The senator’s allies found a way for donors to spend millions to support his presidential campaign while remaining anonymous — forever.
By Shane Goldmacher
03/28/16 05:19 AM EDT
Marco Rubio’s campaign is dead. His secret-money legacy lives on.
Nobody knows who funded the nonprofit group that spent more than $10 million on TV ads boosting Rubio, and untold more on mailers and research. And, unless those donors out themselves, nobody ever will.
No presidential candidate fighting for their party’s nomination has ever benefited from as much undisclosed cash, and watchdogs worry the pro-Rubio group’s unchecked activity serves as a dangerous precedent that will soon become common practice.
“It is now the model for a how a candidate can inject unlimited, secret, corrupting money into their campaigns to benefit their election,” said Fred Wertheimer, president of Democracy 21, a campaign watchdog group. “That is precisely the kind of model that we do not need in America.”
The pro-Rubio nonprofit, known as the Conservative Solutions Project, was created in early 2014 and run by some of the same political operatives who would later lead his super PAC, including South Carolina strategist Warren Tompkins. Both groups can accept unlimited donations from donors, but unlike the super PAC, the nonprofit can keep its contributors hidden from the public — permanently.
The Conservative Solutions Project operates under the “social welfare” 501(c)4 section of the tax code, which requires that such groups not be primarily involved in political matters.
The pro-Rubio nonprofit has claimed not to be directly involved in electoral politics. Yet the group paid for a raft of polling and research in the early primary states of Iowa, New Hampshire and South Carolina, as well as in Rubio’s home state of Florida. It bought millions in TV ads that aired in those early states, and it filled the mailboxes of Republican voters there with pro-Rubio literature. In fact, the Conservative Solutions Project was the second biggest TV advertiser of the 2016 campaign last year — trailing behind only Jeb Bush’s super PAC, according to a media tracker.
Loose nonprofit tax laws, and an unusual filing schedule set up by its creators, ensure the pro-Rubio nonprofit will file little paperwork covering the primary period until April 2017 — months after the next president is sworn in. And even then, no donors will be named.
“If you are trying to obscure your activities, they’re perfect,” Robert Maguire, a nonprofit investigator for the Center for Responsive Politics, said of 501(c)4s.
While super PACs are barred from coordinating with the candidates they support, the pro-Rubio super PAC and nonprofit legally worked hand-in-glove. They shared an address, staff and even a name (the super PAC went by the name the Conservative Solutions PAC). The treasurer of the nonprofit was Robert Watkins; the treasurer of the super PAC was his wife, Nancy Watkins.
Jeff Sadosky, who served as a spokesman for both, called them “two independent organizations, with wholly different missions and focuses.”
The Conservative Solutions Project’s first public splash came last June, when it released a television ad on national cable castigating the Iranian nuclear deal and casting Rubio as its chief opponent in Congress. “Marco Rubio is leading the fight,” the narrator said. The ad was just the beginning of a barrage that would last through November, all while the official Rubio campaign and super PAC conserved their cash.
Sadosky said the ads, all of which featured Rubio prominently, were unrelated to the election. “It was focused on highlighting conservative solutions to issues Americans were facing every day and focused on how conservatives spoke to the broader electorate,” Sadosky said.
The ads aired on broadcast in only three states: Iowa, New Hampshire and South Carolina — the first three states of the presidential primary campaign.
The nonprofit’s broadcast ads ran through Nov. 22 in Iowa and New Hampshire. About a week later, the Rubio super PAC picked up where it left off. The same ad-buying firm, Target Enterprises, executed the ad reservations for both the Rubio super PAC and nonprofit.
“They could not have been more blatant with the way this took place,” Wertheimer said.
At some television stations, such as WMUR in Manchester and KCCI in Des Moines, the forms the television stations filed with the Federal Communications Commission listed the nonprofit as spending on behalf of “Marco Rubio 2016.” When that became public, the nonprofit’s attorney sent letters to some stations asking to correct those records, arguing their ads starring Rubio were not actually about Rubio.
“CSP does not make candidate-related, political expenditures,” wrote Cleta Mitchell, the group’s lawyer and a prominent GOP attorney, of the Conservative Solutions Project. “All public communications are centered around important policy debates and concerns.”
Months before any of the TV ads aired, the group had paid for research that could later prove beneficial to Rubio’s presidential run. In 2014, it commissioned a 271-page, deep-dive report into the electorate in Iowa, New Hampshire, South Carolina and Nevada — the four states that voted first in February 2016 — along with Rubio’s home state of Florida. It analyzed voters’ opinions on immigration (Rubio’s signature issue, as well as a big vulnerability), job creation and gay marriage, and it studied their television watching habits.
It was published on the website of Optimus, the GOP analytics firm that produced it, including numerous tables of data, ensuring the Rubio campaign could later access the findings. Optimus would later sign on as consultants for Rubio’s campaign, getting paid nearly $1 million for its work.
Meanwhile, the timing of the Conservative Solutions Project’s tax filings and ad buys appears calculated to limit disclosure ahead of 2016.
The group was formed on Jan. 29, 2014, but declared its first fiscal year over only five months later, at the end of May 2014. It had raised $100,000 and spent only $63 in that time. The fact that the group aired its first ads in June 2015, just after the start of a new fiscal year, ensured that tax filings covering the period when TV ads aired would be delayed until April 2017.
“As long as you have enough money to spend millions on politics, you have enough money to hire the best lawyers to cover your tracks,” Maguire said.
So far, the group has made one non-required disclosure: Last summer, it announced it had raised $15.8 million, a sum that was promptly included in many media reports as part of the pro-Rubio war chest.
The Conservative Solutions Project is part of an ongoing evolution of the ways in which operatives pull so-called “dark money” into the political system. Millions in secretive spending seeped into the 2012 election through 501(c)4s, the biggest sums through Crossroads GPS, the group co-founded by Karl Rove. A pro-Obama nonprofit, Priorities USA, linked to the similarly named super PAC, also emerged that fall.
Some single-candidate nonprofits sprouted up in the 2014 congressional midterms, the most prominent one supporting Senate GOP leader Mitch McConnell’s reelection in Kentucky. And other 2016 candidates benefited from political nonprofits, including John Kasich, Jeb Bush, Rick Perry, Rick Santorum and Bobby Jindal. Jindal’s spent the most — airing positive ads on his behalf in Iowa. But none of them spent nearly as much as Rubio’s.
“His campaign didn’t create this as an issue,” Maguire said. “They took it to the next level.”
Rubio himself stopped short of calling on his supportive nonprofit to unmask its donors.
“Obviously I can't interact or coordinate anything with them,” Rubio told POLITICO’s Mike Allen last summer at a summit for contributors to the Koch brothers political network, much of whose spending occurs through nonprofits. “And I just ask every group out there to comply with the law.”
When asked whether the group planned to make public its contributors, Sadosky said, “We look forward to complying with each rule and regulation from the IRS regarding 501(c)4s.” The law does not require donor disclosure for nonprofits.
Last November, Wertheimer’s group and the Campaign Legal Center asked the Department of Justice to investigate the pro-Rubio nonprofit for violating the tax code by claiming “social welfare” status. They got a letter back a few weeks later punting on the request, saying the question was the jurisdiction of the Internal Revenue Service, which has shown little inclination for such probes.
“The DOJ is refusing to do enforcement of the tax law. The [Federal Election Commission] is not enforcing the campaign finance laws. The result is the wild west of money in politics,” said Paul S. Ryan, senior counsel for the Campaign Legal Center.
On the campaign trail, Rubio's benefit from a nonprofit flashed as an occasional issue. Some believed Rubio’s allies were so reliant on secret money in part because Jeb Bush had frozen so much of the Florida Republican political class in place. "The fact that Bush was in the race meant a lot of donors wouldn’t help him out in the open,” a former senior Bush strategist said of Rubio.
Bush’s team, in particular, tried to highlight Rubio’s use of the nonprofit as they battled over fundraising totals. “Haven't seen the Rubio press release on frugality did it include the $6 million in secret money TV ads they saved money on?” as Bush communications director Tim Miller tweeted last October.
The issue, however, never really broke through.
“You’re talking about two of the most boring and convoluted fields of law: campaign finance and nonprofit tax law,” said Maguire, the nonprofit investigator. “Trying to explain that in an election where you have someone as outrageous as Donald Trump — it’s hard to do.”
Read more: http://www.politico.com/story/2016/03/marco-rubio-secret-money-legacy-221218#ixzz44WDWwktC
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