major role in making staffing decisions for the Trump White House. Groundswell is now known as TC Group, in keeping with the propensity of these groups to keep changing their names. So in 2013, both Leo and Ginni Thomas cozied up to Steve Bannon, who was at this point already working closing with the Mercers. Leo then joins a Mercer charity and the Mercers becomes major Federalist Society donors. In an important chapter the evolution of the dark money component of the contemporary political landscape:
Flash forward to 2016, and we see Leo involved with the creation of three new dark money entities: the BH Fund, the Freedom and Opportunity Fund, and America Engaged. Although technically four new entities. BH Fund has a sister entity, the BH Group, too. All were formed by an employee of the key dark money conservative law firm Holtzman Vogel Josefiak Torchinsky. As we’ve seen, that employee was Donna Smith and Holtzman Vogel Josefiak Torchinsky is the same law firm that shared a Warrenton, Va. office with the address the 2016 Trump inaugural committee on its tax return. BH Group’s only known activity in 2016 was giving $1 million to the Trump inauguration fund.. Also note that BH Fund was dissolved in January 2023, three days after a report by Politico inquired into whether or not it facilitated the sale of Kellyanne Conway’s polling company. The common theme being that these entities are basically set up for shady dark money activity, dissolved when they received scrutiny, only to be replaced or rebranded. The other common theme being the hiring of CRC to execute the propaganda campaigns:
Also note how money was even being shifted between these three newly formed groups, with BH Fund — which took in nearly $25 million from a single still unknown donor — giving almost $3 million to the other two groups. An interwoven nest of entities that seem to exist for no reason other than obscuring the nature of their existence:
And, of course, there’s the common theme of the CNP, with CNP members seemingly endlessly showing up in these dark money stories. So it shouldn’t be a surprise to find the Freedom the Opportunity Fund was basically used a a vehicle for channeling money to groups like the Independent Women’s Voice that played a role in publicly attacking Brett Kavanaugh’s accusers, run by CNP Heather Higgins. And in keeping with the other common theme of whole disingenuous abuses of the dark money rules that allow for tax-deductible anonymous political activities only if they are non-partisan’, we find Higgins basically bragging about how her group “worked hard to create a branded organization . . . that does not carry partisan baggage.” An organization “branded as neutral but actually having the people who know, know that you’re actually conservative.” She’s saying the quiet part out loud because she can. Because no one cares nothing is going to be done about it. That’s how utterly broken the US’s political financing laws are. So broken the main perps can brag about it:
Finally, with the hundreds of millions of dollars slushing around in these dark money networks, and Leonard Leo’s role as a the master orchestrator of these networks, it’s fascinating to see how nebulous Leo’s own income reporting is over the past two decades. For example, when he claimed to have taken time off from the Federal Society in 2005 and 2006 to work on the Bush administration Supreme Court nomination fights, it turns out his Federal Society compensation actually increased nearly 50 percent. And during this entire period, the only other publicly disclosed employer for Leo is BH Group, founded in 2016 with that nearly $25 million donation from a still anonymous donor and that seems to exist for no other reason than to dole out that money to other dark money entities will shielding the identity of its donors. How much has Leo been paid by BH Group? We have no idea. That’s part of what makes it so interesting to see that 2016 was the same year Leo and his wife Sally were named Stewards of Saint Peter by the Papal Foundation, an honor given to those who pledge to donate $1 million or more for Vatican initiatives worldwide. And then we also find that the Leo not only managed to pay their 30 year home mortgage on a $710,000 home off in less than a decade but they also purchased a $3.3 million luxury home in Maine just two months after paying off that mortgage. How much money is Leo actually making from his role as a right-wing dark money shadow lord? This is a good time to recall how billionaire mega-donor Harlan Crow purchased Clarence Thomas’s mother’s home in an 2014 real estate transaction. A rather odd 2014 transaction that saw Thomas sell Crow his family home for $133k, which was apparently a net-loss for the Thomases, but with a provision that his mother can live there rent free for the rest of her life. That ‘net-loss’ sale price was, in turn, used by Thomas as an excuse to not disclose the deal since he apparently thought, incorrectly, that only profitable transactions needed to be reported. Was there any sort of hidden mega-donor involvement in Leo’s surprise home deals of 2018? We’ll likely never know. But it’s hard to not suspect that large hidden gifts of this nature are part of the dark money puzzle we’re looking at here:
And, of course, all of the information in this 2019 piece predates last year’s historic $1.6 billion bequeathment from industrialist Barre Seid to Marble Freedom Trust, a ‘charity’ that only Leo controls. As profound as Leo’s influence was in September of 2019, he’s much more powerful now. Especially powerful in his core role as a shield for billionaires from scrutiny over their political ‘speech’. ‘Speech’ in the form of giving millions, or billions, of dollars to people or Leo to spend on public persuasion campaigns. Tax-free ‘non-partisan’ public persuasion campaigns, of course. Will the 2024 Leo-backed media campaigns ultimately get financed by Charles Koch? Robert Mercer? Or off the interest earned on Barre Seid’s $1.6 billion war chest? We’ll probably never find out, thanks to Leonard Leo’s dark money mastery. Well, that and the Citizen’s United ruling compliments of Leo’s hand-picked conservative majority.
“No mention of Ginni, of course.” Those were the damning instructions issued by dark money overlord Leonard Leo to fellow CNP member Kellyanne Conway back in 2011 as part of some sort of still-unexplained series of payments made to Ginni between June of 2011 and June of 2012 totally $80k in all. The payments weren’t made directly to Ginni but instead the Liberty Consulting for-profit consulting company she set up in November of 2010. Recall how Ginni started the ‘nonprofit’ Tea Party group Liberty Central in 2009 but stepped away due to conflict of interest concerns. As we’re going to see in the following articles, those were some very valid conflict of interest concerns. By June of 2012, Leonard Leo had arranged for Kellyanne Conway’s polling firm to bill a non-profit he controlled — the Judicial Education Project, now know as the 85 Fund — with the instructing of sending the billed payments to Liberty Consulting. That’s what the “no mention of Ginni, of course” was all about. It was a secret payment from Leonard Leo to Ginni Thomas.
But it gets sleazier and more incestuous. First, recall how Leo was serving on the board of Liberty Central after Thomas formed it in 2010. Also recall how Ginni Thomas reportedly made over $120k as Liberty Central’s President in 2010. So Ginni was getting a pretty hefty salary from an entity that had Leo serving on its when she stepped away from it over conflict of interest concerns in November 2010, only to have a secret payment scheme arranged by Leo by June of 2011.
It also turns out that president of the Judicial Education Project in 2011 is the same man listed as the Liberty Central’s account in 2009 founding documents: billionaire Neil Corkery. As we’ve seen, in addition to being members of Opus Dei, bilionaires Ann and Neil Corkery are a major force behind the Judicial Crisis Netork (JCN)/Concord Fund, which plays a major role in public relations campaigns around judicial nominations. The biggest donor to JCN has been the Wellspring Committee, a 501(c)(4) backed by the donor network operated by the Corkerys. When Wellspring was set up in 2008, it was actually founded by the Koch brothers, and only later handed off to the Corkerys.
It’s the kind of incident that should be the stuff of scandals. Should be. Instead, it’s the latest example of the Supreme Impunity enjoyed by the chief justices of the Supreme Court. But it’s not an impunity exclusively enjoyed by Justice Thomas. It’s like this entire network has carved out a legal bribery niche, using dark money laws and incestuous institutional relationships as cover. And that was all before Leonard Leo was put solely in charge of the $1.6 billion Marble Freedom Trust political war chest. What he was doing in 2012 is child’s play compared to what he’s capable of doing now.
So what is Leonard Leo doing now, with that vast fortune and even more dark money entities at his disposal? We have no idea. Or at least little idea. We do the Marble Freedom Trust has already been depleted down to about $1.2 billion, thanks to the hundreds of millions it’s already given to the other dark money entities that were already under Leo’s control. Entities like the Judicial Education Project (now the 85 Fund) or the JCN/Concord Fund, which, in turn, dole it out to even more dark money groups. And, ultimately, entities like CRC Advisors to run the media campaigns. Recall how CRC advisors has been routinely selected by Leo-affiliated entities to conduct the media component of their propaganda campaigns. As we’re going to see in the following article, Leo joined CRC in 2020, around the same time he resigned as president of the Federalist Society (although he still sits on its board). And as we’re also going to see, CRC Advisors got a big new project last year. The kind of project that was obviously going to raise of host of conflict of interest questions: CRC Advisors is now doing public relations for the Thomas family:
“Stephen Gillers, an expert on legal ethics at New York University School of Law, said that while the connection between Leo, CRC, and Thomas bears reporting, it doesn’t hit an official ethical bar—partly, he said, because the bar is so much higher for Supreme Court justices than for any other federal judge.”
This is fine. Everything is fine. At least from a technical legal perspective. Sure, it’s ethically unseemly for CRC Advisors — a media firm now Leonard Leo joined in 2020 — to take on the role of promoting a documentary about Clarence Thomas and host multiple Thomas-centric web domains. Unseemly, but legal:
And note who else we find working as CRC: long-time Thomas family-friend Mark Paoletta and CNP member Carrie Severino from the “Judicial Crisis Network” (JCN) that Leo is also deeply involved with (now renamed the Concord Fund). Recall how the JCN was instrumental in organizing the GOP stance in 2016 following the death of Antonin Scalia that no Obama nominees to replace Scalia would be considered until after the 2016 election. Also recall how CNP member Gary Marx founded the JCN and is basically a subsidiary of the Federalist Society. As we should, the JCN is also a client of the CRC. So when we see how the CRC is leading the public relations for the Thomases and referring to people like Mark Paoletta and Carrie Severino for related interviews, it’s a reflection of just how the promotion of the Thomases’ legacy doubles as an excuse to get paid for provided ‘promotional services’:
And that report from March of 2022 brings us to the following NY Times Report from last month providing a glimpse into how Leo has settled into role as the master of $1.6 billion Marble Freedom Trust. As the report describes, Leo has indeed been quite busy doling money out to various groups. Specifically, doling money out to other groups that he sits on the board of and controls. And then apparently direct those entities to, in turn, hire CRC Advisors. It underscores one of the more remarkable aspects of Leonard Leo’s $1.6 billion political treasure trove: that trove is getting spent on services provided by the rest of Leonard Leo’s network of dark money entities. Which, of course, only serves to effectively make this entire network even darker and more opaque:
““Marble Freedom Trust is Leonard Leo’s billion-dollar slush fund to erode democracy,” said Kyle Herrig, the president of Accountable.US. “With all this money under his control, Leo can push his extreme agenda by influencing conservative lawmakers on Capitol Hill, deploying state attorneys general to do his bidding and moving extreme bills in state legislatures.””
A billion-dollar slush fund to erode democracy, entirely under Leonard Leo’s control. More than a billion dollars still, despite the hundreds of millions of dollars Marble Freedom Trust has already given out to other Leo-controlled entities like the 85 Fund, previously known as the Honest Elections Project (HEP), and other dark money entities. Dark money entities that, in turn, gave the money out further. Layers of dark money obfuscation at work between the Marble Trust and the ultimate beneficiaries:
And as we should expect, when these Leo-controlled dark money entities needed to run media operations, they hired CRC. As we saw above, it was 2020 when Leo formally joined the CRC. So when we see this surge in spending on CRC services from Leo-controlled entities over the past two years, you have to wonder how much of that surge in spending is ultimately getting pocketed by Leo:
And that brings us to the rather remarkable salary Leo is making off the Marble Trust alone: Leo’s salary for his part-time work went from $350k to 400k. Because not. The guy can pay himself whatever he want. And potentially anyone else he wants to pay off for whatever reason. And it’s not like Leo doesn’t have a track record of doing exactly that: it turns out Leo was arranging for payments to Ginni Thomas back when Thomas was still working for the Liberty Consulting for-profit consulting firm she set up back in November 2010 following conflict-of-interest concerns over the Liberty Central ‘nonprofit’ she set up earlier that year. Secret payments that kept her name off the paperwork:
How many hours did Leo have to put in for that part-time pay of $400k last year? Who knows. But this a good time to recall how Ginni Thomas reportedly made over $120k as Liberty Central’s President in 2010, the year she started the group, only to go on to start the for-profit Liberty Consulting later that year. As the following report describes, he arranged for Kellyanne Conway’s polling firm to bill a dark money entity he controlled — the Judicial Elections Project (now the 85 Fund) — tens of thousands of dollars and use that money to pay Ginni Thomas in a way that leaves her name off of the transaction. That arrangement paid Liberty Consulting $80k from June 2011 to June 2012:
“The arrangement reveals that Leo, a longtime Federalist Society leader and friend of the Thomases, has functioned not only as an ideological ally of Clarence Thomas’s but also has worked to provide financial remuneration to his family. And it shows Leo arranging for the money to be drawn from a nonprofit that soon would have an interest before the court.”
Yes, it turns out Leonard Leo isn’t just an influence peddler. He peddles cash too. Or rather, “financial remunerations”. And as the 2012 payments of $80k between June 2011 and June 2012 to Ginni Thomas’s Liberty Consulting demonstrate, Leo knows how make these remunerations extra quiet. In this case, he asked CNP member Kellyanne Conway to bill a nonprofit Leo controls — the Judicial Education Project (now known as The 85 Fund) — and use that money to quietly remunerate Ginni Thomas. Don’t forget that Leo was serving on the board of Liberty Central after Thomas formed it in 2010. So Leo joins board of Liberty Central in 2010, a ‘nonprofit’ Ginni just formed. Then in November of 2010, Ginni steps away from Liberty Central over conflict of interest concerns and forms the for-profit Liberty Consulting. By June of 2011, Leo has arrange for secret payments from intended for Ginni under the banner of services provided to the Judicial Education Project. And the Judicial Education Project/85 Fund just happened to be actively petitioning the Supreme Court that year. In other words, those conflict of interest concerns were pretty valid:
And while such an arrangement may look incredibly unethical, it’s not illegal. Ethics experts agree that it looks awful, but that doesn’t mean it’s illegal:
And note the president of the Judicial Education Project that year: Neil Corkery. As we’ve seen, in addition to being members of Opus Dei, billionaires Ann and Neil Corkery are a major force behind the JCN/Concord Fund. The biggest donor to JCN has been the Wellspring Committee, a 501(c)(4) backed by the donor network operated by the Corkerys. When Wellspring was set up in 2008, it was actually founded by the Koch brothers, and only later handed off to the Corkerys. So when we see how Neil Corkery also operates as a bookkeeper for several of Leo’s groups, it’s important to keep in mind that he’s the source of a lot of that money too:
And who do we find serving as Liberty Central’s accountant? Niel Corkery. So both Leonard Leo and Neil Corkery were directly involved with Ginni Thomas’s 2010 formation of Liberty Central. That’s part of the context of all of the hoops Leo was jumping through to secret pay Ginni for alleged polling services:
Finally, note the ultimate fate of Kellyanne Conway’s polling company: CRC Advisors bought it. Because of course that’s what happened:
As we can see, they keep in all in the family. A theocratic oligarchic family intent on controlling the levers of power from the shadows. And while we don’t know how exactly $1.6 billion Leo obtained control over will ultimately be spent, we can be pretty confident as to where it will be spent: as much as possible will be spent entire inside this incestuous network of dark money entities under Leo’s control. It points towards one of the weirdly hopeful points in this entire story about the rise of Leonard Leo and his $1.6 billion political war chest: the whole arrangement is so wildly corrupt and shrouded in mystery that there’s not really anything preventing Leo and his allies from simply embezzling the whole thing on bogus ‘services’. Of course, even money wasted on corrupt kickbacks to Leo’s friends still do real damage when those kickbacks are going to public officials or their families. Which also makes this a good time to note that Ginni’s Liberty Consulting is still operating. So don’t be surprised to eventually learn that the Marble Freedom Trust gave millions of dollars to a dark money entity he controls that paid another dark money he controls, etc, until one of them eventually paid Liberty Consulting a pretty penny for some sort of vague service. That’s to be expected at this point. But do be surprised if Ginni’s name is anywhere on the paperwork. This is a classy dark money kickback operation.
One of the increasingly tiring aspects of the Trumpian era of US politics has become the seemingly endless ‘silly season’ nature to so much of the political coverage since Trump entered the political arena in 2015. There’s only so much absurdism one can handle. Not to say the US wasn’t deluged with absurdism and divorced from reality pre-Trump, but there wasn’t as prominent a figure who so forcefully projected such dangerous absurdism on such a regular basis.
But as the following pair of articles remind us, Trump is far from the only absurdist entity on the political stage. He’s just the biggest and most dangerous. Just take the 2024 field. Putting aside the humiliating clown show that the GOP primary turned out to be, we have figures like RFK Jr or Dean Phillips running seemingly hopeless races in the Democratic primary while both pondering similarly hopeless third-party runs. Campaigning earnestly and assuring audiences of their sincerity the whole time, despite the silliness of the whole endeavor.
Except, of course, winning the White House doesn’t have to be the only possible objective for figures like RFK Jr. or Phillips. Simply altering the outcome of the 2024 race could be enough. And while RFK Jr. and Phillips both started off as Democratic primary contenders, RFK Jr. has already switched an independent run and his reportedly looking into the Libertarian ticket which would secure him wider ballot access. Phillips, while still in the Democratic primary for silly reasons, refused to rule out a third party run under the No Labels ticket just a couple of weeks ago. If we see a repeat of 2016 or 2020-style close contests, it’s only going to require them to shave off a fraction of a percent more for Trump or Biden to flip in the highly contested swing states.
So with the growing prospects of both RFK Jr. and Dean Phillips playing spoiler roles in the upcoming race, we have to ask whose race are they most likely to ultimately spoil? Trump’s or Biden’s? And while a case might be made that RFK Jr could end up stealing away more votes from Trump than Biden with their overlapping ‘outsider fight the system’ campaign narratives, some of the biggest clues come in the form of who is financing these campaigns. Spoiler alert: it’s not earnest progressives.
Instead, for RFK Jr. we find none of than Trump mega-donor Timothy Mellon, of the powerful Mellon dynasty. As we saw, Mellon donated $10 million to a Trump super PAC back in 2020. He did so again last year. But that wasn’t his only political giving. Mellon recently gave $10 million to a pro-Kennedy super PAC, which is on top of $15 million he gave to the PAC last year. So, given that Mellon obviously wants Donald Trump to win a second term, it’s also pretty obvious why he gave $25 million to RFK Jr. Is this a $25 million blunder? Timothy Mellon doesn’t think so.
And then there’s the Phillips campaign. A campaign that appears to in midst of identity crisis. A well financed identity crisis. For starters, Phillips — one of the wealthiest members of congress himself — has a pair of wealthy brothers who are not only financing his campaign but helping him craft his message. Matt and Scott Krisiloff, both of whom are very close to OpenAI CEO Sam Altman. Matt even reportedly dated Altman at one point.
And while the decision of these literal ‘tech bros’ to fund a pro-Phillips super-PAC, We Deserve Better, is itself an eyebrow-raising turn of events, there’s more questionable part of this relationship: it appears to violated the US’s campaign finance laws. Notoriously shoddy campaign finance laws that effectively allow campaigns to have allied super-PAC run unlimited spending campaigns on their behalf but only as long as they maintain the pretense of no direct coordination between the campaign and the super-PAC. As we’re going to see, that pretense was not remotely maintained. For starters, the brothers were initially part of Phillips’s “leadership” group that was coordinating via the encrypted Signal app. As part of this work, the brothers conducted at least a dozen focus groups about Phillips. The Krisiloffs removed themselves from the campaign’s Signal group less than three weeks after they gave feedback on the polling memo and ten days later the We Deserve Better super PAC was formed. And while the Krisiloffs maintain that their super PAC is merely “a separate 501(c)(4) organization which has a mission of educating voters about increasing voter turnout for greater practice of democracy,” it’s pretty obvious that it was set up to help the Phillips campaign.
Now, did the Krisiloff brothers and the Phillips campaign violate campaign finance laws by not adhering to the superficial rules of maintaining an appearance of independence between campaigns and super PACs? That will presumably be for regulators and/or courts to decide. But it’s clear that the Krisiloff brothers want to see Biden out of office as soon as possible and that apparently includes financing a stunt that can only end up helping Donald Trump’s chances in the end. We don’t have to wonder why they might want to get rid of Biden. The initial meeting between the Krisiloffs and Phillips took place days after Biden signed an executive order creating new rules for the artificial intelligence industry. Phillips has since embraced the benefits and promise of AI as a talking point on his campaign. So while this story is about the Krisiloffs and the Phillips campaign, it’s worth keeping in mind that Sam Altman and other figures in the AI industry may be playing supporting roles in this spoiler effort.
It’s also worth noting that Matt Krisiloff started Conception, a company dedicated to creating human eggs from stem cells. And as we’ve seen, part of the promise of this technology is the mass creation of large numbers of eggs, and therefore embryos, that can be used for genetic screening and “optimal” embryo selection. Which makes it the kind of service that is going to be very popular with the burgeoning do-it-yourself eugenics industry.
But the Krisiloffs aren’t the Phillips campaign’s only source of questionable mega-donor assistance. Hedge fund billionaire Bill Ackman recently pledge $1 million for Krisiloff’s super PAC. Yep. The same billionaire who has now teamed up with Chris Rufo in waging an anti-DEI crusade against colleges and universities. Shortly after, the Phillips campaign scrubbed the Diversity, Equity, and Inclusion section from its campaign website. It wasn’t a great look.
And with both RFK Jr. and Phillips, we’re going to get endless insistences that they really are ‘in it to win it’ and not just playing a spoiler role. We’ll hear such denails until the day Trump is sworn back into office. Extremely well-financed dangerous absurdism, thanks to the tens of millions of dollars from some unlikely supporters:
“Timothy Mellon, a Republican megadonor who has also backed former President Donald Trump, has donated another $10 million to the pro-Kennedy super PAC, American Values 2024. Mellon, an heir to the Mellon banking fortune, gave a total of $15 million to the group in 2023. He separately donated $10 million to Make America Great Again Inc., a pro-Trump super PAC, in the second half of 2023.”
Timothy Mellon sure has eclectic political tastes: $15 million in 2023 and another $10 million this year for RJF Jr’s super PAC. That’s on top of the $10 million for Trump’s Make American Great Again PAC last year. Which isn’t the first time Mellon has given Trump $10 million. It’s a powerful anecdote to keep in mind when trying to assess RFK Jr’s net-impact on the general election and whether or not he’ll be expected to draw more support from Trump or Biden. While, on the one hand, RFK Jr’s ‘outsider’ political appeal seems to overlap heavily with Donald Trump’s ‘burn it all down’ political brand. But on the other hand, we don’t see Biden mega-donors financing RFK Jr’s campaign too.
Yes, Timothy Mellon sure has eclectic political tastes. Or, more obviously, grossly cynical and Machiavellian ambitions. Which brings us to the following story about another grossly cynical and Machiavellian campaign finance story involving another fringe candidate with some rather interesting mega-donors behind him: Dean Phillips, the Minnesota congressman who has been engaged in an increasingly hapless primary challenge to Joe Biden. It turns out Phillips has a pair of wealthy brothers who are not only financing his campaign but helping him craft his message: Matt and Scott Krisiloff, billionaire Sam Altman standing behind them. And Bill Ackman beside them.
Again, Phillips recently refused to rule out out a third party bid, and admits close ties to no “No Labels”. A third party run is just a matter of time. Phillips only has to drain a small percentage of the vote in key swing states to swing the election. And he’s going to have plenty of AI-backed money to do it:
“Campaign finance lawyers say the Phillips campaign and We Deserve Better, the super PAC, are testing the limits of federal election rules designed to prohibit coordination between campaigns, which are bound by contribution limits, and outside groups that can accept donations of any size. A watchdog group has already filed a separate complaint alleging coordination between the Phillips campaign and a different super PAC supporting the liquor heir’s primary challenge to President Joe Biden.”
The US’s dark money rules have long been a farce, predicated on the silly notion that super PACs spending tens of millions are dollars for a campaign aren’t effectively coordinating with that campaign already. But those are the rules. In order to be allowed to spend unlimited amounts in support of a candidate, a pretense of non-coordination must be maintained. A pretense that wasn’t maintained when we find the Krisiloff brothers were first members of Phillips’s “leadership” group before abruptly removing themselves and forming the We Deserve Better Action super-PAC. It’s pretty hard to break the dark money rules in the US’s current broken campaign finance system. But it looks like Phillips and Krisiloffs may have managed to do it:
So what is motivating the Krisiloff brother’s interest in the Phillips campaign? This is where it starts looking especially sleazy: the brothers — who represent themselves as ambassadors for OpenAI CEO Sam Altman — met with Phillips just days after Joe Biden signed an executive order creating new rules for the AI industry. It’s not hard to see the motivations here:
So what do we know about the politics of the Krisiloffs beyond their presumed opposition to regulations for the AI industry? Well, Matt Krisiloff started Conception, a company dedicated to creating human eggs from stem cells. And as we’ve seen, part of the promise of this technology is the mass creation of large numbers of eggs, and therefore embryos, that can be used for genetic screening and “optimal” embryo selection. In other words, Matt Krisiloff started a company that modern eugenicists should be really excited about:
But the Krisiloffs aren’t the only questionable donor to Phillips’s super PAC. None other than hedge fund billionaire Bill Ackman, the same billionaire who has taken up the ‘anti-DEI’ agenda led by Chris Rufo and turned it into a personal crusade. And then Phillips removed the DEI references from his campaign website. Dean Phillips sure has an interesting relationship with these mega-donors:
It’s the best “Yes to AI. No to DEI.” campaign money can buy. Not that it’s had any traction at all so far. But should Phillips pursue a third party bid as he recently refused to rule out, and with enough billionaire backers (and enough ‘flexibility’ on the Phillips campaign to allow for the adoption of their billionaire pet causes), who knows how much support Phillips might ultimately be able to siphon off from Joe Biden. He’s working to get Trump elected and he knows it. Along with all his backers. And along with Timothy Mellon and RFK Jr. Despite all the denials, they can’t not know these basic truths. And yet, it’s going to be ‘no, no, I’m here to win’ the whole time, as absurd as that will sound. Silly season sucks for a lot of reasons. But the in-your-face denials of the undeniable, amplified by billionaires playing Machiavellian games, might be the worst part. Machiavellian games that wouldn’t be possible if the US had sensible campaign finance limits. But here we are in the permanent silly season of 2024. It’s absurd. And bad. Although, admittedly, not remotely as absurdly bad as the open unchecked fascism season coming up next.