Settlement concludes ‘dark money’ lawsuit

Political consultant and ex-candidate reach deal

A Prescott mayoral candidate who sued Phoenix political consultant Max Fose and his “dark money” campaign against her receives a financial settlement of an undisclosed amount from Fose’s insurer to end a defamation suit. The undisclosed payout to Mary Beth Hrin comes four months after Fose’s attorney had described the lawsuit as frivolous.

A Prescott mayoral candidate who sued Phoenix political consultant Max Fose and his “dark money” campaign against her received a financial settlement from Fose’s insurer to end a defamation suit.

The undisclosed payout to Mary Beth Hrin comes four months after Fose’s attorney, Kory Langhofer, called her Yavapai County Superior Court defamation suit “frivolous.” He vowed at the time to vigorously fight the suit.

Fose said his insurer opted to settle the lawsuit against his wishes.

Chris Jensen, Hrin’s attorney, said Friday, “Maybe it wasn’t so frivolous.”

Jensen said the prompt settlement prevents his client from interviewing Fose to find out who paid for what he called “false attacks” against Hrin in the Prescott mayoral race, which Hrin lost.

Fose, who has worked for many prominent Arizona Republicans, said he did not favor settling the case.

“Losing candidates always want to blame someone else. I voted to fight her and win in court; we ran a clean, truthful and effective campaign and I wanted to prove it for everyone to see,” Fose said in a statement. “Insurance companies, though, dislike lawsuits and settled for a very nominal amount against my wishes and the clear recommendation of my attorneys. Mary Beth Hrin has run twice and lost twice. No lawsuit can change that.”

Neither Fose nor Langhofer would say who signed the settlement to authorize the financial payment to Hrin.

Fose also pointed to a recent ruling by Prescott City Attorney Jon Paladini, who found that Fose and his organization did not violate state campaign-finance laws. Paladini’s findings came in response to separate city complaints filed by Hrin.

Jensen said Hrin’s case might open the door for other political candidates to successfully sue dark-money organizations that run negative or un-

truthful campaigns against them.

Former Arizona Attorney General Terry Goddard, a Democrat who has fought against dark-money groups, said he’s not so sure there has been a “chink in the armor” or that more suits will occur against dark-money groups.

Goddard said the landmark New York Times vs. Sullivan case, which established the standard for actual malice, makes it almost impossible for someone running for public office to sue for defamation.

Goddard said it was possible Hrin’s case was settled because Fose wanted to protect the identities of the sources who funded the ads against her.

“Getting any kind of settlement is pretty remarkable,” Goddard said. “But there may have been a desire to keep the source of the (campaign) money from being disclosed.”

Fose had led the Arizona Voter Education Project, which this summer mailed fliers to Prescott voters containing information that Hrin has called “false, intentionally harmful” and that she said contained “misleading defamatory material.”

Hrin said Friday in a statement that “this settlement proves the assault on my reputation was false.”

Hrin had argued that Fose produced fliers that took a medical-bill lien and an insurance claim of hers out of context by lifting language from public documents. She alleged the fliers put her in a false light.

The Arizona Voter Education Project is considered a dark-money group because it does not have to disclose its donors. Such groups in recent years have become prevalent in local and statewide elections. They are popular because donors can give unlimited sums of money to the non-profit groups without publicly disclosing their identities. The groups then can launch attacks oncandidates with little or no clear information on who is behind them.

Diane Brown, executive director of the non-profit Arizona PIRG, said dark-money campaigns continue to cast a “nasty cloud” over state elections. She advocates laws to create transparency for who funds campaigns.

“When we lose transparency in our elections, voters lose the opportunity to properly judge the credibility or accuracy of political communications and the motivations of who is paying for them,” said Brown, whose group specializes in consumer protection and good government.

Guidestar, an online clearinghouse for 2.5 million non-profit organizations, said the Arizona Voter Education Project lost its federal tax exemption from the Internal Revenue Service because it failed to publicly release its tax-return forms as required by law. Guidestar warns potential donors to do “further investigation and due diligence” before giving.