Fred Thompson's Legacy Includes Giving the Kochs a Free Pass

Reverse mortgage pitchman and former Senator Fred Thompson (R-TN) passed away on November 1, 2015, at the age of 73, but his legacy of giving the Koch Brothers a pass on one of their first major forays into funneling money into mysterious groups to try to win elections continues unabated.

Thompson Refused to Force Answers from the Kochs about Triad

Back in 2007, Senator Thompson chaired the U.S. Senate Governmental Affairs Committee's investigation into "illegal or improper activities in connection with 1996 federal election campaigns," but he refused to force key individuals to answer questions about the multi-million dollar election ad operation known as "Triad Management."

Although the donors underwriting Triad's ads had been kept secret, Senate investigators learned that the "Economic Education Trust" (EET) had given nearly $2 million to Triad, which spent $3 million on TV and radio ads and mailings late in the 1996 election to aid "conservative" GOP politicians.

Senate investigators believed EET was funded in part by the Kochs of Wichita, Kansas, but Senator Thompson refused to force the Kochs to answer questions about EET or Triad's operations, including ads that reinforced candidates directly funded by the Koch family.

In addition to EET, investigators learned that Koch Industries also contributed $2000 to the Triad effort. Triad worked with two subgroups dubbed "Citizens for Reform" and "Citizens for Republican Education Fund," which were basically shell operations or front groups for Triad.

(In addition to EET and the Koch Industries' funding, ads were also underwritten by other big GOP donors like the Cone family that made its wealth from the Grayco corporation, Foster Friess of Wyoming, Robert Cummins of Fargo Electronics, Cracker Barrel, Fred Sacher, and Bruce Benson of Benson Mineral Corp, according to the Washington Post.)

The Triad campaign included at least $420,000 in ads attacking the opponent of Koch-friendly Sam Brownback, who was running for the U.S. Senate (to replace Koch friend Bob Dole, who was running for the White House) as a staunch opponent of women's reproductive freedom, plus more than $130,000 in ads and outreach helping Wichita native and Olympian Jim Ryun in his run for Congress, and another $130,000+ to help Republican Todd Tiahrt represent the congressional district that includes Wichita, where Koch Industries is headquartered. All three won.

Brownback had met with Triad's rep, Carlos Rodriguez, but denied any wrongdoing. Triad's rep also met with and helped John Thune of South Dakota in his pursuit of a House seat (laying the foundation for his narrow defeat of Senator Tom Daschle in 2004), in addition to other rightwing candidates.

"Substantial Evidence of Wrongdoing by Triad"

Despite the denials, the minority on the Senate Governmental Affairs Committee "found substantial evidence of wrongdoing by Triad" that Thompson refused to do anything about.

They issued the following findings:

"(1) The evidence before the Committee suggests that Triad exists for the sole purpose of influencing federal elections. Triad is not a political consulting business: it issues no invoices, charges no fees, and makes no profit. It is a corporate shell funded by a few wealthy conservative Republican activists.

(2) Triad used a variety of improper and possibly illegal tactics to help Republican candidates win election in 1996 including the following:

(A) Triad provided free services to Republican campaigns in possible violation of the federal prohibition against direct corporate contributions to candidates. These services included raising funds for candidates, providing consulting advice on fundraising and political strategy, and providing staff to assist candidates,

(B) The evidence before the Committee suggests that Triad was involved in a scheme to direct funds from supporters who could not legally give more money directly to candidates, through political action committees (''PACs''), and back to candidates. Triad obtained from Republican candidates names of supporters who had already made the maximum permissible contributions and solicited those supporters for contributions to a network of conservative PACs. In many instances, the PACs then made contributions to the same candidates.

(C) Triad operated two non-profit organizations--Citizens for Reform and Citizens for the Republic Education Fund--as allegedly nonpartisan social welfare organizations under 501(c)(4) of the tax code and used these organizations to broadcast over $3 million in televised ads on behalf of Republican candidates in 29 House and Senate races. Using these organizations as the named sponsors of the ads provided the appearance of nonpartisan sponsorship of what was in fact a partisan effort conducted by Triad. Neither organization has a staff or an office, and both are controlled by Triad. Over half of the advertising campaign was paid for and controlled by the Economic Education Trust, an organization which appears to be financed by a small number of conservative Republicans."

As the Minority Report noted, the Committee initially sought documents and "virtually no substantive documents were produced for three months, until July," routine business documents a group like Triad would ordinarily have apparently didn't exist, and Triad's ostensible founder, Carolyn Malenick (who was notorious for her fundraising for Oliver North of Iran-Contra ill repute) had sent a memo to her staff about "cleaning" the computer hard drives just prior to a major Washington Post story about "Triad and the shell companies."

Although Senator Thompson allowed subpoenas for depositions to be issued to 11 people associated with Triad, the mysterious entity allowed fewer than half of the depositions to proceed and in most of those, individuals like Malenick "refused to answer any substantive questions."

As the Report noted: "Prior to the blanket refusal to appear, the Committee had already established that Triad had made significant corporate contributions to Republican candidates; found evidence of illegal earmarking of political action committee contributions; found evidence that Triad coordinated its advertising campaign with Republican candidates; and found evidence that the nonprofit shells had no independent existence apart from Triad."

As the Minority Report noted, "Malenick and her backers and associates joined officials from the RNC and other pro-Republican groups as the only individuals to blatantly defy deposition subpoenas issued by the Committee. No individuals associated with Democratic entities who received personal subpoenas to appear before this Committee and answer questions either refused entirely to appear, or issued a blanket refusal to answer. Yet, no order was ever issued to enforce the subpoenas or to hold Triad, its employees, officers, and directors in contempt of the Senate."

That's because Thompson refused to insist that the subpoenas be treated as legally compulsory, and the Democrats did not have majority control of the Committee or the Senate.

The Minority also believed the Kochs were connected to another mysterious group in the 1996 election, dubbed the "Coalition for Our Children's Future," which ran ads in the same places as a term limits group tied to the Kochs. As the Minority Report stated:

Koch Industries has refused to say whether it funded the Triad-controlled tax-exempts or any other organizations that ran attack ads in 1996. A September 30, 1997, letter to Koch Industries Chairman Charles Koch from the Committee's Minority Chief Counsel, produced no response. Questions from journalists have been met with 'no comment.' After the Minority learned of the existence of the Economic Education Trust, Senator Glenn, the ranking Minority member, asked Chairman Thompson to issue a subpoena to the Riggs National Bank of Washington, D.C., where the Trust maintained the account from which money was wired to the Triad organizations. On November 24, Senator Glenn renewed his request for issuance of the subpoena. No subpoena was issued."

(The term limits group was run in part by Eric O'Keefe, an old compatriot of David Koch's who more recently has been the loudest voice opposing subpoenas to the Wisconsin Club for Growth, which he was on the board of, and other Koch-funded groups involved in the Wisconsin John Doe II criminal investigation surrounding Gov. Scott Walker.)

As the Minority Report noted, "Despite two requests from Senator Glenn, no subpoena was ever issued for the financial records of the Economic Education Trust" (EET).

Bill Moyers Helped Shine a Light on Triad and the Kochs

With Washington, DC, preoccupied with the Monica Lewinsky scandal and Republican efforts to impeach newly re-elected President Bill Clinton, the results of the Senate investigation into the distorting spending by secretive groups in the 1996 election failed to garner as much attention. PBS examined the investigation in detail in a special Frontline investigation called "Washington's Other Scandal," and Bill Moyers interviewed the Senate minority's investigator, Beth Stein, about Triad and the Triad ads. Their conversation is very illuminating:

Moyers: Okay, so you have Triad, which is a for-profit organization, whose purpose is to influence elections, and it has two arms that are shells, in a sense, that are its airwings, its air force. It runs television ads against candidates, right?

Stein: Right.

Donate to CMD!

Moyers: It gets its money from something called the –

Stein: The Economic Education Trust. It went out, we think and hired political consultants, planned an issue ad campaign in key districts that were important to whoever was running the trust, and spent between $1 and $3 million dollars doing that.

Moyers: And what was its relationship to Triad?

Stein: As near as we can tell, the Economic Education Trust basically shopped for organizations to run money through in an effort to keep its existence hidden. So its relationship to Triad is essentially – it went shopping for organizations, and Triad was one that it found.

Moyers: And who gives that money to the Economic Education Trust?

Stein: What the report says and what the evidence the committee developed suggests is that the Economic Education Trust is funded by Koch Oil, which is possibly the second largest privately held company in the country.

Moyers: Is Koch the primary supplier of money for Triad?

Stein: It certainly gave the most money for the advertising that Triad did in 1996.

As investigative journalist Jane Mayer noted in her seminal piece on the Kochs in The New Yorker:

Charles Lewis, of the Center for Public Integrity, described the scandal as 'historic. Triad was the first time a major corporation used a cutout'—a front operation—'in a threatening way. Koch Industries was the poster child of a company run amok.'”

Senator Paul Wellstone (D-MN) noted the activities of outside groups in 1996 "shredded" the post-Watergate campaign finance reforms, and he included an investigative piece by Greg Gordon of the Minneapolis Star Tribune entitled "Turning Nonprofits into Powerful Political Tools" in the Congressional Record, which noted that:

Senate investigators suspect one of these trusts is shielding the identities of Charles and David Koch, brothers who run oil industry giant Koch Industries, which operates a large refinery in Rosemount, a Democratic committee aide said. Jay Rosser, a spokesman for Wichita, Kan.-based Koch, declined to comment on whether the Kochs or their money were involved. Democrats on the committee sent Charles Koch a letter this month asking to speak with him about their inquiry, but he failed to respond, according to investigators. Thomas Mann, a campaign-finance expert who is director of governmental studies for the Brookings Institution, called the financing of politically active nonprofits 'an utter corruption of the system.'"

Where Are They Now?

Eventually, Triad's leader Carolyn Malenick admitted years later "that her business [Triad] counted on Koch contributions, but declined to say how much," according to the Investigative Reporting Workshop (IRW). As IRW noted, "Donors gave input on how to spend the money, Malenick said, but they did not decide where to run the ads." According to IRW, "Triad attorneys said the company had a written agreement to keep the identity of its funder secret. Senate Democrats twice requested a committee subpoena for the Economic Education Trust’s financial records. It was never issued."

Indeed, a former consultant, Kenneth Barfield, later confirmed that the Kochs were funders of the trust, as reported by Glenn R. Simpson who spoke with Barfield about documents leaked in a news article titled "New Data Shows that Koch Firm Funded GOP TV Ads in '96 Races" in the Wall Street Journal. That news story noted that:

It has been an enduring mystery from the 1996 elections: Who was behind the secretive foundation that paid $1.8 million to a Republican campaign group for a series of controversial television and radio commercials that aided GOP candidates?
The episode was a major event in modern political financing, marking the return of massive anonymous contributions to American politics after a 20-year hiatus. While the donations by the Economic Education Trust were extensively investigated last year during the Senate's fund-raising inquiry, investigators couldn't confirm the source of the money.
Now, new information confirms suspicions advanced last year by Democrats on the Senate Governmental Affairs Committee that the foundation "was financed in whole or in part by Charles and David Koch of Wichita, Kan...."

 

Eventually, after the Senate failed to fully investigate Triad, the Federal Election Commission (FEC) found unanimously that there was "probable cause" that the Triad operations were "political committees" that failed to register (and thus disclose donors and expenditures), but it lacked the votes to find that Triad was in fact required to register. Republican Brad Smith, who was then on the FEC, fought against requiring Triad to disclose its donors. Ultimately, Smith left the FEC to create the Center for Competitive Politics, which opposed the Disclose Act in response to the Citizens United decision, and which has urged that several campaign finance laws be struck down.

The case against Malenick and Triad ended up in federal court regarding the funding from Koch Industries and other matters. Years after the failed Congressional investigation--and well after Triad and its funders got some of the election results they wanted--in 2005, a federal court found that Triad acted as "political committee" and noted that Triad conceded its goals were expressly electoral, which were to: "1) Return Republican House Freshmen; 2) Increase by 30 the Republican House Majority; [and] 3) Increase Senate Republicans to a Filibuster-proof 60."

Despite Thompson's failure to use his leadership role in the Senate to get to the bottom of the Triad scandal in 1997, the Senate later passed the Bipartisan Campaign Reform Act (BCRA), otherwise known as "McCain-Feingold," which required disclosure of the kinds of ads that Triad had run by presuming that ads run shortly before the election about candidates in the election are electoral and should be subject to federal election law.

BCRA was initially upheld by the U.S. Supreme Court, but after Justice Sandra Day O'Connor's retirement, a new majority that included two George W. Bush appointees (John Roberts and Samuel Alito) issued the 5-4 decision in the reviled Citizens United case that struck down key parts of that law under the guise that the First Amendment suddenly required that result. (At least two Supreme Court justices voting in favor of that decision have attended the Kochs' Freedom Partners summits: Clarence Thomas and Antonin Scalia.)

Eventually, Thompson ran for the White House unsuccessfully and later posted a photo to Flickr with him smiling next to the leader of "Americans for Prosperity," David Koch and his wife, Julia, years after Thompson refused to insist that Koch Industries answer the Senate's questions or to issue subpoenas to the Economic Education Trust.

Other politicos who got a leg up due to Triad and Thompson's refusal to insist that subpoenas into that political operation be fully enforced have also gone on to greater fame or infamy, to name just a few:

  • Sam Brownback is now the governor of Kansas and has faced a rebellion from some state Republicans for implementing the Kochs' economic wish list, which has devastated the state's economy. In support of Brownback's Senate race back in 1996, Triad claimed "a microcosm of the ideological battle to maintain the Republican Revolution.... The election of Brownback will send shock waves throughout the Republican National Convention...." (Indeed, many believe that the Kochs have basically now created a shadow Republican party through raising and directing the spending of more money than the Republican National Committee does.)
  • Jim Ryun's campaign was also lifted by the injection of Triad money into his race. His congressional profile also gave his sons a platform to launch their own careers advancing the Koch agenda. His son Ned Ryun created "American Majority," which identifies rightwing candidates for local and state office and helps them win their races (it also operates centers in a number of states, including Wisconsin). American Majority employed Ned's brother Drew before the latter's "Media Trackers" operation was basically spun off to write stories that help rightwing candidates trying to win elections and that attack Democratic candidates, progressives, and the media (including attacks on the Center for Media and Democracy). It operates in Wisconsin, Ohio, Florida, and a number of other states.
  • Triad's lawyer was Mark Braden, who has also represented the Republican National Committee and, among other things, he helped Republicans in the American Legislative Exchange Council (ALEC) with their efforts to "redistrict" or recut district lines to their advantage in choosing their voters following the 2010 election, as the Center for Media and Democracy uncovered through open records requests.

So, while the late Fred Thompson may be lauded in the coming days for his political career or his acting, including a stint on Law & Order that earned fans and foes, one thing that will not be forgotten is how he effectively helped protect the Kochs back in 1997. In hindsight, Triad looks like a major trial run for the elaborate election games now being fueled by the Kochs' billionaire network, the "Freedom Partners" operation, which includes their pledge to spend at least 3/4 of a billion dollars in the run up to the 2016 election, having spent nearly $400 million in cloaked spending funneled through various shell trusts and limited liability corporations to non-profits in the 2012 elections. Freedom Partners seems like Triad on super steroids.

Twenty years after Thompson's starring role in the U.S. Senate's thwarted investigation of the Kochs--thanks in part to his refusal to insist that Senate's legal subpoenas be honored (or issued in some instances)--the Kochs are again attempting to win the election for their chosen electoral beneficiaries with as little disclosure as possible.


Disclosure: The author worked with Beth Stein when they both worked for the Senate Judiciary Committee during George W. Bush's first term in office.

Learn more about CMD's research on the Kochs at KOCHexposed.org. Please share this story on Facebook and Twitter: if Fred Thompson were as good a statesman as an actor or a pitchman he would have subpoenaed the Kochs.

AttachmentSize
PDF icon Senate Report re TRIAD998.07 KB
Lisa Graves

Lisa Graves is a Senior Fellow and board President for the Center for Media and Democracy, after serving as the group's executive director for eight years. She was CMD's Executive Director from July 2009 through October 2017. 

CMD launched its award-winning ALEC Exposed investigation after a whistleblower gave Lisa all of the model bills secretly voted on by lobbyists and lawmakers. CMD also publishes PRWatch.org, SourceWatch.org, and ExposedbyCMD.org.