The Campaign Legal Center today joined Democracy 21 in urging the Internal Revenue Service (IRS) to investigate whether American Tradition Partnership (formerly Western Tradition Partnership) submitted false information to the agency in order to obtain its 501(c)(4) tax-exempt status. Copies of the organization’s application materials published by ProPublica and Frontline indicate that the group made numerous false claims while seeking expedited review of its application for exempt status.

In its original application, then Western Tradition Partnership told the IRS that it would not participate or intervene in elections which it subsequently did. Further the group sought and received expedited review and approval of its application for501(c)(4) status by claiming that an individual had pledged $300,000 to the group only if it were granted exempt status by a certain date. In interviews after the IRS documents were published, the supposed donor (Jacob Jabs) reportedly told the media that he never pledged funds to the group and had never even spoken to representatives of the organization until after being identified in stories as the individual who had pledged funds, when he called the group to complain.

“The IRS needs to investigate the matter thoroughly and if it can verify the media reports, the agency must revoke the group’s exempt status and the Department of Justice should prosecute the violations to the full extent of the law,” said J. Gerald Hebert, Legal Center Executive Director. “If these allegations prove true and American Tradition Partnership is not prosecuted, then there would be little to prevent other one-cycle political committees from posing as social welfare organizations in order to launder money for wealthy secret interests seeking to sway our elections.”

To read the full letter sent today to the IRS, click here.

The Board of Directors of the Campaign Legal Center this week approved the selection of Megan McAllen as the Legal Center’s first recipient of the Rapoport Legal Fellowship.  This fellowship was made possible by a generous grant from the Bernard and Audre Rapoport Foundation. The one-year position is designed for recent law school graduates embarking on careers in campaign finance and election law.   

“The generosity of the Rapoport Foundation will allow us to keep a very talented young lawyer on board here at the Legal Center as we litigate a growing number of campaign finance and election law cases around the nation,” said Legal Center Executive Director J. Gerald Hebert. “For the last year we have been lucky enough to have had Megan working with us thanks to a grant from the University of Virginia Law School and we are thrilled to be able to retain her through this new legal fellowship.”

Ms. McAllen litigates numerous campaign finance and election law issues before state and federal courts, and is also active in a range of voting rights and election protection efforts.  With J. Gerald Hebert, she co-authored “Redistricting in the Post-2010 Cycle: Lessons Learned?,” which appeared in the Winter 2012 issue of Human Rights Magazine (published by the American Bar Association’s Section of Individual Rights & Responsibilities).

Ms. McAllen is a graduate of the University of Virginia School of Law (2011) and Princeton University (2007).  She is admitted to practice law in the State of California.

Since its inception in 1986, the Bernard and Audre Rapoport Foundation has dedicated more than $54 million in grants to improve the social fabric of life.  Its mission is to meet basic human needs while building individual and social resiliency.

Today, the U.S. Supreme Court declined to grant certiorari in The Real Truth About Abortion v. FEC and left standing a lower court ruling upholding FEC rules governing donor disclosure.  The suit specifically challenged the “subpart (b)” definition of “expressly advocating” (11 C.F.R. § 100.22(b)), as well as the FEC’s methodology for determining when a group has campaign activity as its “major purpose.” Both are key measures to ensure effective determinations of federal “political committee” status, and by extension, to implement the comprehensive disclosure requirements applicable to such political committees.

“The Supreme Court has once again come down in favor of transparency, recognizing the vital importance of the public’s right to know who is paying for the political advertising geared toward swaying elections,” Legal Center Senior Counsel Tara Malloy stated.  “Even in the highly controversial Citizens United case, the Supreme Court by an 8-1 vote was clear that disclosure of political spending is critically important to our democratic process.  The Real Truth case was part of an extensive nationwide litigation campaign seeking to undermine state and federal disclosure laws, but those attempts have repeatedly been beaten back in the courts.”

Today’s denial marks the end of the long-running proceedings which began as The Real Truth About Obama (RTAO) v. FEC in 2008.  The group originally challenged a number of FEC rules, including the rule implementing the electioneering communications funding restriction that was adopted after the Supreme Court’s 2007 decision in Wisconsin Right to Life v. FEC (11 C.F.R. § 114.15).   The district court and Court of Appeals upheld all of the challenged rules in 2008 and 2009.  Subsequent judicial decisions, most notably Citizens United, mooted much of the case, however.  Consequently, in April 2010, the Supreme Court vacated the 2009 Court of Appeals’ decision, and remanded the case for further consideration in light of Citizens United and “the Solicitor General’s suggestion of mootness.”  Upon remand, the district court again considered and rejected the two remaining claims relating to the “subpart (b)” definition of “expressly advocating” and the FEC’s “major purpose” methodology in June 2011.

Today, the Campaign Legal Center, joined by Democracy 21, supplemented complaints to the Federal Election Commission (FEC) and Department of Justice (DOJ) regarding possible violations of campaign finance law by two companies seemingly created for the purpose of funneling $12 million to the Super PAC FreedomWorks for America while hiding the identity of the donor. New information uncovered by The Washington Post indicates that Illinois millionaire Richard J. Stephenson was the source of the $12 million and that FreedomWorks itself, led by executive vice president Adam Brandon, orchestrated the scheme for Stephenson to evade federal campaign finance disclosure laws. The FEC and DOJ have been urged to investigate whether Stephenson, Brandon and FreedomWorks violated federal campaign finance laws by making and receiving political contributions in the names of two shell companies.

“The latest report, if true, confirms our suspicion that the two companies were created to illegally hide the donor of $12 million given to FreedomWorks in the final weeks leading up to the election,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “Further, the report implies that FreedomWorks played a role and knowingly received the contributions from Mr. Stephenson illegally made in the name of the two straw donor companies. Assuming the media reports can be verified by DOJ and the FEC, the agencies must act quickly to enforce the law and deter future illegal use of straw donors to evade disclosure laws. The integrity of our elections depends on it.”

The two companies named in the original complaint, Specialty Group Inc. and Kingston Pike Development LLC, were both created by William S. Rose of Knoxville, Tennessee in late September 2012 and over the six weeks leading up to Election Day funneled more than $12 million to FreedomWorks.

To read the letter to the Department of Justice, click here.

To read the letter to the FEC, click here.

The Campaign Legal Center today joined Democracy 21 citing new evidence in urging the Internal Revenue Service (IRS) to deny Karl Rove’s Crossroads GPS tax-exempt status as a section 501(c)(4) social welfare organization. The letter points to the recent public dissemination by the news organization ProPublica of Crossroads GPS’s application to the IRS seeking privileged 501(c)(4) tax exempt status as a “social welfare” organization able to keep its donors secret. The application describes an organization bearing little resemblance to the Crossroads GPS whose recent Federal Election Commission (FEC) filings revealed $70 million in independent expenditures and electioneering communications to elect Republican candidates or defeat Democratic candidates for federal office in the 2012 elections.

“The application filed with the IRS by Crossroads GPS is laughable in the face of the growing body of evidence against the pretense that Crossroads GPS is a ‘social welfare’ organization,” said J. Gerald Hebert, Legal Center Executive Director. “The IRS has now allowed this charade to go on for two election cycles at great harm to our democracy and it is long past time when the agency should step up and enforce the law. The tax code is being abused to allow the very rich to spend tens of millions of dollars anonymously in an attempt to buy election results, and by extension to purchase still more influence in Washington. The inaction of the agency will only encourage more widespread abuse of the system in future election cycles so it is important that it act quickly and decisively after its long delay.”

To read the full letter sent today to the IRS, click here.