Takings Initiatives Accountability Project from The Center for Public Integrity

Three Big Donors Bankrolled Americans For Limited Government In 2005

2012-05-30T16:07:49-04:00

Americans for Limited Government, the tax-exempt organization that bankrolled a series of controversial ballot initiatives this year, raised 99 percent of its $5.4 million in total contributions in 2005 from just three donors, the Center for Public Integrity has learned.

The number of ALG’s major donors in 2005, but not their identities, was disclosed in financial statements obtained by the Center.

New York political activist Howard Rich, the organization’s high-profile chairman, did not respond to the Center’s requests for information about ALG’s financial affairs, including a question about how much of his own money, if any, he has given to the group. Rich has repeatedly declined to disclose the identities of donors to ALG and eight other tax-exempt organizations that share common management.

Rich was recently described by The Wall Street Journal as “a publicity-shy, libertarian-leaning businessman who has become the go-to man for supporters of conservative ballot initiatives.”

The reliance of Americans for Limited Government on such a small number of big donors is at sharp variance with how the organization bills itself to journalists and to the public.

“Americans for Limited Government is funded by thousands of individuals from across the country,” the organization’s Web site says. “Grassroots volunteers and donors make up the heart and soul of our organization.”

It’s a theme that Rich and his lieutenants have sounded again and again.

Months before the November elections, for example, Rich told a reporter for the San Francisco Chronicle that his network of organizations — chief among them Americans for Limited Government — is funded by thousands of individual donors.

And in an October 24 e-mail to the Center, John Tillman, ALG’s president, said that the organization’s “funding comes from thousands of Americans all over the country.” Tillman went on to say that “we are also proud of the fact that our support is broad and deep.”

The Center previously reported that Americans for Limited Government was apparently forced last month to move out of Illinois, its longtime base of operations, because it could not comply with the state’s charity laws. Just after the November 7 elections the organization changed the address listed on its Web site to the Virginia residence of one of its officers.

Organization That Bankrolled ‘Takings’ Initiatives Forced Out Of Illinois By Attorney General

Illinois,United States — 2012-05-30T15:27:30-04:00

Americans for Limited Government, the Chicago-based tax-exempt organization that bankrolled a series of controversial ballot initiatives this year, has apparently been forced to move out of Illinois because it could not comply with the state’s charity laws, the Center for Public Integrity has learned.

Americans for Limited Government had operated from offices in Illinois since 2002, but just after the November 7 elections it quietly changed its address to the Virginia residence of one of its officers. At the same time, ALG created two new tax-exempt groups, the Sam Adams Alliance and the Sam Adams Foundation, which occupy its former Chicago address.

The chairman of Americans for Limited Government, New York political activist Howard Rich, was recently described by The Wall Street Journal as “a publicity-shy, libertarian-leaning businessman who has become the go-to man for supporters of conservative ballot initiatives.” Rich did not respond to the Center’s requests for information about the organization’s financial affairs.

In all, Americans for Limited Government spent at least $8 million in 2006 pushing takings initiatives and other ballot measures. The organization has repeatedly refused to disclose the sources of its funds.

Although charitable organizations that operate in Illinois are required to furnish state regulators with annual financial statements audited by a certified public accountant, Americans for Limited Government never did so, the Center has learned.

On September 15, Illinois Attorney General Lisa Madigan notified Americans for Limited Government that its registration under the state’s charitable solicitation laws was “delinquent and not in good standing” and that its registration would be cancelled on October 15 if it failed to file a complete annual report, including the audit.

“Upon cancellation,” Madigan’s letter said, “the file will be reviewed to determine if further action, including dissolution, appointment of new trustees, and/or court-imposed remedies and fines, are appropriate.”

Madigan sent identical warnings to ALG’s affiliate, Americans for Limited Government Foundation.

Neither organization responded to the warnings, and on October 15 the Illinois Attorney General’s office canceled their registrations as charitable organizations.

The Center previously reported that both organizations ran afoul of a different state law last year by continuing to operate in Illinois even after Secretary of State Jesse White had revoked their authority to do business there.

Financial statements filed with Illinois authorities say that Americans for Limited Government Foundation shares “common management” with more than a half-dozen of Rich’s organizations, including ALG; Legislative Education Action Drive (LEAD); Parents In Charge Foundation (formerly LEAD Foundation); U.S. Term Limits; U.S. Term Limits Foundation; Social Security Choice.org (SSC.org), and SSC.org Foundation.

Although Rich’s two new organizations, the Sam Adams Alliance and the Sam Adams Foundation, solicit contributions on their shared Internet site (which was set up by Americans for Limited Government), neither has registered with the Illinois Charitable Trust Bureau, as is required by Illinois law.

Howard Rich’s Tight-Lipped Donors

2012-05-30T15:31:24-04:00

The biggest donors to Howard Rich’s network of “grass-roots” organizations have a few things in common.

Most are deep-pocketed philanthropists, business executives, or tax-exempt organizations that appear to subscribe to Rich’s libertarian views on school choice, term limits, and limited government.

The donors have one other common characteristic: They’re not talking.

In the past week, the Center for Public Integrity attempted to contact 22 contributors to five of Rich’s tax-exempt organization: Legislative Education Action Drive, LEAD Foundation (now known as Parents in Charge Foundation), America at its Best, U.S. Term Limits, and U.S. Term Limits Foundation. The donors gave a combined total of more than $6.7 million to the five organizations.

All but four of the Center’s calls or e-mails went unreturned. Only one donor, the American Education Reform Foundation in Milwaukee, answered each of the Center’s questions about the nature and purpose of its contribution.

The Center was able to identify 11 individuals who in 2004 contributed a total of more than $1.5 million to tax-exempt organizations headed by or otherwise connected with Rich. Only Paul R. Farago, a chiropractor who was heading a campaign to reinstate term limits in Oregon, responded to the Center’s request for comment.

In an October 26 e-mail, Farago confirmed making a contribution to U.S. Term Limits but refused to answer questions about the purpose of the donation. Farago’s e-mail also included a threat of legal action against the Center for possession of what he called “proprietary information.”

At least nine tax-exempt organizations, a revocable trust, and a for-profit business also contributed to Rich’s network of organizations, giving a combined total of more than $5.2 million.

Roughly 70 percent of those funds – $3.6 million – came from Americans for Limited Government, Inc., which Rich chairs. The organization has been the driving force behind this year’s regulatory-takings and eminent-domain ballot initiatives in the West. Neither Rich nor John Tillman, the president of Americans for Limited Government, responded to a request for comment about its seven-figure contribution to America At Its Best, another organization connected to Rich.

Nearly all of the foundations and other tax-exempt organizations that have given to Rich’s groups declined to provide information or answer questions about their contributions. Only the American Education Reform Foundation (see above) and the Indianapolis-based Milton and Rose D. Friedman Foundation provided any additional information about their contributions.

A spokesman for the National Taxpayers Union, in Alexandria, Virginia, which gave $620,000 to Legislative Education Action Drive and $100,000 to America At Its Best, told the Center that the organization had “partnered with numerous organizations” but did not directly answer the Center’s questions about its contributions.

Voters In Three States Reject Takings Initiatives

New York,United States — 2012-05-30T15:34:39-04:00

Despite months of campaigning and millions of dollars in contributions from organizations tied to Howard Rich, a wealthy political activist in New York, regulatory takings initiatives failed Tuesday in three of the four Western states where they were on the ballot.

The measures would have limited government’s use of eminent domain and required that property owners be compensated for regulations that diminish the value of their holdings. Tuesday’s results:

In California, with all precincts counted, Proposition 90 was defeated 52.5 percent to 47.5 percent.

In Washington, with more than 99.4 percent of precincts counted, Initiative 933 was defeated 57.7 percent to 42.3 percent.

In Idaho, with more than 99.7 percent of precincts counted, Proposition 2 was defeated 76 percent to 24 percent.

Oliver Griswold, a spokesman for the Ballot Initiative Strategy Center, told the Center for Public Integrity on Wednesday that voters in the three states rejected the “false populism” propagated by Rich, his political allies in those states, and the undisclosed donors to the Rich-sponsored organizations that bankrolled the effort.

“Howie Rich and his cronies came in from out of state and pretended to be grass-roots and pushed these gimmicks onto the ballot,” said Griswold, whose organization helped coordinate opposition to the takings initiatives and other Rich-backed measures. “They couldn’t even be honest about their true intentions. They hid the regulatory takings initiatives behind a legitimate discussion over the Kelo decision [Kelo v. City of New London, a 2005 U.S. Supreme Court decision that gave governments more latitude to use eminent domain]. Voters saw right through that.”

The lone victory for supporters of takings initiatives came in Arizona; Proposition 207 passed easily, 65.1 percent to 34.9 percent, with more than 99.9 percent of the vote counted.

Arizona courts ruled before the election, however, that a portion of Proposition 207 likely violated state law because it would impose an unfunded mandate on state government.

Sandy Bahr, an organizer of Protecting Arizona Taxpayers Coalition, the chief opponent of the measure, said she does not know if a legal challenge is forthcoming.

“Of course, we’re all looking at it,” Bahr told the Center. She said that the wording on the ballot was confusing and suggested that the initiative dealt only with eminent domain.

In all, Rich-backed organizations contributed more than $8.6 million in eight states in support of takings initiatives. But four of the eight initiatives never were put before voters because of legal and procedural problems.

Rich, the chairman of Americans for Limited Government, the Chicago-based tax-exempt organization that spearheaded efforts to pass the takings initiatives, did not respond to an e-mail seeking comment Wednesday.

The Munificent Seven

2012-05-30T15:44:06-04:00

The fate of four ballot initiatives that seek to radically overhaul land-use and environmental regulations in four Western states may be decided today, but a big question mark remains: Who financed them?

Howard Rich, the political activist in New York City who seems to have orchestrated the multimillion-dollar effort with funds moved through an interlocking array of tax-exempt organizations and other accounts, has said that the identities of donors must be kept secret to shield them from retribution.

While it’s not publicly known whether the money behind the “takings initiatives” and similar efforts came from one mammoth benefactor, a few huge donors, or lots of small contributors, this much is clear: the Rich political machine somehow struck it rich this year:

Consider just seven pieces of the machine and the amounts they’ve spent so far this year, compared with their total reported spending in 2004 (the most recent year for which such figures are available):

Americans for Limited Government, Inc., a tax-exempt organization in Chicago that Rich chairs. 2006: at least $8 million 2004: $206,981
Fund for Democracy, which shares Rich’s address in New York City and describes itself as “a revocable trust dedicated to assisting citizens assert their constitutional rights.” 2006: at least $4.4 million 2004: unknown
America At Its Best, a tax-exempt organization in Fairfax, Virginia, that received more than 97 percent of its funds this year from Rich-operated entities. 2006: at least $2 million 2004: unknown, but less than $25,000
Montanans in Action, a tax-exempt organization in Winifred, Montana, that Rich has acknowledged financing through his other entities. 2006: at least $1.7 million 2004: did not exist
U.S. Term Limits, a tax-exempt organization at Rich’s address in New York City that lists him as its president.2006: at least $1.2 million 2004: $1.5 million
Colorado At Its Best, a tax-exempt organization in Chicago that lists Rich as a director. 2006: at least $1.2 million2004: $122,705
Club for Growth State Action, a tax-exempt organization in Chicago that Rich heads. 2006: at least $270,0002004: $108,030

In all, at least $14.9 million in contributions to pro-initiative efforts came from these seven entities in 2006; the same entities reported total spending of less than $2 million in 2004.

Now You Don’t

2012-05-30T15:48:45-04:00

While they’re supposed to be an exercise in citizen-driven democracy, ballot initiatives — like the “regulatory takings” measures that voters will decide today in four Western states — have instead become vehicles for big-spending special interests to steer around the regular legislative process.

Voters still get the last word. Increasingly, however, they must make their decisions with little information about the motivations or financial backing of the individuals and organizations pushing the measures.

Organizations behind many ballot initiatives have avoided disclosing their donors or detailed activities by operating through a dizzying array of interconnected, tax-exempt entities that two prominent political scientists describe as “resembling Russian matryoshka dolls, where each layer is removed only to find another layer obscuring the real source of money.”

In Tuesday’s elections, the effort to push new land-use regulations through ballot initiatives in Arizona, California, Idaho, and Washington offers a case in point.

Of the $7.2 million raised to push the measures, $5.7 million – 79 percent of the total – has come from tax-exempt organizations and other entitites connected to Howard Rich, a New York real estate investor and political activist, according to state campaign finance reports available through November 2.

The most prominent of the tax-exempt benefactors is Americans for Limited Government, a Chicago-based organization that Rich chairs. The group reported total revenue of just $120,577 on its federal tax return for 2004.

But this year the organization rocketed onto the political-spending stratosphere. An analysis by the Center for Public Integrity shows that Americans for Limited Government has contributed more than $8 million across the country to organizations backing property-rights measures and state-spending limits that are billed as “Taxpayer Bill of Rights,” or TABOR, initiatives.

In some cases Americans for Limited Government has contributed directly to those causes; in others it has given millions of dollars to related tax-exempt organizations that subsequently made contributions to the same efforts.

The group America At Its Best, for instance, has received at least $3.6 million in contributions from Americans for Limited Government, according to campaign finance reports filed in Nebraska. In turn, state records show, it has contributed $575,000 (as of November 2) to the organization backing a takings initiatives in Idaho.

Voters can’t find out, though, who’s really bankrolling Americans for Limited Government. Because it’s registered with the Internal Revenue Service as a 501(c)(4) nonprofit advocacy organization, it is not required to public disclose the identities of its donors, as political candidates and committees are.

Americans for Limited Government could voluntarily disclose its donor list. But the group has consistently refused to do so, arguing that publicity could lead to retaliation against its donors from the powerful government interests it has challenged on issues ranging from land use to term limits.

Explaining its nondisclosure policy on its Web site, the organization says that because “legislatures routinely find ways to jab at those who stand for more limited, accountable government, it is common – even traditional – for individuals to contribute privately to such causes.”

The group also invokes the U.S. Supreme Court’s 1958 decision in NAACP v. Alabama, in which the court held that forced disclosure of the organization’s membership list, particularly given the documented history of reprisals against known members, would be an unconstitutional violation of its members’ free-association rights.

“There certainly are cases where that’s true, but this is not one of them,” Daniel A. Smith, a political science professor at the University of Florida, said in an interview with the Center. “This is using the tax code to skirt disclosure. I certainly have real problems with that when you have absolutely nothing else to regulate the process.”

In a 2005 article for the Election Law Journal that likened such “veiled political actors” to Russian nesting dolls, Smith and Elizabeth Garrett, a political science professor at the University of Southern California, argued that greater disclosure is needed for politically active nonprofit organizations to make it clear to voters who is behind the often folksy, grass-roots-sounding groups that organize petition drives and run well-heeled campaigns.

Such efforts to bankroll ballot initiatives have accelerated in recent years as Congress moved to curb unlimited soft-money contributions to national and state political parties and to enforce stricter disclosure requirements on so-called 527 political advocacy groups.

Some states, in trying to regulate political advocacy by nonprofit advocacy organizations, have bumped up against First Amendment issues. In 2000, the nonprofit California Pro-Life Council sued the state of California, arguing that the state could not force disclosure about any contribution or expenditure in support of ballot-measure advocacy.

In a May 2003 decision, a three-judge panel of the 9th U.S. Circuit Court of Appeals rejected the organization’s argument. The appellate judges noted that state ballot measures in recent years have decided major issues and operated with major budgets – nearly $200 million was spent on campaigns for 12 California ballot measures in the 1998 general election alone.

“All this money produces a cacophony of political communications through which California voters must pick out meaningful and accurate messages,” the 9th Circuit panel said in its decision. “Given the complexity of the issues and the unwillingness of much of the electorate to independently study the propriety of individual ballot measures, we think being able to evaluate who is doing the talking is of great importance.”

After further proceedings in the trial court, another appeal in the same case is now pending before the 9th Circuit.

John G. Matsusaka, the president of the University of Southern California’s Initiative and Referendum Institute, told the Center that he has mixed feelings about the consequences of greater disclosure for nonprofit advocacy.

“On the one side, the text of the measure stands on its own,” he said. “So, in some sense, the law is what the law is regardless of who funded it – and that’s what the voters need to know.

“The other side is, we know from quite a bit of research that the way voters make decisions on these things is they pay some attention to who’s endorsing it, because they don’t have the time to read the measure. So, I think the inability to figure out who’s actually funding it makes it difficult for voters to make informed decisions.”

Unlawful Conduct?

Wisconsin,United States — 2012-05-30T15:52:33-04:00

Two tax-exempt organizations led by Howard Rich may be operating illegally in Wisconsin, the Center for Public Integrity has learned.

Rich, a libertarian political activist in New York City, has been a driving force behind this year’s eminent-domain and regulatory-takings ballot initiatives in Western states.

The Center reported on November 1 that the two organizations — Legislative Education Action Drive, which Rich founded, and Parents in Charge Foundation (formerly the LEAD Foundation), which he chairs — had operated in Illinois without the certificates of authority required to do business there, according to 2004 tax records and records maintained by the Illinois Secretary of State’s Office. The organizations have since moved to Wisconsin, according to their respective Web sites, and now operate from the same address in Madison. According to records maintained by the Wisconsin Department of Financial Institutions, however, neither organization has been authorized to transact business in that state, either.

Both tax-exempt organizations were incorporated in Virginia in 2001, making them “foreign corporations” in the eyes of other states. Wisconsin law states that such an organization “may not transact business in this state until it obtains a certificate of authority from the Department [of Financial Institutions].”

Jenny Acker, the director of Wisconsin’s Bureau of Corporations, which is part of the Department of Financial Institutions, told the Center that all nonprofit corporations must register with her office if they are going to operate in the state.

“It is required that nonstock foreign corporations register with this department to transact business before they actually start transacting business in Wisconsin,” Acker said.

As the Center previously reported, the Illinois Secretary of State’s Office is investigating whether Legislative Education Action Drive, its affiliated foundation, and three other organizations connected to Rich have illegally conducted business within that state.

Howard Rich’s Dot-Com Deal

2012-05-30T15:55:16-04:00

Howard Rich, the libertarian political activist in New York City who’s been a driving force behind this year’s eminent-domain and regulatory-takings ballot initiatives in the West, describes himself as “an entrepreneur in real estate and business since 1965.”

News accounts and government records provide some insight into the real-estate side of Rich’s career, which has been mostly as an owner in apartment buildings. In a five-month period in 1986, for example, Rich sold two contiguous apartment buildings in Manhattan and five other properties, all owned by an irrevocable trust that he had established in 1978 for the benefit of his two sons, according to New York tax records. (Rich had designated his wife as trustee, and the Riches managed the properties on behalf of the trust.) Other public records show that Rich has owned other apartment buildings in New York City as well as in North Carolina and Texas.

The side of Rich’s career that isn’t related to real estate is much less well-known, with perhaps a single exception: his ownership of Votenet Solutions, Inc., a Web-based voting software and systems firm that he acquired in early 2001.

The venture, which Rich scooped up in the wake of the big dot-com boom, began with much promise. But within two years, Votenet Solutions was embroiled in a federal embezzlement investigation that ultimately sent the company’s chief financial officer to prison and marked what Rich called in a letter to the judge “the most painful period of my business life.”

Events stemming from the company’s financial crisis, which Rich has said ultimately cost him $2.5 million, offer a rare glimpse into Rich’s business dealings.

On February 6, 2001, Rich formed Rich Acquisitions, a limited liability company, with his two sons holding a majority interest. Two days later, Rich Acquisitions paid Medinex Systems, Inc., of Post Falls, Idaho – which was bleeding money – more than $800,000 for a 70 percent interest in Votenet. The remainder of the $1.15 million purchase price came from three investors: Eric O’Keefe, a colleague of Rich’s in assorted political and business ventures; Glen Hughlette, the chief executive officer of Votenet under Medinex’s ownership; and Mitchell Reisberg, a Votenet sales manager.

Following the sale, Hughlette stayed on as Votenet’s CEO and president; Reisberg became the firm’s chief financial officer. Through that year and much of 2002, according to court documents, Rich and O’Keefe played a relatively small role in the company’s day-to-day operations.

In the meantime, Rich continued to pour money into Votenet, investing an additional $525,000 in the company by the end of 2002.

Among other products and services, Votenet published a congressional directory, provided voter software products to political and nonprofit organizations, and managed an online program that allowed donors to make contributions to Votenet’s clients, including the Cancer Treatment Research Foundation and America’s Second Harvest, a hunger relief group.

But Votenet’s financial condition worsened in early 2003. Michael Glessner, an accountant who was hired to review Votenet’s books, discovered serious accounting problems. Glessner later told Rich, according to court documents, that he believed Hughlette and Reisberg were stealing from Votenet.

O’Keefe was dispatched to the company’s Washington, D.C. offices, where, as Rich later told it, “he determined that Votenet’s financial reports had been complete fabrications.” Hughlette and Reisberg were fired.

Reisberg was charged with, and later pleaded guilty to, multiple counts of interstate transportation of stolen property, as well as wire, bank, and mail fraud.

Federal investigators charged that Reisberg and Hughlette – who, with a warrant out for his arrest, remains a fugitive – stole more than $370,000 from Votenet to pay for personal expenses such as jewelry, artwork, and plane tickets.

In a letter to U.S. District Judge James Robertson before Reisberg’s sentencing, Rich wrote that Votenet owed roughly $1.5 million to customers, vendors, employees, the Internal Revenue Service, and other government agencies.

“An accountant and an attorney recommended to Mr. O’Keefe that we file for bankruptcy and shut down the company as soon as possible,” Rich wrote. “However, we decided otherwise largely based on the nature of the liabilities.”

Rich provided the $1.5 million needed to erase the debts and invested another $1 million to cover the company’s operating losses. During the course of the bailout, Rich wrote, Rich Acquisitions came to own 100 percent of Votenet because “other shareholders declined to invest to save the company.”

Rich also wrote of the personal impact of Reisberg’s transgressions:

“The Votenet transition was the most painful period of my business life. It was painful enough to be betrayed by an employee, and to lose $2,500,000 because of the betrayal. But our investigation uncovered repeated reports of abuse by Mr. Reisberg of Votenet’s employees, customers, and vendors. He broke agreements with them, took their money and lied to them, and then refused to return phone calls after they discovered his frauds. It was disgusting and disgraceful.”

Reisberg was sentenced in August 2005 to four years in prison and forfeited more than $370,000 in proceeds.

Votenet is still in business. According to its Web site, the company provides “voting software and election consulting to private organizations, including trade associations, award shows, realtor organizations, universities, K-12 schools, law firms, homeowner associations, and other types of organizations.”

Michael Tuteur, Votenet’s chief executive officer, did not return a call seeking information about Rich’s current involvement with the firm.

Déjà Vu All Over Again?

2012-05-30T15:58:05-04:00

Fourteen years after his signature organization, U.S. Term Limits, began deploying millions of dollars to tap widespread voter frustration with career politicians, political activist Howard Rich is using the same playbook to try to overhaul land-use laws in this week’s elections.

The wave of successful term-limits campaigns in the 1990s was marked by two key factors: an unhappy electorate and large infusions of cash from U.S. Term Limits and a few other big donors. For voters facing regulatory-takings ballot measures on Tuesday, that past could prove instructive.

Just as voters were disenchanted in the early 1990s with politicians who stayed in office too long, many voters are livid over a 2005 decision by the U.S. Supreme Court in Kelo v. City of New London that affirmed the power of government to seize private property for non-governmental uses in the name of economic development.

On Tuesday, voters in eight states will decide relatively non-controversial ballot measures that would curb the use of eminent domain for private development. In four Western states, voters will weigh ballot initiatives that would go further, requiring government to pay landowners when regulatory actions — new zoning rules or building restrictions, for example — reduce property values.

As with term limits more than a decade ago, Rich has mobilized a dizzying array of interconnected tax-exempt organizations — chief among them Chicago-based Americans for Limited Government, which he chairs — to try to turn grass-roots grumblings into radical change. The Rich-affiliated organizations have poured nearly $5.7 million — 79 percent of the total $7.2 million raised — into pushing takings initiatives in Arizona, California, Idaho, and Washington, according to state campaign finance records available through November 2.

The same funding patterns appeared in term-limits campaigns during the past decade. In 1992, when voters in 14 states approved ballot measures limiting how long their U.S. senators and representatives could stay in Washington, Rich’s U.S. Term Limits contributed $1.8 million of the total $5.9 million raised by term-limits committees, according to a 1993 analysis by Common Cause.

Later, Rich-backed organizations became even more prominent. In nine state campaigns for term limits in 1994, U.S. Term Limits provided more than 70 percent of the funding, the Associated Press reported in 1995. And in 2002, an opposition campaign that helped to stop an effort to extend the length of terms for California legislators was bankrolled entirely by individuals or organizations connected to Rich, according to state records reviewed by the Center for Public Integrity.

In that 2002 campaign against California’s Proposition 45, the opposition committee Stop the Politicians reported raising $1,032,719. Almost all of the money — $1,024,219, as well as a loan of $500,000 — came from Americans for Limited Terms, which Delaware incorporation records show renamed itself that year to become Americans for Limited Government, which is now the driving force behind the takings initiatives.

The only other contributions to Stop the Politicians in 2002 were a $2,500 donation from Rich’s wife, Andrea Millen Rich, and $6,000 from Council for Responsible Government, an organization based at the Fairfax, Virginia, home of William A. Wilson, a director of Americans for Limited Government.

Like the property rights measures now, the state-by-state campaigns for term limits in the 1990s also relied on professional signature-gatherers to get initiatives on the ballot and the involvement of a cadre of like-minded, libertarian activists.

But unlike with term limits, the push on regulatory takings has met a more organized and better funded opposition, say analysts such as Gary F. Moncrief, a political science professor at Boise State University. Moncrief has studied the term-limits movement and is watching one of the takings initiatives play out in his state.

“Almost everybody in the state understands that Howard Rich is the person who has funded most of this — and he’s a New Yorker, which is a terrible thing to hang on somebody’s neck when you’re in Idaho,” Moncrief said in an interview with the Center.

“For years, it was unclear who was behind the term-limits initiative. I was constantly asked in those days, ‘Who’s actually behind this? Who’s putting up the money?’ Nobody was very clear on it.”

Rich did not respond to a November 3 e-mail from the Center seeking comment for this story.

Beginning in 1990, 21 states adopted term limits for state legislators. But the movement has had setbacks. In 1995 the U.S. Supreme Court ruled that term limits for members of Congress were unconstitutional (23 states had them on the books), and in six states local term-limits laws also have been struck down or repealed.

Still, Rich’s term-limits strategy is far from dead. Colorado At Its Best, a tax-exempt organization that lists Rich as a director, had spent more than $1.1 million as of October 24 to push a measure that would limit the terms of appellate court judges in Colorado, state election records show.

And in Oregon, where voters on Tuesday will decide whether to restore term limits for state lawmakers, U.S. Term Limits had contributed $1.24 million to that effort as of October 25 — roughly 95 percent of the campaign’s funding.

Following The Money (Part 4): U.S. Term Limits

2012-05-30T16:01:48-04:00

On August 3, 2006, U.S. Term Limits, a tax-exempt advocacy group in New York City, gave $50,000 to a Missouri organization that was seeking to get two initiatives on the state’s ballot this November 7.

The initiatives, neither of which made it onto the ballot, were aimed at capping state spending and taxation and requiring government to compensate landowners for “regulatory takings.”

Why would a term-limits organization use money from its donors for such unrelated causes?

Documents obtained by the Center for Public Integrity show that the unexplained largess isn’t unusual. The founder and president of U.S. Term Limits, which seeks to “rally Americans to restore citizen control of government by limiting the terms of politicians,” is Howard Rich, a political activist from New York City who has spearheaded efforts this year to pass takings initiatives in eight states. Rich’s various tax-exempt organizations — there are at least 11 of them — have aroused considerable interest this year for shifting funds from one to another before the money ends up at its ultimate destination.

Like all the other Rich-backed organizations, U.S. Term Limits does not publicly identify its donors. Records obtained by the Center, however, show that the organization and its affiliate, the U.S. Term Limits Foundation, collected contributions of $25,000 or more in 2004 from nine donors:

$500,000 from Robert Wilson, a philanthropist in New York City who made a $25 million gift in 2004 to the New York Public Library.
$120,000 from Jackson T. Stephens, Jr., the chairman of Exoxemis, Inc., a biopharmaceutical research and development company in Little Rock, Arkansas. Along with Rich, Stephens is one of the four directors of the Club for Growth, which advocates free-market economic policies.
$50,000 from Joseph Stillwell, an investment manager in New York City.
$50,000 from Virginia Manheimer, a philanthropist in Lambertville, New Jersey, who is a member of the Club for Growth’s leadership council.
$30,000 from Excited States, LLC, a biotech company in Little Rock, Arkansas. The firm’s chairman is Jackson T. Stephens, Jr. (see above).
$25,000 from John Whitehead, a former co-chairman of the investment banking firm Goldman, Sachs & Company in New York City, deputy secretary of state during Ronald Reagan’s presidency, and the chairman of the Lower Manhattan Development Corporation. (Whitehead has also been a donor to the Center for Public Integrity.)
$25,000 from Paul Farago, a chiropractor and term-limits advocate in Portland, Oregon.
$25,000 from Peter Farago, a retired businessman and philanthropist who lives in Little Compton, Rhode Island. He is the father of Paul Farago (see above).
$25,000 from Warren A. Stephens, the chairman and chief executive officer of Stephens, Inc., an investment banking firm in Little Rock, Arkansas. He is the brother of Jackson T. Stephens, Jr. (see above).
At least six other donors made contributions ranging from $5,000 to $13,000.

The Center contacted all nine donors listed above; only one offered comment.

“I have in fact made contributions to U.S. Term Limits,” Paul Farago wrote in an October 26 e-mail to the Center. “But by asking about specific amounts you clearly have come into possession of proprietary information. Either you stole it or it was illegally given to you by someone in the IRS. Either way, you have raised the prospect of a criminal act of your own part. I intend to refer this matter to my attorney and will recommend to U.S. Term Limits that they likewise seek redress.”

The Center for Public Integrity obtained the documents in question from a government agency. They were furnished in response to a public-records request made by the Center.