Thanks to a loophole in federal election law that allows last-minute campaign spending to go undisclosed for months, an Arizona nonprofit was able to hide $4 million it spent during last year's election — 40 percent of its expenditures on campaign 2012 — until earlier this year.
At the end of last year, Americans For Responsible Leadership had disclosed spending about $5.4 million on federal races, the vast majority of it either bashing President Barack Obama or lauding his Republican opponent, Mitt Romney. But in a little noticed filing made nearly three months after the election, the group disclosed spending another $4.2 million on Nov. 5 and 6, of which $2.2 million was spent on Nov. 6, Election Day. Along with some other minor changes, the final filing brought the groups' total spending on federal elections to $9.8 million.
In January, ProPublica reported that ARL told the Internal Revenue Service it didn't plan to be involved in politics in an application for tax exempt status. After that story ran, an ARL attorney emailed an letter to the editor at the Arizona Capitol Times to say that the error on the application had been fixed.
While outside spending typically has to be disclosed within either 48 hours more than 20 days prior to an election and 24 hours up to the election, the law only requires disclosure of independent expenditures made "more than 24 hours before the day of an election."
Because Americans For Responsible Leadership's late spending came less than 24 hours before 12:01 a.m. on the day of the election, the group didn't file a report at the time of the spending. And because nonprofits are only obligated to file quarterly reports (and not all do), it wasn't until Jan. 31 that the group disclosed the additional spending. All the money that the nonprofit spent on elections was described as going towards "voter contact phones." The biggest recipient was Phoenix-based Direct Response, which earned $6.3 million in fees.
Although Americans for Responsible Leadership's last-minute spending spree has been under wraps, the group has nevertheless gained notoriety for pushing the limits of campaign finance rules. In March, the Huffington Post reported that the California Attorney General's office had issued two rounds of subpoenas targeting both ARL and its associates for what California election authorities described as "campaign money laundering".
The case began last year when Americans for Responsible Leadership gave $11 million to a California PAC that opposed a tax hike measure and supported another initiative that would bar labor unions from raising political money through payroll deductions. Described at the time as the biggest single donation in California electoral politics, it was a surprising move for a group with deep Arizona roots. ARL's president, Kirk Adams, was speaker of the Arizona state house until 2012, when he ran for Congress and lost. Robert Graham, described as the group's board president on tax filings dated last Nov. 19, was an unsuccessful GOP candidate for Arizona governor in 2010 and is now chairman of the state Republican party. Barrett Mason, a spokesman for ARL, said that Graham hadn't been associated with the nonprofit since late last year, when he ran for state party chairman.
After California's Fair Political Practices Commission began looking into Americans for Responsible Leadership's $11 million donation, the group disclosed that the money had been moved through two other non-profit groups. The money was originally given by Americans for Job Security, a DC-based non-profit, to the Center to Protect Patient Rights, which gave the money to ARL. Who originally gave the money to Americans for Job Security is still unknown. Tara Stock, a spokeswoman for the commission, said she couldn't comment on an ongoing investigation.
The Center to Protect Patient Rights has given tens of millions to politically active conservative groups; its president, Sean Noble, has extensive ties to David and Charles Koch, according to the Center for Responsive Politics.
Noble, a political consultant who served as chief of staff for former Rep. John Shadegg, R-Ariz.,, worked for years in Arizona politics and appears to be close with the leadership of Americans for Responsible Politics. A post on Noble's blog, identifies Kirk Adams, ARL's president, as a client. In another post this January, Noble applauded former ARL director Graham's victory for state Republican chairman. When Sean R. McCaffrey, a past executive director of the state party, congratulated Noble for "a nicely run leadership race" in the blog comments, Noble denied helping, writing: "Thanks for the compliment, but I didn't run Graham's race (as much as I'd like to take credit for it)."