TRUTH SQUAD SPECIAL REPORT: Shadow groups dominate political ads

EDITOR’S NOTE: Throughout the 2010 election season, researchers Center for Michigan’s Truth Squad have often found mysterious organizations at the root of some of the most misleading and nasty political ads. Today, Truth Squad referee Rick Haglund examines shadow ad campaigns in detail. For our daily Truth Squad ad foul calls, please visit www.michigantruthsquad.com.

BY RICK HAGLUND

Lansing Mayor Virg Bernero didn’t spend a dime on television advertising in winning the Democratic nomination for governor last summer.

He didn’t need to. A group calling itself the Genesee County Democratic Committee ran $2 million worth of television ads in a shadow campaign supporting him.

That was more than double the amount House Speaker Andy Dillon–Bernerno’s opponent in the primary election–spent on his own unsuccessful effort to win the Democratic nod for governor.

What is the Genesee County Democratic Committee and who is funding it? No one knows, exactly. Or at least those who do are keeping it hidden from the public.

State and federal laws allow such issue groups to raise an unlimited amount of money from donors who can remain anonymous as long as these groups do not coordinate with candidates or parties.

Campaign finance watchdogs say the lack of disclosure by organizations that are playing an ever-larger role in political campaigns is a threat to the democratic process, creating the possibility that office holders are beholden to mystery donors.

“If an interest group or individual spends $1 million on a Supreme Court race to support a candidate they believe will be sympathetic to their position in a case in the appeal pipeline, we should know about it,” said Rich Robinson, executive director of the Michigan Campaign Finance Network.

Labor unions reportedly funneled millions of dollars in donations to the Genesee County Democratic Committee, which ran the pro-Bernero ads.

Robinson says the ads likely played a strong role in Bernero’s primary win.

“Until Virg’s secret friends came up with $2 million that they funneled through the Genesee County Democratic Committee, he was 20 points behind in the polls,” Robinson said.

The committee is not registered as a political group with the Michigan Secretary of State’s office, nor is it registered as a corporation with the state.

Sheridan Lee, described in media reports as the group’s treasurer, did not respond to several requests for comment by the Truth Squad.

“You have reached the Lee residence—home of good Democrats,” the answering machine greeting at his Flushing home says.

Other Candidates, Other Mystery Groups

Bernero was by no means the only candidate benefiting from such organizations. Another secretive group, Advance Michigan Now, ran $444,650 worth of television adds supporting Dillon. Its president is former state Rep. Steven Tobocman.

Dillon also was the beneficiary of $427,925 worth of television ads run by Northern Michigan Education Fund, which reportedly has ties to the Roscommon County Democratic Party.

Robinson’s organization, which tracks campaign spending, found that $4.6 million in candidate-focused advertising during the recent gubernatorial primary was spent by eight secretive issue groups.

That was 43 percent of $10.6 million in total television ad spending during the gubernatorial primary campaign.

Robinson has publicly called on Bernero and Republican gubernatorial nominee Rick Snyder to announce what they plan to do to “clean up our stealth campaigns.”

No Sense of Urgency from Candidates

But neither they nor most others with the power to force disclosure of contributions to shadowy issue groups seem particularly anxious to pull the curtain and expose the groups’ financial secrets.

“I guess we don’t want to do the heavy lifting. It takes too much thinking,” said Rep. Lee Gonzales, a Flint Democratic who supports more disclosure by issue groups. “I think this is going to take outside pressure.”

Cullen Schwarz, a spokesman for Bernero, said in a prepared statement that Bernero believes there should be more openness in the financing of political campaigns.

“Virg believes that continual efforts to promote transparency and accountability are important to our democracy,” the statement said “He’ll undertake a variety of reforms to help make the democratic process in Michigan as fair and transparent as possible.”

Snyder spokesman Bill Nowling says Snyder “hasn’t thought that far ahead” on financial disclosure for issue groups. But he says Snyder believes these groups should be more transparent.

“He certainly would take a look at legislation that comes his way,” Nowling said. “The voters need to know who is financing campaigns, who is behind these ads and who is participating in the election process.”

State Democratic lawmakers introduced a package of bills earlier this year calling for more disclosure by corporations, which are now allowed to make campaign contributions.

The bills were introduced after a controversial U.S. Supreme Court ruling earlier this year in the Citizens United case eased restrictions on corporate spending in election campaigns.

Robinson described the bills as an empty gesture that would require disclosure only in the case of groups running ads that specifically asked people to vote for candidates.

“It’s like smelt dipping with a hula hoop—a grand gesture that means nothing,” he said.

In 2006, Secretary of State Terri Lynn Land called on the Legislature to enact financial disclosure requirements for all issue groups running ads within 60 days of an election. Lawmakers took no action.

Most of these issue groups operating in Michigan are nonprofit corporations that are not required to disclose their donors and contributions under the Michigan Campaign Finance Act.

Others, the so-called 527 soft-money groups (think “Swift Boat Veterans for Truth”) are required to disclose donors to the Internal Revenue Service. But those disclosures are sometimes made long after an election cycle has passed.

Concern Across the Country

While lawmakers are reluctant to force anonymous donors of issue groups into the sunlight, the practice is coming under increasing public scrutiny.

The New York Times published two front-page stories last week about shadowy issue groups that are playing a major role in financing campaigns in the upcoming November election.

And the Wall Street Journal revealed in August that the Michigan Chamber of Commerce has been the biggest contributor so far this year to the Republican Governors Association. The chamber has given the governors association a little more than $2.5 million this year, according to the Journal.

Chamber officials wouldn’t comment for this story, but told the Lansing State Journal that the money came from private, anonymous donations by its members.

The Republican Governors Association has been running ads in Michigan praising Snyder.

And last week it began running an ad questioning the amount of money Bernero allegedly spends on office expenses, including meals, pencils and maintenance of his fish tank.

That ad, which also praises Snyder, uses some images that appear to be from Snyder’s own ads.

Virginia Group Underwrote Attacks on Hoekstra

One of the Times’ stories focused on a group called the Americans for Job Security, which the newspaper described as “a front for a coterie of political operatives, devised to sidestep campaign disclosure rules.”

While the group claims to be a nonprofit organization promoting free markets and “pro-paycheck public policy,” the Times said it has connections to Republican campaigns and spent $6 million on primary election ads.

The Alexandria, Va.-based group played a major role in Michigan’s Republican gubernatorial primary, spending $753,115 on television ads criticizing U.S. Rep. Pete Hoekstra, one of five candidates in that primary.

That was the second-highest amount of spending by in issue group in the primary behind the Genesee County Democratic Committee, according to the Michigan Campaign Finance Network.

Several West Michigan television stations pulled one of the Americans for Job Security ads after Hoekstra complained it was “maliciously false and misleading.”

The Michigan Truth Squad called “fouls” on two of the organization’s ads, saying they misstated Hoekstra’s record and made misleading claims about him. (Disclosure: the Truth Squad is a project of The Center for Michigan and Rick Haglund is one of the squad’s “referees.”)

Mystery Foundation Went After Cox

Another shadowy issue group, the Foundation for a Secure and Prosperous America, spent $212,987 on television ads attacking Attorney General Mike Cox, another failed Republican candidate for governor.

The foundation, based in Alexandria, Va., says it is focused on ways to reach consensus on fighting terrorism and controlling federal spending.

Its ads suggested Cox was covering up information in his investigation of a notorious, never-proven party involving former Detroit Mayor Kwame Kilpatrick at Kilpatrick’s city-owned residence, the Manoogian Mansion.

Those ads drew “flagrant fouls” from the Truth Squad for innuendo and “the worst kind of anonymous political bomb throwing.”

Cox, who was a front-runner for the Republican gubernatorial nomination, attributed his loss in part to the ads’ effectiveness in raising questions about his role in investigating the alleged party. But at the same time, the Truth Squad documented that a former extern in Cox’s office incorporated a shadow group called Michigan Taxpayers Alert which launched last-minute attack ads against Hoekstra and Snyder.

While these issue groups are supposed to be independent of candidates, there is a widespread suspicion that they are working hand in hand.

Snyder, Cox, Hoekstra and Oakland County Sheriff Mike Bouchard, a fourth Republican in the gubernatorial primary, accused each other of being behind the various issue group attack ads.

And, of course, they all denied any involvement with the issue groups.

No Agreement on Disclosure Reforms

All of this has led Democrats and Republicans alike to say that there should be full disclosure of names of those running these groups, as well as the names of donors and dollar amounts of their contributions.

But they have different ideas for accomplishing that goal.

Greg McNeilly, a Lansing-based Republican political consultant, favors unlimited donations in political campaigns, but says they should be disclosed online as soon as the donations are made.

“There should be transparency without limiting political speech,” said McNeilly, who ran Republican Dick DeVos’ campaign for governor in 2006.

Full disclosure could reduce the amount of money contributed by donors and result in more honest campaigns, McNeilly said.

“Donors might not write as big a check if their names were disclosed,” he said. “And there might be more accountability in campaign advertising.”

McNeilly sued the state in June seeking to overturn a 1976 limit on campaign donations by individuals. Those limits are $500 on a state House race and $1,000 for a state Senate campaign.

His lawsuit claims inflation has eroded the value of those donations. He also claims the limits are unconstitutional.

But a federal judge in August refused McNeilly’s request for a preliminary injunction that would have lifted the caps on the upcoming November election.

The stalled Democratic bills in the Legislature would require disclosure of corporate campaign contributions and put new restriction on corporate spending.

Gonzales, the state lawmaker from Flint, says the disclosure provisions should apply to the unregulated issue groups, as well.

“Legislatures are supposed to be guardians of the public interest,” he said. “That’s serious.”