Politics from The Center for Public Integrity

Funds from Adelson-backed super PAC boost GA nonprofit

Georgia,United States — 2013-05-17T12:53:58-04:00

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.”

“We're not sure how that story got started, but it's pure speculation and incorrect,” he wrote in an email to the Center for Public Integrity.

Chalmers declined to specify how the money would be put to use.

Incumbent Republican Sen. Saxby Chambliss announced that he will not seek re-election, sparking a flurry of interest from Georgia Republicans who are eyeing the seat including three sitting U.S. House members, Reps. Paul Broun, Phil Gingrey and Jack Kingston.

In filings with the Internal Revenue Service, Rise and Shine America describes its mission as “protecting conservative values” such as “limited government” and “fiscal responsibility.”

Harry “Chip” Lake III, a former aide to Rep. Lynn Westmoreland, R-Ga., serves as Rise and Shine America’s chief executive officer, chief financial officer and secretary, according to business records filed with the state of Georgia.

The super PAC’s five-figure donation nearly equals the nonprofit’s entire budget during its first year of existence.

Rise and Shine America, which was formed in July 2011, raised $50,000 during its first year, according to a new tax filing obtained by the Center for Public Integrity.

As of June 30, 2012, at the end of its first fiscal year, the nonprofit listed assets of $340 with liabilities of $2,000 — leaving it $1,660 in the red.

There is at least one definitive link between Rise and Shine America and Independence Virginia PAC: Republican political consultant Paul Bennecke.

Bennecke was the treasurer of the Virginia-based super PAC. He is also listed as a director of Rise and Shine America on its IRS annual report.

Bennecke, a former executive director of Georgia’s Republican Party and former political director of the Republican Governors Association, could not be reached for comment.

Do nonprofits' names imply political activity?

2013-05-17T09:00:01-04:00

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.

Only two social welfare nonprofits with any of those buzzwords in their names reported any political spending to the Federal Election Commission, as the Center for Public Integrity today reported. One was Republican-aligned and one was Democratic-aligned.

Methodological note: This graphic was constructed based on a Center for Public Integrity analysis of organizations listed in the IRS business master file that were recognized in 2012, omitting some common, generic words such as "association," "club" and "inc."

'Tea party' nonprofits rarely endorsed political candidates

2013-05-17T06:09:01-04:00

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.

An archived version of the group’s now-defunct website says its mission is “to inform voters of the positions taken by candidates and office holders on issues of interest to veterans.”

Only one other 501(c)(4) “patriot”-named nonprofit reported spending to the FEC during the 2012 election cycle: a liberal-aligned group called Patriot Majority USA.

Ahead of the 2012 election, Patriot Majority USA reported spending about $7.5 million to the FEC on political advertisements, most of them highly critical of Republicans.

Based in Washington, D.C., Patriot Majority USA was established in March 2011, after being spun-off from another operation.

The nonprofit is headed by strategist Craig Varoga, who has advised numerous Democratic candidates, including Maryland Gov. Martin O’Malley and Kentucky Gov. Steve Beshear. In 2010, political committees that were part of the Patriot Majority network spent millions on behalf of Senate Majority Leader Harry Reid, D-Nev., who won a contentious re-election battle that year.

A 2011 filing with the IRS describes the nonprofit’s primary purpose as seeking to “encourage a discussion of economic issues in the United States in order to make America stronger and promote our country’s future economic prosperity.”

When it applied for tax-exempt status, the group told the IRS that its political spending would not exceed 40 percent of its annual budget, according to documents obtained by the Center for Responsive Politics.

Patriot Majority USA has never publicly reported any of its funders.

When the FEC asked about the lack of information about donors, Patriot Majority USA’s counsel Ezra Reese said that the group, as a matter of policy, “does not accept contributions earmarked for a specific political purpose.”

Federal law only requires nonprofit groups to disclose the names of donors who earmark contributions for political advertisements — something donors rarely do.

Meanwhile, political committees — including super PACs, which, like nonprofits, are allowed to accept donations of unlimited size — are required to reveal all donors who give more than $200.

Neither Varoga nor Caprio responded to requests for comment.

Faced with an onslaught of new applications by organizations seeking tax-exempt status under Section 501(c)(4) of the U.S. tax code, IRS employees in 2010 developed a shorthand for cases they thought might merit additional scrutiny.

If words such as appeared in groups’ names, applications were flagged as potential political cases, according to a report released Tuesday by the Treasury Inspector General for Tax Administration.

The rules for who can fund social welfare nonprofits’ political advocacy have been loosened in the wake of the U.S. Supreme Court’s 2010 Citizens United v. Federal Election Commission ruling.

While 501(c)(4) nonprofits cannot primarily be in the business of influencing elections, they are legally allowed to call for the election or defeat of candidates. When they do, they must disclose their expenditures to the FEC — just as individuals, labor unions, business associations and corporations do.

They must also report expenditures related to ads that mention politicians shortly before an election, even if they fall short of explicitly advocating for their support or defeat.

Social welfare nonprofits — such as Crossroads Grassroots Policy Strategies, which was co-founded by Republican strategist Karl Rove — spent hundreds of millions of dollars ahead of the 2012 election.

The inspector general’s report concluded that despite the use of “inappropriate criteria,” the IRS was “not politically biased” in its assessment of nonprofits’ applications.

In recent days, the agency’s actions have received bipartisan condemnation, and IRS Acting Commissioner Steven Miller resigned Wednesday.

Ben Wieder contributed to this report.

ADA forces judge to slash jury award for disabled workers

2013-05-16T14:46:01-04:00

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.

The company, jurors unanimously agreed, acted with “malice or with reckless indifference” to the workers’ federal civil rights. The jury awarded each of the 32 men $5.5 million to compensate them for their pain and suffering, and another $2 million in punitive damages.

In a May 1 press release, the EEOC trumpeted the “historic verdict,” claiming that the $240 million in total damages amounted to “the largest verdict in the federal agency’s history.”

Not so fast.

As it turns out, the Americans with Disabilities Act limits the amount of damages that can be awarded to plaintiffs. That’s why Judge Wolle so drastically reduced the award.

Under the act, compensatory and punitive damages are capped at $50,000 for companies like Henry’s that employ between 14 and 101 employees.

The limit is $300,000 for companies that employ more than 500 employees.

EEOC attorney Robert Canino acknowledged the caps in a brief he filed on May 10.

The EEOC “understands that the amount of damages of $7,500,000 assessed and awarded by the jury to each of the 32 class members, while certainly an appropriate and meaningful measure of the actual harms suffered by these victims of discrimination, including but not limited to, the mental anguish, pain and suffering, and ‘loss of enjoyment of life,’ must be drastically reduced in order to come within the stringent statutory limits for recovery under” the law, he wrote.

Robert Dinerstein, an American University law professor who specializes in disability law, says the caps on damages were implemented in an effort to balance plaintiffs’ needs to be compensated for their pain and suffering without unnecessarily putting companies out of business.

Still, he says, “I think the [caps] are problematic.”

For one thing, Dinerstein says, plaintiffs are already burdened with proving to a jury that the discrimination they’re alleging is real and intentional. “It’s not as if any Tom, Dick and Harry can go to a sympathetic jury and win,” he says.

Moreover, Dinerstein says $300,000 is “chump change” for a large company employing more than 500 workers.

When companies discriminate against their disabled employees, “They should pay the piper.”

Even though the damages were significantly cut, Dinerstein says, “You still have a symbolic victory.”

That symbolic victory is also supplemented by a previous judgment ordering Henry’s to pay the workers a total of about $1.3 million in back pay.

Slideshow: GOP fundraising blitz after IRS scandal

2013-05-16T18:03:01-04:00

Solicitations from GOP politicians and party committees are attempting to capitalize on conservatives' outrage over IRS officials singling out tea party and other right-leaning nonprofit groups for enhanced scrutiny. Meanwhile, the Democrats are mentioning everything but the IRS in their fundraising appeals. | READ THE STORY: IRS scandal sparks fundraising blitz

Canada buoyed by former U.S. ambassador

2013-05-17T10:27:07-04:00

Since U.S. Ambassador to Canada David Wilkins moved back home from Ottawa in 2009, he’s reclaimed his role as liaison between the U.S. and its northern neighbor.

But this time, Wilkins — the Bush Administration’s top diplomat in Canada from 2005 to 2009 — is working for the Great White North, lobbying the U.S. federal government on behalf of Canadian business and government entities.

And last week, Wilkins parlayed his former ambassadorship into a job lobbying Congress on behalf of the Toronto-based Investment Industry Association of Canada, according to reports filed with the U.S. Senate.

Does Wilkins’ latest circuit through the international revolving door create conflict of interest or the appearance of one? No, Wilkins told the Center for Public Integrity, saying he “respectfully disagreed” with such a notion.

“As U.S. ambassador, I advocated for the U.S.-Canada relationship,” Wilkins said. “I do the same thing today, but in the private sector.”

The South Carolina native has lobbied on behalf of handful of Canadian interests since 2009, when he joined the Washington-based firm Nelson Mullins Riley & Scarborough, LLP as partner and chair of the public policy and international law practice group.

Last year, the provincial government of Saskatchewan spent $400,000 to hire Wilkins and his associates to advocate for province’s energy exports and cross-border food safety. That same year, the Canadian Association of Petroleum Producers spent $240,000 for Nelson Mullins to lobby Capitol Hill regarding Canada’s oil sands industry, records indicate.

Additionally, Wilkins has sat on the board of the Toronto Island-based Porter Airlines since April 2009, according to a Financial Post report.

Wilkins is not the only former U.S. diplomat to represent a foreign entity on Capitol Hill.

Jim Blanchard, an ambassador to Canada during the Clinton administration, advocated for the Forest Products Association of Canada in in 2009.

The Republic of India hired Robert Blackwill — a Bush Administration ambassador to India — to lobby Congress and federal agencies on the U.S.-India civil nuclear agreements, records show.

Wilkins says he has not breached any ethical standards by lobbying for Canadian industry because he has not engaged in any lobbying issue that he was “actively involved” with as ambassador.

The bulk of his pro-Canada advocacy has been devoted to facilitating meetings and lining up press opportunities when Canadian officials visit Washington, Wilkins said.

“There is no conflict of interest, because I’m not advocating on any position that I was actively involved in as a U.S. ambassador.”

The Province of Alberta had, however, hired Wilkins to lobby Congress on "issues impacting Alberta's forestry industry" — an area with which he became familiar while for a time overseeing the decades-long U.S.-Canada lumber trade dispute as ambassador.

Since 2010, Alberta has spent $480,000 for Nelson Mullins lobbying services, including those of Wilkins. Officials from the Alberta and Saskatchewan governments did not reply to requests for comment.

Wilkins said that his most recent work for a Canadian client, the Investment Industry Association of Canada, was consigned to a “one afternoon deal,” meet and greet with the association’s President and CEO Ian Russell and members of the House Financial Services Committee.

“When it came to Congress, we needed to have Nelson Mullins provide us with a little bit of help to meet the right congressional leaders,” Russell said.

During typical visits to Washington, D.C., IIAC officials meet with individual regulators in the Securities and Exchange Commission and the Commodity Futures Trading Commissions, but this trip was focused on educating members of Congress on the association’s agenda of regulatory reform and Canada’s securities markets, he said.

Wilkins, who works out of a Greenville, S.C., office, said was not present for those meetings and said that the lobbyist registration form filed on behalf of IIAC was submitted in “an abundance of precaution” to ensure transparency in Nelson Mullins’ dealings — however limited — with Canadian trade group.

“We were not advocating for any specific law or bill,” Wilkins said of the visit. “I don’t anticipate any ongoing lobbying effort.”

Lax state rules provide cover for sponsors of attack ads

2013-05-16T16:20:38-04:00

While much criticism has been lobbed at the federal system for failing to adequately identify who is spending money to influence campaigns, 35 states have independent spending disclosure laws that are less stringent than federal election law.

In fact, in 30 states it’s impossible to total how much money outside groups are spending on campaigns, information that is mostly available when it comes to federal contests.

That’s according to a new 50-state analysis by the National Institute on Money in State Politics, which graded the states on disclosure requirements for super PACs, nonprofits and other outside spending groups.

Fifteen states — Alaska, California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Washington and Wisconsin — received an “A” grade, meaning the states’ laws were at least as robust as federal independent spending requirements.

New Jersey and Virginia, states where residents will be casting votes for governor and state legislature this year, were among 26 states that received a failing grade.

The others were Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Dakota, Pennsylvania, South Carolina, Tennessee and Wyoming.

States were graded on a 100-point scale, based on how much information is provided to the public about non-candidate organizations that buy ads, often negative and misleading, just before an election. Six states — Alabama, Indiana, New Mexico, New York, North Dakota and South Carolina — didn’t garner a single point in the survey.

Independent super PACs and nonprofits intent on influencing campaigns proliferated in the wake of the 2010 U.S. Supreme Court’s Citizens United v. Federal Election Commission ruling, adding about $1 billion in spending in federal races in the 2012 election cycle.

At the state level, lavish spending by outside groups often faces weaker disclosure rules than federal contests and receives far less media attention.

The result is a mishmash of rules, with some states scrambling to pass legislation in the wake of the high court decision while others show little interest in enacting any changes.

In South Carolina, for example, outside groups paid for ads attacking several state and local politicians in 2012 but were not required to report the spending.

Two federal court decisions have left the state without “any rules” related to outside groups’ spending, according to Cathy L. Hazelwood, deputy director of the state Ethics Commission.

State Sen. Wes Hayes, a Republican from Rock Hill, estimates that an anonymous group called Conservative GOP PAC, which despite its name has no apparent affiliation with the state’s Republican party, spent at least $100,000 on campaign fliers in an unsuccessful effort to unseat him.

He concedes that’s just a guess.

“I’ll never know the amount, just like I’ll never know who spent it,” Hayes says. Efforts to contact Conservative GOP PAC were unsuccessful, as the group has no office, no phone number, no website, did not file incorporation records with the state and no individuals have claimed membership in the organization.

Non-candidate, independent spending on elections can be broken into two general categories: “independent expenditures” and “electioneering.” With independent expenditures, potential voters are asked to back or oppose a candidate. With electioneering, a candidate is named, but there’s no explicit request for support or opposition.

In 25 of 50 states, electioneering advertisements are not required to be reported, according to the analysis by the National Institute.

The term “electioneering communications” came to be with the passage of the Bipartisan Campaign Reform Act of 2002. The federal law requires such expenditures be reported, but it applies only to television and radio ads that air shortly before an election.

In a few states, however, the definition of electioneering communications is broader than at the federal level, and may include non-broadcast expenditures like direct mail and print advertising. Independent expenditures refer to all expenditures used to support or oppose a candidate, including non-advertising costs like polling and yard signs.

Points were withheld in the survey based on the level of disclosure and whether disclosure forms differentiate between independent spending and other types of campaign expenditures.

While North Dakota scored a zero, the state passed legislation this year that will beef up disclosure requirements for outside groups once the law goes into effect August 1.

The National Institute’s rankings focus solely on spending and not on donors to the groups that are doing the spending. Increasingly, “social welfare” nonprofits — currently at the center of a scandal involving the IRS — and trade associations are being used to hide donors’ identities in both federal and state races.

In New Mexico, outside political action groups spent heavily on races for the state Legislature, races that typically attract fewer than 20,000 voters. Once sleepy contests have become bruising battles fought through statewide television ads, said state Sen. Peter Wirth, a Democrat from Santa Fe.

He’s pushed a bill requiring greater disclosure by outside groups through the Senate three times (twice with unanimous approval) only to see it die in the state House after frenetic lobbying by “very powerful special interests” from both parties, he says.

“It’s bipartisan support in the open, and then behind the scenes it’s full-on bipartisan opposition,” Wirth says.

But several states have enacted disclosure requirements that go beyond federal requirements.

In Maryland, corporations are required to alert shareholders about a company’s independent political spending;
A “stand by your ad” provision in a 2010 Massachusetts law requires that in corporate-funded ads, the CEO appear in the spot;
Alaska, California and North Carolina require independent expenditure groups to list their top donors in political ads.

The National Institute’s rankings also factor whether states require independent spending groups to disclose which candidate they are targeting.

Two states, Florida and Delaware, require that spending be made public but not the targets or the purpose of the spending. The result: It’s virtually impossible to track how much was spent by outside groups trying to hurt or help a particular candidate.

Thirty-six states will elect governors in 2014. Edwin Bender, executive director of the National Institute on Money in State Politics, said he hopes states with poor grades will strengthen their reporting requirements.

“The majority of states will elect their governors and other major statewide offices in 2014,” he said. “We think the public should know how much money is spent on these races, and by whom.”

John Dunbar contributed to this report.

For more information about money in state politics, visit www.followthemoney.org.

Judicial candidate blames mystery nonprofit's attacks for defeat

2013-05-16T16:20:38-04:00

When Ed Sheehy looked at his mail one day last fall, he was startled to see his face staring back at him, posed alongside the notorious “Christmas Day Killer.” Sheehy, as a public defender, had represented the man a year earlier. Now Sheehy was running for a seat on the Montana Supreme Court and someone was using the double-murder to accuse him of being soft on crime.

“I was furious,” the 60-year-old Sheehy, who was born in Butte, Mont., and now resides in Missoula, told the Center for Public Integrity. “It was misrepresenting what I did and what I do as a lawyer.”

So who was behind the attack?

The mailer showed only that it was paid for by the “Montana Growth Network,” a “social welfare” nonprofit, registered under Section 501(c)(4) of the U.S. tax code. Montana election records revealed next to nothing about the organization, which, because of its tax status, is not required to disclose its donors. The nonprofit’s website says its goal is to make Montana “more business friendly.”

Despite finishing on top in the summer’s primary election, Sheehy lost in November.

Mystery mailers

He blames the mailers and similarly themed radio ads paid for by the group for his defeat, and he is angry that it was not required to report the full extent of its spending — much less the names of those who bankrolled it.

Montana, in fact, is one of 35 states where disclosure laws for independent groups like the Montana Growth Network are less stringent than what federal election law requires, according to a new analysis by the National Institute on Money in State Politics.

Sheehy, the nephew of a former Montana Supreme Court justice, first faced off against attorney Elizabeth Best and Laurie McKinnon, a district judge, in a three-way, nonpartisan primary in June. The top two vote-getters advanced to the general election in November.

Ahead of the primary, the Montana Growth Network endorsed McKinnon and touted her in a mass mailing as “fair,” “honest,” “constitutional” and “the only nonpartisan choice for Supreme Court.”

The group’s mailers also focused on Sheehy’s work defending a murderer and criticized Best for pursuing a lawsuit to “seize control of the state’s atmosphere … to stop global warming.”

Sheehy, who finished first with 34.3 percent of the vote, spent $32,000 during the primary, and McKinnon, who finished second with 33.6 percent of the vote, spent about $30,000, records show. Best came in at third with 32.1 percent.

Best raised more than the other two candidates combined — $128,000, which included roughly $20,000 of her own money. She was the only candidate to advertise on television.

The Montana Growth Network spent roughly $42,000 during the primary election — more than either Sheehy or McKinnon’s own campaigns.

Outsider spends big

Best told the Center for Public Integrity that she was “stunned” by the result.

“Hearing from the candidates doesn’t matter anymore,” she said, adding that what matters is who has well-financed outside supporters to “cast candidates as something they aren’t and to tip the scales.”

McKinnon, Best said, was “running as a partisan with unlimited backing.”

The amount spent by the Montana Growth Network in the primary was required by state law to be disclosed because the mailings urged voters to support or oppose a candidate — a line the nonprofit says it didn’t cross with its subsequent activities, whose costs it did not disclose.

Ahead of the November election, one direct mail piece from the Montana Growth Network argued that under Sheehy, justice would be “beholden to a political party,” based on Sheehy’s past financial support of Democratic candidates.

Additionally, both mail and radio advertisements said that Sheehy had an “activist agenda” for his defense of Tyler Michael Miller, the so-called “Christmas Day Killer” who murdered his girlfriend and her 15-year-old daughter “in cold blood” in 2010.

While defending Miller, Sheehy had unsuccessfully sought for Montana’s death penalty process to be ruled unconstitutional because a single judge, not a jury, is allowed to assess whether “mitigating factors” exist that might rule out a death sentence.

Sheehy says he was simply “doing his job.” Miller is currently serving two life sentences after ultimately pleading guilty.

Ads tread fine line

Instead of urging people to vote against Sheehy or support McKinnon, the ads advised voters to “contact Ed Sheehy and tell him that you want an impartial Supreme Court” and to sign an online petition.

How much was spent on these advertisements is not public.

Montana media outlets reported on the anti-Sheehy radio ads, and Sheehy called on McKinnon to denounce them, which she did.

“Negative advertising has no place in a nonpartisan race,” McKinnon said in a press release at the time. “I ask for your vote based on who I am, not on negative portrayals of my opponent.”

On Election Day, McKinnon bested Sheehy by 12 percentage points.

She had also been endorsed by the Montana Chamber of Commerce and spent about $35,000 on the general election campaign. Sheehy, who had been endorsed by the Montana AFL-CIO and state’s teachers’ union, spent roughly $44,000.

Being painted as an “activist” by the Montana Growth Network, Sheehy said, was insurmountable.

“In judicial elections, that does you in,” he said.

University of Montana political science professor Jim Lopach said he was surprised by the election results.

Name didn't help

“It’s amazing that Sheehy didn’t win with name recognition he had," Lopach said, adding that McKinnon came across as the "more conservative" candidate.

One fact that is known about the Montana Growth Network is the name of its founder and treasurer — Republican state Sen. Jason Priest, who donated the legal maximum of $620 to McKinnon’s campaign.

McKinnon declined to be interviewed for this story. Priest told the Center for Public Integrity that Best and Sheehy “disqualified themselves” during the race.

“The voters made their own decision based on the information they had,” Priest said. “We told voters that you’re better off with a nonpartisan court.”

Priest said the Montana Growth Network didn’t report the spending to the state because it was “issue advocacy,” which is not required to be disclosed.

In the months since the election, the Montana Growth Network has continued to produce issue advertisements, including mailers that encouraged Montana lawmakers to reject the expansion of Medicaid coverage called for under the health care reform law signed by President Barack Obama.

Jim Murry, the Montana Political Practices Commissioner until he resigned earlier this year, told the Center for Public Integrity that “voters should be angry and upset” about the lack of transparency at the state level regarding political ads.

In the wake of the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in 2010, which lifted a ban on corporate spending on political ads that call for the election or defeat of federal candidates, many lawmakers have attempted to update regulations at the state level.

During its most recent legislative session, a bipartisan group of Montana lawmakers pushed for new campaign finance rules that would have required disclosure of “electioneering communications” — defined as ads run within 90 days of an election that show or mention candidates without explicitly advocating for their election or defeat.

The Montana state Senate passed the bill in March on a 29-21 vote, but it died in committee in the Montana House of Representatives. A motion in April to bring it to the House floor without committee approval received majority support but fell six votes short of the three-fifths required.

Secret spending in judicial elections concerns Adam Skaggs, senior counsel at the New York-based Brennan Center for Justice, which advocates for fair and impartial courts.

“There are real concerns that judges will be partial to the individuals or the interest groups that are responsible for putting them on the bench,” he said. “The power of the judiciary depends on its reputation.”

For more information about money in state politics, visit the National Institute on Money in State Politics online at www.followthemoney.org.

IRS scandal sparks fundraising blitz

2013-05-16T14:47:42-04:00

The scandal-singed Internal Revenue Service could unwittingly generate a mountain of cash for Republican interests.

GOP politicians and party committees this week are soliciting supporters far and wide in attempts to capitalize on conservatives' outrage over IRS officials singling out tea party and other right-leaning nonprofit groups for enhanced scrutiny.

Republican National Committee Chairman Reince Priebus blasted a missive to backers Wednesday asserting that this week has been a "complete disaster for the White House," citing the IRS imbroglio, congressional hearings on Benghazi and revelations that the Department of Justice secretly seized phone records of Associated Press journalists. He also snipes at House Minority Leader Nancy Pelosi, D-Calif.

"Clearly he's hoping a Democrat-controlled House will let him off the hook. We can't let that happen," Priebus wrote. "Contribute $25, $50, $100, or whatever you can today to help us defend our House so we can hold President Obama and the Democrats accountable."

Sen. Marco Rubio, R-Fla., wrote supporters through his Reclaim America PAC leadership committee to say that "if there was ever a time for conservatives to take a stand against an expanding federal government, it is now." He further noted that "the very message of the Tea Party movement has been validated" because of the IRS situation.

Then Rubio's pitch: "You can help by contributing to the Reclaim America PAC today. Your donation will ensure that we have the resources to take this fight to the highest levels possible."

The National Republican Congressional Committee, for its part, has set up a page featuring a large photo of House Speaker John Boehner with his recent quote superimposed: "My question isn't about who's going to resign — my question is who is going to jail over this scandal?"

Next to it sits a form where people are asked to submit their name, email address and ZIP code, which the NRCC reserves the right to use for future solicitation purposes. The NRCC is also spending "thousands" of dollars on three Web advertisements slamming the IRS and directing people to its page.

The IRS scandal is a galvanizing issue ripe for political advocacy because it "involves an institution every American has had to deal with and understands — and to make matters worse, Americans hated the IRS to begin with," NRCC spokeswoman Andrea Bozek says. "In terms of 2014, this latest abuse of power is another indication that Democrats are going to have a hard time winning the House with Obama leading their recruitment efforts."

Among House of Representatives members fundraising off the IRS' actions is Rep. Chris Collins, R-N.Y.

"Targeting conservatives and Americans who believe in the Constitution is outrageous and we can't let it stand," he wrote supporters before providing a link to a donation page that states, "Help me today."

Rep. Pat Meehan, R-Pa., took a slightly more direct approach.

"House Republicans are going to investigate the IRS' actions -- but we need a majority in the House to do it," he writes. "Please consider supporting our efforts with a contribution of $250, $100 or even $50."

Democrats haven't shied away from fundraising this week, although there's nary a mention of the IRS to be found in their financial come-ons.

Instead, they struck out at one member of their usual cast of conservative bogeymen and women.

"Scandal-ridden Republican Michele Bachmann is at it again," the Democratic Congressional Campaign Committee writes today. "That's right: in the midst of a federal investigation for campaign violations, Bachmann has the nerve to spearhead the Republican effort to block Obamacare before its full implementation."

The email then asks readers to "declare your support for Obamacare" and provides a link to a political contribution page that urges individuals to "contribute $3 or more today to support President Obama's agenda!"

The Democratic National Committee, meanwhile, today asked party faithful to "chip in $5 or more today and help elect Democrats who will stand up for marriage equality across the country, just like the ones in Minnesota did yesterday."

IRS employees back Obama, Democrats

2013-05-15T12:41:04-04:00

President Barack Obama collected more than $110,000 from employees of the Internal Revenue Service during his 2008 and 2012 campaigns — significantly more money than any other contemporary political candidate, according to a Center for Public Integrity analysis of Federal Election Commission filings maintained by the Center for Responsive Politics.

The donations were split roughly evenly between Obama's two presidential bids.

Ahead of the 2012 election, IRS employees collectively gave Republican presidential candidate Mitt Romney about $25,000 — less than half the amount received by Obama. For his part, Sen. John McCain, R-Ariz., the GOP's presidential nominee in 2008, collected only about $6,000 from IRS employees.

The IRS has become the center of attention following an apology Friday by Lois Lerner, director of the agency’s division that oversees tax-exempt organizations, for what she acknowledged was "inappropriate" targeting of conservative nonprofits for additional scrutiny since 2010. Obama himself said on Monday that offenders in the agency needed to be held "fully accountable."

On Tuesday, a report from the Treasury Inspector General for Tax Administration said the IRS used "inappropriate criteria" when reviewing organizations seeking tax-exemption.

During the past two decades, individual employees of the agency have collectively increased their political giving, which has overwhelming benefited Democrats and liberal-leaning organizations.

Overall, rank-and-file IRS employees donated more than $840,000 to federal candidates and committees from 1989 to 2012, according to the Center's analysis. Democrats and liberal-leaning organizations received about two-thirds of this sum.

While GOP-aligned groups and candidates received the remainder, during some election cycles, such as the 2002 midterms and the 2010 midterms, Republicans and conservative-leaning organizations achieved near-parity.

The Democrats' 2004 presidential nominee, John Kerry, who is now serving as secretary of state, ranked second behind Obama and ahead of Romney among candidates to benefit from the financial largesse of IRS employees, collecting about $31,000 during his failed presidential bid.

The top organizational beneficiary of money from IRS employees is the National Treasury Employees Union, which accounted for more than $102,000 in donations. The labor union has historically supported Democratic candidates, according to the Center for Responsive Politics.

Both the Democratic National Committee and Republican National Committee have also received notable support from IRS employees, with each collecting about $45,000 over the years.

All federal employees, including those who work for the IRS, are bound by the Hatch Act, a law passed in 1939 with the intent of curbing partisan power abuses by civil servants.

The Hatch Act generally bans federal employees from engaging in political activity while on the job, including soliciting funds for candidates. But political activities during personal time that do not use government resources, such as donating or volunteering for a campaign, are typically allowed.

Federal campaign finance law requires all individuals who donate more than $200 to a political group or candidate to list their employer and occupation. These filings may understate the donations of individuals who give less than the reporting threshold or who do not clearly identify the IRS as their employer.

Nonprofits organized under Section 501(c)(4) of the U.S. tax code have flourished in the wake of the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in 2010, which lifted restrictions on the types of political advertising in which these groups could engage.

During the IRS’s 2012 fiscal year alone, nearly 2,800 groups sought tax-exemption under Section 501(c)(4), as the Center for Public Integrity previously reported.

This tax status permits organizations to pursue a mission of promoting "social welfare" and allows them to keep their funders secret. Groups with the primary purpose of engaging in electoral advocacy must disclosure their donors.

Reporter Ben Wieder contributed to this report.