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Wednesday, April 2, 2014

Who Was Wisconsin Club for Growth’s $1 Million Donor?

Tax form sheds more light on Scott Walker ally’s finances and what John Doe 2 prosecutors may be investigating

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Newly obtained tax forms from the Wisconsin Club for Growth show that the controversial group received a $1 million donation as part of its $8 million of revenues in 2012.

But its publicly available tax form doesn’t identify this donor or any of its donors.

The Wisconsin Club for Growth’s tax status as a tax-exempt social welfare group means that it doesn’t have to identify its donors to the public or the Internal Revenue Service, although it must disclose the groups that it sends money to.

One of the strategies special-interest groups use to conceal the identities of their donors is to send bulk contributions to another tax-exempt group, which then passes it on to another tax-exempt group, and so on, until the funds are spent on issue ads or other political activities. In this way, the true sources of the original funds are obscured and donors can remain anonymous.

Brendan Fischer, staff counsel for Center for Media and Democracy, said the organization’s strategy protects its donors’ identities and allows the group to plausibly deny that its funds are being used for political purposes.

“As a ‘social welfare’ nonprofit, Wisconsin Club for Growth is supposed to be primarily engaged in advancing some sort of social benefit, rather than acting as a thinly veiled political committee,” Fischer said. “It’s not supposed to spend more than half of its resources on electoral political activity.”

The 2012 tax form shows that Wisconsin Club for Growth received 101 anonymous contributions of more than $5,000 in 2012.

The $1 million donation is the group’s largest, but its six-figure donations include checks of $880,000, $560,000 and $425,000.

The forms merely say that they were each from a “person,” although that designation may include other entities.

The Wisconsin Club for Growth’s attorney, Mike Wittenwyler of Godfrey & Kahn in Madison, provided the tax form to the Shepherd but wouldn’t comment on it. 

The Sun Prairie-based organization and its founder—right-wing operative Eric O’Keefe—are currently embroiled in litigation over the John Doe 2 investigation into alleged coordination between it, dozens of conservative groups, and Gov. Scott Walker’s campaign during the 2011 and 2012 recalls.

Wisconsin Club for Growth and O’Keefe have filed suit in federal court to shut down the investigation, alleging that prosecutors are violating their First Amendment rights. The suit claims they are not currently politically active because of the investigation, which they claim was the prosecutors’ intent all along.

 

A Right-Wing ATM?

The Club for Growth spent more than $9.1 million during the recalls, one of the biggest sources of “issue ad” funding during that period. However just $100,000 of that was spent directly on issue ads by the Club for Growth during the 2012 recalls targeting Walker and four state senators. But that small amount obscures the group’s true political spending in 2012.

The 2012 IRS form indicates that Wisconsin Club for Growth acted as a sort of dark-money ATM for other right-wing groups that were active in Wisconsin and elsewhere and, in addition, personally linked to O’Keefe.

Wisconsin Club for Growth’s 2012 tax form shows that while it spent very little directly on the 2012 recalls, it gave a whopping $5.25 million to other groups, most of which were actively advocating for Walker’s agenda during his recall.

Wisconsin Club for Growth gave $250,000 to the Washington, D.C.-based voucher group American Federation for Children, which spent $1.6 million on the 2012 recalls, according to data collected by the Wisconsin Democracy Campaign; $2.02 million to the Columbus, Wis.-based Citizens for a Strong America, comprising almost all of its $2.04 million revenues that year; and $2.9 million to the political arm of the Wisconsin Manufacturers and Commerce, which spent $4 million on the recalls.

According to leaks to the Wall Street Journal, John Doe 2 prosecutors sent subpoenas to Wisconsin Club for Growth, Citizens for a Strong America and Wisconsin Manufacturers and Commerce—as well as Walker’s campaign and other right-wing groups. Those subpoenas are being challenged in yet another court battle that is unresolved.

Wisconsin Club for Growth also sent $450,000 to the Austin, Texas-based Alliance for Self-Governance, a tax-exempt operation launched by Wisconsin Club for Growth’s director, Eric O’Keefe. The organization doesn’t appear to have been active in Wisconsin at the time and it doesn’t appear to be active at the moment.

 

Money Flows On

Like Wisconsin Club for Growth, Citizens for a Strong America also seems to be a dark-money ATM for right-wing special-interest groups.

Citizens for a Strong America spent very little money directly on the 2012 recalls—a scant $35,000. But it flowed far greater sums to conservative groups that supported the Walker agenda. In 2012, it sent $253,000 to the anti-gay Wisconsin Family Action, $50,000 to Wisconsin Right to Life and $10,000 to United Sportsmen of Wisconsin, which was embroiled in controversy last year when it received, then lost, a taxpayer-funded grant it had obtained through a highly questionable budget amendment.

But those donations pale in comparison to the $500,000 contribution Citizens for a Strong America passed on to the Alexandria, Va.-based Healthcare Compact Alliance. Like the Alliance for Self-Governance, this group does not appear to have been engaged in Wisconsin matters. But it, too, is run by Wisconsin Club for Growth’s Eric O’Keefe.

Citizens for a Strong America operates out of a post office box in rural Columbus in central Wisconsin—the hometown of former Walker aide Kelly Rindfleisch, who pleaded guilty to misconduct in office and is allegedly one of the targets of John Doe 2, along with Eric O’Keefe.

Citizens for a Strong America received almost all of its funding from the Wisconsin Club for Growth in 2011 ($4.6 million) and 2012 ($2.02 million). It spent $836,000 supporting Supreme Court Justice David Prosser in his 2011 re-election campaign and an estimated $1.7 million on the 2011 recalls, according to the Wisconsin Democracy Campaign. Its treasurer is Valerie Johnson, the wife of Wisconsin Club for Growth spokesman R.J. Johnson, who also worked for Walker’s 2010 and 2012 campaigns.