Americans for Prosperity might be in some trouble as a result of the mouth of funder David Koch himself. And it's certainly about time for him and his similarly extremist brother, Charles, to be on the consequences end of the law.
We're familiar with his off the cuff remarks to a Palm Beach reporter where he mouthed off about his support for Scott Walkers union busting:
Asked about his efforts to sway public opinion, Koch acknowledges his group is hard at work in places such as Wisconsin, where Gov. Scott Walker is facing off with public unions and grappling with a likely recall vote.He also brought forth a doom and gloom proclamation that if Walker goes down, unions will be unstoppable.
"We're helping him, as we should. We've gotten pretty good at this over the years," he says. "We've spent a lot of money in Wisconsin. We're going to spend more."
By "we" he says he means Americans for Prosperity, which is spending about $700,000 on an "It's working" television ad buy in the state. It credits Walker's public pension and union overhaul with giving school districts the first surpluses they've seen in years. The unions and the left see things differently.
What Koch forgot, however, is that his astroturfed organization is a 501 (c) (3) charitable operation. From John Nichols article in the Cap Times:
It’s illegal for “independent” groups operating under the Internal Revenue Service code as a 501(c)(3) organization, such as the Americans for Prosperity Foundation, to participate directly or indirectly in any political campaign.Whooooooo boy. That's a surprise to me considering how many ads AFP runs across the country attacking opponents of their candidates and how many they ran in Wisconsin during the summer recall election and are running now to promote Walkers "It's Working" meme.
The IRS is explicit in this regard: “Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”
Similar, though slightly less strict, rules apply to campaigning by other so-called “501” groups that the Kochs have funded.
While everyone knows about the political slant of AFP, complaints about their violation of IRS rules have fallen on rather deaf ears in the past.
That's perhaps about to change:
The Wisconsin Democrats are taking aim at one of their biggest opponents in the state’s recall elections. No, not just Republican Gov. Scott Walker — but conservative financier David Koch, and his organization Americans For Prosperity. But whether they will actually succeed in the latest front is another question.Of course AFP spokesperson, Levi Russell, dismisses the complaint:
Specifically, the Dems announced on a conference call with reporters Thursday that they were filing a complaint with the state Government Accountability Board, which oversees elections in the state, and also forwarding a copy to the Internal Revenue Service at the federal level. The complaint involves statements that Koch made to a newspaper — and his organization’s official non-profit, non-partisan status.
“This complaint has no merit whatsoever and will be thrown out as any frivolous complaint should be. With no legal ground to stand on, the Democratic Party of Wisconsin is resorting to intimidation tactics and threats against Wisconsin television stations, in an attempt to stifle free speech and halt the educational efforts of ‘It’s Working Wisconsin.’ Complaints of this type are a desperate tactic by a power-hungry political party that has found themselves on the wrong side of the issue.”Rules and laws aren't supposed to be just for us "little people". While it's often the case that the big shots avoid consequences of their law breaking with high priced legal teams who negotiate any penalty down to a fine (usually a small portion of whatever ill-gotten gains were received), sometimes the bad guys really do get held accountable.
I'm not so sure they shouldn't be worried. Or, perhaps Scott Walker should be worried about the loss of huge amounts of attack ads against his future opponents. The rules of a 501 (c) (3) seem fairly clear when read.
I'm not sure what's to become of this complaint to the Wisconsin Government Accountability Board or IRS, but it will be interesting to watch now that David Koch has admitted what has been right before our eyes all the time.
For your amusement, here's the ad AFP in association with the RW MacIver Institute are running now in Wis:
30 second version:
60 second version:
* OK, you're wondering about that #100 in the title. It's sort of a personal milestone. This is diary #100 for me. I recently passed my 10,000th comment and saw this one looming. I was saving it for something special.
I'm not sure if anyone is interested, but I lurked on DK for a couple of years before plunging in and signing up for an account and then lurked some more before I posted my first very tentative comment. I never knew I'd write so much.....
UPDATE: There seems to be some controversy over whether Americans for Prosperity is a 501 (c) (3) or 501 (c) (4) organization, which is what AFP claims. In each article I linked to, written by reputable sources, AFP is reported as a 501 (c) (3) organization. I don't use or link to just any sources I find. John Nichols, the Wisconsin Democratic Party, and Talking Points Memo have high credibility and respectability. I doubt they would tarnish their reputations by reporting something that isn't a fact.
Mike Tate, Chairman of the Wisconsin Democratic Party, in a conference call reported in Talking Points MemoMemo article:
“These organizations are a farce,” said Wisconsin Democratic Party Chairman Mike Tate, referring to AFP’s 501(c)(3) status, as well as that of a state level conservative organization the MacIver Institute. “This designation allows an organization to accept tax-deductible contributions and further provides that they are not required to disclose their donors, nor are they required to report their spending until after an election has taken place.”Update 2: H/T to Heather in SF Bay for researching and finding that AFP has both a 501 (c) (3) and 501 (c) (4) operation. However, in her comment there appears to be a lot of sharing of money in loans, as well as sharing of resources, employees, and mailing lists between the organizations. And that might just be a problem.
He further added: “But to maintain this status, a 501(c)(3) is prohibited from engaging in ‘activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate.’”
Reporters on the phone call, however, voiced various notes of skepticism about whether this would lead to an investigation, noting the recent proliferation of 501(c)(3) organizations that have become active voices in political discourse. But Tate stood his ground.
“Well I think what we have here is a very clear admission from David Koch that he is using and abusing this loophole in IRS code and election law to spend tax-deductible money to the benefit of a candidate,” said Tate. “And while there may seem to be no real rules in Wisconsin politics or federally anymore, we think this is such an affront to the Wisconsin standard of open and clean government that we must take a stand here, and this is worthy of investigating.”
I don't have a problem with political organizations. Create one, let it do political work, but pay your taxes and let there be some accountability and disclosure of who is really behind the organization. Far too many poorly informed voters see a friendly looking, patriotic, populist sounding group name and assume there are many, many people behind it supporting its mission when there are only a couple of rich folks comprising the group.
Update: Good News Edition: Unrelated to this diary, but sharable all the same, Lori Compas, the force behind the unbelievable effort to recall Wisconsin State Senate Republican Majority Leader Scott Fitzgerald, will announce on Tuesdaythat she will run against him in the recall election. Wow. What a candidate!
Update: Clarification: There's a lot of discussion of (c) (3) vs. (c) (4) status that involves complex tax law that I don't pretend to understand. The main point of the complaint, however, remains the statement that David Koch made that indicates that these ads are being done to support Scott Walker and it's that revelation that's at issue. These organizations are allowed to fund educational ads, but apparantly not permitted to do ads with the political intent of supporting or opposing a candidate.
Update: Another article on this subject in The Nation.