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| David Koch, chairman of the Americans for Prosperity Foundation, funds some of the largest dark money networks. (AP Photo/Phelan M. Ebenhack, File) | AP |
WASHINGTON
-- A recent million-dollar settlement in California has stripped back the
curtain on how "dark money" is secretly moved in and around electoral
politics. Documents and interviews revealed how a networks of nonprofits passed
dark money -- that is, money whose source is not disclosed to the public --
from one to another to another to further obscure the original sources.
Examples of
similar financial transfers uncovered by The Huffington Post, in addition to a
host of examples reported by the Center for Responsive Politics and NPR,
demonstrate that the California case is no isolated incident.
Networks of
nonprofits are being created across the country, at the national and state
levels, to secretly fund candidate and ballot initiative campaigns, according
to tax documents and campaign records accessed through Guidestar,
CitizenAudit.org and the National Institute for Money in State Politics. Their
tactics are similar to the schemes adopted by the global rich to hide their
wealth -- except instead of avoiding tax collecting authorities, they're trying
to skirt disclosure laws.
The best
known of these networks are those tied to the billionaire Koch brothers.
Linking the groups together are two dark money hubs: the Center to Protect Patient Rights, which doled out as much as $182.2 million to other dark money
groups from 2010 through 2012, and Freedom Partners, which gave $236 million to other dark money groups, including $115 million to the Center to Protect
Patient Rights.
But dark
money networks have also grown at the state level. They played a notable role
in the clashes over labor rights in Wisconsin and Ohio in 2011.
The
Wisconsin battle erupted over a controversial budget bill, supported by Gov.
Scott Walker (R) and passed in March 2011, that stripped public employees of
their collective bargaining rights. An April vote for a state Supreme Court
justice turned into a referendum on the legislation, and nine state senators
were targeted in a recall election that August. Outside interest groups flooded
these elections with millions of dollars, much of it spent on issue ads.
At the
center of this effort were the Wisconsin Club for Growth, a spinoff of the
national organization working to enforce conservative orthodoxy within the
Republican Party, and the WMC Issues & Mobilization Committee, the
political arm of the business trade group Wisconsin Manufacturers & Commerce.
These two dark money groups not only spent money on their own issue ads, but
also funded the activities of other nonprofits in the state.
In 2011,
the Wisconsin Club for Growth gave $4.62 million to Citizens for a Strong America, which ran ads in two of the recall elections and in support of
conservative incumbent Justice David Prosser. The only other contribution to
Citizens for a Strong America that year totaled $25, making the organization
merely a shell for Wisconsin Club for Growth cash. The "citizens"
group has also been linked to staffers at the nonprofit Americans for
Prosperity, the main political organization run by the Koch brothers.
Citizens
for a Strong America, in turn, made big donations to two anti-abortion groups
-- $916,045 to Wisconsin Family Action and $347,582 to Wisconsin Right to Life
-- and to two gun rights groups -- $235,000 to United Sportsmen of Wisconsin
and $77,908 to Safari Club International. All of these groups turned around and
spent money on issue advertising in either the recall elections or the court
race.
The
$916,045 contribution to Wisconsin Family Action, which opposes gay marriage
along with abortion, constituted 82 percent of its total moneys -- meaning that
it too was almost entirely funded by the Wisconsin Club for Growth in 2011. As
for Wisconsin Right to Life, the contribution from the Club for Growth spinoff
that was funneled through Citizens for a Strong America constituted nearly half
of its budget that year.
This
dark-money shell game allowed the Wisconsin Club for Growth to influence the
elections with both its own ads and those of seemingly unrelated conservative
groups with different public agendas.
The one
thing all these dark money nonprofits share is that they are not required by
law to disclose their donors to the Federal Election Commission or any similar
state agency. But they do report their own donations to the Internal Revenue
Service. In other words, the trail of cash moving from dark money nonprofit to
dark money nonprofit can be traced, in part, through public records of the
groups contributing it.
Information
available from the IRS on those contributing to the Wisconsin Club for Growth
in 2011 turns up more links among dark money groups. These records showed a
$225,000 contribution from the Center to Protect Patient Rights, $1.06 millionfrom the Wisconsin Homeowners Alliance, $988,000 from the WMC Issues &Mobilization Committee, $227,500 from the Wisconsin Insurance Alliance,
$140,000 from the Building Industry Council and $75,000 from the Jobs First Coalition. None of these groups reveal their donors.
A similar
situation unfolded in Ohio, also in 2011, when the state's residents were asked
to vote on a ballot initiative to decide the fate of Republican Gov. John
Kasich's bill to strip public employees of collective bargaining rights.
The primary
funding vehicle to support the anti-union measure was a dark money nonprofit
called Building a Better Ohio, which transferred all its funds to a ballot
initiative campaign of the same name. Corporations, unions and nonprofits have
been able to contribute unlimited amounts to such campaigns since a Supreme
Court decision in the 1980s.
More than
half of the $12 million spent by the Building a Better Ohio campaign came from
two other dark money nonprofits. Make Ohio Great, which was created by the Republican Governors Association solely for the ballot effort, contributed $1.55 million, and Ohioans to Protect Jobs gave $5.21 million. The only
publicly known donor to Make Ohio Great was the Republican Governors Public
Policy Committee, a dark money affiliate of the RGA that gave $2.85 million.
The
Building a Better Ohio nonprofit did voluntarily release a list of donors but
not the amounts given, leaving the public to guess its biggest funding sources.
The
Wisconsin and Ohio cases, moreover, are only two high-profile examples of the
endless layers obscuring dark money from the public's eye. In Arizona and Ohio,
recent ballot initiative campaigns against health care reform were almost
entirely funded by nonprofits, particularly those in the Kochs' orbit.
From 2009
to 2010, the Center to Protect Patient Rights, one of the main dark money hubs,
gave $1.43 million to the U.S. Health Freedom Coalition and $275,000 to the Benjamin Rush League, another name for the U.S. Health Freedom Coalition, which
turned around and gave $1.47 million to an Arizona ballot initiative campaign
seeking to opt the state out of Obamacare's health insurance mandate. This was
an effort endorsed by Americans for Prosperity, the Kochs' main political
voice.
In 2011,
Ohioans for Healthcare Freedom, campaigning for a ballot initiative identical
to Arizona's, received nearly all of its funds from dark money groups.
Donations included $198,438 from Ohio 2.0, $165,000 from Ohio Liberty Council
and $100,000 from the U.S. Health Freedom Coalition -- three groups that all
received substantial sums from the Center to Protect Patient Rights. The same
year, the latter group gave $565,000 to Ohio 2.0, $210,000 to Ohio Liberty Council and $125,000 to the U.S. Health Freedom Coalition. The Center to Protect
Patient Rights also gave $61,953 directly to the ballot campaign.
These dark
money transfers are attracting more attention from other states' officials
following the California case. Investigations exposed similar hide-the-source
games in both Idaho and Kentucky.
Idaho
Secretary of State Ben Ysura (R) forced Education Voters of Idaho to reveal the
funders behind its efforts to pass a ballot initiative gutting collective
bargaining rights for teachers. A court required the group to disclose its donors,
which included New York City Mayor Michael Bloomberg and Wyoming investor
Foster Friess. The Republican Governors Public Policy Committee also
contributed $50,000.
In
Kentucky, a conservative nonprofit called Restoring America was formed just
months before the 2011 gubernatorial race and then funded a political committee
of the same time, which ran ads attacking Democratic Gov. Steve Beshear. A
court order forced those ads off the air until the group disclosed its donors.
Terry Williams, the former father-in-law of Republican gubernatorial candidate
David Williams, was revealed as the source of nearly all of Restoring America's funds.
An effort
by Nevada Secretary of State Ross Miller (D) to force Americans for Prosperity
to disclose its donors, however, was blocked in state courts last month.
Faced with
this evidence of large sums of hidden cash moving into their realms -- and
knowing the unlikelihood of any quick congressional action -- multiple states
are looking to take more proactive steps. Election officials and watchdogs in
Alaska, California, Idaho, Iowa, Maine, Maryland, Massachusetts, Montana, New
York, New York City and Washington have banded together to form the States' Unified Network Center to collaborate on ways to prevent dark money from
flooding future elections.
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