Karl Rove's American Crossroads super PAC had big-money backers, but achieved minimal results, according to a study by the Sunlight Foundation.
By Michael Isikoff, NBC News
Karl Rove was the political genius of the George W. Bush era -- the architect of the last Republican president's two electoral victories. But this week, he may have had the worst election night of anybody in American politics.
Not only did Rove insist on Fox News that Ohio was still winnable for Republican challenger Mitt Romney after all the TV networks had called it for President Barack Obama -- causing anchor Megyn Kelly to march down to the Fox "decision desk" mavens, who assured her on air that they were "99.9 percent" confident in their call -- but his trailblazing "independent" super PAC operation was virtually shut out on election night.
NBC's Michael Isikoff discusses Super PAC spending during the 2012 election and the bang for each donation buck.
American Crossroads spent heavily, not just on Romney, but on attack ads on behalf of GOP Senate candidates in eight states -- thanks to mega contributions from conservative donors like metals magnate Harold Simmons ($19.5 million), Texas homebuilder Bob Perry ($7.5 million) and Omni hotel chief Robert Rowling ($5 million.)
The super donors didn't get much for their money. Six of the eight GOP Senate candidates that American Crossroads spent money to try to elect – Tommy Thompson in Wisconsin, George Allen in Virginia, Josh Mandel in Ohio, Richard Mourdock in Indiana, Denny Rehberg in Montana and Todd Akin in Missouri – lost their races, along with Romney. The group did, on the other hand, help to elect Deb Fischer in Nebraska and Dean Heller in Nevada.
(The Sunlight Foundation calculation of "return on investment" was based on the percentage of money it spent on individual races-- and since Crossroads spent the most on the races it lost on, the group earned its low 1 percent "return on investment" or ROI. A sister group, Crossroads GPS, which operates out of the same offices as American Crossroads but does not disclose its donors, fared little better, netting a return on investment of only 13 percent, according to the Sunlight Foundation report.)
Some in his own party also were unimpressed by the performance of Rove's Crossroads operation. Donald Trump posted a message on Twitter saying: “Congrats to @KarlRove on blowing $400 million cycle. Every race @CrossroadsGPS ran ads in, the Republicans lost. What a waste of money.”
Campaign spending by Super PACs in this election cycle topped $1 billion – nearly four times the amount spent by such groups in 2008. Former White House Deputy Press Secretary Bill Burton and former RNC Chairman Michael Steele discuss.
Jonathan Collegio, a spokesman for American Crossroads, dismissed the Sunlight Foundation report.
"GOP super PACs helped keep the race close and winnable, despite Obama's massive financial advantage," he wrote in an email to NBC News. "On the Senate races, run the numbers. If you don't count the long-shot self-funders in CT and PA, Senate Democrats outraised their GOP opponents by $60 (million) this cycle – and that disparity is greater if you factor out GOP primary fundraising. The DSCC (Democratic Senatorial Campaign Committee) outraised the NRSC (National Republican Senatorial Committee) by another $20 (million). Few have reported on this."
"You can’t have an accurate view of the role of super PACs without the context of how Democrats leveraged incumbency to outraise their opponents by literally hundreds of millions of dollars," he added.
The American Crossroads debacle was only the most dramatic example of the limits of big money in this election, according to the Sunlight Foundation report. About $1.3 billion was spent by outside groups overall -- about two-thirds on the Republican side -- and for the most part their returns were equally low. The Chamber of Commerce, for example, spent $31 million-and had a 5 percent return, according to the Sunlight study. The conservative American Future Fund spent $23.9 million and also realized a 5 percent return. The National Rifle Association spent $11 million, and got shut out.
"It may mean people really don't like big money in politics," says Kathy Kiely, the Sunlight Foundation analyst who co-authored the study. "Maybe they prefer it be spent on something else."
Casino magnate Sheldon Adelson poured $53 million into the 2012 elections via controversial super PACs to back these candidates. All lost. From left to right, Mitt Romney, Connie Mack, George Allen, Allen West, Joe Kyrillos, Rabbi Shmuley Boteach, David Dewhurst and Newt Gingrich. West is demanding a recount, however, claiming 'disturbing irregularities at the polls.'
By Rachael Marcus and John Dunbar, The Center for Public Integrity
Money can't buy happiness, nor can it buy an election, apparently.
The top donors to super PACs in 2012 did not fare well — casino magnate Sheldon Adelson, the No. 1 super PAC contributor with more than $53 million in giving, backed eight losers at this writing.
Adelson was top backer of the pro-Mitt Romney Restore Our Future super PAC, with $20 million in donations. Romney lost to President Barack Obama. In addition, Adelson's contributions to super PACs backing U.S. Senate candidates in Florida, Virginia and New Jersey were also for naught.
He was not the only conservative billionaire who had a bad night.
Contran Corp. CEO Harold Simmons, (No. 2), homebuilder Bob Perry (No. 3) and TD Ameritrade founder Joe Ricketts, (No.4), also bet on Romney. Collectively, the trio gave $13.4 million to Restore Our Future, and Ricketts' super PAC, Ending Spending Action Fund, spent an additional $9.9 million helping Romney's failed bid.
Fred Eychaner, founder of Chicago-based alternative-newspaper publisher Newsweb Corp., was the only one of the top five donors to super PACs to back a winner -- President Barack Obama.
The super donor winner of the night was Newsweb Corp. CEO Fred Eychaner (No. 5). Eychaner gave $3.5 million to pro-Obama super PAC Priorities USA Action through the most recent filing period, which ended Oct. 17, according to Federal Election Commission records.
In Florida, Republican Rep. Connie Mack lost his challenge to the popular Democratic Sen. Bill Nelson, who won with 55 percent of the vote. Adelson gave $2 million to the pro-Mack super PAC Freedom PAC, and Simmons and Perry gave a combined $255,000 to the group.
The hotly contested Senate race in Virginia attracted $2.5 million from Adelson and Perry, both giving to Independence Virginia, the super PAC supporting former Republican Sen. George Allen. His opponent, Democratic Gov. Tim Kaine, won the seat with 52 percent of the vote.
Campaign spending by super PACs in this election cycle topped $1 billion – nearly four times the amount spent by such groups in 2008. Looking back now, how much impact did that money have on the race? Former White House Deputy Press Secretary Bill Burton and former RNC Chairman Michael Steele discuss.
Adelson also invested in the re-election of Rep. Allen West, R-Fla., in Florida's 18th District, who narrowly lost to Democratic newcomer Patrick Murphy. On Wednesday, however, West's campaign called for a recount, citing "disturbing irregularities reported at polls."
The casino billionaire's $1 million to Patriot Prosperity, a New Jersey-specific super PAC supporting the Republican candidate for U.S. Senate, Joe Kyrillos, and the Republican candidate for U.S. House in the state's 9th District, Rabbi Shmuley Boteach, did not pay off.
Shawn Thew / EPA
Sheldon Adelson, chairman and CEO of the Las Vegas Sands Corp., pumped $53 million into the election, but apparently backed only one minor winner by helping defeat a Michigan ballot initiative.
During the primary season, Adelson's $16.5 million in contributions to the super PAC Winning Our Future was not enough guide former House Majority Leader Newt Gingrich to a Republican presidential nomination, though it is credited with keeping him in the race longer than expected. Nor were Adelson's contributions enough to help Texas Lt. Gov. David Dewhurst win the GOP primary for Texas Senate earlier this year, a cause to which gave at least a quarter-million dollars.
Adelson did score one point with his $2 million contribution that helped sink a Michigan ballot initiative seeking to enshrine collective bargaining in the state's Constitution. Adelson runs the only non-union casinos on the Las Vegas Strip.
(Giving to candidate-specific super PACs in the federal election)
Tuesday marked the first presidential election under the new campaign finance regime installed following the 2010 Citizens United U.S. Supreme Court decision. The ruling paved the way for super PACs and nonprofits, allowing them to accept unlimited contributions from individuals, corporations and unions, which could be spent on advertising backing or opposing candidates.
*As of Oct. 17, 2012 for the 2011-2012 election cycle. Source: Center for Responsive Politics and Center for Public Integrity analysis of Federal Election Commission records. Totals include contributions from individuals, family members and corporations that are controlled by the individual super donor.
The Center for Public Integrity is a non-profit independent investigative news outlet. For more of its stories visit publicintegrity.org.
The Rev. Mark Harris endorsed a Republican candidate for the state Supreme Court during his sermon Oct. 7 at First Baptist Church in Charlotte, N.C.
By M. Alex Johnson, NBC News
With the presidential election a dead heat and many other races too close to call, hundreds of religious leaders nationwide are urging their congregations to vote for a specific candidate. They break the law when they do so — that's the point — but it's unclear whether there's any real penalty for pastors who make such endorsements from the pulpit.
About 1,600 pastors across the country violated a 58-year-old ban on political endorsements by churches in October by explicitly backing political candidates in their Sunday sermons, according to the Alliance Defending Freedom of Scottsdale, Ariz., a conservative Christian legal organization behind a campaign called Pulpit Freedom Sunday.
The 1954 law they are challenging prohibits charitable groups, including most churches, from making candidate endorsements, but doesn't bar ministers, priests, rabbis and imams from speaking out on other ballot issues, like voter initiatives, or organizing get-out-the-vote drives and education efforts around elections themselves.
The alliance is seeking to force a court showdown over the constitutionality of the law, violation of which can cost churches their tax-exempt status. Since Oct. 7, the original Pulpit Freedom Day, many pastors who participated in the protest have posted their remarks online or sent them to the Internal Revenue Service, essentially daring the agency charged with enforcing the prohibition to put up or shut up.
So far, the IRS has done the latter.
The Alliance Defending Freedom asserts that it's working to further the rights of all religious groups, but it's an explicitly Christian organization, with a heavy representation of evangelical members and leaders. One clue to its philosophy is that it made it Pulpit Freedom "Sunday" — choosing the Christian Sabbath, instead of more broadly embracing the Jewish Sabbath (Saturday) and the Muslim day of worship (Friday).
So it's no surprise that an unscientific survey of the posted endorsements indicates that they skewed overwhelmingly in favor of Republican presidential nominee Mitt Romney, as in these representative samples:
In a guest sermon at Calvary Chapel in Chino Hills, Calif., Wayne Gruden, a professor and theologian at Phoenix Seminary in Arizona, recommended that "all citizens" vote for Romney "and Republicans in general" (the endorsement begins at 59:58):
Wayne Gruden, a professor and theologian at Phoenix Seminary in Arizona, endorses Mitt Romney.
Pastor Ken Redmond of Abundant Life Worship Center in Midland, Texas, told his congregation they shouldn't vote for President Barack Obama, saying, "Here is your choice: a Mormon or a Muslim" (the remarks begin at 33:17):
As of Friday, none of the hundreds of pastors who took part in the protest reported hearing back from the government. In fact, the Alliance Defending Freedom says, only one of the churches that have taken part in Pulpit Freedom Sundays over the last five years has been the target of IRS action, and that case was dropped shortly after the IRS lost a separate legal ruling almost four years ago.
The Internal Revenue Code specifies that all section 501(c)(3) organizations are "absolutely prohibited" from taking part in, contributing to or making any statement "in favor of or in opposition to any candidate for public office."
But enforcement appears to have halted completely in early 2009 after Living Word Christian Center of Brooklyn Park, Minn., successfully appealed an audit that the IRS launched after its pastor endorsed Republican Rep. Michelle Bachmann for re-election. The judge ruled (.pdf) that the IRS was technically violating its own regulations in deciding whether to audit churches for banned political activities — because the official making that decision wasn't high enough on the Treasury Department's organization chart.
The IRS, however, isn't acknowledging that it has stopped enforcing the ban on candidate endorsements by officials of 501(c)3 charitable organizations.
Dean Patterson, a spokesman for the IRS, said the official "misspoke," adding: "The IRS continues to run a balanced program that follows up on potential non-compliance, while ensuring the appropriate oversight and review to determine that compliance activities are necessary and appropriate."
Noting that it's barred by law from discussing individual tax cases, the IRS declined NBC News' request for documentation showing that it has taken any action against politicking from the pulpit since then.
But Erik Stanley, senior legal counsel for the Alliance Defending Freedom, said it's clear that the agency is sidestepping the issue.
"We surmise the IRS has shut down all its church audits," Stanley said. As time goes on, he added, "It may become clear that the IRS has taken the position that it will not censor a pastor."
(As it happens, there is a legal way for churches to endorse candidates and still not pay taxes, by registering with the IRS under a different section of the tax code, 501(c)4. But nearly all religious institutions reject that choice because individuals who give money to 501(c)4 groups aren't allowed to claim tax deductions for their donations. Donations to 501(c)3 groups are deductible.)
A matter of politics, not constitutionality While the issue is often cast in terms of separation of church and state, the prohibition on candidate endorsements is a political one, not a constitutional one. If anything, "from a constitutional perspective ... American churches have had every right to endorse or oppose political candidates" since 1819, James Davidson, a prominent religion scholar, wrote in a landmark 1998 paper (.pdf) in the Review of Religious Research.
That was when the Supreme Court ruled — in a case involving banks, not churches — that the federal government had the power to limit taxation of specific enterprises in furtherance of the public good, quoting Daniel Webster's argument that "the power to tax is the power to destroy." Subsequent law extended that philosophy to establish that charitable groups could seek exemption from taxation.
The prohibition on candidate endorsements comes from a different source. It dates only to 1954, and like the 1819 decision, it applies to all 501(c)3 charitable groups, not just churches. Democratic Sen. Lyndon Johnson of Texas inserted it into the tax code as he was fighting off a re-election challenge backed by tax-exempt political foundations that historians have linked with the anti-Communist witch hunts of Sen. Joseph McCarthy.
The measure passed with little debate. Its effect was to muzzle religious leaders, even though "there is no evidence that a religious element played a significant part in Johnson's decision," Patrick L. O'Daniel, an adjunct professor at the University of Texas Law School, wrote in a 2001 reconstruction of the bill's passage in the Boston College Law Review.
Whether Johnson intended it that way or not, religious leaders have argued that the provision is an unacceptable stifling of their constitutional rights.
"This is about restoring biblical authority and a constitutional right for pastors to speak freely from the pulpit without any fear of the government on cultural and societal issues from a biblical perspective. And that includes commenting on the positions of the candidates," the Rev. Dann E. Travis, pastor of Crossroads of Life Church in Binghampton, N.Y., said to cheers from the congregation last week.
The Rev. Rob Rotola, who took part in Pulpit Freedom Sunday at Word of Life Ministries in Wichita, Kan., told NBC station KSN: "The concept of separation of church and state meant that the state was to keep out of the affairs of the church, not that the church was supposed to be silent about things about the state."
Pulpit Freedom SundayMinistries taking part in Pulpit Freedom Sunday, Oct. 7
- Baptist/Southern Baptist 409
- Assemblies of God 36
- Nazarene 34
- Church of God 32
- Presbyterian 17
- Lutheran 12
- Church of Christ 11
- Catholic 10
- Allliance Church 7
- Anglican 4
- Messianic Jewish 3
- Nondenominational/ unaffiliated/other 993
Sources: Alliance Defending Freedom, NBC News research
But other religious figures see a political angle — specifically, a conservative and evangelical angle — behind the challenge to the law.
The Rev. Barry Lynn, a minister in President Barack Obama's United Church of Christ and executive director of Americans United for Separation of Church and State, said the Alliance Defending Freedom was hiding behind "a fiction that there's a war against Christianity." The Rev. Martin Luther King Jr., he said, managed to preach about politics almost every day of his adult life without ever endorsing a political candidate.
"It's time to get serious about this, because we could end up with a corruption not only of the political process but of the integrity of the genuine prophetic message of churches," Lynn said in a recent interview on State of Belief Radio.
The Rev. Fester Coffee-Prose, youth minister at First Christian Church in Tyler, Texas, also objected, saying politics should be left to politicians, not pastors.
"While we might take stands on certain issues, when it comes to the candidates, the church should be a place where people of diverse backgrounds and diverse beliefs gather," he told NBC station KETK. "I don't necessarily believe that we should be endorsing any one candidate from the pulpit."
Also of concern to some religious leaders is the alliance leadership's connections to conservative organizations and causes: Its president, Alan Sears, was director of Attorney General Edwin Meese's Commission on Pornography during the Reagan administration, and other board members represent the Latino Partnership for Conservative Principles, the anti-abortion activist group Susan B. Anthony List and the conservative evangelical ministry Focus on the Family.
What pastors say
In a survey of 1,000 Protestant ministers, LifeWay Research, the polling arm of the Southern Baptist Convention, found that:
- 87 percent believe pastors shouldn't endorse candidates from the pulpit
- 44 percent have endorsed candidates, but only outside their church roles
- 78 percent disagreed that this election has been "too religious"
Source: LifeWay Research, May 2012. Margin of error: plus or minus 3.2 percentage points.
Pulpit Freedom Sunday itself was similarly overwhelmingly Christian, with an emphasis on evangelicalism. Working from a list of ministries that signed up in advance, NBC News tabulated that 98 percent were evangelical or otherwise Protestant ministries.
Just 10 Catholic priests took part, defying the U.S. Conference of Catholic Bishops' directive that church leaders "are to avoid endorsing or opposing candidates or telling people how to vote."
Only four Anglican ministers signed up. No imams or traditional rabbis were listed — the three synagogues on the roster are Messianic Jewish congregations, which proclaim the divinity of Jesus.
In a statement, the Council on American-Islamic Relations said it had reminded imams and khateebs (those who give the sermon during Friday prayers) that tax-exempt mosques "cannot explicitly or implicitly endorse candidates." Likewise, the Jewish Council for Public Affairs pointed to its standing directive that "organizations may not rate, endorse or oppose candidates for public office."
The alliance, nonetheless, says its campaign is about a larger question.
"Eventually, we'll have a test case about the constitutionality of the Johnson Amendment," Stanley said. "The IRS has really left pastors and churches no option if they believe they have the right to speak freely from their pulpit."
The Daily Rundown's Chuck Todd talks to NBC's Michael Isikoff about Florida voting fraud and what's being done about it now
By Michael IsikoffNBC News
Updated: 8:46p.m. ET: Election officials in six Florida counties are investigating what appears to be "hundreds” of cases of suspected voter fraud by a GOP consulting firm that has been paid nearly $3 million by the Republican National Committee to register Republican voters in five key battleground states, state officials tell NBC.
But the veteran GOP consultant, Nathan Sproul, who runs the firm, strongly defended his company's conduct, saying it has rigorous "quality controls" and blamed the alleged fraud on the actions of a few "bad apples," workers who were hired to register Republican voters for $12 an hour and then tried to "cheat the system."
The allegations of suspected voter fraud committed by Strategic Allied Consulting of Tempe, Arizona spread Thursday to counties throughout Florida. At the same time, the Republican National Committee said it had severed its ties to the firm altogether.
"We have heard from supervisors in six counties that they have irregularities in voter registration," said Chris Cate, spokesman for the Florida Department of State, which oversees the state's division of elections. Although local prosecutors are already investigating the firm's conduct, Cate said state officials were also considering turning the matter over to the Florida Department of Law Enforcement to determine if there was a pattern of misconduct.
The suspected fraud included apparent cases of dead people being registered as Republican voters, said Paul Lux, the supervisor of elections in Okaloosa County and a Republican. He compared the suspected fraud to the alleged acts of ACORN, the liberal activist group that became the center of a national controversy several years ago.
"It's kind of ironic that the dead people they accused Acorn of registering are now being done by the RPOF" [Republican Party of Florida], Lux said in an interview with NBC News.
While Republican groups as a whole are still outspending Democratic groups, the gap is narrowing, in part to the individual donors finally stepping up on the Democrats' behalf. NBC News' Michael Isikoff discusses.
In addition to Palm Beach County, where election officials initially reported 106 instances of suspected fraudulent registration forms, officials in Okaloosa, Pasco, Santa Rosa, Lee and Clay counties have also reported instances of possible fraudulent forms submitted by the firm, officials said.
In a statement on Strategic Allied's website, the firm's lawyer said:
"Strategic has a zero tolerance policy for breaking the law. Accordingly, once we learned of the irregularities in Palm Beach County, we were able to trace all questionable cards to one individual and immediately terminated our working relationship with the individual in question. Strategic is committed to following the letter of the law and will continue to cooperate with the Palm Beach County Supervisor of Elections to ensure that this issue is resolved."
Sproul said in a telephone interview that his company has employed between 4,000 and 5,000 people to register Republican voters under its contract with the RNC, including over 2,000 in Florida. The employees are given training on how to register voters, including being required to watch a video instructing them not to register felons. The video also instructs recruiters not to "modify or falsify voter registration forms."
"No matter what quality controls you have there are always going to be bad actors in any large scale operation," Sproul said.
Sproul, who has long worked for the GOP, also criticized Florida and national Republican officials for dumping him.
"They're trying to get the distraction behind them," he said about the RNC's action.
Sean Spicer, communications director for the RNC, said Strategic Allied Consulting had been retained by the RNC and state Republican parties to register new Republican voters in five key battleground states.
But Spicer said that the party's relationship with the firm-- which has been paid $2.9 million by the RNC so far this year, according to federal elections records -- has now been terminated in light of alleged voter fraud linked to one of the firm's employees that was reported this week to Florida prosecutors by election officials in Palm Beach County.
"We've made it clear we're not doing business with these guys anymore," said Spicer. "We've come out pretty strong against this kind of stuff -- and we have zero tolerance for this."
Strategic Allied’s parent firm, Lincoln Strategy Group, also headed by Sproul, has been paid about $80,000 by the Romney campaign to conduct "field consulting," according to election records. Asked for comment, Sarah Pompei, a spokeswoman for the Romney campaign, said by email: "We used this vendor for signature gathering services during the primary but have not used them since 2011."
Besides Florida, Strategic Allied Consulting was hired to register GOP voters in Nevada, North Carolina, Colorado and Virginia. Spicer said it was the only firm hired by the RNC to conduct voter registration. In the case of Nevada, he said, the RNC was paying the firm directly. In the other four states, the firm was being paid by state parties with the funds reimbursed by the RNC.
The allegations involving voter fraud by the GOP consulting firm are a new twist in the national controversy over the threat posed by voter fraud and the impact of new state laws passed by Republican controlled legislatures to combat it. While Republican officials have repeatedly accused Democratic groups such as ACORN of fraudulently registering voters in the past, the new dispute over what happened in Palm Beach-- involving the registration of Republican voters -- appears to be one of the first to have led to a criminal inquiry in this year's election.
Christine Weiss, a spokeswoman for the Palm Beach State Attorney's Office, told NBC News Thursday that the alleged voter fraud by a Strategic Allied Consulting employee is "currently being investigated" by prosecutors in her office after it was brought to the attention of prosecutors on Monday by Palm Beach election supervisor Susan Bucher.
Out of 304 Republican voter registration forms recently dropped off by a Strategic Allied employee at a small "satellite office" of the Palm Beach elections office, 106 were flagged as potentially fraudulent-- including "a lot" with "similar looking" signatures and others with apparently phony addresses, Susan Bucher, the Palm Beach elections supervisor, said in an interview.
Among the suspect home addresses were those that matched a gas station in Miami, a medical building in Boca Raton and a Land Rover automotive dealership in Palm Beach County, she told NBC News.
Bucher said she called in the political director for the Palm Beach Republican Party and the GOP official agreed that the registration forms were a problem. She then took the forms to the Palm Beach County State's Attorney's office on Monday and requested the investigation.
In a statement issued Tuesday night, Mike Grissom, executive director of the Florida Republican Party, said: "When we learned today about the instances of potential voter registration fraud that occurred in Palm Beach County, we immediately informed the Republican National Committee that we were terminating the contract with the voter registration vendor we hired at their request because there is no place for voter registration fraud in Florida."
Sproul has been previously accused of suppressing Democratic voter turnout, throwing away registration forms, and manipulating ballot initiatives. His firms -- formerly Sproul & Associates, Lincoln Strategy, and Strategic Allied Consultants -- had previously worked for RNC voter registration efforts during the campaigns of George W. Bush and John McCain. In 2004, Democratic Senators Leahy and Kennedy sent a letter to then Attorney General John Ashcroft requesting that he "launch an immediate investigation into the activities of Mr. Sproul and his firm." But the request did not lead to any criminal charges against Sproul.
Just one month after he was named Mitt Romney's top energy adviser, Oklahoma billionaire Harold Hamm contributed $985,000 to the top pro-Romney Super PAC -- a donation that was the second largest the group collected in April, according to a new campaign disclosure filing today.
The cash infusion from Hamm, the chairman and CEO of Continental Resources -- a firm that touts itself as "America's Oil Champion" -- is a new example of how big Super PAC donors can make their policy views heard by the campaigns they are supporting.
Hamm, whose company is the largest leaseholder of the Bakken, the giant shale formation in North Dakota, has been an outspoken critic of President Obama's energy policy, including his decision to postpone the Keystone pipeline and push legislation to curb tax breaks for oil exploration.
After meeting Obama at a White House event last July, Hamm complained the president "blew him off" after he tried to press him about the abundance of domestic oil supplies, according to a Business Week story last January. "It was like, 'if you’re in the oil and gas industry, you don't matter,'" Hamm was quoted as saying in the story headlined, "The Man Who Bought North Dakota."
On March 1, Romney -- during a campaign stop in Fargo, North Dakota -- announced that Hamm would serve as chairman of the candidate's "Energy Policy Advisory Group" charged with developing a new "pro-jobs, pro-market, pro-American" energy agenda, according to a statement put out by the campaign that day. Hamm said in the statement he was backing Romney in part because he was "acutely aware" of "how outrageously [Obama] has attacked energy producers in particular."
On April 3, Hamm made his $985,000 contribution to Restore Our Future, the pro-Romney Super PAC, the group reported today. That accounts for a little more than one-fifth of the $4.6 million the group raised last month.
Hamm had already contributed $2,500 -- the legal maximum for the primary season -- to the Romney campaign last October, as well as $61,600 to the Republican National Committee in two installments in last September and this February.
But the huge new donation to the Romney Super PAC -- which can accept unlimited contributions -- could potentially raise questions about the connections between his donations and his role in shaping campaign policies that might benefit his company. So far, the campaign has not publicly disclosed the other names of the energy advisory group, making it impossible to determine whether they have also given money to the Super PAC or the campaign.
“We haven’t announced it yet,” Romney campaign spokeswoman Andrea Saul said in an email when asked the names of other members of the campaign energy advisory group. A spokeswoman for Continental Resources, Hamm's company, declined to answer any questions about Hamm's role in the Romney campaign, referring a reporter to the campaign itself.
December 2011 was a busy month for supporters of presidential candidate Newt Gingrich. The former speaker of the House had surged ahead of his Republican rivals in several polls. Suddenly he was being barraged by negative TV ads produced by Restore Our Future, a Super PAC for rival candidate Mitt Romney.
Gingrich did not have the money to retaliate. Individual donations in federal elections are restricted to $2,500. He needed his own Super PAC that could receive unlimited contributions.
Ever since the Supreme Court's 2010 decision in the Citizens United case paved the way for Super PACS, they have been a legitimate new tactic for political campaigns. As far as can be determined, Winning Our Future (WOF), the pro-Gingrich political action committee, did not do anything impermissible under campaign finance laws. But a look at its regular reports to the Federal Election Commission reveals a degree of legerdemain that appears commonplace in FEC records and makes it difficult for the public to know who ends up with the record amounts of money flowing into the political system today.
"Opaque transactions in politics undermine public confidence in the process," said Meredith McGeehee, owner of McGehee Strategies, which works on public interest advocacy, and policy director at the Campaign Legal Center.
Flying under the radar
Because Super PACs are required to operate independently of the candidates they support, three longtime Gingrich allies scrambled to assemble one on his behalf. Winning Our Future filed papers with the Federal Election Commission on December 13, 2011. Texas billionaire Harold Simmons seeded it with $500,000 and gave twice more, for a total of $1.1 million. The family of casino mogul Sheldon Adelson donated $21.5 million. By the end of March 2012, WOF had raised an additional $1.2 million, for a war chest of $23.8 million.
Who received that money is difficult to discern.
Within six weeks of the Super PAC's launch, three new companies were set up to serve as vendors for WOF. (A fourth had been formed earlier in 2011, after Gingrich declared his candidacy in May, by an individual behind one of the three later outfits.) These four new companies received 84 percent of WOF's total disbursements, according to FEC records.
Some political consultants said they set up separate companies for different races for accounting purposes or to create a kind of firewall between their political work and their commercial activities. Others said the maneuver can be used to conceal work being done simultaneously for rival camps. And it can have tactical advantages.
"A new entity means they can fly under the radar for a few minutes," said one source. "Theoretically, it slows down the opposition research on their buying style." Where a candidate chooses to advertise says a lot about the issues and voters he or she is targeting.
The key word is "buying." The biggest checks written by any campaign or Super PAC go to the companies that buy ads on TV, radio and the Internet. Under long-standing industry practice, the broadcaster gives the buyer a 15 percent discount that the buyer has kept as a commission. These days, the percentage kept by political media buyers is likely to be 5 percent or less, according to various industry insiders. The rest of the discount from the broadcasters may be apportioned any way the leaders of the PAC or campaign wish.
PACs are required to report expenditures, including recipient and amount. Bulk checks to media buyers routinely run into the millions of dollars without disclosing subcontracts and other expenses. Side agreements over splitting of the discounts from the broadcasters are not subject to FEC disclosure.
"Our system is based on the idea that (Super PACs) can basically spend money however they see fit, and if your donors think the committee is not spending it wisely, then they can decide not to give further," said FEC Commissioner Cynthia Bauerly.
Rick Tyler is a seasoned political operative who began advising Winning Our Future in December. He described in the harshest terms what he says is the common industry practice of PAC staff secretly divvying up portions of the discount: "Kickbacks … come back either to the campaign or the media vendor, in many cases the campaign manager. So you'll get a congressional campaign manager who on the surface you think is making $50,000-$60,000. The fact is he could be making hundreds of thousands of dollars - you have no idea because he's being paid separate from what you're seeing."
Total broadcast and cable spending during the 2012 race is projected to be $3 billion. That means as much as $450 million could be divvied up among political consultants and campaign or PAC staff according to negotiated fee agreements and informal side deals.
Tyler disparaged this opaque system of fee sharing as a hallmark of big-name political consultants. He didn't name any specifically, but he says WOF avoided their help. Yet it's clear that some of the pro-Gingrich Super PAC's vendors engaged in some opacity.
WOF's TV ad buys were handled by Media Advantage, which was incorporated in Baton Rouge, Louisiana, on December 6, 2011 - a week before WOF submitted its organizing statement to the FEC. The owner was listed as Laura Lancaster, of Baton Rouge, who did not return phone calls from Reuters.
The real buyer, according to Tyler, was Ken Kurson, a partner and executive vice president of Jamestown Associates in Princeton, New Jersey. Neither Kurson nor Jamestown CEO Larry Weitzner would comment for this story.
Tyler said that when WOF first approached Kurson, Jamestown said it had a conflict: It was already handling TV ads for the pro-Rick Perry Super PAC Make Us Great Again.
While media buyers have no obligation to avoid such conflicts the way law firms or investment banks do, they prefer not to advertise them. Commercial clients may not want to be linked to certain politicians, and political clients may worry about leaks inside the organization.
Political vendors sometimes work for rival campaigns because there are more candidates than companies that can execute a good national media-buying strategy, according to industry experts. To avoid disclosing their identity in FEC records and to avoid leaks within the organization, one prominent media consultant explained, they spin off a separate corporation. How separate is another matter.
Jamestown Associates "just told Ken it would be fine to set up his own company," Tyler said in explaining why Kurson established Media Advantage in December.
Kurson was behind another mysterious WOF vendor, according to Tyler. Empire Creative is shown in FEC reports as receiving $195,875 to produce ads. This company was incorporated in Delaware on October 31, 2011, by National Registered Agents Inc. An official with National Registered Agents said the company has an agreement with its customers to keep their identities confidential. The incorporation documents reveal nothing beyond a post office box number in New York City.
The name of Sam Hassell does not appear on any FEC reports from Winning Our Future, but Reuters discovered that he received the largest chunk of money from the Super PAC. Payments totaling more than $8.1 million were made to his two companies. He created Marketel Media Inc five months before WOF was formed and Intelimarc Inc just nine days before.
Although Hassell is the sole stakeholder in Intelimarc, his name is not on its incorporation documents. Two local attorneys are cited instead. Because December was so hectic, said Hassell, he had his brother's law firm do the work. WOF paid Intelimarc $1.2 million for Internet and email advertising, according to FEC records.
In recent years, Hassell sold radio ads for Salem Radio Network, a national network of stations that feature Christian music and conservative talk show hosts. He left in May 2011 to become chief executive officer of one of its clients, the Association of Mature American Citizens (AMAC), a for-profit company that offers members discounts on various goods and services. When Hassell incorporated Marketel in July, AMAC was its only client. WOF is now a second.
WOF bought $1.9 million in radio air time, according to Smart Media Group, a political advertising company in Alexandria, Virginia, that monitors political ads on TV, radio and cable outlets. According to its reports to the FEC, WOF paid Marketel at least $2.9 million solely for radio advertising.
That leaves $1 million - a third of the disbursements - that didn't show up as buys.
Hassell couldn't explain the gap or say how much his companies profited. He did say they took the "industry standard" of something less than 15 percent in commissions for the placing of radio ads.
Explanations for the gap could include Smart Media's missing some air-time purchases by Winning Our Future. Some of the expenditures listed in the Super PAC's reports to the FEC might have included money spent on something else, such as producing the ads. (Winning Our Future reported separate outlays for ad production.)
From the FEC records alone, however, it's hard to know where much of the $8.1 million paid to Hassell's two new companies ended up.
"You have to have people you can trust"
Rebecca Burkett came to Winning Our Future from American Solutions, a nonprofit political group run by Gingrich that largely closed down when he became a candidate. The Super PAC paid her $249,505 between December and March for fundraising and management consulting. In all, Winning Our Future paid out $217,834 for fundraising, although only $1.2 million was raised beyond amounts contributed by Simmons and the Adelson family.
A vendor listed as VHH Consulting LLC turned out to belong to the wife of Lee Habeeb, who helped build up the roster of popular conservative radio hosts at Salem Radio and has had a long association with Gingrich. He also helped WOF get organized in December, including providing advice about how to handle the radio and Internet advertising eventually contracted to Hassell's two companies. Habeeb and his wife, Valerie, have consulting companies in their hometown of Oxford, Mississippi - LMH Consulting LLC for him, VHH for her. VHH received $59,235 from Winning Our Future for consulting "on strategy and branding and the ways to go about putting the ads together," she said.
Why so many longtime Gingrich associates got business from Winning Our Future is no mystery, she said: "You have to have people that you trust. You need to know who you're dealing with."
Scams waiting to happen
Meredith McGeehee points to another tie that binds: "Any politician has a retinue of people that over time they build up, and if you're one of those consultants, one of those who provides services to those candidates, it's a great business. You can make a good living growing all the different services to the candidate or to the Super PAC."
But the complex web of shell companies effectively thwarts the transparency the Supreme Court took for granted in Citizens United, and scams or self-dealing would be difficult to detect.
"It's very hard to keep track of that and have accountability," said McGeehee.
Where she sees danger in the advent of Super PACs, Lee Habeeb sees opportunity.
"(The) Super PAC is constitutional, so it's with us for a while," he said. "To the talented will go some real spoils."
Mitt Romney could face new questions about his overseas investments after a campaign official acknowledged to NBC News that his campaign is revising his federal ethics forms to report more than a half dozen offshore holdings, including income from a multi-million dollar Swiss bank account that was not disclosed last year.
The tax returns released by the Romney campaign this week showed that the Ann Romney Blind Trust had reported $1,783 in interest income from a bank account held at UBS in Switzerland in 2010. But interest from the Swiss bank account -- as well as holdings in other offshore investments in the Cayman Islands, Bermudas and Ireland that appear in the trust fund's tax returns -- were not disclosed in Romney’s financial disclosure form filed with the Office of Government Ethics last August.
A Romney campaign official emailed Thursday afternoon that Romney’s financial disclosure form is now being amended with the government ethics office “to address this minor discrepancy” and “to deal with some other minor issues.” The Romney campaign’s decision to amend the forms, and additional details about the failure to report the overseas holdings, was also reported Thursday by Los Angeles Times.
The number and size of Romneys’ offshore investments have lately emerged as a major campaign issue, putting the former Massachusetts governor on the defensive over his wealth (estimated at up to $250 million) and forcing his campaign to release his 2010 tax returns this week. When the campaign released the returns on Monday, it arranged for R. Bradford Malt, a longtime lawyer for the Romneys, to brief reporters in a conference call about them.
But while the returns have produced no revelations about any improper dealings on Romneys’ part, they have continued to raise questions about how and why some of his multiple overseas investments were made in the first place, and why there were not more fully reported on Romney’s financial disclosure forms.
Malt said he opened up the Swiss bank account, holdings in which are valued at between $1 million and $5 million, in 2003 on behalf the Ann Romney trust in order to provide “international currency diversification” for the trust's holdings. He then shut it down in early 2010, he said, and transferred the assets to the United States, noting that Romney was preparing to run for president at the time and he did not want to have it become an issue in the presidential campaign.
“I was worried that people would write stories not understanding this,” said Malt, who administers the blind trust on behalf of the Romneys.
But Malt apparently did not act quickly enough, given that the interest income had to be reported on the trust's tax returns for 2010. (He would not say when in 2010 the account was closed.)
The account was first disclosed as one of Romney's holdings when he filed a financial disclosure form in 2007 after he launched his first campaign for president. Malt acknowledged today that it should have actually been reported as a holding of the Ann Romney blind trust and that Romney’s 2007 financial disclosure form is also being amended to correct what he described as a "clerical error."
The campaign had no immediate explanation for why the $1,783 in interest income from the UBS account had not been included in the 2011 financial disclosure, an omission noted by political rivals. The Democratic National Committee hastily organized a conference call Thursday afternoon to seize on the revelation.
Malt initially insisted in an interview that the amount was below the threshold that needed to be reported. But one category on the standard government financial disclosure form specifically asks candidates to report assets valued at between $1,000 and $5,000 as well as income from any holdings of between “$1,001 and $2,500.” A campaign official later said Malt had been misunderstood, acknowledging that both the 2007 and the 2011 financial disclosures the campaign filed are being revised.
But the inclusion of the Swiss bank account is apparently not the only revision. The Ann Romney blind trust also reported income from shares in offshore companies such as Barricuda Investments Ltd. in Ireland, Castle Garden Funding in the Cayman Islands, and Sankaty High Yield Assets Investors Ltd. in Bermuda. Those holdings also were not included in the financial disclosure form that Romney filed last August. The form requires presidential candidates to report all assets and income for them and their spouses for the full calendar prior to the year of the filing.
But Malt said there had been no attempt by the Romneys to conceal these investments, and all taxes on their earnings were fully paid. Malt stressed that the Ann Romney trust fund was simply a passive shareholder in the investments funds, which in turn owned shares in the offshore companies. He said the investing entities were like “mutual funds.”