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Karl Rove May Yet Face The Music Over Crossroads GPS Campaign Activities

Public Citizen and Protect Our Elections are taking aim at the FEC for dropping the ball on Rove’s failure to disclose donors.

Earlier this year, FEC Commissioner Ann Ravel was so frustrated by the partisanship within the panel that she took to the op-ed pages of the New York Times to shake her fist at the way her Republican colleagues went out of their way to protect Karl Rove and his shady donors.

In frustration, Ravel invited the groups who brought the FEC complaint to sue them, writing that “unless Public Citizen and prevail in their lawsuit, there will be no inquiry, and Crossroads GPS will continue to spend millions of anonymous dollars to influence our elections.”

Public Citizen and have now done just that. Last week both organizations along with two individual plaintiffs filed a lawsuit in federal court against the FEC, demanding that they pursue action against Crossroads GPS to force disclosure of their secret donors in compliance with federal election law and the principles of disclosure laid out in the Citizens United ruling by the United States Supreme Court.

There are no guarantees in courtrooms, but the organizations have put forward strong arguments. The complaint rests on the question of what defines “direct political activity” which 501c4 organizations must limit to less than 51 percent of their total spending, versus “advocacy,” which is not subject to the same limits. The organizations also point out that FEC’s general counsel recommended that the case be pursued, only to see it blocked by naked partisanship by Republican commissioners.

Here’s one example of what Crossroads GPS calls “advocacy” and what the rest of us think is “direct political activity.” The text of one of the ads they ran against Jack Conway in his race in 2010:

“Obamacare” is taking health care in the wrong direction, and Jack Conway has gone the wrong way, too. Conway endorsed “Obamacare,” with its higher taxes and Medicare cuts, and Conway refused to join thirteen other attorneys general and defend Kentucky from Obama’s health care mandate. “Obamacare” and Jack Conway are taking Kentucky’s health care down the wrong road. Tell Jack Conway: turn around, stop defending “Obamacare,” and protect Kentucky from the federal insurance mandate.

Is that ad advocacy, or direct political spending? It does not mention Rand Paul by name, but it suggests that voters register their discontent somehow with Jack Conway, which implies they should vote for his opponent, which is exactly what they did.

Even Stephen Colbert caught on without much effort, as evidenced by his Committee for a Better Tomorrow, Tomorrow ad.

In fact, Colbert submitted a comment on the original FEC complaint, and urged his viewers to do so as well, which they did in force. Sometimes comedy is the best way to make a point.

This is a huge issue. Until now, Citizens United has been viewed as a huge cash cow for conservative candidates with absolutely no accountability, even though the Supreme Court ruling explicitly said disclosure was not a violation of the First Amendment.

From the Campaign Legal Center’s press release:

“Courts are the only recourse when three Commissioners ignore the laws passed by Congress, ignore the FEC’s own longstanding policies and ignore the call for an investigation by their own General Counsel,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “As a result of that FEC deadlock the seemingly clear cut violations of the law by Crossroads GPS have continued unabated and other ‘dark money’ groups have been emboldened to follow suit resulting in a massive spike in undisclosed political spending in our elections. We hope that the court sees fit to grant this motion and ensure that every member of the Commission fulfils the duties of their office and enforces the laws passed by Congress.”

Karl Rove may have thought he was home free when his Republican pals deadlocked the panel, but he may have another think coming. One that is far less pleasant for him, and far healthier for our elections process.

For months I have been complaining that our side of things seems to fail to turn to the courts to resolve issues like this, while the right wing uses the courts like a cudgel to smash elections into partisan bits. It is gratifying to see our side use litigation to push forward reasonable disclosure requirements for this dark money.


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Tell the White House: Fire Rove’s Prosecutors!

-A message from Don Siegelman:

For eight long years, the Bush-Cheney Administration politicized the Department of Justice and pursued politically-motivated prosecutions all across the country.

It infused the Justice Department with Rove-anointed, Bush-appointed officials who put politics ahead of the law — including many of the 93 U.S. Attorneys — like Leura Canary, the wife of Karl Rove's best friend and business partner who said he got Rove to get the DOJ to come after me.

When President Obama and Attorney General Eric Holder took office, we expected real change. That means ending the Bush-Rove politically motivated prosecutions with no basis in fact and restoring the integrity of the Department of Justice.

Still, after seven months, only a handful of the hundreds of Bush-Rove DOJ appointees have been replaced. That's unacceptable. It's time to clean house of all the Bush-Rove appointees in the Justice Department, including all 93 U.S. Attorneys, and ensure justice for all.

Please email White House Senior Advisor Valerie Jarrett below: Urge President Obama to do the right thing and Fire Rove's Prosecutors!


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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.