We Must Shine Light on Dark Money Scams

Corey Goldstone
Nov 3, 2016
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Senate Majority Leader Benefiting from Dark Money; Blocking Efforts to Reform Disclosure

Last week, a super PAC associated with Senate Majority Leader Mitch McConnell received an $11 million donation from Karl Rove’s One Nation, a 501(c)(4) organization that keeps its donors secret.

A combination of Supreme Court decisions and lax enforcement from the Federal Election Commission and the Internal Revenue Service has allowed groups like the Senate Leadership Fund – which is closely linked to McConnell - to use nonprofits like One Nation as a conduit for secret campaign cash.

And as recent reports have demonstrated, that secret cash could be hiding foreign money.

Last month, CLC filed a complaint against the pro-Trump Great America PAC after its leaders were secretly videotaped arranging to help a Chinese businessman funnel $2 million into Great America PAC through a for-profit company and two 501(c)(4) organizations that keep their donors secret.

Might One Nation similarly be disguising foreign funds? Who knows!

Even though super PACs like Senate Majority Fund must publicly disclose their donors, wealthy (or foreign) donors can keep their identities secret by giving to a 501(c)(4) like One Nation, which then gives to a super PAC. The FEC only requires the super PAC to disclose One Nation as the donor, keeping the true sources of the funds a secret.

This roadblock to reform is straight out of the Colbert Report evasion, where comedian Stephen Colbert showed the country how easy it is to sidestep disclosure requirements. Colbert demonstrated the scam by which operatives like Karl Rove launder “dirty money” to super PACs through secret 501(c)(4)s.

As the New York Times reported, polls show that three-quarters of self-identified Republicans support requiring more disclosure by outside spending organizations. In fact, 1.2 million Americans called on the Securities and Exchanges Commission (SEC) to issue a rule requiring public companies to disclose their political spending.

Although Republican and Democratic voters want to shine a light on dark money, some elected officials want to hide the sources of their support from the public – including Sen. McConnell.

As recently as 2007, McConnell declared, “we ought to have full disclosure of all the money that we raise and how it is spent.” After Citizens United v. Federal Election Commission (2010), he changed his tune, and is now a vehement opponent of transparency, blocking bills such as the DISCLOSE Act.

Partner organizations like Common Cause are working diligently to encourage people to sign a petition calling on the IRS to close the 501(c)(4) loophole.

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Further reading on the Great America PAC foreign money complaint: Sunlight Foundation

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