Should voters knowmore about sources of politicalmoney?
Some hopeHB6 bribery scandalwill fuel change to state disclosure laws.
A $60million bribery scandal at the Statehouse has put a spotlight on how nonprofit groups that don’t have to disclose where they get their money can corrupt politics.
In July, U. S. Attorney David DeVillers alleged that Republican LarryHouseholder and four associates tookmore than $60 million fifiltered through these groups to put Householder in power and then pass and defend House Bill 6, a controversial energy bailout law.
These nonprofifit groups have been part ofOhio’s political landscape for years and are becoming more common in state and local contests, experts say.
Defenders of the groups say the organizations represent a small percent of overall political spending and they promote free speech.
WhenMikeDeWine ranfor governor in 2018, a nonprofifit group called Securing Ohio’s Future Action Fund used $ 2.1 million
fromSecuring Ohio’s Future Inc. and $2.75 million from the Republican Governors Association to help turn out voters for DeWine.
The governor declined to comment through his spokesman.
And when his daughter, Republican Alice DeWine, ran and lost in the 2020 GOP primary race for her father’s old job as Greene County prosecutor, Protecting Ohio Inc. sent $349,000 to Protecting Ohio Action Fund, which advocated for her campaign. The donors to Protecting Ohio Inc. are not publicly disclosed. Alice DeWine has previously said the money was an independent expenditure that she didn’t know about and was surprised to see the campaign mailer they sent out.
These groups often pay for the kinds of political activity that also is done by campaigns themselves or their political parties, which have to report who gives them money. The groups pay for mass mailings, TV, radio and digital advertising, and other ways of supporting a candidate or issue.
Behind-the-scenes funders found they can have a big impact on state and local elections for relatively littlemoney, said Catie Kelley, senior director of policy for the Campaign Legal Center.
“The harm is that people have a right to know who is trying to influence candidates and ultimately lawmakers aboutwhat bills are getting passed, what bills never see the light of day and how our government is being run,” Kelley said.
Catherine Turcer of Com
monCauseOhiosaid: “We’ve seen an incredible increase in dark money. But we’re talking about a 10-year problem rather than something that’s come to pass in just the last few years.”
In 2010, theU.S. Supreme Court ruled in the Citizens United case that corporations, unions, associations and nonprofits could give unlimitedmoney to political causes. If there is no coordination between a candidate’s campaign and the outside group and no conversion of the money for personal use, it’s legal.
The Citizens United case was a victory for free speech, according to the Institute for Free Speech, aWashington D.C.-based group.
Fears of corruption are misplaced and most political spending is done by candidates, parties and political action committees, according to Bradley A. Smith, the institute’s founder and chairman and a former Federal Elections Commission commissioner.
Since the Citizens United ruling, the nonprofit groups that don’t have to disclose their donors have usually accounted for about 3% to 5% of total campaign spending, Smith said in a September column.
“Though their role in elections remains a minor one, nonprofits bring valuable perspectives and information to voters,” Smith said in a September column. “Instead of demonizing dark money, we should welcome more speakers and more speech in campaigns.”
Federal investigators used subpoenas and other tools to shed light on how Ohiobased utility companies funneled more than $60-million to Generation Now, a 501(c)4 organization, which then transferred the cash to aweb of related entities and accounts.
“The millions paid into the entity are akin to bags of cash — unlike campaign or PAC contributions, they were not regulated, not reported, not subject to
public scrutiny — and the (Householder) Enterprise freely spent the bribe payments to further the Enterprise’s political interests and to enrich themselves,” according to an 80-page affidavit written by FBI Special Agent Blane Wetzel.
The affidavit did notname the energy companies but descriptions identify them as Akron-based FirstEnergy Corp., FirstEnergy Service Co., and FirstEnergy Solutions, which is now known as Energy Harbor.
The Householder case involves multiple groups that don’t have to disclose their funding sources. The FBI named GenerationNow Inc. but used pseudonyms for others — Energy PassThrough, Coalition, Dark Money Group 1. Descriptions of the others identify them as Partners for Progress Inc., Coalition for Growth & Opportunity Inc. and Hardworking Ohioans Inc., respectively.
The treasurer for two of those groups, attorney Eric
Lycan, did not respond to messages seekingcomment.
A 501(c)4 organization is a tax-exempt, socialwelfare organization whose donors do not have to be publicly disclosed. A majority of501(c )4 organizations’ expenditures must be for social welfare purposeswhile the remainder can be spent on politics.
Ian Vandewalker, senior counsel for the democracy program at The Brennan Center, said the IRS rarely enforces that rule so it has little impact.
Themoneywebcanbe difficult to decipher. Sophisticated participants send the money through multiple organizations to make it difficult to follow, Kelley said.
For example, a501(c )4 funded by Columbus-based American Electric Power donated $900,000 to Generation Now and a second group, the Coalition for Growth& Opportunity, over three years. A representative for Generation Now and the Coalition for Growth & Opportunity didn’t respond to requests for comment.
It also gave $ 525,000 in 2018 to State Solutions Inc., which gave money to an entity called the American Comeback Committee, which gave money to Securing Ohio’s Future Action Fund, the outside groupthat helped drive turnout for Mike DeWine. State Solutions Inc. in 2018 paid a Columbus-based Republican fundraiser $307,500 to raise $5 million, according to its IRS990 form.
Vandewalker and Kelley both said that layering money through multiple groups is intended to make it confusing and less transparent.
“I’ve played this game of trying to followthe IRS 990s andthe secretary of state registrations and it’s very frustrating,” Vandewalker said.
Disclosure and transparency laws at the state and federal level should be bolstered, Van de walker and Kelley said, to guard against this type of money being used as bribes and to give the public more information so they can be informed voters.
“TheHouseholder case is getting national attention. I think it will help increase support for disclosure,” Vandewalker said. He added, “It’s a bit of a double edged sword because the allegations are so egregious that the political status quo will say that it was bribery and bribery is already illegal, so we don’t have to do anything here.”
Kelley said: “The court has said you can’t stop the spending. So the solution is to give voters information about where the money is coming from.”
While 80% of Americans support increased transparency in political spending, Kelley said: “It is the political elite that are more resistant to providing that. The lawmakers, parties and people running these outside groups don’twant increased transparency.”
Turcer argued that Ohio lawmakers should recognize the House Bill 6 scandal as an opportunity to improve disclosure laws and broaden the rules against coordination between candidates and outside groups.
“It should be really clear to lawmakers that operating in the dark is not good for them as well as the rest of the state,” she said.