October 31, 2016
On October 11, the Senate Leadership Fund, a super PAC affiliated with both Senate Majority Leader Mitch McConnell (R-KY) and Karl Rove, received a massive $11 million infusion of cash as part of a last ditch effort to save the GOP’s Senate majority. The money didn’t come from a billionaire though, at least not directly.
The contribution is the single largest dark money contribution ever made to a super PAC, meaning the true source of the money is still unknown. It is also one of the largest super PAC contributions ever.
The contribution was made by One Nation, a non-profit group organized under section 501(c)(4) of the tax code that does not have to disclose its donors, which is also run by the same political operatives as the Senate Leadership Fund. The two organizations are so close, in fact, their fundraising tallies are announced in tandem as part of the effort to preserve Republican control of the Senate.
According to a search on the Federal Election Commission’s (FEC) website for contributions over $10 million, One Nation’s donation is tied for the fourth largest super PAC contribution ever. Note that the search results do not include the One Nation contribution since the Senate Leadership Fund’s pre-general report was filed on October 27 and is therefore too recent to be reflected on the FEC’s website, and the authenticity of the $50 million contribution from “Statware Inc., and other firms” to Get Our Jobs Back, Inc. appears quite questionable and is not included in CREW’s analysis:
A spokesman for One Nation, which reportedly spent at least $25 million on communications targeting Senate candidates by early September, all without any disclosure to the FEC, describes the group as just an “issue advocacy nonprofit.” In reality, however, the non-profit organization acts as a thinly-veiled political organization that allows donors, who might otherwise give to the super PAC, to remain anonymous.
When the Crossroads operation was first set up, it consisted of just a section 527 political organization called American Crossroads (now a FEC-registered super PAC) that filed disclosure reports with the IRS, regularly revealing contributors and expenditures. But after the founders of that group faced challenges raising money from donors who did not want their names disclosed, they formed Crossroads GPS as a 501(c)(4) organization, allowing donors to remain anonymous as long as politics did not become the group’s major purpose. Steven Law, the president of Crossroads GPS, American Crossroads, the Senate Leadership Fund, and One Nation, conceded “the value of confidentiality to some donors” when the group formed, though he denied that was the driving purpose for Crossroads GPS.
With its giant contribution to its related super PAC, One Nation was able to move anonymously contributed money into a disclosing entity while maintaining the secrecy of the donors. Of course, this isn’t the first time that a non-profit has made a large contribution to a super PAC, resulting in dead end disclosure.
But no prior example comes close to the scale of One Nation’s contribution to the Senate Leadership Fund. There is no way to know if the $11 million was a transfer of bundled contributions, perhaps drawn from the $13.3 million the group raised in September, or the movement of a single donor’s funds, which stopped in One Nation’s bank account to gain an invisibility cloak before ending up in the Senate Leadership Fund’s coffers.
The latter scenario is not at all implausible. Earlier this week, the British newspaper The Telegraph reported on how operatives tied to a pro-Donald Trump super PAC told undercover reporters how a fictitious Chinese donor could make a forbidden foreign contribution to the super PAC by first funneling the money through a for-profit company and then two 501(c)(4) organizations.
If they had followed through with the scheme, the super PAC’s disclosure reports to the FEC would have looked very similar to the Senate Leadership Fund’s: a dark money non-profit listed as the donor, not the true source of the money.
Ian Prior, the spokesman for both One Nation and the Senate Leadership Fund, recently told a reporter “there’s no such thing as a dark money super PAC” because “super PAC donors are disclosed with the FEC.” Except, of course, when the super PAC is funded by dark money.