John Dunbar stories from The Center for Public Integrity

Judges often ignore trip disclosure rules

United States — 2013-03-28T08:29:34-04:00

Publicly filed reports of privately funded trips and seminars made by federal judges are often difficult to find, incomplete or missing altogether, according to a Center for Public Integrity investigation.

In 2007, the organization that oversees the conduct of federal judges implemented an ethics policy requiring public disclosure of details about privately funded judicial education conferences.

Noting that judges may be “influenced inappropriately” by those who conduct the events, a panel of the Judicial Conference of the United States said the new disclosure requirements “should strengthen public and congressional confidence in federal judicial ethics.”

The Center collected disclosure information from 2008 through 2012. Many federal court websites are poorly designed and hard to navigate, making it difficult to find links to judges’ seminar-disclosure reports.

In some cases, links to reports were either broken or nonexistent. A handful of courts, including the U.S. Bankruptcy Court in Delaware, linked to a different set of disclosures. In Delaware’s case, it was the U.S. District Court in Northern Texas.

The Center’s analysis also showed apparent lapses in reporting by hosts and judges.

For example, in August 2011, the Foundation for Research on Economics and the Environment (FREE) hosted a five-day judicial conference at a ranch in Big Sky, Mont., entitled “Terrorism, Climate & Central Planning: Challenges to Liberty & the Rule of Law.”

FREE’s report indicated there was just one lecture: “Taking the Long View of Progress,” delivered by Judge Daniel Boggs of the 6th Circuit U.S. Court of Appeals. But a conference agenda posted on FREE’s website shows there were in fact 11 lectures at the event.

Absent from FREE’s disclosure report were lectures delivered by two federal judges: Richard G. Stearns of the U.S. District Court of Massachusetts and Douglas H. Ginsburg of the U.S. Court of Appeals D.C. Circuit.

John Baden, FREE’s chairman, told the Center he didn’t have the “foggiest idea” why his organization’s disclosure report appears incomplete in court records. “We make everything totally public,” he says, noting that complete conference agendas are always listed on FREE’s website.

Neither Stearns nor Ginsburg reported attending the conference on the required seminar disclosure forms. (Stearns, in fact, has never filed a seminar disclosure report.) However, both judges reported the conference on their more detailed, congressionally mandated annual financial disclosure reports.

Marsha Zierk, Stearns’ law clerk, told the Center that the judge was unaware of any seminar disclosure policy. Ginsburg did not respond to requests for comment.

Stearns and Ginsburg aren’t the only judges to report attending conferences on annual financial disclosure reports — which are enforced by fines and even jail time — yet fail to do so on seminar disclosure forms.

U.S. District Judge Helen G. Berrigan of Louisiana’s Eastern District reported attending the 2010 International Human Rights and Humanitarian Law seminar hosted by the Aspen Institute but did not file the separate, required conference attendance paperwork that the Center used as the basis of its analysis.

“It’s just a mishap,” says Berrigan, noting that her secretary must have forgotten to file the seminar disclosure.

In some cases, seminars were reported, but no judges reported attending them.

Twenty-two seminars between July 2008 and the end of 2012 went unattended by federal judges, according to filings.

It is possible that only state judges attended; or that federal judges did appear, but paid their own way. But the discrepancy could also mean they failed to file.

Occasionally, judges report the presence of other judges at seminars who have not filed disclosure reports.

For example, last October Judge Ron Clark of the Eastern District of Texas District Court and Chief Judge Robert Clive Jones of the U.S. District Court in Nevada reported attending a judicial conference on patent litigation hosted by The Sedona Conference, a nonprofit research and educational organization, in Del Mar, Calif.

On each of their disclosure reports, the judges noted the names of eight other federal judges who also attended the conference.

None of the eight judges, five of whom were listed as speakers at the seminar, reported attending the privately funded conference. Speakers are required to report their attendance if they are reimbursed by the conference host.

In May 2011, U.S. District Judge Thomas Shields of Iowa’s Southern District reported attending a Northwestern University judicial program with two other federal judges. But neither of them filed disclosure reports.

The policy on judicial seminars was created in response to congressional efforts to ban judges from attending the often lavish educational retreats paid for by corporations and other private sources that might someday end up facing one of the participating judges in court.

The policy lacks teeth — there is no enforcement mechanism. In addition, the reporting requirements are weak. For example, the amount sponsors provide to fund seminars and retreats does not have to be reported.

Both judges and sponsors are required to file reports. Sponsors file must detail the event’s programs, speakers and sources of funding. State and local bar associations and some judicial groups are exempt from the policy.

Judges, if reimbursed by a private source for more than $335 worth of expenses, must post online a report disclosing certain details about the conference and its sponsors within 30 days of the event.

“There’s no doubt in my mind that … there are instances where a judge goes somewhere and they don’t report it,” says Russell Wheeler, former deputy director of the Federal Judicial Center, an education and research agency for the federal courts. “How big a problem it is, I just don’t know.”

Wheeler says it’s not surprising that the disclosure policy lacks an enforcement mechanism. The Judicial Conference has very little authority.

“What are you going to do,” Wheeler asks, “dock their pay?”

Bad day for super donors

2012-11-07T11:27:44-05:00

Editor's Note: Today marks the final installment of the Daily Disclosure. To keep up with post-election, money-in-politics news, please visit Consider the Source.

Money can't buy happiness, nor can it buy an election, apparently.

The top donors to super PACs in 2012 did not fare well — casino magnate Sheldon Adelson, the No. 1 super PAC contributor with more than $53 million in giving, backed eight losers at this writing.

Adelson was top backer of the pro-Mitt Romney Restore Our Future super PAC, with $20 million in donations. Romney lost to President Barack Obama. In addition, Adelson's contributions to super PACs backing U.S. Senate candidates in Florida, Virginia and New Jersey were also for naught.

He was not the only conservative billionaire who had a bad night.

Contran Corp. CEO Harold Simmons, (No. 2), homebuilder Bob Perry (No. 3) and TD Ameritrade founder Joe Ricketts, (No.4), also bet on Romney. Collectively, the trio gave $13.4 million to Restore Our Future, and Ricketts’ super PAC, Ending Spending Action Fund, spent an additional $9.9 million helping Romney’s failed bid.

The super donor winner of the night was Newsweb Corp. CEO Fred Eychaner (No. 5). Eychaner gave $3.5 million to pro-Obama super PAC Priorities USA Action through the most recent filing period, which ended Oct. 17, according to Federal Election Commission records.

In Florida, Republican Rep. Connie Mack lost his challenge to the popular Democratic Sen. Bill Nelson, who won with 55 percent of the vote. Adelson gave $2 million to the pro-Mack super PAC Freedom PAC, and Simmons and Perry gave a combined $255,000 to the group.

The hotly contested Senate race in Virginia attracted $2.5 million from Adelson and Perry, both giving to Independence Virginia, the super PAC supporting former Republican Sen. George Allen. His opponent, Democratic Gov. Tim Kaine, won the seat with 52 percent of the vote.

Adelson also invested in the re-election of Rep. Allen West, R-Fla., in Florida’s 18th District, who was trailing in his battle with Democratic newcomer Patrick Murphy at this writing.

The casino billionaire’s $1 million to Patriot Prosperity, a New Jersey-specific super PAC supporting the Republican candidate for U.S. Senate, Joe Kyrillos, and the Republican candidate for U.S. House in the state’s 9th District, Rabbi Shmuley Boteach, also did not pay off.

During the primary season, Adelson’s $16.5 million in contributions to the super PAC Winning Our Future was not enough guide former House Majority Leader Newt Gingrich to a Republican presidential nomination, though it is credited with keeping him in the race longer than expected. Nor were Adelson’s contributions enough to help Texas Lt. Gov. David Dewhurst win the GOP primary for Texas Senate earlier this year, a cause to which gave at least a quarter-million dollars.

Adelson did score one point with his $2 million contribution that helped sink a Michigan ballot initiative seeking to enshrine collective bargaining in the state’s constitution. Adelson runs the only non-union casinos on the Las Vegas Strip.

Win-Loss Rundown:

(Giving to candidate-specific super PACs in the federal election)

Sheldon Adelson, Republican, $53.7 million*

Mitt Romney — loss
Connie Mack (Florida Senate) — loss
George Allen (Virginia Senate) — loss
Allen West (House, Florida’s 18th) — too close to call, but leaning toward loss
Joe Kyrillos (New Jersey Senate) — loss
Shmuley Boteach (House, New Jersey’s 9th) — loss
Newt Gingrich (GOP presidential primary) — loss
David Dewhurst (GOP primary, Texas Senate) — loss

Harold Simmons, Republican, $26.9 million*

Mitt Romney — loss
Connie Mack (Florida Senate) — loss
Rick Santorum (GOP presidential primary) — loss
Newt Gingrich (GOP presidential primary) — loss
Rick Perry (GOP presidential primary) — loss
David Dewhurst (GOP primary, Texas Senate) — loss
Orrin Hatch (GOP primary, Utah Senate) — win

Bob Perry, Republican, $21.5 million*

Mitt Romney — loss
George Allen (Virginia Senate) — loss
Connie Mack (Florida Senate) — loss
Rick Perry (GOP presidential primary) — loss
David Dewhurst (GOP primary, Texas Senate) — loss

Joe Ricketts, Republican, $12.9 million*

Mitt Romney — loss

Fred Eychaner, Democrat, $12 million*

Barack Obama — win

Tuesday marked the first presidential election under the new campaign finance regime installed following the 2010 Citizens United U.S. Supreme Court decision. The ruling paved the way for super PACs and nonprofits, allowing them to accept unlimited contributions from individuals, corporations and unions, which could be spent on advertising backing or opposing candidates.

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

Video: Talking super PACs with PBS NewsHour

2012-11-09T14:45:55-05:00

The Center for Public Integrity's John Dunbar joins PBS NewsHour's streaming coverage at 12:30 p.m. ET to discuss the impact of super PACS on the 2012 election.

Donor profile: Republican Governors Association

2013-01-23T12:59:20-05:00

Ranking: 10

Total contributions to super PACs: $9.8 million*

$9.8 million to RGA Right Direction PAC (pro-Republican), formerly known as the RGA Ohio PAC

Notable state-level contributions:

$8.3 million to the Florida Republican Party (2010)
$6 million to Pennsylvania Gov. Tom Corbett (2010)
$3 million to Texas Gov. Rick Perry (2010)

Background:

The Republican Governors Association’s appearance on a list of top donors to super PACs — formed to spend money on federal races — at first glance appears to be a mistake. But a close look at the Washington, D.C.-based “527” organization’s disclosure filings shows it is using super PACs to funnel funds into state races.

The recipient of the RGA’s generosity is a super PAC called “RGA Right Direction PAC.” The super PAC takes the money it receives from the RGA — which, as a 527, can accept unlimited funds from corporations and wealthy individuals — and spends it on state races.

In an October 2012 filing, Right Direction disclosed a $250,000 contribution to North Dakota’s Republican Gov. Jack Dalrymple, who assumed the job in 2010, when then-Gov. John Hoeven resigned to become a U.S. senator. In North Dakota, corporate donations to candidates are prohibited, but contributions from political action committees to candidates are unlimited, according to the National Conference of State Legislatures.

The Center for Public Integrity has also previously reported that Right Direction gave $1 million to Mike Pence, the Republican House member who won a bid in November to become governor of Indiana, where corporate contributions are limited.

The RGA has maintained that all of its donations have been by the books.

The RGA has been working to put Republicans in the nation’s governor’s mansions for almost 50 years. Its past leaders include some of the biggest names in the Republican Party: former President Ronald Reagan, Texas Gov. Rick Perry and former Mississippi Gov. Haley Barbour.

Over the past few months, the Center for Public Integrity has exposed the complex money-moving schemes the RGA uses to benefit Republican governors’ campaigns. In this year’s North Carolina election, the group has spent millions on ads underwritten by corporations who were unaware of how their money was being spent.

In Florida’s 2010 election, the RGA took advantage of a loophole in state law when it gave $8.3 million to the Florida Republican Party, which in turn contributed $5.2 million to winning candidate Gov. Rick Scott.

And in Pennsylvania, the RGA contributed $6 million of the $28.7 million Gov. Tom Corbett raised, including a $1.5 million contribution from an affiliated group whose donors are unknown.

Last updated: Jan. 17, 2013

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

Daily Disclosure: Chevron gives $2.5 million to conservative super PAC

2013-05-29T16:11:04-04:00

The dearth of large contributions being made by big corporations to super PACs so far this election has ended.

Chevron Corp., ranked No. 3 on the Fortune 500 list of largest U.S. companies, made a $2.5 million contribution on Oct. 7 to the conservative Congressional Leadership Fund, a super PAC dedicated to electing Republicans to the House and Senate.

Following the U.S. Supreme Court’s Citizens United decision in 2010, which allowed corporate money to be spent on elections, there were predictions that companies would tap their treasuries and flood races with unlimited cash.

Instead, the bulk of the giving has come from individuals — like casino magnate Sheldon Adelson. Adelson and wife Miriam gave at least $14.5 million in the first 17 days of October, boosting his total giving to the controversial political organizations to a remarkable $53 million. It would take 10,600 contributions of $5,000, the maxiumum allowed to candidates, for Adleson to reach that amount were he giving directly to campaigns.

Super PACs filed their final reports before the Nov. 6 election on Thursday with the Federal Election Commission. Adelson is far and away the biggest donor to the organizations this election cycle.

Chevron, the No. 2 oil and gas company in the U.S. with 2011 revenue of nearly a quarter-trillion dollars, is active in nearly every aspect of the energy business, including the highly controversial practice of hydraulic fracturing, or “fracking,” a means of extracting natural gas from shale deposits.

The company spent $9.5 million lobbying the federal government in 2011 and $5.3 million so far this year, according to the Center for Responsive Politics.

Chevron becomes at least the fifth Fortune 500 company to give to super PACs this election, according to a Center for Public Integrity analysis of corporate giving, and by far, the largest. Others include Florida-based Fidelity National Information Services (425th), which gave the pro-Mitt Romney super PAC Restore Our Future $75,000; CONSOL Energy (399th), which donated $150,000 to the group; Alpha Natural Resources (356th), which gave $100,000 to American Crossroads; and Caesars Entertainment Corp. (288th), which gave $150,000 to Majority PAC.

Chevron’s donation to the Congressional Leadership Fund represented the bulk of the group’s receipts for the reporting period. The super PAC took in $3.1 million through the first part of October, entering the home stretch with $8.7 million in the bank.

The Adelsons gave $10 million to Restore Our Future over the reporting period, bringing the organization’s receipts to a whopping $20.2 million, more than it raised for the entire month of September.

Restore Our Future also benefitted from $1 million from Jerry Perenchio, former owner of Spanish-language broadcast company Univision; $1 million from super donor Harold Simmons; $1 million from real estate mogul Edward St. John; and $1 million from hedge fund pioneer Julian Robertson.

Restore Our Future’s fundraising easily eclipsed that of Priorities USA Action, the super PAC supporting President Barack Obama, which brought in $13 million. The pro-Obama group had outraised Restore Our Future for the past two months.

Priorities received seven $1 million contributions all from individual donors. They include Mark Pincus, the CEO of Zynga, the online game maker, hedge fund billionaire George Soros* and LinkedIn founder Reid Garrett Hoffman.

Restore reported $24.2 million in cash going into the home stretch while Priorities had $10.1 million, according to FEC records.

In the final months of campaign, more super PACs dedicated to the election of U.S. House and Senate candidates have emerged.

Treasure Coast Jobs Coalition, a super PAC supporting Republican Rep. Allen West in Florida’s 18th District, received $1 million from the Adelsons. So did Freedom PAC, which supports Rep. Connie Mack’s quest for U.S. Senate in Florida.

Adelson is also helping former Virginia Gov. and Sen. George Allen in the state. Allen lost a close race to Sen. Jim Webb, the Democrat, in 2006, who is not running for re-election. He faces former Gov. Tim Kaine in a close race for the Senate seat.

Adelson gave $1.5 million to Independence Virginia, which is supporting Allen. The couple also gave $1 million to Joe Ricketts’ Ending Spending Action Fund, a super PAC that supports fiscally conservative candidates.

Ending Spending, which has promised to spend at least $12 million in the weeks leading up to the election, reported $4 million in cash on hand. While it has only raised $1 million so far in October, its founder Ricketts gave more than $11 million to the super PAC in September.

American Crossroads, the conservative super PAC co-founded by Republican strategist Karl Rove, brought in $11.7 million in the first part of October, thanks largely to a $4 million contribution from super donor Simmons and $1 million each from Texas homebuilder Bob Perry and oil man and hedge fund chief T. Boone Pickens, another Texan.

American Crossroads had $6.4 million in the bank as of Oct. 17.

Democratic donors also kept their checkbooks open in October. Fred Eychaner, the CEO of Newsweb Corp., gave $2 million to House Majority PAC, which supports Democratic U.S. House candidates, and $2 million to Majority PAC, which supports Senate Democrats.

Majority PAC took in $9.9 million, including a $1 million contribution from Tennessee real estate mogul Franklin Haney and $900,000 from Arnold Hiatt, the former president of the Stride Rite footwear company.

It reported $7.5 million cash on hand as of Oct. 17.

Hiatt also gave $900,000 to House Majority PAC, which raised $6.7 million and had $5.2 million on hand as of Oct. 17.

In other outside spending news:

The Democratic Senatorial Congressional Committee reported spending $8.5 million opposing Republican candidates for U.S. Senate.
The Republican National Committee reported spending $5.2 million opposing Obama, and the National Republican Senatorial Committee reported spending $7.8 million opposing Democratic candidates for U.S. Senate.
Conservative nonprofit Crossroads GPS reported spending $3.7 million opposing Obama and Democratic candidates for U.S. Senate and House in several races.
Majority PAC, a super PAC backing Senate Democrats, reported spending $3.1 million opposing Republican candidates in Pennsylvania, Wisconsin, Montana, Indiana, Nevada, Virginia and New Jersey.
House Majority PAC reported spending $2.3 million opposing Republicans in numerous races. The super PAC released three news ads: “False Start” opposes Richard Tisei, the Republican candidate in Massachusetts’ 6th District; “Person” opposing Randy Altschuler, the Republican candidate in New York’s 1st District, and “Our Choice,” supporting Bill Enyart, the Democratic candidate for U.S. House in Illinois’ 12th District.
Women Vote!, a pro-abortion rights super PAC, reported spending $1 million opposing Republican House and Senate candidates.
Ending Spending Action Fund reported spending $1 million opposing Obama, former Democratic Sen. Bob Kerrey in Nebraska, who is running to get his old job back, and Sen. Sherrod Brown, D-Ohio. The spending also supported Romney and Ohio Treasurer Josh Mandel, Brown’s Republican challenger.
American Action Network, a conservative nonprofit, released “Rail” opposing Democratic House candidate Jose Hernandez in California’s 10th District, and “Spending” opposing former Democratic Rep. Carol Shea-Porter in New Hampshire’s 1st District.
American Unity PAC, a conservative super PAC, released “Putting People Ahead of Politics,” supporting Rep. Richard Hanna, R-N.Y., and “Politics Aside,” supporting Andrew Roraback in Connecticut’s 5th District and former wrestling executive Linda McMahon for U.S. Senate in Connecticut.
The 60 Plus Association, a conservative nonprofit, released “Strengthen,” starring Pat Boone and opposing Obama.
American Future Fund, a conservative nonprofit, released four new ads: “Reno Gazette-Journal Endorsement” and “Orlando Sentinel Endorsement” oppose Obama, “Paper” opposes Rep. Tammy Baldwin, the Democratic candidate for U.S. Senate in Wisconsin; and “Raises” opposes Democratic California Assemblywoman Julia Brownley, running for U.S. House in the state’s 26th District.

Michael Beckel contributed to this report.

*George Soros is the chairman of Open Society Foundation, which provides financial support to the Center for Public Integrity. For a list of the Center’s donors, visit the website.

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Ameritrade founder, auto union among top super PAC donors

2012-10-24T14:41:16-04:00

Joe Ricketts, a billionaire who pioneered online stock trading by founding TD Ameritrade Inc., was far and away the biggest donor to super PACs last month, having given $11.4 million to the Ending Spending Action Fund.

The donations rocket Ricketts to No. 4 on the list of top donors to super PACs, according to data provided by the Center for Responsive Politics and analyzed by Center for Public Integrity.

The amount is equal to about 90 percent of his total giving to the controversial political organizations.

Also entering the top 10 this month is the United Auto Workers union, which, in September, contributed $5.4 million to its super PAC, the new UAW Education Fund. The donations rank it at No. 9.

The top 10 super PAC “super donors” have collectively given about $135 million to these unlimited spending groups so far this election cycle, about 25 percent of the $546 million that all super PACs have raised, according to CRP.

Ricketts and his super PAC pledged to spend $12 million this election with $10 million opposing Obama and $2 million helping Republicans in Congress.

The UAW backs Democrats, especially President Barack Obama, who authorized an $81 billion bailout of Chrysler and GM in 2008. Obama will no doubt enjoy UAW support in Ohio, which once again has emerged as the pivotal swing state in the presidential election.

The UAW super PAC gave $1 million to Priorities USA Action, a super PAC supporting the president.

Super PACs were formed in the wake of the U.S. Supreme Court’s Citizens United decision and a lower court ruling that allowed unlimited corporate and union spending on elections. Super PACs collect the funds from donors and spend them on advertising and other materials. The groups are banned from coordinating their spending with candidates’ campaigns.

Among the other big donors last month and over the third quarter were Texas homebuilder Bob Perry, who continues to write seven-figure checks. Perry gave $3.5 million to super PACs in September, including $2 million to pro-Mitt Romney Restore Our Future. Perry ranks No. 3 at $20.5 million.

Second is fellow Texan Harold Simmons, a billionaire businessman who gave $2.5 million to conservative super PAC American Crossroads in September. Simmons, his wife Annette and Contran Corp., which he controls, have given $21.9 million thus far this election cycle.

Casino billionaire Sheldon Adelson and his family are still on top, having given $38.5 million. In early October he gave $1.5 million to a super PAC backing Republican George Allen's Senate bid in Virginia and $190,000 to the Hispanic Leadership Fund, which has fought for donor anonymity. These contributions move his total beyond the $40 million mark at the close of the next filing period.

Three other unions and two wealthy liberals round out the Center’s list of the top 10 super donors.

The National Education Association (No. 5, $8.8 million), Service Employees International Union (No. 8, $6 million) and AFL-CIO (No. 10, $5.5 million), each increased their super PAC giving during the last month.

Meanwhile, Chicago media mogul Fred Eychaner (No. 6 at $7.8 million) and James Simons (No. 7 at $7.5 million), the founder and former CEO of Long Island-based hedge fund Renaissance Technologies, are the only two Democratic-aligned individual donors to rank among the top 10.

Overall, according to CRP, conservative super PACs have raised nearly $340 million — or about 62 percent of all super PAC receipts — while liberal super PACs have raised roughly $195 million.

Nonpartisan groups, such as the super PACs of the National Association of Realtors and the Cooperative of American Physicians, account for the remaining funds.

For a complete list of the most prolific donors, a set of super donor playing cards and more profiles please go here.

Andrea Fuller contributed to this report.

Stealth spending on the rise as 2012 election approaches

2012-10-19T11:00:28-04:00

If there was a silver lining for open-government advocates in the U.S. Supreme Court’s 2010 ruling that unleashed corporate and union spending on elections, it was that the identity of those who pay for all those annoying ads would be made public on a regular basis.

It hasn’t quite worked out that way.

Since Labor Day, spending by outside groups taking advantage of the high court’s Citizens United decision totaled a little more than $229 million, including unions. Forty-four percent of the total — $100 million — has come from non-disclosing, nonprofit corporations.

The clearest example comes from the top two spenders, two organizations that share the same post office box in Washington, D.C.

American Crossroads, the so-called super PAC co-founded by Republican strategist Karl Rove, has spent $33.1 million since Labor Day, according to Federal Election Commission records. Its top donor is Texas billionaire and businessman Harold Simmons, who along with his company, Contran Corp., has given $13 million to the group so far this election, according to a Center for Public Integrity review of Federal Election Commission records.

Second is Crossroads GPS, the nonprofit sister organization of American Crossroads, also co-founded by Karl Rove, which has spent $30.3 million. Its top donor is — unknown. Crossroads GPS was organized as a nonprofit, “social welfare” organization. The Internal Revenue Service does not require it to disclose its donors to the public, nor does the FEC.

Both groups, which back Republicans, can pay for the same type of “express advocacy” ads, urging people not to cast a ballot in favor of a particular candidate — often in not-very-friendly ways.

Rounding out the top five spenders are the U.S. Chamber of Commerce, also a nonprofit, at No. 3 ($16 million); Priorities USA Action, at No. 4 (which favors President Barack Obama, $15.3 million); and House Majority PAC at No. 5 (which favors House Democratic candidates, $9.2 million).

Unions can make large donations to super PACs and direct expenditures from their treasuries thanks to Citizens United. So far, the direct spending totals a little more than $4 million.

For the presidential race, independent expenditures since Labor Day total $121 million. Twenty-seven percent was aimed at helping Obama; 71 percent at helping Romney.

If it seems ads are mostly negative, it is not your imagination. Eighty-eight percent of independent campaign spending went to negative ads, mailings and other materials.

Even super PACs, which do reveal their donors, at times report contributors that — you guessed it — don’t reveal their donors.

The Now or Never super PAC, which shifted from backing unsuccessful tea party and Sarah Palin-backed candidate Sarah Steelman for Republican nominee for U.S. Senate from Missouri, is running ads opposing Iraq War veteran Tammy Duckworth, who is running as a Democrat in Illinois’ 8th Congressional District.

The super PAC reported contributions of $2.3 million in quarterly filings with the FEC released Monday. Of the total, $2 million came from Americans for Limited Government — a nonprofit that doesn’t reveal its donors.

Rachael Marcus contributed to this report.

The ‘Citizens United’ decision and why it matters

2012-11-07T23:32:36-05:00

By now most folks know that the U.S. Supreme Court did something that changed how money can be spent in elections and by whom, but what happened and why should you care?

The Citizens United ruling, released in January 2010, tossed out the corporate and union ban on making independent expenditures and financing electioneering communications. It gave corporations and unions the green light to spend unlimited sums on ads and other political tools, calling for the election or defeat of individual candidates.

In a nutshell, the high court’s 5-4 decision said that it is OK for corporations and labor unions to spend as much as they want to convince people to vote for or against a candidate.

The decision did not affect contributions. It is still illegal for companies and labor unions to give money directly to candidates for federal office. The court said that because these funds were not being spent in coordination with a campaign, they “do not give rise to corruption or the appearance of corruption.”

So if the decision was about spending, why has so much been written about contributions? Like seven and eight-figure donations from people like casino magnate and billionaire Sheldon Adelson who, with his family, has given about $40 million to so-called “super PACs,” formed in the wake of the decision?

For that, we need to look at another court case — SpeechNow.org v. FEC. The lower-court case used the Citizens United case as precedent when it said that limits on contributions to groups that make independent expenditures are unconstitutional.

And that’s what led to the creation of the super PACs, which act as shadow political parties. They accept unlimited donations from billionaires, corporations and unions and use it to buy advertising, most of it negative.

The Supreme Court kept limits on disclosure in place, and super PACs are required to report regularly on who their donors are. The same can’t be said for “social welfare” groups and some other nonprofits, like business leagues.

These groups can function the same way as super PACs, so long as election activity is not their primary activity. But unlike the super PACs, nonprofits do not report who funds them. That’s disturbing to those who favor transparency in elections. An attempt by Congress to pass a law requiring disclosure was blocked by Republican lawmakers.

The Citizens United decision was surprising given the sensitivity regarding corporate and union money being used to influence a federal election. Congress first banned corporations from funding federal campaigns in 1907 with the Tillman Act. In 1947, the Taft-Hartley Act extended the ban to labor unions. But the laws were weak and tough to enforce.

It wasn’t until 1971 that Congress got serious and passed the Federal Election Campaign Act, which required the full reporting of campaign contributions and expenditures. It limited spending on media advertisements. But that portion of the law was ruled unconstitutional — and that actually opened the door for the Citizens United decision.

Spending is speech, and is therefore protected by the Constitution — even if the speaker is a corporation.

So far in the 2011-2012 election cycle, super PACs have spent $378 million, while non-disclosing nonprofits have spent $171 million, at times praising, but mostly badmouthing candidates, according to figures compiled by the Center for Responsive Politics.

D.C.-based governors' associations provide back door for corporate donors

Pennsylvania,United States — 2012-10-18T10:31:55-04:00

It was no secret in the 2010 race for governor of Pennsylvania that Republican Tom Corbett, the state’s attorney general, was the favorite of the burgeoning natural gas industry.

Corbett collected almost $1.3 million from donors with oil and gas interests, according to the National Institute on Money in State Politics.

Aubrey McClendon, the CEO of Chesapeake Energy, the nation’s No. 2 natural gas producer and the top driller in the lucrative Marcellus Shale region of Pennsylvania, gave the campaign $5,000 while his company’s political action committee contributed $12,000.

But that’s a small fraction of what Chesapeake gave to Corbett’s top donor.

McClendon’s company gave a little over $300,000 in 2010 to a so-called “527” organization called the Republican Governors Association, according to the Center for Responsive Politics. The RGA gave Corbett’s campaign more than $6 million, 21 percent of the $28.7 million he raised, according to the National Institute on Money in State Politics.

The RGA acts as a central depository and distributor of funds from wealthy individuals and corporate treasuries that are used to underwrite governors’ races in the states.

The organization routinely accepts six- and seven-figure contributions and deals out the funds to state candidates and parties. In states like Pennsylvania, where corporate contributions are banned, the group appears to be skirting the law.

But the RGA says it keeps track of where the money comes from and adheres to all state laws and regulations. Corporate and non-corporate funds are segregated. Critics say, however, that such segregation is meaningless thanks to the wide variation in state campaign finance laws.

Nothing, for example, would prevent Chesapeake’s donations to the RGA from being spent on state races that allow corporate contributions — and a like amount from individual donors being shifted to Corbett’s campaign.

Donors can say “they're not trying to influence policy in a particular state,” said Ciara Torres-Spelliscy of Stetson Law School. “But only that donor and the staff at the governors association know if this money is given without strings attached.”

RGA spokesman Mike Schrimpf said the group “fully complied with all Pennsylvania campaign finance laws” during the 2010 election.

Chesapeake did not respond to a request for comment.

Pennsylvania’s gas boom

Times were tough in Pennsylvania in 2010 — unemployment peaked in February and March at 8.7 percent. Economic issues were at the forefront of the state’s race for governor. But a controversial technology that allowed access to deposits of natural gas deep underground brought with it the promise of new jobs and new revenue for the state.

Hydraulic fracturing involves the pumping of millions of gallons of water into wells to break up layers of shale and release natural gas deposits. Environmentalists say the practice — exempt from portions of the Clean Water Act and other laws — contaminates private wells, lowers property values and ultimately harms communities, not helps them.

During the 2010 campaign, Corbett promised not to impose a gas extraction tax on drillers and said he would eliminate red tape and regulations, said Brian Nutt, his adviser and former campaign manager, in an interview with the Center.

His opponent, Democrat Dan Onorato, then-chief executive of Pittsburgh’s Allegheny County, urged the passage of the same tax Corbett opposed, calling the Republican a representative of Pennsylvania gas drillers instead of Pennsylvanians.

Corbett’s position attracted large contributions from major players in the state’s natural gas industry.

Christine Toretti gave nearly $98,000 to Corbett’s campaign, support that was reported to state campaign regulators. Unlike in federal races, contributions from individuals are not capped.

Toretti is the former chairwoman and CEO of the S.W. Jack Drilling Co., which was the largest privately held, land-based driller in the U.S. She also gave $110,000 in 2009-2010 to the Pennsylvania Republican Party, which was the No. 2 donor to Corbett at $2.1 million.

What wasn’t reported to the state was $50,000 in donations she made to the RGA, according to CRP.

Likewise, Texan Trevor Rees-Jones, founder and chairman of drilling company Chief Oil & Gas, gave Corbett’s campaign $50,000 and the RGA $100,000.

Toretti and Rees-Jones could not be reached for comment.

Donors get say in future development

Some of Corbett’s biggest contributors were awarded spots on his Marcellus Shale Advisory Commission, a group that included executives from Chevron, Exxon Mobil and EQT, each doing business in the Marcellus Shale region.

Terry Pegula gave Corbett $100,000 and wife Kim gave $180,000; Terry sits on the commission. The Pegulas founded East Resources and built it into a major independent natural gas exploration and development company before selling it to Royal Dutch Shell in 2010.

Terry Bossert, a senior executive at Chief Oil & Gas, also has a spot on the commission.

A 527 like the RGA — and its Democratic counterpart, the Democratic Governors Association — is not regulated by the Federal Election Commission and cannot make contributions to federal candidates. It is required to report its donors and expenditures to the IRS.

The DGA gave Onorato $1.9 million out of $25.3 million raised, according to the National Institute on Money in State Politics.

Companies with an interest in the development of the natural gas industry in the state, including Chesapeake, gave at least $4 million in corporate treasury funds to the RGA in the 2009-2010 election, according to a Center for Public Integrity analysis of CRP data.

Among them were Exxon Mobil ($704,900), CONSOL Energy ($338,200), Encana (151,400), the American Natural Gas Alliance ($101,000) and two natural gas-consuming electrical utilities.

To show that none of that corporate money made it into Corbett’s campaign account, the RGA created a political action committee in the state; actually, its address is the same as that of its Washington headquarters.

Pennsylvania contribution records show the PAC listed contributions from 101 individuals — three of them residents of Pennsylvania. One donation was a mysterious $1.5 million transfer from the RGA’s Wisconsin PAC (also housed in Washington).

Donors listed who were contacted by the Center were unaware their money was headed to the Pennsylvania PAC and into Corbett’s campaign account.

The DGA also created a state PAC to make its contributions.

Finding loopholes

At the same time the Pennsylvania PAC was formed, the RGA was spending large sums in states that do not ban corporate contributions. For example, it gave $8.3 million to the Florida Republican Party, which gave $5.2 million to now-Gov. Rick Scott, the Republican winner.

Corporate contributions in Florida are capped at $500 per candidate, but there are no limits on how much corporations can give to parties. Parties can make unlimited contributions to candidates as long as they are earmarked for campaign costs like research, events and staff.

“It’s such a gigantic loophole that you can drive a truck through it,” said Peter Butzin, volunteer state chairman of the Florida chapter of Common Cause.

In some states, there are no corporate limitations. In Virginia in 2009, Republican candidate Bob McDonnell collected nearly $2 million directly from the RGA.

Corbett, as governor, has been a friend to the gas companies.

Act 13, signed into law in February, was a comprehensive update of Pennsylvania’s 28-year-old Oil and Gas Act. Though the law contains updated environmental protections, the measures take a back seat to industry interests, say some anti-drilling activists.

One such group, PennFuture, said the act did not bring in enough money for the state, is weak on environmental safeguards and favors drillers over other businesses.

“Pennsylvania citizens will get little in return,” said Jan Jarrett, then-president of the group, days before Corbett signed the act into law.

The act’s most controversial provisions allowed drilling almost anywhere — even in residential areas. Since municipalities are required to abide by state law, Act 13 nullified most residential zoning restrictions on drilling. For example, drilling operations were allowed to be located as close as one football field from buildings.

Patrick Henderson, the governor’s energy executive, says Act 13 was aimed at streamlining regulations allowing drillers to start work more quickly.

Since Act 13’s passage, the zoning provisions have been overturned in court.

Time equals money

“[We’re] making sure we’re protecting the environment,” said Nutt, Corbett’s former campaign manager and current adviser, but dealing with unnecessary regulations takes time, and “time means losses of revenue.”

The act does levy an annual impact fee of $5,000 to $60,000 per well on natural gas drillers, but these monies can be used only to offset the impact of drilling — not for the benefit of the state at large.

Pennsylvania’s impact fee brought in more than $200 million in 2011. In Texas, where each unit of natural gas is taxed at 7.5 cents on the dollar, $1.4 billion was raised in 2009.

James Browning, the author of a Common Cause report critical of the industry’s activity in Pennsylvania, said the state is a “worst-case scenario” for natural resource exploitation.

But the Corbett administration defends its practices.

“[Act 13] helped to realize and maximize economic benefits,” Henderson said. “And we think that’s a good thing.”

Paul Abowd contributed to this report.

Pro-GOP donor one-upped by boss's support of Democratic PAC

Texas,United States — 2012-09-28T17:21:05-04:00

Backer of Democrats and hedge fund billionaire James H. Simons jumps to No. 8 on The Center for Public Integrity’s list of top donors to super PACs, surpassing his former protégé, GOP supporter Robert Mercer, who ranks No. 9.

Democrats also came up with a counter to pro-Republican homebuilder Bob Perry (No. 3 with a bullet), who backed efforts in Texas to pass laws that lower jury verdicts. Husband-and-wife trial lawyers Steve and Amber Mostyn, also of Texas, make their first appearance on the list at No. 10.

Super PACs — organizations that formed in the wake of the Citizens United Supreme Court decision — filed reports with the Federal Election Commission last week.

Simons is founder and non-executive chairman of Renaissance Technologies, a Long Island-based hedge fund with $15 billion under management. He has given a total of $4 million to super PACs, including $2 million to pro-President Barack Obama group Priorities USA Action.

Robert Mercer is Renaissance’s co-CEO. He is a prolific Republican contributor and has given $3.4 million in contributions to super PACs so far this election cycle, including $1 million to pro-Republican super PAC American Crossroads and $1 million to pro-Mitt Romney super PAC Restore Our Future.

Super PACs can accept unlimited contributions from corporations, billionaires and labor unions and spend the money on ads urging voters to support or oppose a candidate. They are not permitted to coordinate with the candidate’s campaign, however.

The Mostyns $3.3 million in donations included $2 million to Priorities USA Action. The total is small potatoes compared with Perry's, who has given $16 million to super PACs, including $8 million to Restore Our Future and $6.5 million to American Crossroads.

The top two donors remain the same.

Casino magnate Sheldon Adelson and family are still far and away the top donors at nearly $38 million. Adelson, who single-handedly kept former House Speaker Newt Gingrich’s candidacy for the GOP presidential nomination alive, has shifted his spending to Restore Our Future, having donated $10 million along with wife Miriam.

The No. 2 spot goes to Harold Simmons, a Texas billionaire who has given nearly $19 million, $8 million of which has gone to American Crossroads.

For a complete list of the most prolific donors, a set of super donor playing cards and more profiles please go here.

Transparency test: Grading the super PACs

2012-09-14T06:00:01-04:00

Throughout the course of the 2012 election, the Consider the Source team will continue to write profiles about the major super PACs and nonprofits that are spending heavily on political advertising.

In addition to providing basic information about the origin of the organizations and their spending history, today we add a transparency grade to each group, indicating how much they reveal about their donors.

Super PACs, which are required to report donors to the Federal Election Commission, generally receive good grades. But they may be marked down if major donations come from shell corporations or nonprofits.

Nonprofit outside spending organizations, which are not required to report their donors, receive a "no disclosure" designation.

The grades are tabulated by the Consider the Source staff and are subjective. Any organization that would like to dispute its grade or provide a list of donors to the Center, please contact project director John Dunbar via email at jdunbar@publicintegrity.org.

Transparency Test

FD (Full Disclosure): All donations of $200 or more are reported.

SD (Significant Disclosure): All donations of $200 or more are reported, but some large contributions come from nonprofits or mystery corporations.

PD (Partial Disclosure): A majority of donors of $200 or more are reported but a substantial percentage of funds come from nonprofits or mystery corporations.

ND (No Disclosure): The government generally does not require these organizations to publicly report their donors.

Transparency Grade: FD

Transparency Grade: SD

Transparency Grade: PD

Transparency Grade: ND

North Carolina governor's race awash in out-of-state funds

North Carolina,United States — 2012-09-05T10:53:11-04:00

North Carolina’s race for governor is expected to be the most expensive in the state’s history thanks largely to two deep-pocketed, Washington, D.C.-based organizations whose underwriters may not even know how their funds are being spent.

The state is the latest field of battle for the Democratic Governors Association and the Republican Governors Association, organizations whose impact has increased thanks to court decisions that eliminated limits on campaign spending.

The two groups have spent roughly $3 million in North Carolina — nearly as much as candidates Pat McCrory and Lt. Gov. Walter Dalton combined — and have committed more to the race. Outside groups are poised to eclipse the $7.7 million record set during the 2008 governor’s race.

The state is experiencing “an advertising onslaught like we’ve never seen before” according to the Raleigh-based Free Enterprise Foundation.

North Carolina law caps donations to the candidates at $4,000 and prohibits donations from unions and corporations. But outside organizations — like the DGA and the RGA — can accept unlimited donations from virtually any source and spend the money on ads.

Those sources are tough to track. Even though the RGA is reporting the identities of corporate funders of ads, donors contacted by the Center for Public Integrity were unaware their money was being spent that way and denied having any stance on the North Carolina race.

The DGA, meanwhile, is funneling large sums through a state political committee, thus obscuring the identities of the original donors.

Things won’t quiet down any time soon. Not only is the state filling an open governor's seat, it is also a presidential swing state — one of the reasons it is hosting the Democratic National Convention this week.

Possible GOP pickup

North Carolina’s current governor is Bev Perdue, elected in 2008. With sinking approval ratings, Perdue decided not to seek a second term. Despite the long history of dominance by Democrats, prognosticators see the state leaning right. In 2010, Republicans took control of the legislature for the first time in more than a century.

RGA spokesman Mike Schrimpf told The Charlotte Observer in May that North Carolina is a “prime pickup opportunity,” and that the RGA is “committed to provide the resources to win it.”

Thus far, the RGA has spent roughly $1.4 million and reserved another $3.5 million for ads this fall. The DGA has spent roughly $1.5 million on the race.

Lt. Gov. Dalton captured the Democratic nomination in May, though he had to survive an expensive primary that left him low on funds. Filings with the state show McCrory with six times more cash as of July.

Dalton, at least, will get some national exposure thanks to the convention. A spokesman said the lieutenant governor is scheduled to speak Thursday evening at Bank of America Stadium, the final night of the event.

McCrory, the Republican, is the former mayor of Charlotte. He was the Republican nominee in 2008 and lost to Perdue in a close race.

Soon after Dalton won the primary, the RGA launched its first attacks.

A DGA-funded group responded with its own ads in May, while Dalton’s cash-starved campaign got back on its feet.

“If Dalton hadn’t had the outside help,” said Jonathan Kappler, of the Free Enterprise Foundation, “he would have been sunk.”

McCrory has pledged to disavow negative ads run by independently funded groups, but he and Dalton have no control over the RGA and DGA. Outside spending groups may not give money directly to the candidates, nor are they permitted to coordinate their spending with the campaigns.

McCrory did not respond to a request for comment for this story.

Dalton’s spokesman Ford Porter called the independent advertising “an unfortunate reality” and said the Democrat’s campaign is trying to break through the “outside noise” the spending creates.

RGA spending

The RGA’s strategy has been to link Dalton to the unpopular governor, referring to him as Perdue’s “right-hand man” in advertising. It blames the lieutenant governor and Perdue for “higher taxes” and “job killing policies.” The Raleigh News and Observer said the ad distorts the truth.

Dalton was not Perdue's "running mate" — the lieutenant governor in North Carolina is elected indpendently.

The RGA is paying for the ad directly and not “funneling its money through another entity,” which is what it says its Democratic counterpart is doing.

“This is a case where the RGA is truly being much more transparent than the DGA,” wrote Schrimpf in an email to the Center.

Instead, the RGA is reporting funders of its ads to the state board of elections. According to paperwork filed with North Carolina election authorities, the ad was paid for by 38 out-of-state corporations to the RGA — among them, a $75,000 contribution from insurance giant AFLAC.

The fact that AFLAC’s donations were used to pay for an ad attacking Dalton was news to the company, according to spokesman John Sullivan. Of the donation, $25,000 was meant to be used for “2012 convention sponsorship,” he said.

The RGA says it reserved the right to use the “sponsorship” money for any purpose it chose, including the ads in North Carolina.

The Metropolitan Milwaukee Association of Commerce was also unaware that its donation was going toward ads attacking a sitting lieutenant governor 900 miles away.

“This is the first I’ve heard of it,” said Steve Baas, director of governmental affairs at the Milwaukee business association, “but it’s not a shock to us.”

Baas said he trusts the RGA’s spending decisions with the association’s $150,000 contribution.

While Baas may be OK with it, the use of the donation raises legal questions.

“We appreciate and welcome disclosure whenever possible,” said Kim Strach, deputy director of campaign finance at the state’s Board of Elections, “as long as it’s accurate.”

No limits

Corporations and unions can give $4,000 to candidates from their PACs that draw on small donations from employees. But donations to the RGA and DGA are unlimited.

AT&T gave McCrory $2,000 from its PAC in April. The next month, it gave a $250,000 check to the RGA. General Electric gave $105,000 to the RGA in May, more than all of its PAC donations to all North Carolina candidates in the last decade combined.

None of the corporate funders of RGA’s ads contacted by the Center said their companies had declared a favorite in the race for governor.

General Electric pays a “membership fee” to both governors associations, according to spokeswoman Helaine Klasky, “to enable GE to participate in a wide range of activities sponsored by the DGA and RGA.”

Klasky adds that GE does not direct money toward specific campaigns.

The company’s Citizenship Report says GE has a “long-standing practice against using corporate resources for the direct funding of independent expenditures expressly advocating for or against candidates.”

AT&T did not respond to calls, but has supported both major parties and its candidates for governor in North Carolina for a decade. IRS filings show the company gave $100,000 to the DGA in 2012, less than half of what it gave to the RGA.

In fact, of the 38 corporations and organizations that have pitched into the RGA ad effort, 15 have also given to the DGA this year — including GE, AT&T, AFLAC, Altria, and the Milwaukee Chamber.

The RGA’s largest donor from North Carolina, Duke Energy, gave $175,000. The company, which is a major supporter of the Democratic convention, also gave $200,000 to the DGA.

Disclosure in the dark

The RGA, meanwhile, is criticizing its counterpart for not being as forthcoming with the state’s voters.

The DGA-funded entity is a Raleigh-based organization called North Carolina Citizens for Progress. The group has no formal affiliation with the DGA and has a separate board that makes spending decisions and solicits money.

The DGA is the main donor to North Carolina Citizens for Progress, giving 93 percent of the $2.1 million the group raised this year, according to IRS reports.

The cash infusion funded two controversial ads accusing McCrory of “questionable ethics” during his time as mayor of Charlotte.

The DGA and the RGA are 527 groups, named for the section in the IRS tax code that regulates them. The groups report donors and donations to the IRS as well as expenditures, including contributions to other organizations.

The DGA avoided listing specific funders of ads it financed by giving the money to the local PAC.

In addition to the DGA contribution, the National Education Association’s super PAC, funded by the nation’s largest public employee union, chipped in $144,000 toward the race.

“I have no idea where our money came from, beyond the fact that it comes from the DGA or the NEA,” said Michael Weisel, spokesman for North Carolina Citizens for Progress, the pro-Dalton group.

While it weathers criticism for its lack of transparency, the DGA-funded ads are attacking McCrory for refusing to release his tax returns. A spokesman for the DGA said it is “proud” to support the efforts to “expose Pat McCrory’s failure to release his tax returns and other financial interests.”

The DGA said it is “transparent about who our donors are and what they have given, and we regularly report that information."

Courts change playing field

The RGA and DGA have played an increasingly significant role in the state thanks to a series of Supreme Court rulings beginning in 2007, which have eroded North Carolina’s ban on corporate and union money in the state.

The Wisconsin Right to Life decision in 2007 cracked open the door to corporate funding of ads that mention a candidate but stop short of telling viewers to vote for or against that candidate. So far in North Carolina, the DGA and RGA are funding ads of this type, which do not ask people for their vote.

If the 2007 decision opened the door, the Supreme Court’s 2010 Citizens United ruling blew it off its hinges.

The high court said corporate and labor donations to outside spending groups are legal — including organizations that ask voters to support or oppose a particular candidate. The decision led to the creation of super PACs which have played a major role in federal elections.

“We had entities spending millions in the state’s gubernatorial races before Citizens United, using various vehicles,” said Bob Hall, a longtime director of the state’s election watchdog group Democracy NC. “But now, more entities are stepping up to spend money as though the Supreme Court has blessed the whole enterprise.”

History of enforcement

North Carolina’s Board of Elections has investigated the previous two Democratic candidates for governor, and has also taken up long battles with outside spending groups.

“Groups from both sides have been complained about,” said Strach, the state agency’s veteran campaign finance director.

The RGA ran afoul of the elections board during its unsuccessful attempt to unseat Democrat Mike Easley in 2004. The board demanded that the RGA pay a penalty of $196,000 for violating state limits on corporate contributions.

But the RGA appealed and in 2005 an administrative law judge reversed the board’s ruling. The RGA acknowledged that its ads in the state were funded through an account that commingled corporate and individual contributions.

In a letter to the State Board in 2004, the RGA’s lawyer wrote that “determining which sources of funds were used … is an impossible task,” as contributions to the RGA were never earmarked for specific use.

Furthermore, the RGA argued that its “major purpose” was not as a North Carolina PAC, and therefore it was not subject to the state’s contribution caps.

In 2008, the board held a lengthy hearing about the fundraising and spending by several outside groups including the RGA and the Democratic Legislative Campaign Committee.

Election watchdog Democracy NC, which filed a complaint which prompted the hearing, claimed that the RGA was listing donors “who had no idea their money was going to a North Carolina PAC or was being used to impact a North Carolina election.”

The state-appointed board ultimately ruled 3-2 that the RGA and other outside spending groups had broken no rules.

Any ambivalence about what’s OK and what’s not is gone now.

Before the Supreme Court’s landmark ruling “there were lots of groups that were nervous about getting involved, who were being told by their lawyers, ‘that’s too messy,’” said Hall.

Today, he says, the environment is far more inviting. And the state’s disclosure laws fail to “give the public a chance to understand who is backing some engine of advocacy.”

Strach says both RGA and DGA “are finding ways to mask disclosure,” but the Citizens United decision makes the board’s decade of investigations largely moot.

“I don’t think those questions are relevant anymore,” she said. “If a group wants to make independent expenditures of any kind, the roadblocks are no longer there.”

Bailed-out banks, Freddie Mac, AIG gave $6 million to 2008 conventions

2012-08-27T11:26:15-04:00

The Republican nominating convention that kicks off this week in Tampa has been funded by tens of millions of dollars in corporate contributions, the exact source of which won’t be known until after the party is over.

But it’s a sure bet that there are at least two big donors from the 2008 event that won’t be giving this time around — American International Group and Freddie Mac.

The two institutions together gave $1 million to the Republican convention host committee. A few months after the conclusion of the convention they were in danger of collapse, and would ultimately receive a combined $139 billion taxpayer bailout.

The donations are possible thanks to a loophole in campaign finance rules that allow corporations, unions and wealthy individuals to give unlimited sums to support the conventions.

It is “absolutely ridiculous” that corporations are able to make such donations, says Craig Holman, a lobbyist for the consumer advocacy group Public Citizen. He calls it “nothing but throwing money at the feet of congressional and White House leaders, presumably with the assumption of getting something in return.”

The two groups were bipartisan in their giving.

AIG gave $750,000 to both the Republican and Democratic host committees. The government would eventually sink $71 billion into the insurance giant. Mortgage buyer Freddie Mac gave $250,000 to both committees. Three days after the close of the Republican event, the government took it over along with Fannie Mae. Taxpayers ultimately sank $70 billion into the floundering institution.

In all, $6 million was donated by financial institutions that received bailout money to both party conventions, according to a Center for Public Integrity review of Federal Election Commission filings — $3.4 million to Republicans and $2.6 million to Democrats

The total raised for the previous conventions is likely much higher than what we will see this year.

Through the end of 2008, the Republican host committee collected more than $65 million for the event, conducted in Minneapolis, while the Democratic convention in Denver drew about $63 million.

Festivities for the opening day of the Republican convention were postponed due to the approach of Tropical Storm Isaac, which as of Monday morning appeared to be headed northwest toward New Orleans. A full convention schedule is planned for Tuesday starting at 2 p.m.

Republicans aim for $50 million while Democrats, meeting in Charlotte, N.C., a week later, set a relatively modest goal of $37 million, having refused to accept direct contributions from corporations.

It wasn’t supposed to be this way. Reforms in the 1970s were meant to keep corporate money out of conventions. In 1972, as Republicans were trying to decide where to host their national convention, International Telephone & Telegraph offered $400,000 if the GOP would bring it to San Diego. Eight days later, the administration of President Richard Nixon dropped antitrust litigation against IT&T and offered a settlement that was favorable to the corporate giant.

After details of the apparent deal appeared in the press, Republicans tried to save face and moved the convention from San Diego to Miami Beach.

The scandal prompted Congress to enact a new law that would provide taxpayer funding for the parties' conventions, thus removing the need for private contributions — in theory, anyway. For 2012, each party has received $18.2 million from the U.S. Treasury to help defray costs.

But both parties are permitted to operate nonprofit corporations known as “host committees” set up as charitable organizations to offset the financial burden on local governments associated with hosting the conventions.

Democrats have struck a populist note this year, prohibiting direct corporate, political action committee and lobbyist donations. The party has also restricted individual donations to $100,000.

Campaign finance reformers still see loopholes — corporations are allowed, for instance, to make "in-kind" contributions.

During the Democrats’ 2008 convention in Denver, companies provided the host committee with about $5.8 million in in-kind contributions, including $1.7 million in “network equipment” from the tech giant Cisco System, which, records show, was the No. 1 corporate donor to the host committee.

Yet still, “it’s a very significant departure from the past,” Holman said.

The No. 1 corporate supporter of the Republican’s host committee was Qwest, now CenturyLink, which provided nearly $5 million. About half of that was donated directly to the committee and about half was from in-kind contributions. The telecommunications firm also gave roughly $840,000 to the Democratic host committee.

The top individual donor to the Republican committee was Raymond T. Dalio, founder of Bridgewater investments, the world’s largest hedge fund. He gave $2 million.

Overall, companies contributed more than $40 million to the Democratic host committee in Denver and unions donated about $9 million, according to federal records. And companies contributed roughly $52 million to the Republicans’ host committee in Minneapolis-St. Paul.

The Republicans’ Tampa host committee website lists more than two dozen companies and trade associations as “our sponsors.”

This year, companies ranging from Coca-Cola and Wells Fargo to Xerox and UPS are working to ensure that they have a presence at both conventions.

“There’s a lot of cost around the convention,” said Wells Fargo spokesman Kathy Harrison. “It is important as a good corporate citizen to support the host city.”

Wells Fargo was one of the banks that benefited from the government’s bank bailout, though it has paid the $25 billion equity investment back, plus a $2.3 billion profit.

In 2008, the Republican host committee received $3.4 million in donations from banks that received investments from the U.S. Treasury. Donations came from U.S. Bancorp ($1 million), Goldman Sachs & Co. ($255,000), Wells Fargo ($250,000), J.P. Morgan Chase ($100,000) and Morgan Stanley ($100,000) and others.

The Democratic host convention collected $2.6 million, including nearly $330,000 from Wells Fargo and its foundation; nearly $317,000 from U.S. Bancorp; $250,000 from both Goldman Sachs and Citigroup; $150,000 from Morgan Stanley and $100,000 from Bank of America.

Most of the banks and other institutions that made contributions to the conventions have recovered nicely from the recession, once again posting healthy profits — with at least one major exception. Lehman Brothers, whose bankruptcy filing in 2008 spun the global financial markets into a panic, gave $100,000 to the Democratic convention.

Update (Aug. 27, 10:26 a.m.): Convention events postponed until Tuesday due to approaching storm.

Akin wins Missouri Senate primary, Dems get their wish

2012-08-08T15:33:01-04:00

Rep. Todd Akin, a six-term lawmaker and evangelical Christian with the support of former Arkansas Gov. Mike Huckabee, won a hotly contested Republican U.S. Senate primary in Missouri, meaning he will face incumbent Claire McCaskill, a Democrat the GOP considers beatable.

Unlike his two main opponents, Akin was spared from millions of dollars worth of attack ads paid for by outside groups. Super PACs and politically active nonprofits targeted former state treasurer Sarah Steelman, who was endorsed by former Alaska Gov. Sarah Palin, and millionaire businessman John Brunner.

With all precincts reporting, Akin won 36 percent of the vote, Brunner finished second with 30 percent and Steelman was a close third at 29.2 percent, according to the Missouri Secretary of State's offfice. Steelman called Akin to concede a little after 10 p.m., according to news reports.

Brunner, a self-funder who enjoyed favorable advertising paid for by the powerful U.S. Chamber of Commerce, was the target of more than $1.1 million in attack ads paid for by Majority PAC, the main super PAC focused on helping Democrats retain control of the Senate.

Similarly, McCaskill’s own campaign ran ads against all three Republican candidates. Notably, her advertisements targeting Akin called him “Missouri’s true conservative,” which may have helped the underfunded congressman. The move prompted political observers to note that Akin may be McCaskill's preferred November rival.

In late July, it looked like Steelman was gaining steam against her rivals. That’s when Palin, the Republican’s 2008 vice presidential nominee, endorsed her. And that’s also when a super PAC sprang into action on her behalf.

During the final two weeks of the race, a pro-Steelman super PAC called Now or Never PAC spent about $700,000 on ads in the race, mostly attacking Brunner.

Now or Never’s top donors include Stanley Herzog, who runs a highway and railroad construction company, who gave $250,000; retired financial executive and income tax opponent Rex Sinquefield, who gave $100,000; and Maxine Steelman, the candidate’s mother-in-law, who gave $50,000.

Steelman was boosted by the political action committee of the Tea Party Express, which invested about $76,000 on television and radio ads backing her candidacy. But she was fervently criticized in ads sponsored by the Chamber, which spent nearly $700,000 on a last-minute spot that argued Steelman and McCaskill were “two peas in a pod.”

Overall, outside groups spent more than $2.2 million during the GOP primary advocating for or against one of the Republican candidates. Nearly 90 percent of the total went to negative advertising, as the Center for Public Integrity previously reported.

The Missouri GOP Senate primary marks the second time in a week where a self-funded candidate went down to defeat. On July 31, former Texas solicitor general Ted Cruz bested Lt. Gov. David Dewhurst in a Senate primary runoff.

Brunner, who was long considered the frontrunner in Missouri, likewise spent millions of his personal wealth.

The former CEO of his family’s health products company, Brunner is worth between $25.5 million and $103 million, according to the St. Louis-Post Dispatch.

He contributed nearly $7.6 million of his own money to his campaign, more than 90 percent of the $8.3 million that his campaign raised, all to no avail. Meanwhile, Akin raised about $2.3 million, and Steelman raised about $1.9 million, with $800,000 of it coming from her own pocket.

For her part, McCaskill had about $3.5 million in the bank as of her most recent campaign finance filing in mid-July.

The Missouri Senate race also marks the second recent occasion in which a contentious three-way race saw a surprise victor on Election Day. In May, Republican Deb Fischer won the Nebraska GOP Senate primary after her two main rivals and their allies spent millions attacking each other.

Update (Aug. 8, 1:45 p.m.): This story was updated to include the final vote percentages.

ALEC faces new challenge to tax-exempt status

2012-07-17T07:47:59-04:00

A prominent tax attorney has accused an organization of state lawmakers and corporations officials with improperly claiming nonprofit status, alleging the group’s role is to benefit businesses, the Republican Party, and legislators and not the public.

The American Legislative Exchange Council (ALEC) “elevates commercial gain for a few over the well-being of society’s less fortunate,” says a complaint penned by Marcus Owens, the former chief of the Internal Revenue Service’s nonprofit corporations division, on behalf of Clergy VOICE, a group of ministers from progressive churches in Ohio.

ALEC has attracted attention recently for its model “stand your ground” and voter ID laws which led major corporate backers like Coca Cola and Kraft Foods Inc. to drop their membership in the face of a threatened boycott by activists. The Florida gun law became a hot topic following the slaying of Trayvon Martin, an unarmed teen, by a neighborhood watch volunteer in February.

Until recently, ALEC has enjoyed a low profile, despite its substantial influence over legislation in the nation’s statehouses. The group claims on its website that it has helped craft close to 1,000 bills introduced by state lawmakers and that “an average of 20 percent become law.”

In its complaint, Clergy VOICE says ALEC has “deliberately and repeatedly failed to comply with some of the most fundamental federal tax requirements applicable to public charities” and that evidence “quite strongly” suggests that the group is violating civil and criminal tax laws.

The clergy’s complaint goes beyond allegations of improper lobbying, claiming that ALEC exists for the “private benefit” of its members rather than for charitable, educational or other exempt purposes that serve the public interest and deserve special tax treatment.

The Center forwarded the complaint to ALEC’s media relations representative Tuesday via email but a call was not returned. The Center forwarded the complaint and questions Wednesday morning to the organization and was told it had been passed along to “appropriate parties” but did not receive a response.

The 30-page letter sent to the IRS on June 18 was inspired by a separate, whistleblower claim lodged by consumer group Common Cause in April, which alleged ALEC is a corporate-funded lobbying group, which violates IRS rules that govern 501(c)(3) nonprofit corporations. The complaint was based, in part, on information about ALEC obtained by the Center for Media and Democracy, a nonprofit research group opposed to ALEC's legislative ambitions.

ALEC, formed in 1973, has consistently argued it is bipartisan and educational in nature, because it provides research and analysis for legislators. It pays no income tax and donors to the organization, including its corporate members, can deduct their contributions from their taxable income, just as they would for a charity.

The Internal Revenue Code says a 501(c)(3) organization “may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.” ALEC reports no lobbying on its annual filings with the IRS, according to the complaint, but state records in North Dakota show two lobbyists registered to represent the organization in 2008 and 2009: Mark Behrens and Cory Shaecher.

ALEC was formed in Chicago by a group of state legislators and the late Paul Weyrich, a pioneering conservative activist and co-founder of the Heritage Foundation. Based in Washington, D.C., the group says its mission is to advance “free-market enterprise, limited government and federalism at the state level through a nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public.”

Its 23-member board of directors is made up of entirely of state legislators. But it also has a “private enterprise board” consisting of corporate representatives, including GlaxoSmithKline, PhRMA, Pfizer Inc. AT&T Inc., Koch Companies Public Sector, LLC, Altria (formerly Philip Morris) Client Services, ExxonMobil Corp. and State Farm Insurance Co. Legislators join for $50 per year while private sector members join for $7,000, $12,000 or $25,000 for the top-tier “Jefferson Club.”

The criticism of the group is focused mainly on its “task forces,” which bring legislators and corporate members together to create model bills.

The complaint alleges that industry representatives have “effective veto power” over the recommendations of the task forces.

While ALEC describes the output of its task forces as bipartisan analysis and research, the complaint said the task force proposals “do not appear to contain ‘a sufficiently full and fair exposition’ of the public policy issue underlying the legislative proposal. To the contrary, they promote the ideological views and business interests of ALEC’s Private Sector members — the corporate funders.”

Clergy VOICE consists of 18 religious leaders who have come together in the past to challenge nonprofits. In 2004 and 2006, they filed complaints against two large Ohio churches alleging they were promoting Republican candidates.

They also challenged the tax-exempt status of a Christian organization and its $1.8 million Washington, D.C., townhouse that housed conservative Christian members of Congress. The “C Street Center” made the news as a refuge for three Republican politicians tarnished by scandal.

The religious leaders do not represent their congregations. Half are members of the United Church of Christ, a Protestant denomination that has been historically liberal on social issues. In a cover letter to IRS Commissioner Douglas Shulman, they accuse ALEC of compromising free and fair elections, weakening union rights, degrading the environment and a host of other offenses.

The organization singled out a handful of corporate-influenced model bills, including a cap on damages for asbestos claims, the “stand your ground” legislation pushed by the National Rifle Association and an immigration bill which reportedly served as the basis for Arizona’s law and was drafted with help from a private prison company. The immigration law was partially knocked down by the U.S. Supreme Court on June 25.

The complaint also said ALEC had improperly provided a benefit to lawmakers by creating “scholarships” under the control of the national headquarters that paid for the lawmakers’ attendance at meetings ”held in luxury hotels, frequently in vacation-worthy destinations like San Diego, New Orleans and Scottsdale.” These include “perks such as meals, recreational activities, and subsidized childcare for legislators and their families” that are often not reported by the lawmakers on their state ethics disclosure forms, the complaint said.

“Meeting agendas include events like golf tournaments, open bar parties and baseball games — all subsidized directly or indirectly by ALEC’s corporate members,” the letter said, citing an estimate by ALEC that these benefits cost $1 million to $2 million each year.

ALEC claims to be bipartisan, but all 23 legislative members of its board listed on ALEC’s 2010 tax return are Republicans, according to a Center review. The clergy complaint claims 72 of ALEC’s 74 filled state chairman seats are held by Republican legislators.

The group states ALEC faces potential civil penalties for “a pattern of filing multiple inaccurate” tax returns with the IRS, such as not reporting lobbying activities and providing incorrect information about its payments to legislators for travel and entertainment.

It also says the group may face criminal tax penalties if the misstatements or omissions were made “knowingly or willfully.”

Whether the IRS will pursue any action is difficult to say. Complaints are typically answered with a “thank you” letter acknowledging their receipt and the agency does not release details about investigations or audits.

Owens, who was director of the Exempt Organizations Division of the IRS from 1990 to 2000, said he expects a reaction.

“The legal analysis is done for them. They just have to read it,” he said. “I would be surprised if the IRS took no action in response to this letter.”

This article was updated with new information on July 3, 2012.

U.S. Chamber, GOP block election ad transparency bill

2012-07-13T02:21:05-04:00

Alexi Giannoulias “can’t be trusted,” the 2010 election ad said. His family’s bank loaned money to mobsters, he accepted an illegal tax break and he even squandered money that families were saving for college.

If the charges were true, the U.S. Senate candidate from Illinois must have been a real creep. But they were bogus. Giannoulias, the Democratic candidate, lost anyway.

His accuser was not his opponent. It was an anonymously funded, pro-Republican nonprofit called Crossroads GPS, a “social welfare” organization that, thanks to the U.S. Supreme Court’s Citizens United decision, can accept unlimited donations from corporations, wealthy individuals and unions, and run attack ads.

In short, it functions just like the better-known super PACs but with a major distinction — it is not required to disclose its donors, despite the high court’s consistent support for disclosure rules

In 2010, legislation introduced by Rep. Chris Van Hollen, D-Md., would require nonprofits that buy political ads to disclose their donors. The bill — fought by the U.S. Chamber of Commerce, the nation's most powerful business lobby — failed. A stripped-down version introduced this year has been blocked by Republicans in both the House and Senate.

The Chamber claims disclosure would “silence free speech.” Critics say its opposition is more about shielding the business association’s corporate donors from a potential public backlash.

Transparency means ‘informed decisions’

“Disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way,” wrote Justice Anthony Kennedy in his majority opinion in the Citizens United case. “This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

But the reality is there is often no transparency in the current system.

Crossroads GPS spent $16 million on “express advocacy” in 2010, more than $15 million on ads bashing Democrats. That’s far more than any other non-disclosing group, according to the Center for Responsive Politics, a non-partisan, nonprofit group that tracks money in politics.

The outside spending addressed by the high court is in two categories: Independent expenditures and electioneering communications.

An independent expenditure group buys ads that urge voters to support or reject a candidate. Electioneering communications allow the mention of a candidate but stop short of urging a yes or no vote. In either case, coordinating the ads with a candidate is prohibited.

What DISCLOSE discloses

The 2010 DISCLOSE Act introduced by Van Hollen contained a number of provisions that were not strictly related to disclosure. For example, it barred campaign contributions from government contractors, foreign-owned businesses and companies that received government bailouts.

Nonprofits were required to report their donors when spending reached a certain level. And it required the group’s leaders to appear in a disclaimer approving the message conveyed in the ad.

The Chamber spends the bulk of its money on electioneering advertising. A key provision of the bill would expand the definition of electioneering. Currently, only electioneering advertising made within 30 days of a primary or 60 days of a general election must be reported.

Consequently, there is a disclosure gap.

And even when an ad buy is made within the disclosure period, the Chamber and other groups in the past have not revealed their donors. In Van Hollen v. Federal Election Commission a judge recently decided that all donors who give more than $1,000 to electioneering groups must now be disclosed. An appeal of the decision is pending.

In response, the Chamber — which is a nonprofit corporation — announced on May 21 that it would no longer make electioneering ads and switch to independent expenditures so it can continue to keep its donors secret.

In 2010 the Chamber was especially outspoken against regulations on government contractors and argued the bill unfairly targeted businesses’ speech while insulating unions.

Unions also opposed parts of the bill. They were concerned that reporting requirements would pose an unnecessary burden by requiring fund transfers among chapters be reported within 24 hours.

Broadcasters voiced their opposition in 2010, particularly when it came to the provisions expanding the requirement that they offer political airtime at the lowest rate.

Clean bill

The 2012 DISCLOSE Act eliminates almost all those points of contention.

Restrictions on government contractors are gone and unions are subject to the same reporting requirements as the other groups.

Like the first version, DISCLOSE 2.0 requires that once an outside spending group has spent a certain amount, it must report the identity of each contributor who gave $10,000 or more. Groups must “stand by” their ads, the same way candidates do. And corporations, unions and other organizations that file annual financial reports must include their campaign-related spending.

In 2010, the Chamber was one of 113 organizations to lobby the bill and by far the largest. In 2010, it spent $100.2 million on lobbying. The 2012 bill hasn’t attracted nearly as much attention, due no doubt to its almost certain failure thanks to Republican opposition. The Chamber is again leading the fight. It sent a letter, signed by 124 organizations, to the Senate in May voicing its opposition.

Among the signers were the Associated Builders and Contractors and several of its local chapters, Edison Electric Institute and the Wichita Independent Business Association, whose board of directors includes Koch Industries’ vice president of government and public affairs, Mark Nichols.

The bill “is designed to chill the political speech of corporations, business interests, and others, while giving labor unions special protections,” the letter says. “The bill does not propose genuine reform — its disclosure requirements are transparently political and ultimately unconstitutional.”

Chamber spokeswoman Blair Latoff called the bill “politically motivated” and designed “to single out and stifle the speech of …the business community.”

The bill does not ban businesses from election advertising — it only requires them to go public. When asked how DISCLOSE would “stifle” speech, the Chamber did not respond. Advocates for disclosure say the speech issue is a smoke screen.

“By keeping its donors secret, the Chamber prevents the brand names of its members from being associated with policies and politicians that half of the public — their customers — reject,” said Bill Allison of the pro-open-government group the Sunlight Foundation. “The Chamber serves the interests of its members, and in politics, that means anonymity.”

Speech or secrecy?

As a tax-exempt trade organization, the Chamber does not report who its donors are, though filings with the IRS do include contribution totals. In 2010, the Chamber collected $188 million from contributions alone.

Its 138-member board of directors includes top executives from a cross-section of the largest corporations in America. Their interests include oil and gas, pharmaceuticals, transportation, telecommunications, insurance and finance.

Unions have been much quieter this time around. Bill Samuel, director of government affairs at the AFL-CIO, said they strongly support additional corporate disclosure.

“We’re pretty much an open book,” Samuel said, referencing the detailed reports on membership, dues, revenue and expenditures that unions file with the Department of Labor. “There’s no comparable disclosure for companies.”

The nation’s best-known defender of individual rights, the American Civil Liberties Union, opposes the bill.

“Anonymity in speech is really critically important,” said Michael Macleod-Ball, the ACLU’s legislative chief of staff. He said the bill harms groups that are purely involved in policy issues, not electing politicians.

The ACLU runs ads that fall into the electioneering communications category but does not take sides. If the issue at hand is controversial — Don’t Ask, Don’t Tell, for example — revealing donors could increase the chance of retaliation, MacCleod-Ball said.

But Richard Hasen, a campaign finance lawyer, testified before a Senate committee that the bill’s high dollar-amount thresholds and the option for nonprofits to create a separate account to preserve the anonymity of donors who do not make election-related contributions provide ample constitutional protections.

“Disclosure laws can prevent corruption and the appearance of corruption … provide valuable information to voters … [and] help enforce other campaign finance laws,” he said.

Social welfare?

Groups like Crossroads GPS are organized as 501(c)(4)s and known as “social welfare” organizations. They may not make politics their “primary” activity, according to IRS rules.

These 501(c)(4) groups make up an increasing percentage of outside spending.

In the 2010 election, they outspent super PACs by a 3-to-2 margin, according to a Center for Public Integrity study.

Crossroads GPS, co-founded by Republican operative Karl Rove, is one of the most active nonprofits. In 2010 and 2011, it raised $76.8 million, the Center for Public Integrity has reported, far more than the $46.4 million raised by its sister super PAC American Crossroads during the same period.

Top Democratic 501(c)(4)s include Priorities USA, affiliated with pro-Obama super PAC Priorities USA Action; American Bridge, affiliated with pro-Democrat super PAC American Bridge 21st Century; and America Votes, which gained prominence from a $1 million contribution in early May from hedge fund billionaire George Soros.*

GOP opposes DISCLOSE

DISCLOSE 2012 has gone nowhere.

Senate Minority Leader Mitch McConnell, R-Ky., led the filibuster that doomed the bill in the Senate in 2010. A representative for McConnell would not comment on the 2012 bill despite repeated requests.

While a handful of moderate Republicans, most notably campaign finance reform champion Sen. John McCain, R-Ariz., have considered taking up the bill this year, it’s still considered a longshot.

Republican House Speaker John Boehner of Ohio also opposes the bill. His office did not did not respond to requests for comment for this story, but Boehner said the 2010 version was a "backroom deal to shred our Constitution for raw, ugly, partisan gain."

But in 2007, Boehner said on “Meet the Press” that there should be “full disclosure of all of the money that we raise and how it is spent.” And seven years before that, McConnell said on the same show that “Republicans are in favor of disclosure.”

Despite numerous requests, Van Hollen, the bill’s author, did not grant an interview and instead released a statement through his representative.

“If you have nothing to hide, you have nothing to fear from the DISCLOSE Act 2012.”

Disclosure has become a partisan issue — only two out of 114 cosponsors of the 2010 bill in the House were Republicans — then-Rep. Mike Castle, R-Del., and Rep. Walter Jones, R-N.C. This year, not one of the House bill’s 160 co-sponsors or the Senate bill’s 44 co-sponsors is Republican.

Adam Skaggs, counsel at the Brennan Center for Justice, which advocates for campaign finance reform, said that since the 2012 bill is more closely tailored to disclosure and not cluttered with other issues support or opposition among members of Congress should be telling.

“By eliminating some of the provisions that prompted opposition in the first version of the act, the current bill presents members with Congress with a stark choice,” he said. “Do you support transparency in elections or do you not?”

For up-to-date news on outside money in the election, follow our Source2012 Tumblr and the hashtag #Source2012 on Twitter.

* George Soros is the chairman and founder of the Open Society Foundations, which is a financial supporter of the Center for Public Integrity. To learn more about the Center’s funders, please go here.

Correction (June 26, 3:02pm): The Center originally reported that Crossroads GPS raised $76.8 million in 2011 and that American Crossroads raised $46.4 million in 2011. The story has been updated to indicate these totals are for 2010 and 2011.

Obama, Dems dominate GOP in April fundraising

2012-05-24T09:59:29-04:00

As President Barack Obama attacks Mitt Romney's tenure at a private equity firm, the former Massachusetts governor continues to benefit from six- and seven-figure contributions made by former peers to a super PAC supporting his candidacy.

Restore Our Future reported $4.6 million in contributions for April, including $1 million from John Kleinheinz, a San Antonio, Texas-based hedge fund manager and $250,000 from Stephen Zide, a former colleague of Romney’s at Bain Capital.

The real total, however, appears to be $3.9 million — the super PAC reported a $750,000 refund of a donation from Texas homebuilder Bob Perry. Perry is still the top donor at $4 million. Overall, though, it was a disappointing haul for the group — when factoring the refund, the amount was less than half what it raised the previous month.

Meanwhile, the Obama campaign and the Democratic National Committee outraised Romney and the Republican National Committee by a nearly 2-1 margin in April, which appears counter to media reports last week that indicated the two camps were running about even.

Last week, the Obama campaign started an advertising blitz attacking Romney’s tenure at Bain, claiming that the company was responsible for buying a steel company, saddling it with debt and then shutting it down, leaving hundreds of employees out of work. Romney says he left Bain two years prior to the closure of the company.

John Kleinheinz is founder of Capital Partners Inc., which manages a fund with nearly $2 billion in assets. Stephen Zide has been a managing director at Bain Capital since 2001 and an employee since 1997, according to the company’s website. He gave the super PAC $250,000 in March of last year bringing his total contribution to Restore Our Future to $500,000.

Other donors tp Restore Our Future from the investment world included billionaire Wilbur Ross Jr. who gave $100,000 and Marc Leder and Rodger Krouse, co-CEOs of Sun Capital Advisors Inc. Ross is chairman and CEO of WLRoss & Co. and is a well-known corporate buyout specialist. Sun Capital is a Florida-based private equity company.

The second-biggest donor to the super PAC was oilman and Romney energy advisor Harold Hamm, chairman and CEO of Continental Resources Inc. of Oklahoma City. Hamm gave $985,000 according to the Federal Election Commission.

Last month, the Center for Public Integrity reported that half of Restore Our Future’s funds have come from the finance industry, with the largest contributions coming from ultra-wealthy hedge fund and private equity managers.

In the overall money race, the Democrats dominated.

The Obama campaign raised $25.7 million for the month, $10 million less than March, but more than double Romney’s $11.7 million. The Obama campaign reported $115 million cash on hand compared with Romney’s $9.2 million.

The Democratic National Committee reported raising $14.3 million for the month and had $24.3 million cash on hand compared with the Republican National Committee’s $11.4 million raised and $34.8 million cash on hand.

The combined total for the Democrats was $40.1 million compared with $23.2 million for the Republicans. Numerous media reports last week, citing unnamed sources, indicated that Romney’s joint fundraising total nearly matched that of the Obama camp. The Republican National Committee's press office did not return calls seeking clarification.

The discrepancy may lie in how the “Romney Victory, Inc.” joint fundraising committee is doing its math. In addition to the campaign and RNC, the joint committee includes four state parties and both Republican House and Senate fundraising arms.

The two other major partisan super PACs had relatively disappointing months. American Crossroads, which supports Republican candidates, raised $1.8 million. Super donor Harold Simmons, billionaire chairman and CEO of Contran Corp., was responsible for $1 million of the total. The group reported reported a hefty $25.5 million in the bank, however.

Priorities USA Inc., which supports Obama, raised $1.6 million with $1 million of the total coming from the National Air Traffic Controllers Association. It was a million dollars less than what the organization raised in March. It reported $4.7 million in the bank.

Super PACs outspend favorite candidate in Indiana Senate race

Indiana,United States — 2012-05-21T09:24:48-04:00

Super PACs and other outside groups are on track to spend more on tea party favorite Richard Mourdock in his battle to unseat Sen. Richard Lugar in Indiana’s Tuesday Republican primary than Mourdock’s own campaign, records show.

Lugar, a moderate known for his expertise in foreign affairs and national security, is in danger of seeing his 36-year run as a senator come to an end. Mourdock, the Indiana state treasurer, was leading Lugar by 10 points in a Howey/DePauw Indiana Battleground Poll released Friday.

Through the most recent campaign finance filings with the Federal Election Commission, outside groups supportive of Mourdock have spent about $3 million, $1 million more than Mourdock’s own campaign.

A total of $4.5 million has been spent on the race on independent expenditures so far, the most on a congressional race this season and a possible preview of elections to come.

“It's difficult to believe that Mourdock would have seriously threatened a six-term senator had he not had strong backing from the super PACS and other outside groups,” said Larry Sabato, director of the Center for Politics at the University of Virginia.

Sabato added that outside groups such as super PACs can be more influential in a U.S. Senate or U.S. House race than they can be at the presidential level.

“Voters get tons of free news coverage about the presidential candidates,” he said. “But often their only frequent sources of information about congressional candidates come from TV ads.”

Super PACs and certain nonprofits are permitted to accept unlimited contributions from corporations, unions and wealthy individuals and spend the money on advertising to help elect or defeat a candidate. They were made possible thanks to the U.S. Supreme Court’s Citizens United decision and a lower court ruling in 2010.

They are not permitted to coordinate their spending activities with the candidates but can run ads that are virtually indistinguishable from those run by the candidates — except for the disclaimer at the end.

The top spender by far supporting Mourdock has been super PAC Club for Growth Action, an anti-tax organization unafraid to attack Republicans it considers to be too liberal on spending. It has spent about $1.5 million attacking Lugar and supporting Mourdock.

Barney Keller, the communications director of the Club for Growth said the organization was supporting Mourdock because he would “vote to cut taxes, eliminate wasteful spending and shrink the size of government.”

Club for Growth Action’s top supporter is Virginia James, an investor from Lambertville, N.J., who gave the group $1 million in January. James was personally thanked for her donations to conservative causes by the billionaire Koch Brothers, according to Mother Jones magazine at an event in 2011.

Other big donors include investment adviser Robert Arnott of Newport Beach, Calif., who gave $500,000 and tea party favorite Sen. Jim DeMint (R-S.C.), who transferred $500,000 from his campaign to the super PAC in February, as the Center for Public Integrity previously noted.

The National Rifle Association spent nearly a half-million dollars helping out Mourdock. The NRA spending comes from its regulated political action committee. Unlike a super PAC or nonprofit, donations to the PAC are limited and must come from members of the organization. And no corporate or union money is allowed.

A Club for Growth ad says Lugar “voted for bailouts, tax hikes and Obama Supreme Court justices.” The NRA says Lugar is the only candidate in Indiana with a grade of “F” from the group.

The pro-tea party super PAC FreedomWorks for America spent about $580,000. A new group, called “USA Super PAC,” spent nearly $100,000 on a mailing supporting Murdock. This new super PAC is connected to GOP super lawyer Jim Bopp — who hails from Terre Haute, Ind., and has made a career out of challenging campaign finance regulations.

Democrats consider Lugar to be a more formidable opponent than Mourdock as evidenced by a Democratic super PAC called “Majority PAC” that spent $32,500 on online ads opposing the incumbent senator.

Lugar, meanwhile, has also had support from super PACs, having seen $1.5 million in outside spending by his allies, records show. Moreover, his campaign has outraised Mourdock’s, having brought in $5.9 million over the past six years.

Two super PACs materialized to support Lugar’s candidacy: “Indiana Values Super PAC” and “Hoosiers for Jobs.” Despite their names, neither is from Indiana. Indiana Values has a Washington, D.C. address while Hoosiers for Jobs is in Sacramento, Calif.

Nor has either PAC relied on money from Hoosiers. According to a Center for Public Integrity analysis, 90 percent of the Indiana Values Super PAC’s money has come from donors outside of Indiana, and out-of-staters are responsible for two-thirds of the money Hoosiers for Jobs has collected.

In an act of political hubris, Hoosiers for Jobs (formerly Hoosiers for Economic Growth and Jobs) ran an ad criticizing Mourdock and his support from outside groups. Two fifty-something, flannel-clad actors accuse Mourdock and “some D.C. special interest group, Club for Growth” of “trying to buy our Senate seat."

Hoosiers for Jobs received a $25,000 contribution from 7-Eleven Inc. on April 17. Corporations are permitted to fund super PACs, but such donations have been relatively rare. It may be tied to Lugar’s support of retailers in a battle with banks over debit card swipe fees last year and the fact that his daughter-in-law is a lobbyist for a retail trade association on whose board the president of 7-Eleven also sits.

7-Eleven spokeswoman Margaret Chabris said Lugar “understands our issues” and has a strong record for supporting small businesses. “Plus, he is popular among our Indiana franchisees,” she added.

For his part, Mourdock has been fueled by enthusiasm from tea party activists, as well as money from the banking industry, which is getting some payback for Lugar’s vote.

Bank political action committees have donated $19,550 to Mourdock’s campaign. Lugar, meanwhile, has gotten PAC contributions from the Retail Industry Leaders Association (RILA), the National Association of Convenience Stores, the National Retail Federation, McDonalds, Wal-Mart, Walgreens and Target.

The Indiana Values Super PAC has spent more than $450,000 on TV ads bashing Mourdock, and Hoosiers for Jobs has spent about $175,000 — also all on negative ads against Mourdock.

In addition to 7-Eleven, other big donors to Hoosiers for Jobs include former lobbyist Roy Pfautch of St. Louis ($50,000); Sam Fox, the St. Louis-based GOP fundraiser who served as President George W. Bush’s ambassador to Belgium ($25,000); and Jim Morris, the president of the Indiana Pacers NBA basketball team ($25,000).

Meanwhile, the top donor to the Indiana Values Super PAC is hedge fund executive Mark Dalton of Greenwich, Conn., who has donated $100,000. The No. 2 donor to the super PAC is its treasurer, Andrew Klingenstein, whose wife, Julie, is a former aide of Lugar’s. Klingenstein has donated $25,395 to the Indiana Values Super PAC as of the most recent filings with the FEC.

Former Goldman Sachs executive John Whitehead has given $25,000 to the super PAC, as has Andrew Klingenstein’s father, investor John Klingenstein. Andrew’s brother, Thomas Klingenstein, has given $10,000.

Two politically active nonprofits have also spent money on ads designed to aid Lugar’s re-election quest: the “American Action Network,” which is headed by former Sen. Norm Coleman (R-Minn.), has spent more than $645,000, and “YG Network, Inc.,” a group started by former aides to House Majority Leader Eric Cantor (R-Va.), has spent more than $200,000.

Unlike super PACs, nonprofits are not required to publicly disclose their donors.

Top 10 donors make up a third of donations to super PACs

2012-05-21T09:24:48-04:00

Contrary to expectations, the much-criticized court decisions that gave us “super PACs” have not led to a tsunami of contributions flowing from the treasuries of Fortune 500 corporations — at least not yet anyway.

What the Citizens United decision and a lower court ruling have done is make household names out of a bunch of relatively unknown, very wealthy conservatives. Of the top 10 donors to super PACs so far in the 2012 election cycle, seven are individuals — not corporations — and four of those individuals are billionaires.

The top 10 contributors gave more than a third, or $68 million of the nearly $202 million reported by the outside spending groups this election, according to a Center for Public Integrity analysis of Federal Election Commission records.

Rounding out the top 10 are two labor unions and a physicians’ medical malpractice insurance group.

The top donor list is mostly Republican, which is not surprising given the competitive GOP presidential primary season. Even so, Democrats have had less success in raising money for super PACs so far.

In 2010, the U.S. Supreme Court and a lower court set the stage for the new super PACs.

Such organizations can accept unlimited contributions from corporations, unions and individuals to spend on advertising supporting or opposing a candidate, but are not permitted to coordinate their spending with campaigns, though many employ former campaign operatives.

Top donors

No. 1 on the donor list by far is billionaire casino owner Sheldon Adelson and family, who gave $26.5 million. Nearly all of it was spent in a fruitless effort to elevate former House Speaker Newt Gingrich to the GOP presidential nomination through donations to the pro-Gingrich super PAC “Winning Our Future.” Another $5 million went to a group aimed at electing Republicans to the House.

Adelson, 78, ranks 8th on the Forbes 400 list of the nation’s richest people with a net worth estimated at $21.5 billion. He is an outspoken supporter of Israel and backed Gingrich’s comment that Palestinians are “an invented people.”

No. 2 Harold Simmons, an 80-year-old Texan, ranks 33rd on the Forbes list with a net worth estimated at $9.3 billion. He gave $16.7 million, which includes $3 million from Contran Corp., in which he has a 95 percent interest.

Simmons, and his wife, Annette, have given to six different super PACs this cycle, but the conservative group American Crossroads, co-founded by Karl Rove, former adviser to President George W. Bush, is by far his favorite. Simmons has given the super PAC $12 million in the 2012 election cycle.

Contran is in a wide range of businesses, including chemical manufacturing, metals and waste management. Simmons has been very public in his dislike of President Barack Obama calling him a “socialist” in an interview with the Wall Street Journal and “the most dangerous American alive … because he would eliminate free enterprise in this country.”

Third on the list is another Texan, homebuilder Bob Perry. Perry, one of the GOP’s most active and prolific donors over the past decade, is a relative piker compared to Adelson and Simmons. He’s not on the Forbes list. Of his $6.7 million in donations, $3.5 million has gone to the pro-Mitt Romney super PAC Restore Our Future and $2.5 million has gone to American Crossroads.

The other individual donors in the top 10 are:

Peter Thiel (fifth), a libertarian, gave $2.7 million to super PACs supporting GOP presidential candidate Rep. Ron Paul, R-Texas. Thiel co-founded PayPal. Forbes ranks him No. 293, with a $1.5 billion net worth.
A. Jerrold Perenchio (sixth), gave $2.6 million, with $2 million going to American Crossroads. He is a longtime GOP donor and former owner of Spanish language network Univision. Forbes ranks him at 171 with a $2.3 billion net worth.
William J. Doré, a Louisiana energy executive, and Foster Friess, an investor, tied for ninth at $2.25 million. The two men were responsible for most of the contributions to the pro-Rick Santorum super PAC, the Red, White and Blue Fund.

The National Education Association, the nation’s largest union, was fourth at $3.6 million. It gave $3 million to its super PAC, the NEA Advocacy Fund, which has yet to spend any money on advertising this year. Ranked eighth is the AFL-CIO, with $2.3 million in donations, virtually all of it going to its Workers’ Voices super PAC.

Rounding out the top 10 is an unlikely super donor, the Cooperative of American Physicians. The co-op gave all its money — nearly $2.6 million — to a super PAC of the same name. The group consists of California doctors who buy medical malpractice insurance through the organization. The doctors want lower malpractice insurance rates and smaller awards in medical malpractice judgments.

Courts change the game

This marks the first presidential election following the landmark Citizens United v. Federal Election Commission case, decided in January 2010. The conservative majority of U.S. Supreme Court justices ruled that spending on independent messages that support or oppose federal candidates by corporations and labor unions does not lead to corruption.

A few months later, a federal court cited this rationale in SpeechNow.org v. Federal Election Commission. That decision led directly to the creation of super PACs. It said that outside spending groups — like American Crossroads, for example — could accept unlimited contributions from corporations, unions and individuals to be spent on political ads.

Previously, if a group wanted to expressly advocate for or against a federal candidate, it could only collect $5,000 per person per year.

If an independent group were to raise $5 million for high-profile TV ad campaign advocating against the president or members of Congress, it would need at least 1,000 donors in a year to give the legal maximum. Now, one wealthy individual can single-handedly give a super PAC the cash it needs — and change the political dynamics of a race overnight.

Washington, D.C.-based attorney Dan Backer, a proponent of super PACs, suspects that much of the money flowing to these nascent groups will come from “the same folks who’ve always contributed," though he also argues that super PACs will allow more people to get involved and have their voices heard.

Backer said the money “translates into information that empowers voters."

No limits

Bob Edgar, a one-time Democratic congressman from Pennsylvania who now heads the advocacy group Common Cause, is among those who have railed against the prospect of deep-pocketed corporations and individuals spending big sums ahead of the 2012 election.

“There’s no limit on the amount of money that can enter a political campaign,” he said.

Edgar admits he is surprised that fewer corporations haven’t flexed their political muscle by giving to super PACs, but he predicts that a few “brand-sensitive” corporations will wade into the super PAC water.

“Corporations are discovering that they have to be careful,” he said. “They can tarnish their brands if they are seen as meddling in partisan politics.”

However, there is a way for donors to go unnoticed. Nonprofits organized under section 501(c)(4) of the U.S. tax code can accept unlimited contributions and spend the money on ads, just like super PACs, but they aren’t required to reveal their donors.

In fact, 62 percent of the $123 million raised by American Crossroads, the super PAC, and Crossroads GPS, the nonprofit, through the end of 2011 came from mystery donors, according to a Center for Public Integrity analysis of tax and campaign finance records.

So there may indeed be a flood of money from big corporations headed into the 2012 election — we just won’t see it.

Wells Fargo hit with $3.1 million fine in mortgage servicing mess

WELLS FARGO & COMPANY — 2012-04-10T12:15:26-04:00

A federal judge ordered Wells Fargo to pay $3.1 million in punitive damages over its mishandling of a homeowner's loan, according to a report in the Huffington Post.

The opinion was issued by Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana. Manger described Wells Fargo's behavior as "highly reprehensible" in its five-year fight with the homeowner.

The plight of the homeowner was raised in a Jan. 27 story on iWatch News.

In an emailed statement published in the Huffiington Post, Wells Fargo spokesman Tom Goyda said "we believe that there are numerous factual and legal problems with the opinion and are reviewing our options regarding an appropriate legal response."

Meanwhile the Consumer Financial Protection Bureau, created by the Dodd-Frank financial reform law, is reportedly considering new rules to require lenders to provide borrowers with more information about the status of their loans.