Exclusive: Largest Dark Money Donor Groups Share Funds, Hide Links

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OpenSecrets.org

Exclusive: Largest Dark Money Donor Groups Share Funds, Hide Links

by
Robert Maguire and Viveca Novak

This is the latest in an exclusive OpenSecrets Blog series about the funding and activities of politically active tax-exempt groups.

There's a new dark money game in town, one meant to further cover the tracks of tax-exempt groups that have provided major sums to help Republican causes in the 2010 and 2012 elections.

Recent tax filings by the two largest "shadow money mailboxes" -- groups that do virtually nothing but pass grants through to other politically active 501(c)(4) organizations, many of which have been big spenders on election ads benefiting the GOP -- show their financial ties run far deeper than previously known.

The groups, TC4 Trust and the Center to Protect Patient Rights -- both of which have connections to the billionaire industrialist Koch brothers -- have been playing a high-stakes game of hide-the-ball, disguising transfers of millions of dollars from one to the other behind a veil of Delaware limited liability corporations.

 

All covered up

Already, under tax law, 501(c)(4) groups -- like TC4, CPPR and nearly all the groups to which they've given money through the years -- don't have to disclose their donors. By further shrouding the recipient groups behind entities with different names (and, usually, different employer identification numbers), the donors are attempting to make it even more difficult to find out how the money is flowing.

TC4 is now out of business. But in its termination report, signed on May 14, 2013 and sent to the IRS, TC4 reported giving $27.9 million in grants to other groups between July 1, 2011 and June 30, 2012. The report was included in data posted yesterday by Resource.org.

The largest grant by far -- $14.3 million -- was sent to a group called Corner Table LLC. That's a big chunk of change to a folksy-sounding but unknown -- in the political or any other realm -- organization.

But two days after TC4's trustee finalized its termination report, the Center to Protect Patient Rights -- the other big shadow money pass-through -- signed off on amendments to its 2010 and 2011 tax filings that help solve the mystery.

The amendments say that, contrary to CPPR's earlier representations on IRS filings that it had no connected entities operating under a different name, it actually did.

One of them, according to one of the amendments, was called Eleventh Edition, which received $4.3 million from TC4 sometime between July 1, 2010 and June 30, 2011. And not only was Eleventh Edition the same as CPPR, but it had taken on a new name: Corner Table LLC.

And CPPR's other amendment indicates it has another of these units: Meridian Edition LLC -- which, the documents say, was originally called American Commitment LLC. American Committment had received a total of $9.3 million from TC4 in 2010 and 2011 (its earlier grant was unclear at first because the recipient's name was smudged on TC4's 990 return).

American Commitment is a name that has been used for several nonprofits. The incarnation that received the TC4 money (a group that seemed to disappear, along with its millions from TC4) -- is the one that shows up in CPPR's amended filing.

The image below shows TC4's contributions to CPPR:

The upshot: Now we know that CPPR -- through its previously unknown sub-units -- received a total of nearly $28 million from TC4 from August 2009 through June 2012. That's a big chunk of CPPR's overall $95 million revenue. The source of most of the rest of its funds remains publicly unknown.

Disregarded no more

These wholly-owned sub-units of larger groups have a particular designation under the law: They're known as "disregarded entities" -- meaning their different names and separate identification numbers are disregarded by the IRS for income tax purposes, and they must be reported on the same forms with their parent groups. Officially, they are "disregarded as an entity separate from its owner." They are almost always single-member LLCs.

CPPR has given out more than $70 million in grants from its inception in 2009 through the end of 2011. And we don't yet know -- because of lag time in IRS filing schedules -- what it spent in 2012, which could have been a big year for the organization.

TC4, which began operating the same year as CPPR, has made $64.7 million in grants. One of its main recipients has been a conservative voter database project, Themis Trust, started in early 2010 by David and Charles Koch, the billionaire industrialists who are major funders of the right.

Themis Trust, too, has hidden some of the grants it has received from TC4 by using disregarded entities. Under its own name, Themis received $2.5 million from TC4. But the donor group also gave $5.6 million to a Themis unit called STN LLC, and sent $1.8 million to yet another Themis LLC, DAS MGR. The grants from TC4 to Themis total $9.9 million.

In addition, TC4's final filing shows it gave a grant of $725,000 to something called ORRA LLC, which is a disregarded entity of Evangchr4 Trust.

The latter group is formally a "related organization" of Themis, according to Themis' 990. And
Evangchr4 gave out $1.2 million in grants, almost all of which went to something called CitizenLink, the c4 arm of the social conservative group Focus on the Family. The last link in that particular daisy chain of grants, CitizenLink reported to the FEC that it spent $2.6 million on independent expenditures in 2012, most of it on behalf of Republican presidential nominee Mitt Romney.

CitizenLink is just one of the tax-exempt, nondisclosing organizations that reported spending more than $250 million in the 2012 elections, according to filings made with the FEC.

TC4 has in the past given grants to several other disregarded entities of other groups, such as $891,000 it sent to PRDIST LLC -- a unit of the much better-known Americans for Prosperity. In its termination report, TC4 reported sending PRDIST another $500,000.

Then there was the $7.3 million TC4 sent to POFN LLC, a subsidiary of SGC4 Trust, which does business under the name Public Notice. TC4's final report notes another $1.7 million contribution to POFN.

There are still grantees whose true identities OpenSecrets Blog hasn't yet been able to learn: Something called TRGN LLC had earlier received $1.5 million from TC4, but the latest report shows another grant of $2.1 million. Three other groups appear on the termination report for the first time, receiving a total of a little less than $5 million: SLAH LLC, TDNA LLC and TOHE LLC. It's not clear what these groups do or whether they are related to more well-known organizations.

The existence and activities of both TC4 and CPPR were first uncovered by OpenSecrets Blog last year.

Things go better with Kochs

The connections between these groups and the Koch brothers, generous funders of conservative causes, are evident in their personnel as well as in grants.

Gretchen Hamel, the executive director of Public Notice, the recipient (through its sub-units) of $9 million from TC4, gave a presentation during at least one of the Kochs' annual conservative strategy sessions. But that's not all: Hamel was also a founding member of TC4, which from its earliest days gave to the Kochs' voter database project Themis.

Another presenter at that same conference was Sean Noble, a political consultant known for being closely connected to the Kochs' operations. He founded CPPR, and is still its president and executive director. Noble knows his way around the world of politically focused 501(c)(4)s: He also founded all three versions of American Commitment -- the most recent  of which is now run by Phil Kerpen, who's on the board of the Kochs' large (c)(4), Americans for Prosperity.

Americans for Prosperity -- which spent more than $36 million in the 2012 election cycle, almost all of used for ads opposing President Obama's re-election, according to reports filed with the FEC -- has received a total of nearly $1.4 million from TC4, and at least another $4.3 million from Noble's CPPR.

CPPR figured in a scheme last year in which a Americans for Responsible Leadership, a group founded by one of Noble's clients, funneled $11 million to advocates mobilizing against a California ballot initiative (a temporary tax increase for education) and on behalf of another one (to ban unions from using dues for political purposes).

When California's election watchdog won a court order to force ARL to disclose its donors, it revealed little: ARL got its money from CPPR, which had received it from another dark money group called Americans for Job Security. The money, then, had passed through a triple-layered curtain of nondisclosing groups, and its original source was still unknown. The state agency called it a plain case of "money laundering." The Daily Beast has reported that a grand jury has been empaneled to investigate the transactions.

Images: Photo of Sean Noble (left) with retired baseball player Steve Garvey, via Noble's Twitter feed.

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