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Tuesday, Sept. 2, 2014

Scott Walker Flip-Flops on Campaign Money Transparency

Recall fundraising at odds with his call to disclose donors

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How times have changed.

As a lightning-rod governor facing a recall in 2012, Gov. Scott Walker raised unheard-of sums for his campaign. And, thanks to revelations in the new John Doe investigation, we now know that Walker also raised funds for an outside group, the Wisconsin Club for Growth.

Although Wisconsin statutes place strict limits on candidate and independent group coordination, Walker denies that he did anything illegal.

Still, Walker and the Club for Growth aren’t talking much about how they raised their funds or from whom, although emails revealed in the John Doe from Walker campaign consultant Kate Doner, who was raising funds for both Walker and the Club, explained why Walker was soliciting funds for the group: “Wisconsin Club for Growth can accept corporate and personal donations without limitations and no donors disclosure.”

The ability to raise secret, out-of-state funds is at odds with a bill that Walker, then a Republican legislator from Wauwatosa, introduced in 1997 that would have required all out-of-state groups that spend money on Wisconsin elections to report the source of their out-of-state funds.

Back when Walker was crusading for donor disclosure in the state Assembly, he was reacting to the money raised and spent in the 1996 election by the Democratic Legislative Campaign Committee (DLCC), based in Washington, D.C., that aided his political opponents in the Legislature.

In a press release, Walker called it “one of the most elaborate money-laundering schemes in history.”

About $53,050 of the $167,000 the DLCC spent in Wisconsin came from out of state.

“For all we know, some of this money could be coming from foreign sources,” Walker warned back then.

Walker’s flip-flop is not lost on Common Cause of Wisconsin’s Jay Heck, who dug up the press release in his office’s archives.

“He’s done quite a change, at least on the money from outside of Wisconsin,” Heck said.

 

Ellis Brought Down

Another irony is that Walker is claiming that his fundraising and campaign coordination with the Wisconsin Club for Growth is perfectly legal, although state Sen. Mike Ellis (R-Neenah) was pilloried and eventually was forced into retirement for suggesting doing much the same thing in a videotaped rant when he was in a Madison bar in April.

“I am putting together my own Super PAC,” Ellis said on the tape. “I have a $400,000 committee and [Republican fundraiser] Judi Rhodes will—I’m raising the money, she will manufacture the crap.”

Walker had called Ellis’s comments “disturbing.”

But Ellis’s hypothetical scheme sounds a lot like Walker’s relationship with his top aide, R.J. Johnson, who, prosecutors allege, was working for both Walker’s campaign and the Club for Growth as well as overseeing ads and messaging for both entities and funneling millions of dollars to other groups that supported the Walker agenda.

Heck said that Ellis’ videotaped boast was surprising, since he’d always been a staunch supporter of campaign finance reform in Wisconsin.

“Ellis hated outside spending,” Heck said. “He was never someone who supported giving outside groups the ability to run or take over campaigns. He was particularly vehemently opposed to nondisclosure. It was always his contention, and rightfully so, that the public deserved the right to know who was spending money.”

 

Big Out-of-State Funds Fueled Recalls

According to documents from the special prosecutor, Francis Schmitz, Walker met with out-of-state donors during the recall campaigns and, shortly thereafter, those donors would give large sums to Wisconsin Club for Growth.

For example, emails show that Walker was scheduled to meet with Michael Sullivan of SAC Capital Advisors on March 10, 2012. Just a month later, Sullivan’s boss, Connecticut-based SAC founder Steven Cohen, sent $1 million to the Wisconsin Club for Growth. While the group listed the $1 million donation on its tax forms, it didn’t have to identify the source of the money. Nor did it have to report the donor’s identity to the state Government Accountability Board.

Cohen has seemingly no ties to Wisconsin. The billionaire is known as a hedge fund king who, according to New York magazine, showed little interest in politics. That changed in recent years, however, as the U.S. Attorney’s office pursued Cohen and SAC Capital for insider trading. Cohen held a fundraiser for GOP candidate Mitt Romney just four days after Sullivan met with Walker. Still, Cohen’s political donations couldn’t help him: Eight of his current or former employees were convicted of insider trading, SAC itself was indicted for insider trading and the company paid a $1.8 billion settlement to make it go away. SAC now operates as Point72 and cannot invest outside money, only Cohen’s fortune.

The John Doe emails also show that Walker solicited corporate funds for Wisconsin Club for Growth, something that his campaign couldn’t accept. For example, Walker met with Barry Maclean, CEO of the Illinois-based Maclean-Fogg Company; two months later, the company itself donated $100,000 to Wisconsin Club for Growth. Fundraiser Doner also urged Walker to ask Larry Nichols, chair of Oklahoma-based Devon Energy, for $250,000. Three weeks later, $50,000 of Devon Energy corporate money was deposited in Wisconsin Club for Growth’s bank account, prosecutors allege.

Those donations belie the perception that corporations aren’t spending on elections, even though Citizens United allows them to do so. They’re just shielding their donations from scrutiny.

“With this snapshot, we see that for-profit corporations are indeed spending on politics and funneling money to these dark-money groups,” said Brendan Fischer, general counsel for the Center for Media and Democracy.