By Brendan Fischer on November 18, 2013

Governor Scott Walker's campaign and dozens of Republican-aligned political groups have been subpoenaed in a wide-ranging probe into potential campaign finance violations during Wisconsin's contentious 2011 and 2012 recall elections, and a group at the center of the storm appears to be Wisconsin Club for Growth, one of the top spenders during the recalls and whose leaders have close ties to Governor Walker and national donors, including the Koch brothers.

Wisconsin Club For Growth logoThe Wall Street Journal reports that the secret "John Doe" investigation has hit "dozens of conservative groups with subpoenas demanding documents related to the 2011 and 2012 campaigns to recall Governor [Scott] Walker and state legislative leaders."

For two years, Governor Scott Walker was caught up in an earlier John Doe probe into political corruption during his 2010 campaign for governor. Although the Wall Street Journal describes the previous John Doe as having "turned up nothing on Mr. Walker and embarrassingly little else," the probe netted six criminal convictions -- including three Walker aides, one political appointee, and one major campaign contributor -- for a variety of crimes including embezzlement, campaign finance violations and political corruption. That probe closed in March, but the new inquiry is following up on leads uncovered by that earlier investigation.

The Milwaukee Journal Sentinel first broke the news that a second John Doe is underway, and that it is led by Francis Schmitz, a former federal prosecutor who was on George W. Bush's shortlist for a U.S. attorney appointment.

Risking prosecution for talking about the latest John Doe, which is conducted in front of a judge but under the strictest secrecy rules, Wisconsin Club for Growth board member Eric O'Keefe told the Wall Street Journal that he was subpoenaed in early October, and that some of the targets "had their homes raided at dawn, with law-enforcement officers turning over belongings to seize computers and files."

Although details about the goals of the John Doe probe are scarce, new research shows that during that recall fight, Wisconsin Club for Growth was at the center of a tangled web of dark money.

Wisconsin Club for Growth Under the Microscope

The Wisconsin Club for Growth dropped at least $9.1 million supporting Governor Walker and legislative Republicans in the 2011 and 2012 recall elections, making it one of the top spenders in the state.

Although the group does not disclose its donors, information that can be gathered from tax filings shows that Wisconsin Club for Growth group took in funds from some of the top Republican donors and Koch-connected dark money conduits in the country, and in turn shuffled millions to other organizations that spent money on ads in 2011 and 2012, all while keeping Wisconsin voters in the dark about the true source of the funds.

At least one politically-active nonprofit, Citizens for a Strong America, was entirely funded by Wisconsin Club for Growth in 2011. That group, in turn, provided the majority of funding for a third nonprofit that was active in the recall elections, and also shuffled money to two other groups. Another nonprofit, the Jobs First Coalition, received half of its total funding from Club for Growth Wisconsin, and in turn made a large contribution to a third politically-active group.

The scheme is reminiscent of a Koch-connected dark money shell game recently uncovered in California, and includes some of the same players, including the Center to Protect Patient Rights, a conduit for funnelling Koch money, which made a six-figure contribution to Club for Growth Wisconsin in 2011. The revelations also raise new questions about how much undisclosed Koch funds flowed into the state.

Wisconsin Club for Growth's Deep Ties to Walker

Although the investigation is secret, the Wall Street Journal reports that around 29 Republican-aligned groups have been targeted, including the Walker campaign itself, the David Koch-founded Americans for Prosperity, and the Republican Governors Association, as well as Wisconsin Club for Growth. (The Journal's sources are likely good ones given that editorial board member Stephen Moore is a co-founder of the national Club for Growth organization.)

Wisconsin Club for Growth leaders are tightly intertwined with national and state right-wing networks. Board member Eric O'Keefe, who spoke with the Wall Street Journal, is a national player. He helped launch Center for Competitive Politics (which fights campaign finance regulations), as well as the Sam Adams Alliance, American Majority and the right-wing news outlet the Franklin Center for Public Integrity. He was national director of the Libertarian Party in 1980, when David Koch was the party's Vice-Presidential candidate, and is on the board of the Koch-founded Cato Institute. His wife and kids work for the Lucy Burns Institute, an affiliate of the State Policy Network that publishes Ballotopedia and Judgepedia.

Wisconsin Club for Growth's top "advisor," R.J. Johnson, is a close Walker ally and the former Executive Director of the Republican Party of Wisconsin. In Walker's soon-to-be-released book, Unintimidated, the governor refers to Johnson as a friend of more than 20 years and his key campaign operative. While the Wall Street Journal editorial notes that the John Doe inquiry may be looking into illegal coordination between independent groups and political campaigns, it fails to mention that Johnson is an advisor to both Walker's campaign and Wisconsin Club for Growth.

There is evidence that the R.J. Johnson-led Club for Growth was coordinating with Walker's office early in the battle over the governor's controversial Act 10 legislation. Just three days after Governor Walker introduced his "budget repair bill" that ended collective bargaining in the state back in February 2011, Wisconsin Club for Growth began running slick ads accusing state workers of not having to sacrifice, and urging support for the legislation to make state workers "pay their fair share." One week later, Club for Growth and Americans for Prosperity organized a pro-Walker rally featuring Sarah Palin, Herman Cain, Andrew Breitbart and others.

Coordination about policy matters may not be illegal, but a question might be whether that coordination lasted as the policy debate flowed into election campaigns. Wisconsin Club for Growth went on to spend $415,000 in the following months on a high-profile state Supreme Court race that was widely considered to be a referendum on Walker's controversial anti-union legislation, and then dropped an additional $9.1 million over the next year supporting Governor Walker and legislative Republicans.

Koch-Tied Conduits Funnel Cash to Wisconsin Club for Growth

Who's behind Wisconsin Club for Growth? They would prefer that you not know.

Most of its political spending is on sham "issue ads" that don't explicitly tell viewers who to vote for, allowing it to evade state campaign finance disclosure laws. When Wisconsin's Government Accountability Board tried to tighten the state's disclosure requirements for "issue ads" in 2010, Wisconsin Club for Growth sued.

Nonetheless, some information about Wisconsin Club for Growth's donors can be pieced together from the tax filings of trade associations or nonprofits that contributed to the group.

Wisconsin Club for Growth received$400,000 in 2011 from the Wellspring Committee, a dark money conduit that does little more besides offer donors a way to secretly funnel money to politically-active groups.

According to the Center for Responsive Politics, Wellspring is "little more than [a] UPS mailbox," and was created because:

For donors especially concerned with protecting their anonymity, the bounce pass -- writing a check to a non-disclosing group that'll turn around and give the funds to another non-disclosing group -- can seem attractive.

Additionally, according to CRP:

if a group is ever forced to say where its money came from -- and there are lawsuits, pending legislation and an array of state attorneys general trying to make that happen -- it will only have to cite the name of other, similarly protected groups.

Another dark money conduit group funnelling money to Wisconsin Club for Growth is the Center to Protect Patient Rights, raising new questions about how much more Koch money flowed into the Wisconsin recall than has been previously reported. As Lisa Kaiser reported last week at the Shepherd Express, CPPR gave $225,000 to Wisconsin Club for Growth in 2011.

According to the New York Times, CPPR "is one of the largest political nonprofits in the country, serving as a conduit for tens of millions of dollars in political spending, much of it raised by the Kochs and their political operation and spent by other nonprofits active in the 2010 and 2012 elections." CPPR, in turn, received most of its funding from another Koch-connected organization called "Freedom Partners."

Like the Wellspring Committee, CPPR exists to offer an extra layer of anonymity to donors. Both groups also often contribute to the same nonprofits, many of which have Koch ties, such as Americans for Prosperity.

CPPR was recently fined $1 million for its involvement in a dark money shell game in California, where $15 million was shuffled between four different nonprofits to influence two ballot initiatives while evading the state's donor disclosure laws.

Wisconsin Donors Also Operate in Dark Money Realm

Trade associations inside the state have also contributed to Wisconsin Club for Growth. But money has also passed from some of these same dark money conduits to those Wisconsin trade groups, further obfuscating the true source of the funds.

For example, in 2011, the most recent year tax filings are available, Wisconsin Club for Growth received$988,000 from the "action" wing of Wisconsin Manufacturers and Commerce, the state chapter of the U.S. Chamber of Commerce. But Wisconsin Manufacturers and Commerce has also received hundreds of thousands of dollars from Wellspring Committee in recent years. Wisconsin Manufacturers and Commerce was a major Walker supporter that directly spent $4.7 million on the Wisconsin recalls.

Like Wisconsin Club for Growth, Wisconsin Manufacturers and Commerce has been named as part of the John Doe probe, according to the Wall Street Journal.

Other known donors to Wisconsin Club for Growth include $1.06 million from the Wisconsin Homeowners Alliance, $227,500 from the Wisconsin Insurance Alliance, a trade association for the insurance industry, and $140,000 from the builder's association the Building Industries Council. These known donations still only amount to a fraction of the $12.5 million Wisconsin Club for Growth raised in 2011.

Club for Growth Bankrolls Citizens for a Strong America

The similarities between the California's dark money shell game and Wisconsin's investigation become more clear when looking at where Wisconsin Club for Growth's money has gone.

In 2011, Wisconsin Club for Growth effectively provided the entire operating budget for "Citizens for a Strong America," a mysterious group that was also active in Wisconsin's 2011 and 2012 elections. Club for Growth gave an astounding $4,620,000 to the group in 2011.

Citizens for a Strong America spent millions on ads influencing Wisconsin elections and also funneled money to other groups, which in turn spent the money on political activity in the state.

The treasurer for Citizens for a Strong America is Valerie Johnson, R.J. Johnson's wife. As CMD recently uncovered, Citizens for a Strong America appears to be the successor to an earlier dark money group named the Coalition for America's Families, with some of the same directors (including Valerie Johnson), and which also was bankrolled by Wisconsin Club for Growth contributions. Wisconsin industrialist Terry Kohler, a top donor to Republicans in the state and nationally, was once referenced as a "driving force" behind Coalition for America's Families, and has also funded Wisconsin Club for Growth.

Citizens for a Strong America seemed to appear out of nowhere in early 2011, when it became one of the top spenders on the high-profile 2011 Supreme Court race, attracting national attention from the likes of Rachel Maddow and others. (CMD uncovered that the group's director was John Connors, an Americans for Prosperity staffer, who registered the group's web domain as an address in the same building as Americans for Prosperity.) The group went on to spend money supporting Republican Senators facing recall, in some cases in tandem with Club for Growth.

Citizens for a Strong America Bankrolled Wisconsin Family Action

Citizens for a Strong America, which was bankrolled almost entirely by Wisconsin Club for Growth cash, in turnfunneled $916,045 to Wisconsin Family Action in 2011, which was over 90 percent of the $1,009,616 in grants that the anti-abortion, anti-gay marriage group received that year.

The group spent an estimated $850,000 on the Senate recall campaigns that year, and an additional undisclosed amount on the Prosser-Kloppenburg race.

Wisconsin Family Action has also been named in the John Doe probe by the Wall Street Journal.

Citizens for a Strong America Also Funded United Sportsmen

The dark money daisy chain doesn't end there. Citizens for a Strong America -- using the funds provided by Wisconsin Club for Growth -- transferred $235,000 to the group "United Sportsmen of Wisconsin" in 2011, the first year that United Sportsmen was in existence.

United Sportsmen was the subject of controversy earlier this year, when it was revealed that outgoing Assembly Majority leader Scott Suder (a former ALEC State Chair) slipped a half-million dollar, renewable grant into the Wisconsin budget that was later called a "sweetheart deal" for the group. Kohler, the Republican donor, personally reached out to lawmakers on the budget committee and urged their support for the grant.

The organization had no record conducting the outdoors training that the grant was purportedly intended to promote, but it did have close ties to Suder and other Republican leaders; its board included Luke Hilgemann, Suder's former Chief of Staff, who is now #2 at the national office of David Koch's Americans for Prosperity. As details of the "sweetheart deal" emerged, the Walker administration was finalizing its hiring of Suder for a political appointment that would have nearly doubled his pay. But as the grant grew increasingly controversial -- and with his sights set on higher office -- Walker intervened at the last minute and killed the grant, and Suder declined the position and took a job as a lobbyist.

Citizens for a Strong America also gave $347,582 to Wisconsin Right to Life in 2011, a group that was the plaintiff in a high-profile 2010 U.S. Supreme Court case that struck down regulations on the so-called "issue ads" that many groups in this dark money network have engaged in.

Club for Growth Funded Jobs First Coalition, Which Backed American Federation for Children

The complex web of money flows does not end there.

Club for Growth Wisconsin gave a group called the "Jobs First Coalition" $425,000 in 2011, which amounted to nearly half of the $927,860 that the Coalition raised that year. (The Jobs First Coalition also gave Club for Growth Wisconsin $75,000, which would appear to be a reimbursement).

The Jobs First Coalition formed in 2009 and has close ties to disgraced former Assembly Majority Leader Scott Jensen, who was the ALEC state chair as a legislator. Jensen is now the top lobbyist at the school privatization group American Federation for Children, a group organized and funded by Amway heirs Dick and Betsy DeVos (who also gave Walker $250,000 during his recall election). Jensen represents the organization on the ALEC Education Task Force and has brought AFC bills to ALEC for adoption as "model" legislation.

Here is where the web gets even more tangled.

After receiving $425,000 from Wisconsin Club for Growth in 2011, the Jobs First Coalitiontransferred $245,000 that same year to Jensen's other group, the American Federation for Children.

In the 2012 gubernatorial recall race, American Federation for Children was one of Governor Scott Walker's top PAC supporters, reporting $1.1 million in expenditures on his behalf. They also reported spending $1.3 million helping GOP Senators facing recall in 2011. It is not known whether additional spending was not disclosed.

Earlier this year, AFCcame under fire for inadvertently exposing its "issue ad" dark money charade. AFC told Wisconsin's elections board it spent only $345,000 on state legislative races in 2012, claiming that most of its spending was "issue advocacy" rather than "electioneering" and need not be disclosed. But in a document titled "2012 Election Impact Report" AFC boasted to its funders that it spent $2.4 million in Wisconsin helping elect nine pro-privatization legislators to office -- exposing the issue ad charade for the ruse that it really is.

States Shining Light on Dark Money

To the public, these money flows are absolutely obtuse and untraceable.

Even the information about Wisconsin Club for Growth's donors described above is only a fraction of the $12.5 million the group raised in 2011. What's more, many of those known funders exist in order to disguise the identity of the true donor; we still don't know who provided the original funds from Center to Protect Patient Rights or the Wellspring Committee or Wisconsin Manufacturers and Commerce.

This secrecy deprives voters of the information necessary to assess a particular ad, and makes it nearly impossible to track whether elected officials are giving those donors special treatment. Even if donors to Wisconsin Club for Growth are keeping their identities hidden from the public, they are likely making their names known to the beneficiaries of their spending.

In addition to the California enforcement action, states have begun to take steps to shine light on dark money. In Idaho, in response to an action by the Secretary of State, a court ordered "Education Voters of Idaho" to reveal the donors to its effort to pass an anti-union ballot initiative. Education Voters of Idaho purported to represent Idaho parents, but was actually funded by New York Mayor Michael Bloomberg. In Kentucky, an enforcement action against "Restoring America," a mysterious group that spent millions on ads supporting the Republican candidate for governor, revealed that it was actually bankrolled by the candidate's father-in-law.

Like these investigations, a John Doe in Wisconsin may be needed to unravel the elaborate dark money web. But what is truly needed is to put citizens back in the driver seat, and enact (and enforce) disclosure laws that prohibit the shell game and let the public know who is meddling in state and local politics.

Brendan Fischer

Brendan Fischer is CMD's General Counsel. He graduated with honors from the University of Wisconsin Law School.

Comments

Who does George Soros fund? Should I care? Is he a US citizen?

You soft-core fascists are a hoot. You lost, Walker won, twice.

There's nothing illegal about spending money to further interests, liberal or conservative. Interests are interests.

Is hobbling political opponents via the IRS legal? Ask Lois Lerner, oh, wait, she clammed up.

You pocket-tyrants are itching for an uncivil war. Be careful what you wish for. Remember, the whipping posts you use to abuse your foes today will be there to use on you tomorrow.

Reports came out today about the dark money that CMD has been receiving.

When ipsophakto comments, "There's nothing illegal about spending money to further interests, liberal or conservative. Interests are interests," the implication is that the Citizens United ruling made all public information and filings about campaign-related spending totally secret. Hardly. The activities documented by PR Watch clearly indicate an elaborate money-laundering scheme -- which is precisely the kind of activity that was run in the '70s by the Committee to Re-Elect the President on behalf of the Nixon campaign. Nixon resigned in disgrace when the full extrent of these activities became known. Unregulated or underregulated campaign funding is detrimental to the public interest and democracy itself. Gutting campaign finance laws, as the current wingnut majority on the Supreme Court has been doing, helps nobody in the long run. Sunlight is the best disinfectant, and hiding in the shadows will only work so long.

Lois Lerner, by the way, was actually a Bush appointee, and the IRS investigated groups on the right and left. Ironically, the only group that ultimately faced sanction was one on the left.