Primary Source

IRS official Lois Lerner is sworn in on Capitol Hill in Washington, Wednesday, May 22, 2013.

(AP Photo/Carolyn Kaster)

Conservative nonprofit seeks to oust IRS official

By Michael Beckel

The American Future Fund, a Republican-aligned “social welfare” nonprofit, is circulating a petition to “fire Lois Lerner,” the Internal Revenue Service official at the center of the ongoing political storm about the agency’s targeting of conservative groups seeking tax-exempt status.

“Did you see IRS official Lois Lerner’s stunning and insulting actions before a Congressional committee yesterday where she made a personal statement of innocence, then plead the Fifth and left?” American Future Fund founder Nick Ryan wrote in an email to supporters Friday obtained by the Center for Public Integrity.

“Does it leave you seeing red that Ms. Lerner refused to fully and honestly answer questions before the Committee about who knew what and when?” Ryan continued. “Then let’s do something about it.”

The American Future Fund itself has frequently been singled out by campaign finance reform groups, who have accused the nonprofit of masquerading under Section 501(c)(4) of the U.S. tax code when it ought to be registered as a political committee — and subject to donor disclosure rules.

During the 2012 election season, the American Future Fund spent more than $29 million on political advertisements, as the Center for Public Integrity previously reported.

As a 501(c)(4) nonprofit, it is allowed to make election-related expenditures, so long as politics are not its “primary” purpose.

Solyndra

Tesla Motors was one of the companies selected to receive loans from an Energy Department program meant to create jobs and spur development of fuel-saving cars. Other recipients include Ford Motor Co., Nissan North America and Fisker Automotive.

Emma Schwartz/CPI

Two DOE electric car loans, two different paths

By Ronnie Greene

They are two cutting-edge electric car makers, headquartered in California and backed by powerhouses of politics and money. In 2009, each secured half-billion dollar loan commitments from President Obama’s Department of Energy to help transform their clean-energy cars from drawing boards to showrooms.

But this week, the fortunes of Tesla Motors and Fisker Automotive took sharply divergent turns.

On Wednesday, the Energy Department announced that Tesla repaid the balance of its $465 million government loan nine years early. Fisker, meantime, has ceased making cars as it weighs potential bankruptcy, confronts a $171 million loan balance with DOE and, last month, faced questions from the House Committee on Oversight & Government Reform.

In October 2011, The Center for Public Integrity and ABC News explored the Energy Department’s risky $1 billion bet on two companies lauded for their innovative design, but facing warnings from experts over the marketability of cars that, in some models, carry price tags hovering around six figures.

In announcing Tesla’s loan repayment this week, the department said the risks were worth taking, coming at a time the industry itself suffered a deep downturn. “The lack of financing for the automotive industry was critical and potentially lethal,” Energy Secretary Ernest Moniz said in a statement. “Providing these loans was a calculated risk — but it was the right decision for the country.”

Primary Source

Senators investigating Apple own company stock

By Dave Levinthal and Reity O'Brien

Two senators serving on a subcommittee that Tuesday grilled Apple Inc. executives over the company's offshore tax practices are themselves owners of Apple stock, either directly or through a spouse, according to interviews and a review of federal disclosure documents by the Center for Public Integrity.

Sen. Heidi Heitkamp, D-N.D., owns the most Apple stock among the 14 members of the Senate Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Investigations, with her holdings worth at least $250,001 and up to $500,000, according to personal financial disclosure documents for calendar year 2012. She also earned up to $5,000 in Apple stock dividends last year, records show. 

Heitkamp was one of six committee members to not attend Tuesday's hours-long hearing, during which Apple Chief Executive Officer Tim Cook defended his company against accusations of tax dodging. Attendee or not, the senator's stock holdings do not pose a conflict with her committee service, a spokeswoman said.

“Senator Heitkamp was selected to serve on the Homeland Security and Governmental Affairs Committee because of her unique position being from a border state and her past experience as a state attorney general working along aside law enforcement," spokeswoman Whitney Phillips said. "Her position on this committee is in no way impacted by her personal financial holdings.” 

Consider the Source

Sen. Rand Paul, R-Ky., speaks during a May 16 news conference with Tea Party leaders about the IRS targeting Tea Party groups.

Molly Riley/AP

Pro-Rand Paul super PAC's name may violate law

By Michael Beckel

Supporters of Republican Sen. Rand Paul, R-Ky., have launched “Rand PAC 2016.” But because the super PAC uses the potential presidential candidate’s first name, this action may violate federal law.

Three Hillary Clinton-themed super PACs established earlier this year could also find themselves in the same situation. Since, however, the former secretary of state is not officially a candidate for president or any other federal office, they are on safe ground — for now anyway.

Paul, on the other hand, has raised more than $600,000 for his 2016 re-election to the U.S. Senate, including $457,000 during the first quarter of 2013, according to Federal Election Commission filings.

Federal law, in most cases, only permits political committees authorized by a candidate to use that candidate’s name — which super PACs, by definition, are not.

The regulations, though, are unclear about whether the use of a partial name would trigger a change.

This would be “a good area for the FEC to clarify its own rules,” Paul S. Ryan, an attorney at the nonpartisan Campaign Legal Center, told the Center for Public Integrity.

An FEC spokesman directed questions to the agency’s chairman and vice chairman, who could not immediately be reached for comment.

The FEC typically sends a letter to a super PAC if it uses a candidate’s name. For example, during the 2012 GOP presidential primaries, the super PAC “Americans for Rick Perry” ran afoul of the rule and changed its name to “Restoring Prosperity Fund.”

Primary Source

tax.gov

IRS rarely denies 'social welfare' applications

By Michael Beckel

During its past four fiscal years, the Internal Revenue Service has formally denied the applications of just 60 organizations seeking recognition under Section 501(c)(4) of the U.S. tax code as “social welfare” groups.

In the same period, the agency processed 8,214 applications and approved 6,837 of them — about 83 percent, according to a Center for Public Integrity analysis of IRS data.

Sometimes applications were neither approved nor denied, meaning groups could still be awaiting recognition of tax-exempt status or still be providing the IRS with additional information. They may also have withdrawn their applications.

The IRS's approval processes have come under fire following an inspector general report that found IRS employees used “inappropriate criteria” to discern which organizations’ applications warranted additional scrutiny.

The IRS’s 2012 fiscal year, which covered the period between Oct. 1, 2011, and Sept. 30, 2012, saw a surge of new applications under Section 501(c)(4). During that period, 2,774 groups sought recognition as “social welfare” nonprofits, as the Center for Public Integrity has previously reported.

That represented an increase of more than 56 percent from fiscal year 2011 — and an increase of nearly 86 percent from fiscal year 2008.

The IRS processed 23,722 applications for 501(c)(4) nonprofit status between fiscal years 2001 and 2012, records indicate.

Primary Source

Las Vegas Sands Corp. Chief Executive Sheldon Adelson answers questions during a press conference.

Sam Kang Li/AP

Funds from Adelson-backed super PAC boost Georgia nonprofit

By Michael Beckel

One of the largest super PACs active in Virginia’s high-profile U.S. Senate race last year has ceased operations and transferred its leftover funds to a Georgia-based nonprofit — though what the group plans to do with the money is unclear.

Rise and Shine America, Inc., the Georgia nonprofit, is organized as a “social welfare” organization under section 501(c)(4) of the U.S. tax code. It received nearly $42,000 on April 30 from Independence Virginia PAC, according to records filed with the Federal Election Commission.

Ahead of the 2012 election, Independence Virginia PAC spent approximately $5 million attempting to boost Republican George Allen in his unsuccessful U.S. Senate bid against Democrat Tim Kaine.

Casino magnate Sheldon Adelson accounted for $4 million of the group’s $5.2 million in receipts. Adelson was the top donor to super PACs during the 2012 election cycle, when he, along with his relatives, contributed more than $93 million to GOP-aligned super PACs.

Independence Virginia PAC’s donation to Rise and Shine America was first reported by Roll Call’s Kent Cooper, who posited that the funds might be used in connection with the state's upcoming U.S. Senate election.

However, Doug Chalmers, the attorney for Rise and Shine America, Inc., told the Center for Public Integrity that the nonprofit “does not intend to be involved in the Georgia U.S. Senate race.”

Primary Source

Center for Public Integrity

Do nonprofits' names imply political activity?

By Michael Beckel and Ben Wieder

Trevor Potter — a Republican lawyer and president of the Campaign Legal Center, which advocates for stronger campaign finance regulations — says that the Internal Revenue Service is right to be on the lookout for organizations with a “significant amount of political activity.”

“What they are trying to do is identify groups that intend to be politically active, which is the appropriate thing for them to do,” he told the Center for Public Integrity, adding an important caveat.

“It seems to me, personally, that using the name is a pretty weak indicia,” he continued.

There are about 90,000 organizations recognized by the IRS as "social welfare" nonprofits under Section 501(c)(4) of the U.S. tax code.

Most don't have politically charged names, but scores do.  

For instance, there are 20 social welfare nonprofits with the word "Democrat" in their name, according to a Center for Public Integrity review of IRS data. Meanwhile, 18 social welfare nonprofits include the word "Republican" in theirs.

Twenty-one organizations use the word "conservative," while 31 use the word "progressive."

Sixty-nine social welfare nonprofits include the word "campaign" in their names. Just three use the word "politics."

Words such as "America" and "veterans" are far more commonly used by 501(c)(4) organizations, as our word cloud illustrates.

According to a recently released inspector general report, the buzzwords “tea party,” “patriot” and “9/12” were used by IRS employees to flag potentially political cases.

Primary Source

Garrett Lear addresses a crowd at a 2010 tea party rally in Augusta, Maine.

Robert F. Bukaty/AP

'Tea party' nonprofits rarely endorsed political candidates

By Michael Beckel

Tea party groups and other conservative nonprofits at the heart of a scandal rocking the Internal Revenue Service have, of late, largely avoided electoral politics, according to a Center for Public Integrity review of Federal Election Commission filings.

About five dozen groups with the buzzwords “tea party,” “patriot” and “9/12” in their names have been officially recognized by the IRS as "social welfare" nonprofits under Section 501(c)(4) of U.S. tax code. There are about 90,000 such organizations.

But only two of the buzzword groups reported overtly advocating for or against political candidates during 2012, or even mentioning political candidates in broadcast advertisements immediately before primary or general elections.

And one of those is, in fact, unabashedly liberal.

Both groups, which use a version of "patriot" in their names, offer contrasting perspectives into the nebulous world of politically active nonprofits.

One of these is Patriotic Veterans, Inc, a Chicago-based organization launched in 2008. Conservative political consultant Paul Caprio serves as its president.

Patriotic Veterans told the FEC that it spent $86,700 on radio ads that mentioned Sen. Bob Casey, D-Pa., and Republican House candidate Adam Kinzinger of Illinois ahead of during the 2012 election.

IRS records show automated phone calls have also been a regular expense of the group.

In 2004, Caprio worked with John O’Neill, co-author of the controversial book Unfit for Command, to design a voter-contact program aimed at veterans highlighting Democratic presidential nominee John Kerry’s “true record of service in Vietnam,” according to Caprio’s online biography.

Primary Source

Tim Meko/For the Center for Public Integrity

ADA forces judge to slash jury award for disabled workers

By Chris Young

An Iowa federal judge who frequently attends business-friendly judicial education conferences slashed a landmark $240 million verdict to $1.6 million for 32 mentally disabled workers who suffered abuse and discrimination at the hands of their employer.

It might appear that a pro-business judge made a predictably pro-business ruling. Turns out the judge had no choice. The 22-year-old Americans with Disabilities Act — designed to protect the rights of disabled workers — is to blame for the paltry award.

On Tuesday, U.S. District Judge Charles R. Wolle of the Southern District of Iowa ordered Henry’s Turkey Service to pay $50,000 in damages to each of the workers involved in a discrimination lawsuit brought by the Equal Employment Opportunity Commission. In total, the judge ruled, the company must pay the workers $1.6 million.

Wolle’s decision came two weeks after a federal jury awarded each of the workers a total of $7.5 million in damages — $240 million in all. Jurors found that Henry’s, a now-defunct Texas company, violated the Americans with Disabilities Act by subjecting the disabled workers to years of unfair treatment and harassment.

The EEOC’s complaint, filed in 2011, accused Henry’s of taking advantage of the workers’ mental disabilities, paying them substandard wages — $60 to $65 per month despite working at least 35 hours per week — failing to attend to the workers’ illnesses and injuries, and subjecting them verbal and physical abuse.

(Updated May 21, 2013, 1:28 p.m.: This story has been updated to add details of the accusations by EEOC against the employer.)  

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