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National Organization For Marriage Broke Campaign Finance Law

The National Organization for Marriage, a leader in the campaign to ban same-sex marriage in the U.S., sustained a blow to its five-year effort to keep campaign donors’ names secret on Wednesday.

The Maine Commission on Governmental Ethics and Election Practices ruled that NOM broke the law in 2009 by refusing to disclose donor names during its successful campaign to overturn the legalization of same-sex marriage in the state. The commission ordered NOM to pay more than $50,000 in penalties and to reveal supporters’ identities.

“Maine people deserve to know who is funding political campaigns to influence their vote,” a memo from the commission explains. The memo says NOM intentionally circumvented a law requiring political campaigns to disclose donors.

In a confidential internal document from August 2009, leaked that fall, NOM identified a “serious hurdle” in the way of its core goal of banning same-sex marriage nationwide. Written after a bruising fight over California’s same-sex marriage ban, the document warned that recent “threats of intimidation” against donors may discourage people from making political contributions for ballot initiatives in states where political campaigns were required to disclose donor identities.

The memo proposed a workaround: Invite donors to give directly to NOM, instead of to the organization’s individual campaigns in those states. NOM could then funnel money to these campaigns from its coffers, while keeping quiet about where the money came from.

NOM gave roughly $2 million to Stand for Marriage Maine, a group formed by NOM president Brian Brown and the leaders of two other organizations, with the aim of striking down the marriage law. The donation amounted to roughly two-thirds of the group’s total budget.

Maine’s Commission on Governmental Ethics and Election Practices said this practice threatened to set a harmful precedent. “If this circumvention of disclosure laws were to be sanctioned, it would significantly reduce the amount of information available to voters in future elections if other large political advocacy groups used a similar rationale for not reporting their financial activity to influence elections in Maine,” the commission’s memo says.

This is not NOM’s first loss in the fight to keep its donors secret. Since 2009, NOM has filed two lawsuits challenging the constitutionality of Maine’s campaign finance laws. It lost both.

NOM president Brown, in an interview with The Huffington Post, described the Maine ruling as a “political witchhunt,” and denied wrongdoing. Brown said he believes other groups opposing Maine’s marriage law also failed to disclose donors, using the same strategy as his organization. “Its a basic part of American law that there should be fairness and justice should be equally applied,” he said. “The reality is that we’re going to appeal this decision,” Brown said.

In 2010, the U.S. Supreme Court ruled 8 to 1 against a NOM-backed group called Protect Marriage Washington, declaring that the group broke the law by hiding the names of petition-signers during its fight against same-sex marriage in Washington state. Justice Antonin Scalia, no friend of gay causes, joined the majority, writing that fear of harassment is “a price our people have traditionally been willing to pay for self-governance.”

Fred Karger, a gay activist who ran for president on the Republican ticket in 2012, called for Maine and other states to look into NOM’s campaign practices back in 2009. Although investigations are still playing out in Iowa and Hawaii, Karger said he considers the Maine report a major victory.

NOM is “still a force to be reckoned with,” Karger said. “But my goal is scare away their donors, and that’s what today really did.”

Back in 2009, NOM portrayed the Maine campaign as central to its efforts around the country. “Maine is about more than Maine,” Brown wrote, according to a fundraising email quoted in Wednesday’s report. Success in the state would prove that “there is no majority for gay marriage anywhere in these United States,” he added.

Three years after that, Maine citizens voted again, this time in favor of same-sex marriage. By the end of 2013, more than 1,500 gay couples had married in the state.



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Campaign Finance Watchdog Spearheads Battle Against Anonymous Donations

Applauds IRS Initiative to Enforce Gift Tax of Fraudulent Non-Profits

Announcement Comes Months After Campaign Accountability Watch Sends Letter on Issue to AG Holder

WASHINGTON, May 16, 2011 /PRNewswire/ — Campaign Accountability Watch (CAW), a watchdog at the forefront in the battle against secret campaign contributions, today applauded the IRS for announcing it will seek payment of a gift tax of 35% for donations made to non-profit organizations involved in electoral campaigns. CAW called it a good "first step" to reigning in these organizations.

CAW sent a letter on October 25, 2010 to Attorney General Holder seeking a special prosecutor for the misuse of non-profit organizations to hide the source of electoral donations.

The letter specifically highlighted the provision in the law that the IRS is now addressing:
…press reports indicate that these same 501c(4) organizations are not advising their donors that their donations are taxable as a 'federal gift tax' at a rate of 35%, thereby both misleading the donors and depriving the federal government of potentially hundreds of millions in tax revenue. 

"We are thrilled that the IRS is now addressing the concerns we raised by enforcing the gift tax against donors to these fraudulent non-profits," said Kevin Zeese who signed the letter to Attorney General Holder last October and is spokesperson for Campaign Accountability Watch.

"The IRS needs to continue to take action against these organizations by denying their non-profit tax status. They are misusing the tax laws to avoid disclosure required by federal campaign laws. The IRS should put a halt to this practice. These non-profits should be required to disclose the identities of all their donor."

The organizations themselves may find they are liable for this gift tax. Tax lawyers advise: "Individual contributors and 501(c)(4)s may wish to consider carefully the possible gift tax implications of contributions, and to seek the advice of counsel … both contributors and 501(c)(4)s need to be cognizant of the issues. 501(c)(4)s may face secondary liability for unpaid gift taxes owed by their contributors."

"Federal agencies regulating tax and election laws should be taking action against the illegal use of non-profits to avoid disclosure of donors and donations," Zeese said. "To de-politicize further action, we urge the Department of Justice to appoint a special prosecutor that will subpoena people such as Karl Rove of American Crossroads GP and Tom Donohue of the Chamber of Commerce as well as their donors. 

The administration needs to take an aggressive approach in ensuring these groups stay within the law, specifically, the FBI should escalate an ongoing investigation of these organizations which began last November; the IRS should deny their tax status; and the FEC needs to act on complaints filed against these groups for violation of the Federal Election Campaign Act. The time to act is now, before the fundraising for 2012 shifts into high gear," said Zeese.

Earlier this month CAW sent letters to 40 U.S. Attorneys along urging prosecution of organizations including Karl Rove's Crossroads/Crossroads GPS, the Chamber of Commerce and American Future Fund for illegally using non-profit front groups to violate the Federal Election Campaign Act (FECA) during the 2010 elections. None have been prosecuted for their violations to date.

The organization also urged President Obama to sign an executive order, in the face of dogged opposition, requiring disclosure of donations by those who seek contracts with the federal government.