Illinois business group’s big political spending boosted by dark money contribution
In late 2018, a spike in political spending associated with the Illinois Manufacturers Association raised eyebrows in the state. It also raised questions about where the influential business group, which reportedly had a total operating budget around $4 million at the time, got the $6.3 million it pumped into two state-focused super PACs targeting races in Illinois.
Now, a tax return examined by CREW reveals that a little-known nonprofit organization, Tenth Amendment Project Inc., provided a major influx of funding to the Illinois Manufacturers Association that year, giving the trade association $4.8 million. It could be the missing piece that helps explain the Illinois business group’s huge spending in 2018. Since the Tenth Amendment Project does not disclose its own donors the original source of the money remains unknown.
But the disclosure of the contribution could rekindle speculation that the wealthy Ricketts family that owns the Chicago Cubs was behind the manufacturers group’s 2018 surge in political spending. The Tenth Amendment Project generated its own suspicions that it was tied to the Ricketts in 2018 when it popped up with ad campaigns targeting candidates in several states.
The contribution also highlights apparent discrepancies between the Illinois Manufacturers Association’s own 2018 tax return and other public records. Despite the $4.8 million contribution, for instance, the Illinois Manufacturers Association reported that it only brought in a little more than $3.7 million in total revenue in 2018, a more than $1 million inconsistency between the two filings.
One of the first spotlights on the Illinois Manufacturers Association’s extraordinary burst of political spending came on October 12, 2018 when Greg Hinz, a political columnist for Crain’s Chicago Business, published a story about how the then-retiring CEO of the Illinois Manufacturers Association, Greg Baise, was “going out with a bang, dropping a ton of association cash on what appears to be a long-shot race to unseat an incumbent whom other business groups strongly support.” The incumbent was Chicago Alderman Tom Tunney, who represents the ward that includes the home of the Cubs, Wrigley Field.
Hinz noted that The JOBS PAC, a super PAC funded with more than $1 million from the Illinois Manufacturers Association and for whom Baise was then serving as treasurer, was responsible for web ads and flyers attacking Tunney. He also raised the idea that the Ricketts could be involved, noting his previous reporting that the Ricketts were helping bankroll a dark money group called Neighbors for A Better Lakeview that targeted Tunney with mailers suggesting he was responsible for property tax increases.
The rumblings about the Illinois Manufacturers Association’s campaign season largesse, and how the Ricketts might be involved with it, picked up from there. On October 18, Mark Maxwell, the capitol bureau chief for WCIA in Springfield, IL, tweeted about how “a lot of dark money” was “passing through [the] Illinois Manufacturer’s [sic] Association” into another super PAC, the Economic Freedom Alliance, that was backing then-Gov. Bruce Rauner’s reelection (the super PAC, which received $5.3 million from the Illinois Manufacturers Association, targeted Tunney too).
“But whose money is it?” Maxwell asked rhetorically. “Several GOP sources think it could be Todd Ricketts,” he answered, referring to the Cubs co-owner who had been named finance chair of the Republican National Committee earlier in the year.
The Ricketts soon sought to smother the rumors. The next day, Politico’s Illinois Playbook ran an item in its newsletter that led by stating, “The Ricketts family says there’s no truth to talk that they’re behind dark-money schemes to get Gov. Bruce Rauner elected and Ald. Tom Tunney booted—or that Todd Ricketts is trying to position himself as the next Illinois GOP leader.” Going even further, “a source knowledgeable about the family’s personal and business interests” claimed that the Ricketts family “doesn’t operate in the dark-money world. They are transparent about their giving even when it’s not popular.”
The denial, and the quote about the Ricketts disinterest in dark money, caught the attention of Rich Miller, the author of the Illinois inside politics newsletter Capitol Fax, who wrote later that day that he “almost spit out my coffee reading those Ricketts family source quotes.” “I mean, ‘This family doesn’t operate in the dark-money world’? You’re joking, right?” Miller then listed a series of news stories describing dark money efforts believed to be associated with the Ricketts.
Crain’s Hinz followed up on October 22 with another column about the Illinois Manufacturers Association’s political spending spree and the intrigue it was stirring up among insiders. Noting that Baise had told him the Illinois Manufacturers Association’s total operating budget was around $4 million and that the Economic Freedom Alliance had already reported receiving $5.3 million from the organization, Hinz observed that the “trade group does not have that kind of free cash lying around. So, where did it get it?”
“GOP insiders” suggested to Hinz that “some combination” of Todd Ricketts and hedge fund manager Ken Griffin, a major political donor in the state, was responsible. A spokesman for the Ricketts did not respond to Hinz’s requests for comment. Following publication of this report, a spokesperson for Griffin denied to CREW that he was involved in the contributions. For their part, neither Baise nor his then-impending successor, Mark Denzler, would say who provided the money the business group was channeling into super PACs. Baise would only tell Hinz the money “comes from members and supporters of our efforts.” Denzler previously told Hinz that the Ricketts family and the Cubs were not members of the Illinois Manufacturers Association, though that does not necessarily rule out that they were “supporters”of the group’s efforts.
According to Hinz, both Baise and Denzler “strongly dispute[d] contentions that, with hidden political donors now bringing more money than IMA’s program activities, the prominent group has become mostly a political front for laundering dark money.” “I adamantly disagree with that characterization,” Baise told him in an interview.
A Little Known But Big Spending Nonprofit
Despite such protests, it certainly appears that hidden political donors were pumping outsized sums into the Illinois Manufacturers Association’s coffers around the time it was pouring millions into super PACs. As tax records now make clear, the Tenth Amendment Project, a nonprofit organization exempt from taxation under section 501(c)(4) of the tax code, gave the manufacturers group $4.8 million in 2018, enough to cover a significant portion of the contributions it made in its own name to super PACs that same year.
Since the Tenth Amendment Project holds itself out as a nonprofit organization rather than a political committee, it is not required to disclose its own donors, so the original source of the funds remains unknown. While there is no direct evidence that the Ricketts have funded the Tenth Amendment Project, the group’s political activity and some of the individuals involved with it have spurred suspicions that the nonprofit is a vehicle for the family’s spending.
The Tenth Amendment Project was formed in Virginia in March 2017 by lawyers at the firm Clark Hill. It’s initial chairman was Daniel Conston, a political consultant who became president of the American Action Network and the Congressional Leadership Fund in 2019, and its original treasurer was Maria Wojciechowski. It was through Wojciechowski’s involvement that people used to first draw a potential connection to the Ricketts when the Tenth Amendment Project began paying for ads targeting political races.
Wojciechowski has also served as treasurer for Future45, a federal super PAC, and 45Committee Inc., a dark money nonprofit. According to Politico, in 2016, Todd Ricketts established control of Future45 as it became a major super PAC backing former President Trump’s election. Since 2016, J. Joe and Marlene Ricketts have contributed more than $5 million to the super PAC. In 2016, Todd Ricketts also reportedly pitched donors reluctant to be publicly associated with Trump to give to 45Committee since their support would be able to be kept secret due to the fact that as a section 501(c)(4) social welfare nonprofit it does not disclose its donors. (Brian Walsh, the president of Future45, told the Omaha World-Herald in May 2018 that his group didn’t have any affiliation with the Tenth Amendment Project and suggested they simply used the same vendor for compliance work.)
According to the Tenth Amendment Project’s 2018 tax return, both Conston and Wojciechowski left their roles with the group in July 2018. Conston was replaced by James McKay, who runs the New Hampshire-based political consulting firm Norway Hill Associates, according to the Rapid City Journal.
McKay also has past ties to Ricketts-related political efforts. In June 2015, WMUR in New Hampshire reported that Ending Spending Action Fund — a super PAC founded by Joe Ricketts — was planning a “multi-million dollar, multi-platform paid media effort, including television, radio and online advertising” in the 2016 New Hampshire Senate race between Maggie Hassan and Kelly Ayotte. The TV station reported that the chief consultant for the project would be veteran Republican strategist David Carney, and that McKay, his partner in Norway Hill Associates, would be working with him “in a joint general consulting role.” During the 2016 election, Ending Spending Action Fund, which had shortened its name to ESAfund, paid Carney and McKay’s Norway Hill Associates $1.6 million for independent expenditure services. The Tenth Amendment Project later paid Norway Hill Associates $105,695 for “strategy consulting” in 2018.
Some of the Tenth Amendment Project’s 2018 spending benefited candidates that members of the Ricketts family supported. In Nebraska, for instance, the Omaha World-Herald reported that the group paid for radio ads attacking farmers who were challenging candidates supported by Todd’s brother, Gov. Pete Ricketts. A spokesperson for Gov. Ricketts denied that the governor had any knowledge of the Tenth Amendment Project. Gov. Ricketts himself told a local TV station that he was unfamiliar with the group and that he hadn’t “put any money into that.”
In Florida, the Tenth Amendment Project paid for attack ads targeting Adam Putnam, who was running against then-Rep. Ron DeSantis (R-FL) in the GOP gubernatorial primary. TCPalm noted that the Ricketts family had previously donated to DeSantis’ campaigns and that DeSantis’ campaign manager worked for a consulting firm that also counted Pete Ricketts among its clients.
In his October 22 column, Hinz also commented on “an additional quirk” to the Illinois Manufacturers Association’s political spending that had “raised some eyebrows”: a major vendor for the Economic Freedom Alliance (as well as The JOBS PAC) was Xpress Professional Services, a for-profit subsidiary of the business group formed in 2004 “to serve the business community in the political arena.” Hinz suggested that this meant that “a chunk of the money that IMA collects from someone and gives to the alliance gets returned to it because it’s spent on ads crafted” by a firm wholly-owned by the business group.
Baise, who led Xpress, appears to have brushed off the idea that anything was untoward with the set up when he told Hinz, “I can assure you my board members know what’s being spent.” Baise also said that the public disclosures “speak for themselves.”
Except, at least when it comes to the Illinois Manufacturers Association’s 2018 tax return, the disclosures don’t appear to speak for themselves. Both the $4.8 million the Tenth Amendment Project reported giving to the Illinois Manufacturers Association and the $6.3 million the super PACs reported receiving from the business group do not square with the numbers reported on the group’s tax return available on the IRS website.
According to the return, which was filed in November 2019 and covers the 2018 calendar year, the Illinois Manufacturers Association took in $3.7 million in total revenue, most of which came from member dues. The business group told the IRS it only raised $135,328 from contributions and grants. There does not appear to be any way that the Tenth Amendment Project’s $4.8 million contribution could be accounted for in those numbers.
On the spending side, despite the $6.3 million in super PAC contributions disclosed in Illinois state campaign finance records, the Illinois Manufacturers Association told the IRS it spent a little less than $3.5 million overall in 2018. Most of the reported spending was dedicated to compensation and employee benefits.
The millions in political contributions are nowhere to be found on the tax return. While the business group acknowledged engaging in political activity, it only disclosed spending $20,000 on directly or indirectly influencing elections, which it described as payments to Manufacturers Political Action Committee, a traditional political action committee affiliated with the manufacturers group. The contributions were also not disclosed on the form typically used to report grants to other organizations. In fact, the Illinois Manufacturers Association did not include the form, known as Schedule I, in its tax return and reported it did not make any such grants.
The Tenth Amendment Project, however, did file a Schedule I with its 2018 tax return, which is where it disclosed its giant contribution to the Illinois Manufacturers Association. The money transfer was easily the largest expenditure by the nonprofit organization, which spent $9.8 million overall that year.
The contribution to the Illinois Manufacturers Association, which appears to have ended up bankrolling super PAC activity, was crucial to keeping the Tenth Amendment Project’s political activity from accounting for a majority of its overall activity. On its tax return, the Tenth Amendment Project reported spending $2,651,758 on political activity, which consisted of $656,718 in direct expenditures described as “political strategy consulting and polling” and $1,995,000 contributed to two federal super PACs that spent on state-level elections. That spending accounted for a little more than a quarter of the Tenth Amendment Project’s total spending, well under the 50 percent threshold that could turn politics into the group’s primary activity, which would be a violation of its tax-exempt status as a social welfare organization.
The $4.8 million the Tenth Amendment Project gave to the Illinois Manufacturers Association effectively offset the Tenth Amendment Project’s political spending. If the Tenth Amendment Project had given the money directly to the state-level super PACs the Illinois Manufacturers Association funded, it would have needed to report the expenditures to the IRS as political activity, which would have meant it spent more than three quarters of its funds on politics. That would have been a problem. The nonprofit was able to avoid dealing with it though by giving to the Illinois Manufacturers Association instead.
Of course, that’s assuming the Tenth Amendment Project intended for its contribution to pass through the Illinois Manufacturers Association to the two super PACs. There isn’t enough information in the public record to say so definitively, but the trail of transactions continues to raise questions about both groups’ activity in 2018 and how it accounted for it in its tax returns. Ultimately, the question looming over all of this is where did an almost completely unknown group get millions of dollars that ended up being spent to influence elections?
This report was updated on July 23, 2021 to include the denial by a spokesperson for Ken Griffin that he was involved in the contributions.