elections confidential

7/29/2019 Elections Confidential

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How Shady Operators Used Sham Non-profts

and Fake Corporations to Funnel MysteryMoney into the 2012 Elections


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Brendan Fischer, Sta CounselCenter or Media and Democracy

Blair Bowie, Democracy AdvocateU.S. PIRG Education Fund

How Shady Operators Used Sham Non-profts

and Fake Corporations to Funnel Mystery

Money into the 2012 Elections


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Acknowledgements

The authors would like to thank Mike Russo o the U.S. PIRG Education Fund and Lisa Graveso the Center or Media and Democracy or their thoughtul review, U.S. PIRG Education FundDemocracy Intern Steven Franks or wading through large amounts o data on shell corporations,and the data team at Demos or helping to provide specic gures.

The Center or Media and Democracy (CMD) is a nonpartisan, non-protwatchdog and investigative reporting group based in Madison, Wiscon-sin, which publishes PRwatch.org, ALECexposed.org, SourceWatch.org,and BanksterUSA.org.

CMD has received numerous awards or its investigations into corporate infuence on democracy,policy or media, including the Izzy I.F. Stone Award or outstanding achievement in independentmedia, the Sidney Award or investigative journalism (shared jointly with The Nation magazine),and the Proessional Freedom and Responsibility Award rom the Association or Education inJournalism and Mass Communication, Culture and Critical Studies Division.

U.S. PIRG Education Fund conducts research and public education on behalo consumers and the public interest. Our research, analysis, reports and out-reach serve as counterweights to the infuence o powerul special interests thatthreaten our health, saety or well-being.

With public debate around important issues oten dominated by special interests pursuing theirown narrow agendas, U.S. PIRG Education Fund oers an independent voice that works on be-hal o the public interest. U.S. PIRG Education Fund, a 501(c)(3) organization, works to protectconsumers and promote good government. We investigate problems, crat solutions, educate thepublic, and oer meaningul opportunities or civic participation.

Cover photos: Flickr.com/vgm8383; eskay lim/Bigstock (inset)

Design & layout: Alec Meltzer


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TABLE OF CONTENTS

Executive Summary ..................................................................... 1

Introduction ................................................................................. 2

Secret Money in the 2012 Elections ............................................ 6

Dark money in the 2012 elections ....................................... 6

Shell corporations in the 2012 elections ........................... 11

Conclusion ................................................................................. 16

Methodology .............................................................................. 18

Endnotes .................................................................................... 19


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1 ELECTIONs CONFIDENTIAL

Executive Summary

Elections Confdentialdescribes how secret do-nors poured hundreds o millions into the2012 election through social welare non-prots that are really political vehicles and viashell corporations ormed as conduits to hide aunders identity.

The rst post-Citizens Unitedpresidential elec-tion cycle was bought and paid or by a handulo wealthy donors, but the corrosive infuenceo money in politics was amplied by the actthat we dont know whoor whatactuallyprovided much o the unding.

Despite widespread public support or disclo-sure and decades o legal precedent supporting

the publics right to know the sources o elec-tion-related spending, voters were bombardedwith messages rom secretly-unded, innocu-ously-named dark money non-prots that donot disclose their unding sources. Even thosegroups that do disclose their donors receivedmillions rom ake corporations that coveredthe money trail.

Key ndings include:

Shell corporations that do not disclose thesources o their unding unneled at least$17 million to Super PACs in the 2012elections.

Nearly seventeen percent o all businesscontributions to Super PACs came romidentied shell corporations.

Dark money non-prots reported spend-ing over $299 million in the 2012 election;however, because these groups ran issueads that need only be reported when airedjust beore primaries or election day, thetotal spending by these non-prots is cer-tainly much higher than was reported tothe FEC. Crossroads GPS, or example,told the FEC that it spent just under $71million in the 2012 election cycle, but itactually spent more than twice as much aswas reported, topping at least $165 million.

Dark money non-prots, which are notsupposed to have electoral interventionas a primary activity, will justiy their tax-

exempt status in the post-election periodby engaging in activities like lobbying.Incredibly, this qualies as advancing thesocial welare.

A dark money groups lobbying clout isamplied by the act that, come electiontime, they can back an uncooperative law-makers primary challenger.

With both dark money non-prots and

shell corporations, it is almost impossibleto identiy violations o election or tax law,such as the inltration o oreign unds.


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ELECTIONs CONFIDENTIAL 2

INTRODUCTION

There is not a crime, there is not a dodge,

there is not a trick, there is not a swindle,

there is not a vice which does not live by

secrecyPublicity may not be the only

thing that is needed, but it is the one thingwithout which all other agencies will fail.

Joseph Pulitzer

The 2012 elections were marked by a nearlyunprecedented level o secrecy, with entirelyanonymous donors pouring hundreds o mil-lions o dollars into eorts to infuence our

vote. Sunshine might be the best disinectantbut since the Citizens United ruling Americahas been living in the dark.

Thanks to hundreds o millions spent by darkmoney non-prots that do not disclose theirdonors and shell corporations that allowunders to disguise their identity while contrib-uting to Super PACs, voters did not know thesource o nearly a third o all reported dollarsspent by outside groups in the 2012 elections.

Thanks to the U.S. Supreme Courts 2010 deci-sion in Citizens United v. FECand related courtdecisions,the vast wealth o or-prot corpo-rate treasuries and CEO bank accounts cannow be released into an election and wealthyindividuals can give to nominally independentSuper PACs and non-prot groups without

limit, threatening to drown out the voice o or-dinary citizens who could not dream o givingat such levels.1

But one o the most striking aspects o the2012 elections is that average Americans can-not even estimate the level o corporate orspecial interest infuence thanks to the amounto secret, undisclosed money fowing throughour election system. Although there has beenwide public opposition to the U.S. SupremeCourt striking down Congress power to regu-late election-related spending, the majority ojustices in the Citizens Unitedcase armed thelong-standing notion that the identity o do-nors who seek to infuence elections should not

be kept secret. Ironically, in that very opinionwhich helped open the door or secret spend-ing in elections, Justice Kennedy laid out thethree main virtues o transparency in elections,which are undermined by secret money.

First, [c]itizens can see whether elected o-cials are in the pocket o so-called moneyedinterests, he wrote.

Second, transparency enables the electorate to

make inormed decisions and give proper weightto dierent speakers and messages . . . [whichprovides] citizens with the inormation neededto hold corporations and elected ocials ac-countable or their positions and supporters;2

Finally, [r]ecordkeeping, reporting, and dis-closure requirements are an essential means


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o gathering the data necessary to detect viola-tions o campaign nance law, he noted. Andas the D.C. Circuit wrote in SpeechNow.org vFEC, a case that ollowed Citizens Unitedandgave rise to Super PACs, requiring disclosureo such inormation deters and helps exposeviolations o other campaign nance restric-tions, such as those barring contributions romoreign corporations or individuals.3

Justice Kennedy and our other justices gota lot wrong in Citizens United, and as a resulthelped unleash a torrent o money into ourelections that has diminished the voices o av-erage voters.

But, Citizens Unitedaccurately described whytransparency in election spending is so vitaldemonstrating that reorms to mandate dis-closure o the sources o money in politics areconstitutionally sound and providing a rame-work or understanding how secrecy taintedthe 2012 elections:

Are elected ofcials in the pocketo so-called moneyed interests?

The secrecy that tainted the 2012 electionsmakes it nearly impossible to assess whethera donors secret investment in support o acandidate pays o through avorable policy,thereby shielding both elected ocials and do-nors rom public accountability. It creates anenvironment where backroom deals and pay-

to-play politics could become the normbutwithout the public ever knowing. Even thoughthe American public is unaware o the sourceso a dark money groups unding, there is noth-ing keeping donors rom making their iden-tities clear to the politicians beneting rom

their largesse. And big donors almost certainlywant something in return or the millions theyinvest getting a candidate elected.

Justice Kennedy is correct that transparencyallows voters to discern whether elected o-cials are in the pocket o so-called moneyedinterests. But unortunately the Courts un-derstanding o in the pocket is too narrow adescriptor or the distortion o our democracyby Big Money. There is a deeper, more system-ic corruption that the Supreme Court ailedto recognize: how democracy is underminedwhen an elite set o wealthy donors and in-terests dominate campaign nancing, therebyhaving a much larger infuence over who cantake oceand what that oceholders pri-orities will bethan the average donor.

Although campaign nancing has long beendominated by the very wealthy, Citizens Unitedexaggerated this problem to a new level, con-centrating the infuential donor class to just ahandul o individuals who can give donations

that are $1 million or larger. This truth is bestembodied by this statistic: only 32 large donorsto Super PACs, giving an average o $9.9 millioneach, matched the $313 million in grassrootscontributions rom more than 3.7 million smalldonors to the major party presidential candi-dates.4 The secret unding sources o dark mon-ey groups are almost certainly even more elite.For example, the dark money group CrossroadsGPS does not disclose the identity o its donors,but must disclose the amounts o its largest do-

nations in its year-end IRS lingsand nearly90 percent o the $77 million it collected in itsrst year-and-a-hal in existence came rom nomore than 24 individuals or corporations givingmore than $1 million each. Two o the dona-tions were $10 million each.5


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In addition to it being inherently anti-demo-cratic that an elite class o donors is able to di-rectly translate their economic success into po-litical power, the values o that class o donorshave become the reality o what lawmakers o-cus their eorts on. Whether this is a result othe donor class elevating candidates who valuewhat they value, or o elected ocials bend-ing to the will o the powerul interests undingpolitics, a growing body o work suggests thatpolicy making and debate more closely resem-bles the opinions and needs o the donor classthan that o the average voter.5

Allowing business corporations to spend di-rectly on electionsor indirectly and secretlythrough dark money groupsalso creates thisbroader type o corruption. The vast wealth ocorporate treasuries that can now be releasedinto an election threatens to drown out thevoice o ordinary citizens who could not dreamo giving at such levels. Many U.S. corpora-tions have revenues larger than the GDP oentire world nations. In an election system

where money is oten in higher demand thanvotes, should these juggernauts release even araction o a percentage o their value into thepolitical arena, how could the average donormake her voice heard?

In this way, transparency is necessary not justto allow citizens to connect the dots betweenquid pro quo exchanges o campaign contribu-tions and policy making and hold culprits ac-countable, but is necessary so that Americans

can ully understand the way big money is dis-torting our democracy, hold accountable theinterests seeking to benet, and take steps tocorrect that imbalance.

Transparency enables the electorateto make inormed decisions

For voters, not knowing which interests arebacking or opposing specic candidates orraising issues about those candidates limitsour ability to make inormed decisions aboutthose individuals. This is what Justice Kennedywas reerring to when he noted that transpar-ency allows the electorate to make inormeddecisions and give proper weight to dierentspeakers and messages.

Having an accurate understanding o the trueinterests that support or oppose a given candi-date helps us better understand the policy po-sitions o that candidate. I a candidate toutshersel as an environmental champion but anenvironmental group backs her opponent, itmay say to voters that the candidate has distort-ed her environmental record and that she wouldnot be a champion at all. On the other hand,in a post-Citizens Unitedworld, a group with agreen-sounding name may jump into the race

to convince voters that the candidate they sup-port has the strongest environmental record, yetthe voters may never know that in reality, thegroup may actually be unded by a coal corpora-tion seeking to elect the candidate most likely toback their interests.

This was the case when a seemingly conserva-tive non-prot jumped into the Senate race inMontana to convince voters that the libertar-ian candidate was the true conservative, but

it turned out that this dark money group wasactually led by Democratic interests seeking tosiphon conservative votes away rom the Repub-lican, helping the Democrats margin o votes.7


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The second reason transparency is so impor-tant to helping voters make inormed decisionsis to allow them properly weigh the credibilityo communications meant to infuence theirvote. Part o this is about understanding themotivations o the messenger, as in the exam-ple described above. But it requires speakersto stand behind their messages. Studies haveshown that dark money groups are ar morelikely to air misleading ads, presumably becausethe unds behind those ads are hiddenallow-ing unders to avoid being held responsible ordistorting the truth or fat out lying. A studyby the Annenberg Public Policy Center oundthat, as o June 1, 2012, 85% o the dollarsspent on presidential ads by our top-spendingthird-party groups known as 501(c)(4)s werespent on ads containing at least one claim ruleddeceptive by act-checkers at FactCheck.org,PolitiFact.com, the Fact Checker at the Wash-ington Post or the Associated Press.8

Disclosure can deter and detectcampaign fnance law violations

The Supreme Court has additionally held thattransparency in election spending allows thepublic and government agencies to detect anddeter campaign nance violations. It is truethat the rules have been so loosened by Citi-zens Unitedand Speechnow that the traditionalrule-breaking which might occur under theveil o secrecysuch as exceeding contribu-tion limits or corporate donationsare practi-cally moot points. However, the 2012 electionssaw donors playing shell games or the directpurpose o disguising their identity in electionreporting, which remains illegal. Non-protsgot around even the modest disclosure ruleson the books by exploiting a loophole allow-ing unders to remain secret i a donation wasnot specied or ads, even i that was actuallya donors intent or the recipients request. Ad-ditionally, we saw non-prots openly playinggames with the content o their advertising toget around a court decision intended to correct

this loophole and orce disclosure o donors.

Perhaps the most threatening o the violationso campaign nance law enabled by the veil osecrecy is the possibility o oreign money en-tering American elections either through darkmoney non-prots, shell corporations, or somecombination thereo.


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SECRET MONEY IN THE

2012 ELECTIONS

Despite strong public support or disclosureand decades o legal precedent declaring thepublics constitutional interests in transpar-ency, secret money nonetheless played a big-ger role in the 2012 elections than in any otherpresidential campaign since Richard Nixons.

Dark money in the

2012 electionsMuch o this secret spending came via non-prots organized under Sections 501(c)(4) and(6) o the tax code, which collected unlimitedcontributions and spent hundreds o millionsinfuencing elections, but kept their donors se-cret and did not register as political commit-teesthus becoming known as dark moneygroups. Dark money non-prots that hid thesource o their unding reported spending over$299 million in the 2012 elections, but the ac-tual total likely exceeds $400 million.9

The 2010 U.S. Supreme Court decision inCitizens United and its earlier 2007 decisionin Wisconsin Right to Lie opened the door ornon-prots unded by or-prot corporationsto buy political ads and contribute to SuperPACs. Unlike PACs and Super PACs, whichare ormed exclusively or electoral purposesand disclose all o their donors and expendi-tures to the Federal Elections Commission,these non-prots are entirely secret about their

sources o unding and only report a limitedamount o their election spending.

A ew o these non-prots are legitimate, long-standing advocacy organizations with a reputa-tion that allows citizens to potentially recognizethe motivations o their donors and thus betterunderstand the values o the candidate support-

Disclosed 501(c)(4)s 501(c)(6)s Known Shell Corporation

Money in Super PACs

$11,880,1351%

$722,199,045

70%

$267,171,784

26%

$36,706,6724%

Outside spending in 2012


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ed by those unds. However, many o the oth-er non-prot organizations active in the 2012elections appear to have been set up or the solepurpose o electioneering and spending by thesesham non-prots became a common phenome-non in the 2012 election. Ostensibly ormed andgranted tax-exempt status to advance some sorto social welare, these non-prots insteadspent hundreds o millions in 2012 doing noth-ing else besides infuencing elections.

Hiding donors and deceiving voters

A loophole in FEC rules only requires thatnon-prots disclose donations made or thepurpose o unding specic ads.10 And basi-cally every non-prot active in the 2012 elec-tions avoided disclosing their unders by claim-ing none o the donations were earmarked orparticular activities. The rule operates like aDont Ask/Dont Tell policy to keep the pub-lic in the dark. At least as applied to issue adsthat run in the months beore an election, this

loophole was briefy closed by a ederal courtin Marchduring which time dark moneygroups declared that they would shit to expressadvocacy to continue hiding their donorsbutthat decision was reversed on appeal.11

Secrecy not only makes it nearly impossible toascertain whether a large donation resulted inavorable policy or treatment ater a candidatetakes oce, but during the election, it becomesdicult or voters to assess a dark money

groups message or, in the words o the CitizensUnitedmajority, to make inormed choices inthe political marketplace. An innocuous nameand uninormative website does not give voterssucient inormation about what really moti-vates a dark money group.

Those rare disclosures that have occurreddemonstrate this point. For example, the501(c)(4) American Action Network (AAN)spent $11 million on ads attacking Democratsin the run-up to the 2012 elections, but thecontent o those ads would likely not indicateto the average viewer they were bankrolled bythe insurance and pharmaceutical industries.But those industries really were behind thegeneric-sounding American Action Network:insurance giant AETNA accidentally disclosedin year-end lings they gave $3 million to AANin 2011, and the pharmaceutical trade associa-tion PhRMA reported a $4 million contribu-tion in 2010 in its mandatory tax lings.

AANs ads attacked Democratic candidates ona variety o issues12rom personal ethics, totheir support or mining, to their position ontaxesbut AANs messages about a candidatessupport or single-payer healthcare,13 or its$1.2 million campaign in July urging Repub-licans to overturn the ederal health care law,14would surely be viewed by voters in a dier-

ent light when provided with the knowledgethat the ads may have been unded by the in-surance and pharmaceutical industries. Giventhat many o the ads unded and aired by AANhave been ound to be misleading by nonpar-tisan act-checkers,15 the innocuously-namedAmerican Action Network, like many otherdark money groups, acts as a ront or thesecorporations and industries, allowing them toinfuence elections and policy without havingto publicly stand behind their message.

In Montana, a dark money group seeking toinfuence that states U.S. Senate race urthershowed how voters can be kept in the darkabout an organizations true motivations whenits unders are kept secret. A non-prot calledMontana Hunters and Anglers Action boughtads supporting the third-party candidate in the


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states U.S. Senate race, libertarian Dan Cox,describing him as the real conservative orthe true conservative. Montana voters neverknew who was behind the Montana Huntersand Anglers group or who was bankrollingtheir adsbut an investigation by ProPublicaound that the group has ties to Democrats,suggesting the groups true motivation was tosiphon votes away rom the Republican candi-date rather than to support Cox.16 The Demo-cratic candidate, Jon Tester, won a narrow vic-tory in that state and Cox received more votesthan any other libertarian on the ballot.

Other instances where donors to a dark moneygroup have been uncovered only revealed moreobuscation. For example, an enorcement ac-tion by Caliornias election board in 2012 un-covered a dark money shell game where secretdollars were shufed between non-prots toinfuence 2012 ballot initiatives in that state,thereby guaranteeing the unders identitieswould be kept secret. Caliornias elections boardsought to uncover who was really behind an $11

million donation rom an Arizona-based darkmoney group called Americans or ResponsibleLeadership to a registered Caliornia PAC calledSmall Business Action Committee, which spent$11 million on ads to infuence two Caliorniaballot initiatives. But the source o the Arizonagroups unds was only revealed to be anotherdark money group, the Center to Protect PatientRights, whose money came in turn rom a thirddark money group, Americans or Job Security(which in previous years had received money

rom the Center to Protect Patient Rights.) De-spite the Caliornia election boards best eortsto mandate disclosure, in this case it only oundanother layer o the dark-money onion.

The dark money shell game was also played onthe national level. The Center to Protect Pa-tient Rights is a 501(c)(4) whose name gives the

impression it is concerned about healthcare,but it actually appears to do little else besidesoperate as a conduit or unding conservativeelectoral operations. As a non-prot, CPPR isnot required to report its unders, but it mustdisclose its grant recipientsand throughthose disclosures, the Center or ResponsivePolitics ound that CPPR gave $55 million in2010 to a variety o non-prot groups, such asAmericans or Job Security, the 60 Plus Asso-ciation, and American Future Fund, which inturn spent at least $46 million attacking Dem-ocrats in the 2010 elections.17 In 2011, a non-election year, CPPR gave at least $14 millionto some o those same dark money groups andothers, all o which spent millions infuencingthe 2012 elections. The amount CPPR doledout in 2012 is not yet known; non-prots donot le their IRS orms and grant recipientsuntil late the ollowing year. It is not knownrom where CPPR received its unding, but in-vestigations have revealed ties to the billionaireconservative activist Koch brothers.18

These dark money shell games reveal anoth-er major problem with secrecy: it becomesalmost impossible to identiy violations oelection or tax law. For example, oreign cor-porations and citizens are prohibited rominfuencing U.S. elections, but absent disclo-sure, neither the public nor regulatory agen-cies can know whether a oreign national isintervening in U.S. electionseither indi-rectly by giving to a shell non-prot like theCenter to Protect Patient Rights or even di-

rectly by giving to a dark money group thatdoes not disclose its donors.

And this secrecy makes it nearly impossible toassess whether a donors secret investment insupport or a candidate pays o through avor-able policy, thereby shielding both elected o-cials and donors rom public accountability.


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Minimal expenditure reporting

Because dark money groups are ocially or-ganized as social welare non-prots undersection 501(c)(4) o the tax code or as tradeassociations under section 501(c)(6), they aresupposed to primarily advance some sort o so-cial welare, or in the case o a 501(c)(6) the in-terests o a particular industryand thus needonly report their electoralexpenditures to theFEC, rather than all o their spending.

But electoral activities have been narrowlyconstrued to only require reporting o expen-ditures on ads that explicitly call or the elec-tion or deeat o a candidate or that mentiona candidate and air during a particular win-dow o time beore the election, allowing darkmoney groups to avoid disclosure by runningissue ads that criticize a candidate on issueslike taxes or healthcare but stop short o explic-itly telling viewers to vote or or against. Theomission o an explicit call or a candidates de-eat or victory allows the groups to claim with

a wink-and-a-nod the ads were about issues,despite clearly being intended to infuence theelection. This helps the groups escape someFEC reporting requirements and can helpthem protect their non-prot status.

Crossroads GPS, or example, spent $9.7 mil-lion running an ad titled Basketball attack-ing President Obama with a long list o criti-cisms, and saying he promised changebutthings changed or the worse. But because

the ad ended with the message tell Obamato cut the job-killing debt rather than voteagainst Obama, it qualies as an issue adunder current legal interpretations. And theamount spent on issue ads (but not thesource o those unds) must only be reportedduring the electioneering communicationswindowthat is, i the ads run within 60 days

o a general election or 30 days o a primaryor party convention. Because the CrossroadsGPS Basketball ad aired in May o 2012,outside o the reporting window, it was neverreported to the FEC.

Given that Americans are now subjected to apermanent campaign, this narrow 30 day/60 dayreporting period does not capture many o theon-going year round eorts to infuence voters.

This is why the nearly $300 million in electionspending reported to the FEC by dark mon-ey groups is an underestimate o their actualspending to infuence the elections. Overall,Crossroads GPS told the FEC that it spentjust under $71 million in the 2012 electioncycle,19 but because it only reported those is-sue ads that ran near the primaries or electionday, it actually spent almost twice as much aswas reported, topping at least $165 million, ac-cording to a review o Crossroads GPS pressreleases since mid-2011.20 The total spent bydark money groups could be equally as high.

A U.S. PIRG / Demos report rom July oundthat the top ve spending 501(c)(4) groups hadreported less than 1% o their actual electionspending through June 30th, 2012.21

How is this legal?

Despite dark money groups spending at least$299 million on the 2012 elections, as non-prots, these groups are oered tax-exempt

status because they are ostensibly advancingsome sort o social welare, and are thereorelimited in how much they can participate inelectoral or partisan politics.

According to the IRS, political interven-tion cannot be a non-prots primary ac-tivity, which has been construed to mean


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that no more than hal o their sta time ornancial resources can be directed towardselectoral endeavors. But the IRS rules onwhat constitutes political intervention arerelatively murky, and more importantly, arerarely enorced.

One way dark money non-prots have claimedthey are primarily advancing social welare isby classiying some o their electoral expendi-turesparticularly those they call issue adsaseducation, issue advocacy, or lobbying,rather than political intervention.22 While theFEC has specic rules or what constitutes apolitical ad, the IRS takes a more vague, case-by-case approach that some non-prots haveconstrued very broadly.

Americans or Prosperity, or example, re-ported to the FEC that it spent $1.3 millionon electioneering communications in the 2010elections23 but told the IRS that it did not spenda penny on political expenditures.24 Another501(c)(4), the American Action Network, re-

ported spending $15.4 million on ederal elec-tioneering communications in 2010, but basedon its IRS lings appeared to classiy this aslobbying rather than political expenditures,despite the ads running near the elections andclearly being intended to tell people how tovote.25 Neither o these groups disclosed theidentity o those unding the ads.

But or those groups that do accurately de-scribe their electoral expenditures as political

intervention, they still must be able to showthat it accounts or less than hal o their over-all activities to retain their tax-exempt status.

One way they can do this is by running adsduring policy debates that they can classiy aspublic education in their tax lings. Althoughinfuencing policy through issue ads can be a

legitimate advocacy tool, many dark moneynon-prots appear to be using the ads as an ac-counting tricka way to balance their booksbetween electoral and non-electoral spending.And some groups appear to be using their is-sue ads to soten up candidates or their nextelection. Crossroads GPS, or example, ran aseries o radio ads in December 2012 duringthe scal cli debate encouraging lawmak-ers to reject President Obamas massive taxincreases and even more debt and urging bi-partisan solutions to strengthen Medicare andSocial Security and tax reorms that raise morerevenue without killing jobs.26 Even thoughthese issue ads will likely be classied as pub-lic education in GPS IRS lings, they appearto be more about politics than anything elserather than targeting legislators who mightbe swing votes in a debt deal, the ads targetedDemocratic legislators in vulnerable districts.Incredibly, this means that one way dark mon-ey groups can claim their primary purpose issocial welare is by engaging in permanentpolitical campaigns.

Dark money groups will also direct more otheir non-election-season resources towardslobbying.27 Few Americans would say that lob-bying is advancing social welare, but resourcesspent on lobbying do allow dark money groupsto tip their overall balance towards electoralintervention not being considered their pri-mary purpose.28 Organizations that spent tenso millions in the 2012 elections, like Club orGrowth and FreedomWorks, have already be-

gun lobbying legislators, and Crossroads GPShas also indicated it will begin lobbying. Thesegroups, which in 2012 became increasingly in-volved in primaries, have a powerul weapon intheir lobbying arsenal to hold legislators eetto the re: the threat, come election time, thatthey will back an uncooperative lawmakersprimary challenger.


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Some dark money groups have also claimedthat political intervention is not their primarypurpose by making grants to other dark moneygroups, which in turn spend millions on elec-tionsessentially making the absurd claim theyare advancing social welare by acting as a con-duit or laundering dark money to other darkmoney groups. Crossroads GPS, or example,in 2010 transerred millions o dollars to othernon-prot organizations, many o which thenspent millions on that years elections.29 Call-ing the reason or the donation social welare,GPS gave Americans or Tax Reorm $4 millionin 2010, and ATR spent $4.14 million on the2010 elections. GPS also gave $2.75 million tothe Center or Individual Freedom (which spent$2.5 million on political ads) and $500,000 tothe American Action Network (which spent $26million on ads), among other groups.30

Shell corporations

in the 2012 electionsAbuse o the corporate orm in the 2012 electionswas not limited to non-prot corporations. Clan-destine donors made use o straw or-prot cor-porations to unnel money into elections as well.Over the course o the 2012 cycle reporters andadvocates uncovered several instances o inactivebusinesses contributing large sums to Super PACs.In a ew cases, the original donors came orward,liting the veil o secrecy, but in several others, themoney could only be traced back to a third party

rather than the true source o the unds.

All o this demonstrated that in a post-Citizens Unit-edworld, those concerned with transparency in ourelections should pay considerable attention to theabuse o the corporate orm. In act, o all businesscontributions to Super PACs, nearly 17%(over $17million) came rom identifedshell corporations.

There are serious concerns in the post-CitizensUnitedworld about the outsized infuence oreal businessescompanies that provide goodsand services, employ workers, and have anobvious interest in policy-making. However,some corporations exist only as pieces o paper,a P.O. Box, or an electronic le. These shellcorporations undermine the integrity o ourelections with their opacity, which at best cir-cumvents campaign nance law to shield do-nors trying to evade reporting requirements,and at worst may launder oreign, criminal,even terrorist unds into U.S. elections.

Shell corporations

A shell corporation is dened as a companythat engages in minimal or no business activity.Sometimes these corporations serve a legitimatebusiness purpose, such as creating a legal struc-ture at the start o a genuine business or, slightlymore questionably, hiding intellectual propertyrom competitors. However, these entities are

also used to evade taxes, launder criminal pro-its, illicitly transer oreign unds into the Unit-ed States, and, in some cases, nance terroristactivities.31Citizens Unitedopened the door ora new use as well: anonymously unneling mil-lions o dollars into our elections.

Regardless o the end goal, a shell corpora-tions main attraction or attention-shy donorsis the same as the attraction or criminals: theanonymity it provides. Setting up a clandestine

company is easy enough - one need simply hirea surrogate, typically an attorney or holdingscorporation, to le the paperwork or you.According to the Government AccountabilityOce, most states do not require the ler toreport, or even to retain proo o, the identityo the true owner o the new company, alsoknown as the benecial owner.32


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In act, the paper trail is sometimes so conve-niently evanescent that all the investigative ex-pertise o the ederal government cant even ol-low itmuch less the average voter. This wasthe case when Immigration and Customs En-orcement discovered that a Nevada-based shellcorporation had received $81 million in 2 yearsrom almost 4,000 suspicious wire transers, butcould not pursue the case as they were neverable to identiy the benecial owner.33

Identifed shell corporations

in the 2012 electionsThe media uncovered several examples o shellcorporations unneling money to super PACsin 2012, which are described below, totalingnearly $17 million, or 16.5% o all businesscontributions to super PACs.

The bulk o all identied shell corpora-tion contributions went to two SuperPACs:FreedomWorks or America and Restore Our

Future, suggesting that the committees them-selves may have been acilitating the schemes.Restore Our Future has said o such encourag-ment, its not something we normally ask.34Over 97% o the unds given rom businessesto FreedomWorks were rom shell corpora-tions, accounting or over hal o all the moneyit raised or the 2012 cycle.

Specialty Group Inc., Kingston PikeDevelopment - $12.1 million

The single largest business donor by ar in 2012turned out to be a shell corporation called Spe-cialty Group, Inc., which made gits totaling$10.6 million to the Tea-Party aliated SuperPAC FreedomWorks or America. About halo that was given less than two weeks beoreElection Day, providing an additional layer o

secrecy because that spending would not bedisclosed to the public until the post-electionreporting date o December 5.

The corporation itsel was ormed in Septem-ber 2012 by Knoxville-based attorney Wil-liam Rose, who likely acted as a third partysurrogate to create the corporation on behalo the true donor. Rose, who is active in theRepublican party, ormed a similar corporationcalled Kingston Pike Development in October,which gave an additional $1.5 million to thatsame Super PAC.

An investigation by the Washington Post re-vealed evidence suggesting that the scheme tocreate shell corporations was orchestrated byRichard J. Stephenson, the suspected originaldonor, and Adam Brandon the Vice President oFreedomWorks.35 It is unclear why Stephenson,who is a well-known conservative, and Brandonwould go to such lengths to hide the source o

ShellCorporation

AmountDonated

% Of TotalBusiness Contributions

To Super Pacs

Specialty Group Inc. $10,600,000 10.4%

Kingston Pike Development $1,500,000 1.5%

W SPANN LLC $1,000,000 1.0%

Eli Publishing $1,000,000 1.0%

F8 $1,000,000 1.0%

SeaSpray Partners $400,000 0.4%

Waterbury Properties $666,666 0.7%

Fairbanks Properties $666,666 0.7%

Total $16,833,332 16.5%


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donations but it is clear that both the creation othe shell corporations and the timing o the con-tributions indicate intent to circumvent SuperPAC reporting requirements. The CampaignLegal Center and Democracy 21 have sent let-ters to both the FEC and the Department oJustice asking them to investigate whether bothStephenson and FreedomWorks violated ed-eral law prohibiting political contributions rombeing made in the name o another person.36

W SPANN LLC - $1 million

The rst reported incident o the shell-corpo-ration-to-Super PAC-phenomenon came rom

an NBC investigation o W SPANN LLC,a group that made a million dollar contribu-tion to the Pro-Romney Super PAC RestoreOur Future. W SPANN LLC caused suspicionwhen the NBC reporter noticed that the cor-poration had ormed, made the $1 million con-tribution, then disbanded all in the course oabout three months. It appeared to never havedone any business other than making the gitto Restore Our Future.37

Again, the corporation was ormed by a third-party surrogate, Boston-based attorney Cam-eron Casey, but this time, just hours ater Cam-paign Legal Center and Democracy 21 led acomplaint with the DOJ, ormer Bain Capi-tal executive Ed Conard came orward as theoriginal source o the unds. Conard claimedthat he did not believe that he was violating

any laws but gave no reason or creating a shellcorporation to make the donation to RestoreOur Future, leaving a number o unansweredquestions and no real proo that he was, in act,the original donor.38

Eli Publishing and F8- $2 million

W SPANN LLC was just the rst in what ap-pears to be a series o shell corporation dona-tions to Restore Our Future, including two $1million gits made by apparent shells Eli Pub-lishing and F8 corporations which share thesame address in Provo, Utah.39 The addressis associated with NuSkin owner and Rom-

ney supporter Steve Lund, but as with all shellcorporations, there is no way to conrm thatLund or any o his businesses were indeed theoriginal source o the unds.

SeaSpray Partners - $400,000

Yet another apparent shell corporation contri-bution to Restore Our Future came rom Sea-Spray Partners. The $400,000 git raised eye-brows when the owner o the business at the

address where SeaSpray was reportedly basedclaimed he had nothing to do with the contri-bution. Restore Our Future chalked up the dis-crepancy in their reporting to a clerical errorwhich they said they intended to x.40

It is still unknown who or what was the originalsource o these unds.

Super PACTotal Known

Donations From

Shell Corporations

Total DonationsFrom Businesses

% Of BusinessDonationsFrom Shell

Corporations

Total Donations% Of Total Funds

From Shell

Corporations

Restore Our Future $4,066,666 $30,478,545 13.3% $169,143,666 2.4%

FreedomWorks for America $12,100,000 $12,392,830 97.6% $23,499,983 51.0%


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Waterbury Properties and FairbanksProperties - $1,333,332

Mother Jones reported that Restore Our Fu-tures June campaign lings included contri-butions rom three corporate donors: CRCInormation Systems, Inc.; Fairbanks Proper-ties, LLC; and Waterbury Properties, LLC.Although the latter two companies dont evenhave websites, they all ponied up nearly identi-cal sums$333,333, give or take a dollarandlisted the same address: PO Box 2608, Day-ton, Ohio 45401.41 All three companies areowned by Robert Brockman but he declined tocomment on the contributions. His company,Reynolds and Reynolds, claimed CRC as asubsidiary but said it had no knowledge o theother two corporations.

The three companies employed the same tacticto make gits o the same size to CrossroadsGPS, as well.42

It is unclear why Brockman would use a divi-

sion scheme to make these $999,999 contri-butions or i he or his companies are even theoriginal source o the unds, or that matter.These donations are again a good exampleo the games being played with the corporateorm and the key inormation hidden rom vot-ers in the process.

Behind the veil o secrecy

As is the case with dark money non-prots,the secrecy inherent in donations via shell cor-porations makes it almost impossible to iden-tiy violations o election or tax law, such as theinltration o oreign unds.

In spite o the means opened byCitizens Unitedor oreign money to enter elections undetect-ed, the Supreme Court has since rearmedthe ban on oreign nationals and corporationsspending in elections.

The GAO report on Company Formationsnoted several known instances o shell corpo-rations illegally bringing millions in oreignunds into the U.S. rom countries such asIran43, Libya, and states in the ormer SovietUnion.44 It would be simple enough or thisstrategy to be repeated to unnel that moneyinto elections. A oreign donor would set upa corporation in Delaware or Nevada, say, llit with cash, and then have it spend to supportthe desired candidate.

Thus ar, none o the electoral unds romknown shell corporations have been proven tohave originated in oreign countries; but themany instances o shell corporations secretlyunneling money into elections should be causeor concern and suspicion.

While it is not a shell corporation, the Connect-icut based rm OdysseyRe, a wholly ownedsubsidiary o Canadian corporation FairaxFinancial Holdings Limited, caused a stir thiscycle when it donated $1 million to the RestoreOur Future Super PAC. Because OdysseyRedoes in act do business in the U.S., the undswere ascribed to American commerce and theAmerica based board members; however, thecontribution raised concerns about indirect

oreign spending in elections.45

Given the am-biguity o this donation even with a unctioningbusiness claiming responsibility, this exampledoes raise fags about the fuidity o the corpo-rate orms ability to hide oreign donations.


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Using legal loopholes orillegal purposes

While intrepid reporters and activists identi-ed a handul o shell corporations donating toSuper PACs in the 2012 elections, there maybe others that are not legitimate business enti-ties, and still more that are making use o otherlegal loopholes to urther cloak their identities.

Another way a donor may unnel money intothe election without being ound out is byorming a shell corporation, then having thatshell corporation donate to a dark money non-prot, in a sort o Russian Doll-like schemeresembling the $11 million shufed betweenthree non-prots and a PAC to infuence Cali-ornia ballot initiatives (described above). Be-cause those dark money non-prots do nothave to publicly disclose their donors, this tac-tic would keep the shell rom appearing on anysort o list o politically active businesses andsparking scrutiny. Although the dark moneygroups do have to report their income to the

Internal Revenue Service, the agency almostnever looks into the integrity o donors un-less there is a request or investigation roma watchdog group. And watchdogs can only

identiy a discrepancy i there is public report-ing. It has been noted that i oreign moneywere entering our elections, this would be thesaest route to hide it.46

As with campaigns, donations to Super PACsunder $200 do not have to be separately listedwhen reported to the Federal Election Com-mission. Another way a donor could cover theirtracks is to divide a donation up among vari-ous shell corporations and have each donatean unitemized sum to the same Super PAC. Ia donor wanted to give $1 million to a SuperPAC undetected, she could orm 5026 corpora-tions with unique names and have each donate$199. On the FEC report, this would simplylook like $1,000,174 in unitemized contribu-tions. To the Super PAC, assuming the donormade all the companies give the same amounton the same day, it might raise suspicion. Butwithout rules requiring the recipient o privatecorporate unds to collect inormation on thebenecial owners o the corporation, even insuch a blatantly suspicious scenario it would

be dicult to prove that a crimeusing a alseidentity to donate election unds or the acili-tation o such by the receiving group, or ex-amplewas committed by either party.


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Conclusion

We may never know the true identity o thosewho literally spent hundreds o millions odollars attempting to buy the 2012 electionsthrough these shadowy groupswhetherthe unders were corporations or people,domestic or oreignand we really cannotknow what infuence those donors will haveover the 113th Congress or, or that matter,over the Executive Branch during PresidentBarack Obamas second term. But we do knowthat American democracy is increasingly orsale, and that the transactions are increasinglyhappening in secret.

Luckily there is much that can be done at everylevel o government to let in some sunlight.

Recommendations:

Create More Transparency

The Internal Revenue Service should createbright-line rules or what constitutes politicalintervention, as well as descriptions o protect-ed tax-exempt speech, to help resolve ambigui-ties that have been exploited by dark money

non-prots in the post-Citizens Unitedworld.This would make it clear to groups like Ameri-cans or Prosperity that their political activitiescannot be classied as education. In a Julyletter to Democracy 21 and the Campaign Le-gal Center, the IRS indicated it is indeed con-sidering changes to rules that govern 501(c)(4)

non-protsand we look orward to the IRSollowing through.47

The Securities and Exchange Commis-sion should require that publicly traded cor-porations disclose their political spending totheir shareholders and the general public.Such a rule would create transparency on theront end, allowing the public to know when abusiness corporation is unneling money intothe elections either through a Super PAC orthrough a dark money non-prot. Although itwould not touch privately-traded companies,it would help shine some much-needed lightonto corporate political spending. The SECrecently added this rulemaking to their agenda

and should ollow through on enacting it be-ore the 2014 elections.

The Federal Communications Commis-sion should improve its online database obroadcasters political ad les to make theinormation easily accessible to the generalpublic. In 2012, the FCC nally adopted arule requiring broadcasters in the top 50 me-dia markets to post inormation about theirpolitical ad sales in an online FCC data-

base, potentially providing a means to trackexpenditures by dark money groups that donot report to the FEC. But the website is notsearchable by group and excludes hundredso important media markets. Making the da-tabase more user-riendly and expanding thenumber o media markets would allow citi-


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zens and reporters to better track the dollarsbeing spent to infuence elections.

The Federal Election Commission shouldrequire that Super PACs collect inormationon the benecial ownerwhich must be a nat-ural person or publicly listed corporationoall private companies rom which they collectcontributions. This inormation should be re-ported on their monthly and quarterly lingsto the agency.

Congress should tighten limits on howmuch a non-prot can participate in politi-cal activity. Ambiguity under current law hasled many non-prots to assert they can spendup to hal o their total activities or expen-ditures on politics, which the Internal Rev-enue Service has neither reuted nor clearlysupported. Attorney Greg Colvin has pro-posed an addition to the Internal RevenueCode clariying that a non-prot hoping tointervene in a political campaign is limited tospending a certain dollar amount or less than

a certain percentage o their total expendi-tures in a given year, with the exact amountsset by Congress.48 I the organization wantsto spend more on politics, it must do sothrough a separate, registered political com-mittee that reports all donors giving abovethe already-established thresholds laid out inelection law. Providing clarity in this area othe law could help curb some o the worstabuses o the tax-exempt non-prot orm.

Action rom Congress to update disclosurerules in a post-Citizens United world is longoverdue. Our ederal legislators must requirethat non-prot corporations account or everydollar spent on elections, reporting, at mini-mum, donors over $200 whose contributionsadd up to their total spent. To ensure that thisincludes all issue ads meant to infuence the

election, Congress must also expand the elec-tioneering communications window to accountor the actual length o modern campaigns.One strong proposal would be to expand thatwindow to Jan 1 in non-Presidential electionyears and one year beore the election in Presi-dential years.

Furthermore, to ensure that secretive donorsdont shit their unding to shell corporationsin response to transparency requirements ordark money non-prots, Congress should re-quire that Super PACs and dark money groupsthat intend to spend on the election collect andreport inormation on the benecial owner oall private corporate donors.

The States should require all private corpo-rations to list their benecial owners upon in-corporation and make that inormation readilyavailable on the public record. A GAO reportound that, as o 2006, none o the 50 statesroutinely requires applicants who want to orma new corporation to disclose who will own the

corporation; most states do not require owner-ship inormation or LLCs.49 This commonsense reorm would ensure that the public canollow the money and it would help preventthe possibility o oreign and criminal moneyentering our elections.

I states ail to implement such a rule,Congress should require that states enact auniorm standard.

OverturnCitizens United

Although all o these measures are vital to rein-troduce a level o accountability and transpar-ency into Americas political system, increaseddisclosure is not enough. It appears the onlyway to truly limit the outsized infuence oprivate donors over our political and electoral


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systems is a constitutional amendment declar-ing, at minimum, that money is not speech,that Congress and the States have the power toregulate election spending, and that only natu-ral persons should be allowed to spend moneyon elections. Corporations are neither peoplenor citizens: they are organizations o people.Those individuals certainly have the right toespouse and make contributions or expendi-tures (within reasonable limits) on behal o thecorporation, but notasthe corporation or us-

ing the corporations unds. A government o,by, and or the people should not tolerate theoutsized infuence o articial entities on thepolitical process.

Municipalities, cities, and states across thecountry should ollow the lead o 300 citiesand towns and 11 states and pass resolutionsto join the growing call to overturn the Courtswrongheaded and dangerous interpretation othe First Amendment.

METHODOLOGY

To calculate total secret outside spending g-ures, we added money spent by 501(c)(4)s and501(c)(6)s. To calculate the total secret undsrom shell corporations spent by Super PACswe multiplied the total that all super PACsspent by the percentage o all Super PAC un-draising or which shell corporations account.


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Endnotes

1. For urther discussion, please see: Blair Bowie and Adam Lioz,Auctioning Democracy: The Rise o Super PACs & the 2012Election, Demos/U.S. PIRG Education Fund, February8, 2012. http://www.uspirg.org/reports/usp/auctioning-democracy

2. Citizens United v. Fed. Election Commn, 558 U.S. 310,(2010).

3. SpeechNow.org v. FEC, 599 F.3d 686, 698 (D.C. Cir. 2010).

4. U.S. PIRG Education Fund / Demos, Billion-DollarDemocracy. http://www.uspirg.org/reports/usp/billion-dollar-democracy

5. S.V. Dte, Crossroads GPS Redenes SocialWelare Political Action, National Public Radio,November 05, 2012. http://www.npr.org/blogs/itsallpolitics/2012/11/05/164364802/crossroads-gps-redenes-social-welare-political-action

6. For urther discussion o this phenomenon see: Blair Bowieand Adam Lioz, Auctioning Democracy: The Rise o SuperPACs & the 2012 Election, Demos/U.S. PIRG EducationFund, February 8, 2012. http://www.uspirg.org/reports/usp/auctioning-democracy

7. Kim Barker, In Montana, Dark Money Helped DemocratsHold a Key Senate Seat, ProPublica, December 27, 2012.http://www.propublica.org/article/in-montana-dark-money-helped-democrats-hold-a-key-senate-seat

8. Kathleen Hall Jamieson, High Percent o PresidentialAd Dollars o Top Four 501(c)(4)s Backed AdsContaining Deception, Annenberg Study Finds,Annenberg Public Policy Center, June 20, 2012. http://www.annenbergpublicpolicycenter.org/NewsDetails.aspx?myId=491

9. Paul Blumenthal, Dark Money In 2012 Election Tops$400 Million, 10 Candidates Outspent By Groups WithUndisclosed Donors, Hungton Post, November 2, 2012.http://www.hungtonpost.com/2012/11/02/dark-money-2012-election-400-million_n_2065689.html

10. The rule was enacted ater the Wisconsin Right to Lie case, pursued by James Bopp, where the U.S. Supreme Courtstruck down the McCain-Feingold Bipartisan CampaignReorm Acts bar on corporations and unions spending romtheir general treasuries on electioneering communications ithe ads did not contain the magic words o express advocacyor their virtual equivalent. The FEC then decided donorsonly had to be disclosed i they intended the money be usedin that way, although Congress avoided such a loophole. Fed.Election Commn v. Wisconsin Right To Lie, Inc., 551 U.S.449 (2007).

11. Alex Engler , Dark Money Organizations Change Strategiesto Keep Donors Secret , Sunlight Foundation, September 25,2012. http://sunlightoundation.com/blog/2012/09/25/dark-money-organizations-change-strategies-to-keep-donors-secret

12. AmericanActNets Channel . YouTube. American ActionNetwork, Accessed January 11, 2013. http://www.youtube.com/user/americanactnet

13. Amanda Terkel, David Gill, Single-Payer Advocate, TargetedBy American Action Network , Hungton Post, September14, 2012. http://www.hungtonpost.com/2012/09/14/david-gill-single-payer-american-action-network_n_1885554.html

14. Amanda Terkel, American Action Network Launches $1.2Million Campaign To Repeal Obamacare, Hungton Post,July 9, 2012. http://www.hungtonpost.com/2012/07/09/american-action-network-repeal-obamacare_n_1659425.html

15. See: DAngelo Gore, Fouling Lugars Foe, Factcheck.org,April 19, 2012. http://www.actcheck.org/2012/04/ouling-lugars-oe/; Lori Robertson, More Mediscare , Factcheck.org, August 4, 2011. http://www.actcheck.org/2011/08/more-mediscare/;

16. Kim Barker, In Montana, Dark Money Helped DemocratsHold a Key Senate Seat, ProPublica, December 27, 2012.http://www.propublica.org/article/in-montana-dark-money-

helped-democrats-hold-a-key-senate-seat

17. Matea Gold and Joseph Tanani, $55 million or conservativecampaigns but where did it come rom?, Los AngelesTimes, May 28, 2012 http://articles.latimes.com/2012/may/28/nation/la-na-secret-money-20120528

18. Id.

19. American Crossroads/Crossroads GPS. Outside Spending,Center or Responsive Politics, Accessed January 11,2013. http://www.opensecrets.org/outsidespending/detail.php?cmte=American%20Crossroads%2FCrossroads%20GPS&cycle=2012

20. S.V. Dte, Crossroads GPS Redenes SocialWelare Political Action, National Public Radio,November 05, 2012. http://www.npr.org/blogs/itsallpolitics/2012/11/05/164364802/crossroads-gps-redenes-social-welare-political-action

21. Blair Bowie and Adam Lioz, Million-Dollar Megaphones,Demos/U.S. PIRG Education Fund, August 2, 2012. http://www.uspirg.org/reports/usp/million-dollar-megaphones

22. Kim Barker, How Nonprots Spend Millions on Electionsand Call it Public Welare, ProPublica, August 18, 2012.http://www.propublica.org/article/how-nonprots-spend-millions-on-elections-and-call-it-public-welare


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23. Americans or Prosperity. Outside Spending, Centeror Responsive Politics, Accessed January 11, 2013.http://www.opensecrets.org/outsidespending/detail.php?cycle=2010&cmte=Americans%20or%20Prosperity

24. 990 2010 Americans or Prosperity, ProPublica, AccessedJanuary 11, 2013. http://www.propublica.org/documents/item/332581-990-2010-americans-or-prosperity

25. 990 2010 American Action Network, ProPublica, AccessedJanuary 11, 2013. http://www.propublica.org/documents/item/357315-990-2010-american-action-network

26. Paul Blumenthal, Crossroads GPS Enters Senate 2014 RaceWith Fiscal Cli Ads , Hungton Post, December 11, 2012.http://www.hungtonpost.com/2012/12/11/crossroads-gps-senate-2014_n_2277314.html

27. Brendan Fischer, Next Act or Super PACs and Dark MoneyNonprots: Lobbying to Block Compromise on the FiscalCli, Center or Media and Democracy, November 19,2012. http://www.prwatch.org/news/2012/11/11857/next-act-super-pacs-and-dark-money-nonprots-lobbying-block-compromise-scal-cl

28. Eliza Newlin Carney, Super PACs Make Move to Lobbying ,Roll Call, November 13, 2012. http://www.rollcall.com/news/super_pacs_make_move_to_lobbying-219080-1.html?pg=1

29. Viveca Novak and Robert Maguire, For Friends, CrossroadsHelps with the Tab, Center or Responsive Politics, April 18,2012. http://www.opensecrets.org/news/2012/04/or-riends-crossroads-helps-with-t.html

30. Id.

31. Report to the Permanent Subcommittee on Investigations,Committee on Homeland Security and Governmental Aairs,U.S. Senate GAO Report, Company Formations, UnitedStates Government Accountability Oce, April 2006. http://www.gao.gov/new.items/d06376.pd; Steanie Osteld, Shellgame: Hidden owners and motives , CNN, September 11,2012. http://www.cnn.com/2011/10/26/opinion/osteld-shell-companies/index.html

32. GAO Report Finds Anonymous U.S. Companies Pose Risk,Website o Sen. Carl Levin, D-Mich., April 25, 2006. http://www.levin.senate.gov/newsroom/press/release/?id=806dec2e-6bc-4d86-be0e-3d9919da450

33. Id.

34. Michael Isiko, Firm gives $1 million to pro-Romney group,then dissolves, MSNBC, August 4, 2011. http://today.msnbc.msn.com/id/44011308/ns/politics-decision_2012/#.UO7_66xg8zl

35. Amy Gardner, FreedomWorks tea party group nearly allsapart in ght between old and new guard, The WashingtonPost, December 25, 2012. http://www.washingtonpost.com/politics/reedomworks-tea-party-group-nearly-alls-apart-in-ght-between-old-and-new-guard/2012/12/25/dd095b68-4545-11e2-8061-253bccc7532_story.html

36. Fredreka Schouten, Watchdogs seek ed investigationo Illinois businessman, USA Today, January 3, 2012.http://www.usatoday.com/story/news/politics/2013/01/03/reedomworks-super-pac-money-complaint/1807651/

37. Michael Isiko, Firm gives $1 million to pro-Romney group,then dissolves, MSNBC, August 4, 2011. http://today.msnbc.msn.com/id/44011308/ns/politics-decision_2012/#.UO7_66xg8zl

38. Donovan Slack, $1m mystery donor to PAC or Romney IDshimsel, The Boston Globe, August 6, 2011. http://www.boston.com/news/nation/articles/2011/08/06/1m_mystery_donor_to_pac_or_mitt_romney_ids_himsel/

39. Russ Choma, Nonprots, Shell Corporations Help ShieldIdentity o Ad Backers, Center or Responsive Politics,October 30, 2012. http://www.opensecrets.org/news/2012/10/secret-money.html.

40. Callum Borchers, Pro-Romney super PAC declinesto give details behind $400,000 donation, The BostonGlobe, April 23, 2012. http://www.bostonglobe.com/news/politics/2012/04/23/pro-romney-super-pac-declines-give-details-behind-donation/XmLbudyAFvR1KBzCb31xVO/story.html

41. Tim Murphy, 3 Companies, 1 PO Box, and a $1 MillionSuper-PAC Git, Mother Jones, June 20, 2012. http://www.motherjones.com/mojo/2012/06/robert-t-brockman-restore-our-uture-donation

42. Luke Rosiak, Corporate shells ramp up super PACgiving, Washington Times, July 21, 2012. http://www.washingtontimes.com/blog/inside-politics/2012/jul/21/corporate-shells-ramp-super-pac-giving/

43. Sen. Carl Levin, D-Mich., Shell Corporations, AccessedJanuary 11, 2013. http://www.levin.senate.gov/issues/shell-corporations

44. GAO Report Finds Anonymous U.S. Companies Pose Risk,Website o Sen. Carl Levin, D-Mich., April 25, 2006. http://www.levin.senate.gov/newsroom/press/release/?id=806dec2e-

6bc-4d86-be0e-3d9919da450

45. Michael Beckel, Center or Public Integrity, Foreign-Owned Firm Gives $1 Million to Romney Super-PAC,Mother Jones, October 5, 2012. http://www.motherjones.com/politics/2012/10/canadian-oreign-donation-super-pac-restore-our-uture

46. Andy Kroll, How Secret Foreign Money Could InltrateUS Elections, Mother Jones, August 8, 2012. http://www.motherjones.com/politics/2012/08/oreign-dark-money-2012-election-nonprot

47. Paul Blumenthal, Dark Money Nonprot Rules Will GetReview, IRS Letter Says, Hungton Post, July 23, 2012.http://www.hungtonpost.com/2012/07/23/dark-money-nonprots-irs_n_1695510.html?utm_hp_re=elections-2012

48. Greg Colvin, A Silver Bullet That Would End SecretTax-Exempt Money In Elections, Center or Media andDemocracy. April 11, 2012. http://www.prwatch.org/news/2012/04/11432/silver-bullet-would-end-secret-tax-exempt-money-elections

49. GAO Report Finds Anonymous U.S. Companies Pose Risk,Website o Sen. Carl Levin, D-Mich., April 25, 2006. http://www.levin.senate.gov/newsroom/press/release/?id=806dec2e-6bc-4d86-be0e-3d9919da450

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