New Hampshire Dempcrats Are Supported By The Same Dark Money They Rail Against

Five Dollars In Hand
Five Dollars In Hand

By: Robert Maguire and Ashley Balcerzak

This story was cross-posted at The Daily Beast.

If hypocrisy is the coin of the realm in politics, then spending by a Democratic dark money group in New Hampshire's Senate race could be Exhibit A.

For years, Democrats have blasted Republicans' use of unlimited secret money in elections. Senate Minority Leader Harry Reid has very publicly tangled with the billionaire industrialists Charles and David Koch, whose network of dark money groups have spent hundreds of millions of dollars trying to influence races over the last five election cycles. And in New Hampshire, Democratic Gov. Maggie Hassan, running to unseat incumbent GOP Sen. Kelly Ayotte, is selling herself to voters as someone who has stood up to "dark money groups like the Koch Brothers' Americans for Prosperity."

There's one problem: Hassan herself is receiving millions of dollars in ground support from a 501(c)(4) social welfare organization called Majority Forward, which is run by Democratic operatives close to Reid. Not only has the group not disclosed its donors to the public, but it's also timing its spending to avoid reporting the New Hampshire electioneering to the Federal Election Commission.

The only difference between Majority Forward and many of the groups linked to the Koch Brothers or Karl Rove is that Democrats are the beneficiaries, and that seems enough to quiet progressive calls for transparency.

FEC data shows Majority Forward has spent a sizable $2.7 million in the two tightly contested Senate races in Pennsylvania and Nevada. But nowhere in the records is there mention of the New Hampshire outlays.

Majority Forward's investment in the Granite State dates at least as far back as April, when it paid for web ads targeted at Ayotte and other Republican senators in Pennsylvania, Ohio, Wisconsin, and Kentucky -- three of whom are also scrambling to keep their seats.

And an analysis of Federal Communications Commission filings by the Center for Responsive Politics shows that Majority Forward has paid for a New Hampshire ad blitz on cable, Direct TV and network stations running through the end of this week. The timing here is important, because the ad itself does not ask viewers to vote for Ayotte's opponent. Instead, it's cast as an "issue ad" criticizing Ayotte's purported views on Medicare. The FEC only requires such ads to be reported 30 days before a primary or 60 days before a general election, so dark money groups often go outside these windows to run what frequently are little more than thinly veiled political ads.  

FCC filings show that the bulk of the most recent ad run started in the final week of August and will air right up to the opening of the FEC's pre-general election reporting window on Sept. 9. The careful timing will make it easier for Majority Forward to claim, when it files its tax returns with the IRS, that the spending shouldn't count against its primary purpose as a social welfare organization.

With a price tag of $2.4 million, the New Hampshire buy isn't chump change -- and it's happening in a race that is already one of the most expensive in the country, with $25.5 million in reported outside spending so far. The candidates themselves, in this contest that could help flip the Senate back into the blue column in November or keep the body in Republican hands, had spent just $15.5 million as of the end of June.

For years, Democrats have decried not only dark money in politics in general, but also the use of issue ads in particular as vehicles for stealth political spending. Yet that appears to be exactly what Majority Forward is doing with its latest buy.

A Majority Forward spokesman declined to comment when asked about the disconnect -- though he did allow that the group's actual ad spending this cycle was about $6 million, including issue ads; that's more than many dark money groups will voluntarily disclose. That figure includes spending on the New Hampshire, Pennsylvania, Kentucky and Nevada Senate races, as well as money spent trying to pressure Republicans to act on Merrick Garland's nomination to the U.S. Supreme Court.

Spending by dark money groups on the left doesn't compare, in some ways, to the same kind of activity on the right. In fact, in each election cycle since the Supreme Court's 2010 Citizens United decision, conservative dark money spending -- as disclosed to the FEC -- has swamped the liberal equivalent, and continues to do so this time around. Unreported spending is harder to measure, but consider the fact that One Nation, a conservative dark money group linked to political behemoth Crossroads GPS, has spent at least $9 million on issue ads airing outside of the FEC reporting window this election cycle in New Hampshire alone, according to press releases on the 501(c)(4)'s site. A recent Wesleyan Media Report, in partnership with the Center for Responsive Politics, pegs One Nation's overall spending at more than $23 million in eight Senate races.

Rules of the game

Undercutting the idea that Majority Forward's products are anything but political ads dressed up as issue advocacy is the fact that the buyer's descriptions of the ad, filed at two stations, include the phrase "pro Maggie Hassan," and are devoid of any mention of a policy issue. In another instance, the buyer lists both Hassan and Ayotte and the date of the election, along with the description "Ayotte Medicare voucher program."

That buyer, Waterfront Strategies, is also the primary vendor for Senate Majority PAC, the super PAC that shares staff, legal team, and office space with Majority Forward.

The super PAC was founded by former aides to Reid in 2011 in response to the 2010 wave of Republican wins in Congress. It hit up megadonors such as Newsweb Corporation chairman Fred Eychaner and Saban Entertainment's Haim Saban for million dollar donations with the aim of regaining control of the Senate. Majority Forward was incorporated in June 2015 after years of Democrats' railing against dark money and its use by Republicans. 

The same key players who manage Senate Majority PAC's operations also run Majority Forward. J.B. Poersch, the cofounder and general strategist for Senate Majority PAC, is recorded on Majority Forward's FCC filings as the 501(c)'s treasurer. Poersch is the managing director at the political consulting firm SKDKnickerbocker, having been executive director of the Democratic Senatorial Campaign Committee and chief of staff for Sen. Jack Reed (D-R.I.) earlier. And then there's Rebecca Lambe, former senior advisor at Cassidy & Associates, who is listed as Senate Majority PAC's treasurer and Majority Forward's co-chair. Lambe was said to be indispensable to Democrats' success in 2008, serving as chief political strategist and campaign manager for Harry Reid. The two groups even share the same spokesperson, Shripal Shah.

Further illustrating how intertwined the two groups are, they have paid a combined $27 million to Waterfront Strategies to run ads in five states; four of them have been targeted by both groups, though only two have been mentioned in Majority Forward's filings with the FEC.

The shared staff, offices, and vendors of the super PAC and (c)(4) raise big questions about the social welfare status of the latter. Whether or not the nonprofit has spent more than half of its funds politicking, which won't be known until it files its tax returns with the IRS more than a year after the election, the other question is whether the group has provided excessive benefit to a particular group -- in this case, the Democratic Party.

"Section 501(c)(4) organizations have to be primarily operated for a community or public benefit, rather than a private benefit," said Marcus Owens, partner at Loeb & Loeb and former director of the IRS exempt organizations division. "The overlap of the two groups suggest they have a common goal, electing Democrats - a private benefit - which would disqualify the (c)(4) for exemption."

"The difficulty is the IRS has not defined...with mathematical precision" how much private benefit is too much, Owens said.

In order to pass muster, theoretically, with the IRS, Majority Forward would have to spend most of its time on other programming that benefited the public. When asked about the group's activities, a Majority Forward spokesman said it is running nonpartisan voter registration programs "in key states across the map" and declined to comment further when OpenSecrets Blog requested materials produced for those efforts. The group's website didn't offer any clarity either: It's a single page, with two paragraphs of text.

"That's the legal way you cover your tracks," said Jessica Levinson, a professor at Loyola School of Law in Los Angeles. "The IRS rules allow and almost invite this kind of activity, where a 501(c)(4) looks, acts and quacks like a political committee, but can still categorized as a (c)(4) by doing nonpartisan activities."

As for Hassan, the beneficiary of this spending? The fact that outside spending by super PACs and dark money groups is supposed to occur independently of candidates allows her to stand firm. "Governor Hassan, in contrast [to Ayotte], has long fought to stand up to special interests and take action to ensure that money does not control our politics," wrote Aaron Jacobs, Hassan's campaign communications director, in an email to OpenSecrets Blog. "She strongly supports a constitutional amendment to overturn Citizens United and, as governor, she has worked to strengthen reporting requirements for political committees in New Hampshire."