Two dark money groups quietly filed paperwork terminating their corporate existence after CREW filed complaints against them with the Federal Election Commission related to political activity backed by undisclosed donors, continuing a pattern of groups shutting down in recent months.
In late November 2020, CREW filed complaints against three nonprofits and a super PAC over their efforts to funnel money from anonymous sources into the 2018 elections. Since then, two of the nonprofits, the Government Integrity Fund and the Jobs and Progress Fund, terminated their operations, a move that could impact how the FEC rules on the complaints.
The Government Integrity Fund, which CREW alleged acted as an anonymizing conduit for contributions to a super PAC backing then-Rep. Scott Taylor (R-VA) in the 2018 election, began the process of dissolving its corporate status on December 22, 2020. The group effectively ceased its operations by New Year’s Eve.
The nonprofit had a long history of spending secret funds to influence elections that it carried on to the very end. Georgia United Victory, a super PAC that backed now-former Sen. Kelly Loeffler’s (R-GA) reelection efforts, reported receiving $25,000 from the Government Integrity Fund on December 23, 2020, the day after the nonprofit began shutting down.
The Jobs and Progress Fund, which CREW argued failed to register and report as a political committee despite spending more than half its funds influencing elections in multiple years, took longer to shut down. The nonprofit didn’t start its corporate termination process until February 26, 2021. It was effectively closed on March 4, 2021.
The group’s last known moment of political activity came on October 29, 2020 when it gave $10,000 to Fighting for Kansas PAC, a super PAC that backed now-Rep. Jake LaTurner (R-KS) in his House race. The Jobs and Progress Fund was the super PAC’s primary funder, giving it $260,000 between July and October 2020.
Both the Government Integrity Fund and the Jobs and Progress Fund have not been required to disclose their donors due to their claims that they were “social welfare” nonprofits rather than political committees. But CREW’s complaints, if successful, could lead to the disclosure of some of the secret funders behind the groups’ political activity.
The sudden shutdowns of the Government Integrity Fund and the Jobs and Progress Fund mark the second and third time since the FEC regained a quorum in December 2020 that a nonprofit organization named as a respondent in a still-active CREW complaint closed up shop. Within weeks of the three new FEC commissioners’ Senate confirmation, both Independence and Freedom Network, a “social welfare” nonprofit,” and its subsidiary, LZP LLC, filed paperwork with the Ohio Secretary of State’s office to dissolve their corporate status. In its complaint to the FEC, CREW argued that LZP LLC had been used as a conduit vehicle for unknown donors to pump $270,000 into a super PAC that ran attack ads in an Ohio state legislative race in 2018.
As CREW noted when Independence and Freedom Network and LZP LLC’s terminations were discovered, the move to shut down while an FEC complaint is still pending could be a real factor in the complaint’s ultimate resolution. In the past, FEC commissioners have cited a nonprofit ceasing its activity as a justification for invoking prosecutorial discretion as they sought to dismiss an enforcement action.
The FEC, however, still can (and should) take action on CREW’s complaints against the recently terminated nonprofits. In 2019, the FEC forced a dark money group called Americans for Job Security to register as a political committee and to report its donors and disbursements from previous election cycles despite the group being defunct. The disclosure marked the first major release of dark money sources in the post-Citizens United era.
Unfortunately, the move of politically active nonprofit organizations shutting down after being brought to the attention of the FEC in a manner that could expose their secret funders to sunlight is becoming all too common. Two other nonprofits, Freedom Frontier and Freedom Vote, that were named as respondents in still-pending FEC complaints CREW filed in 2018 also dissolved as corporate entities after the complaints were lodged.
While it is impossible to determine the precise reason these nonprofits shut down without more information than is currently in the public record, an inference that their action was taken to stymie accountability from the FEC is supported by the known reasoning of another nonprofit that terminated while an FEC complaint was pending. That case, involving a nonprofit known as the Commission on Hope, Growth & Opportunity (CHGO), saw the FEC deadlock, with the anti-enforcement bloc of commissioners pushing to close the file in an “exercise of [the FEC’s] discretion.” To support their position, the three “controlling” commissioners cited, among other things, the fact that CHGO “no longer existed” having “filed termination papers with the IRS,” which occurred after the initial complaint that triggered the case was filed. (CREW also filed a complaint against CHGO and later sued the FEC when the file was closed without action, ultimately resulting in a controversial — and CREW believes incorrect — ruling by the D.C. Circuit court that FEC refusals to pursue complaints based on “prosecutorial discretion” cannot be subject to judicial review.)
As part of its investigation of CHGO, the FEC’s staff discovered an email from a consultant for CHGO suggesting to his colleagues that the nonprofit be terminated “most quickly” because of the “outstanding matter at the Federal Elections [sic] Commission” and the “sense … that we ought to shut it down to make things less complicated moving forward.” Following that advice apparently did simplify matters for the nonprofit as it provided one of the hooks three Republican commissioners used to justify blocking action that could have required CHGO to register and report as a political committee.
To the detriment of efforts to hold accountable those who seek to evade the law’s requirements that money influencing America’s elections be disclosed, closing down nonprofits when there is an “outstanding matter” at the FEC appears like it has become standard practice for many dark money groups. The FEC, however, does not have to allow this to be an effective tactic. The agency can still pursue disclosure through the people who ran and maintain the records of these technically defunct corporate entities.