Charles Rex Arbogast / AP

Prominent GOP backers cited in FEC probe of nonprofit

Regulators found group violated campaign finance rules, but they couldn’t agree on whether to take legal action

Three notable conservatives, including a top fundraiser for Republican presidential candidate Marco Rubio, are linked to a now defunct dark money nonprofit group that failed to disclose several million dollars spent on candidate-related TV ads, according to documents released Friday by the Federal Election Commission (FEC).

The three involved with the group, the Commission for the Hope, Growth and Opportunity (CHGO), are William Canfield, the general counsel for super PAC Carly for America, affiliated with Carly Fiorina; Scott Reed, a senior political strategist for the U.S. Chamber of Commerce; and Wayne Berman, a senior adviser at the Blackstone Group who serves as presidential candidate Marco Rubio’s national finance chairman.

The three men are characterized, in 227 pages of FEC documents released after a five-year investigation, as having been part of the decision-making core of the CHGO, which the FEC concluded transgressed rules governing the 501(c)(4) social welfare category under which the group was created, which preclude it from focusing on politics.

But the trio as well as the group will likely dodge punishment.

Habitually gridlocked FEC commissioners — three are Republican appointees, three Democratic appointees — agreed that the CHGO violated federal law by failing to properly report details about its ads, but they voted to take no action at the time on the violation.

The commissioners then deadlocked 3-3 over whether the group broke the law by failing to organize, register and report as a political committee, with the three Democratic commissioners voted to find the group in violation.

“This is one of the most outrageous decisions that I have ever seen come out of the commission,” Ann Ravel, the FEC’s Democratic chairwoman, told the Center for Public Integrity.

In a joint statement, the commission’s Republicans — Matthew Petersen, Caroline Hunter and Lee Goodman — said no action was merited because the group has disbanded. “Any conciliation effort would be futile … The most prudent course was to close the file,” they wrote.

The FEC’s lawyers contended that the CHGO was blatantly and primarily political. While acknowledging difficulties in punishing the group, FEC lawyers nevertheless recommended pursuing enforcement actions.

Through 2010, the CHGO received $4 million from one undisclosed donor — an amount that made up the bulk of its $4.8 million fundraising total.

The nonprofit then directed an estimated 85 percent of that $4.8 million toward an ad blitz in key 2010 House races without disclosing any of that spending to the FEC, agency lawyers wrote.

Of its spending, an estimated 61 percent went to express advocacy for the election or defeat of candidates, FEC lawyers said.

Michael Mihalke, a principal at the political consulting firm Meridian Strategies, told FEC lawyers that “Canfield and Reed approved the content, production and placement of all CHGO-related television ads” and that Berman received a “fundraising commission” from the group’s coffers after the 2010 elections.

The three men told FEC lawyers that they had limited involvement with the group. Berman told investigators that he offered advice on a “voluntary basis.” After being pressed by lawyers, Reed said that he was “involved in discussions on the strategic placements of television ads for CHGO but could recall no details of these discussions.”

Reed and Berman declined to comment on the matter for Al Jazeera; Canfield could not be reached for comment by time of publication.

In a November 2010 letter to the FEC, Canfield asked the agency to dismiss the complaints against the CHGO. He argued that the FEC failed to follow “statutory and regulatory-mandated timely notice requirements” and that the group was therefore “denied procedural fundamental fairness by the commission.”

The case has highlighted the issue of dark money groups’ involvement in political campaigns. Incorporated as social welfare organizations, these nonprofits are not required to disclose donors but are barred from engaging in politics as their primary activity. Some have been criticized for pushing the boundaries that preclude them from intervening in election campaigns.

The CHGO’s public activities began soon after its organizers checked a box on an IRS form, indicating in 2010 that they did not plan on spending money to influence elections.

The group’s mission, according to documents filed with the IRS, was to “implement statutes, rules and regulations that are consistent with free-market principles and that adhere [to] economic growth and expansion.”

That year, the nonprofit directed an estimated $4.7 million on TV advertisements that criticized House Democrats such as John Spratt of South Carolina, John Salazar of Colorado and Suzanne Kosmas of Florida, all of whom were unseated in the 2010 elections.

One ad called for voters to “pull the plug on this song and dance once and for all” naming Spratt as a legislator “who approved billions in deficit spending without missing a beat.”

That ad included a boost for Mick Mulvaney, the Republican who unseated Spratt.

Two organizations filed FEC complaints after that ad flurry: the watchdog group Citizens for Responsibility and Ethics in Washington and the Democratic Congressional Campaign Committee.

Noah Bookbinder, the executive director of Citizens for Responsibility and Ethics in Washington, called the FEC’s deadlocked vote “outrageous and profoundly disturbing.”

“The fact that three commissioners nonetheless prevented any action on the matter is powerful evidence of the dysfunction currently incapacitating the FEC,” he said in a statement, adding that his organization “is working to determine what further legal steps can be taken to attempt to ensure accountability for serious abuses of the laws governing political organizations.”

Ravel said the FEC decision sent a message that it is unwilling to enforce the law. “When people see that, they tend to act with impunity,” she said.

This story is from the Center for Public Integrity, a nonprofit, nonpartisan investigative media organization in Washington, D.C. Read more of its investigations on the influence of money in politics or follow it on Twitter.

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