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Podcast: The Hidden Power of Dark Money

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Photo by Flickr user 401(k) 2012, 401kcalculator.org

Midterm races are approaching, and tax returns continue to yield telling tidbits from the 2012 election. In their campaign finance reporting, ProPublica's Kim Barker and Theo Meyer look for ways to help Americans understand the effects of the U.S. Supreme Court's 2010 Citizens United ruling on political spending.

For the latest podcast, they joined Steve Engelberg in the Storage Closet Studio to talk about a few of their recent stories laying out the ways new groups have spent to influence elections while keeping their donors secret. In particular, libertarian billionaire brothers Charles and David Koch have made good use of social welfare groups and trade associations, building a complex network that spent more than $383 million in the run-up to the 2012 election, according to tax documents released late last year.

"You have to look at it not just in terms of a river but sort of a way station," Barker says. "Money flows in there from these different organizations or individuals or people – you don’t know who exactly they are – and then it flows out to other groups. And very little of it actually was used for any sort of programs or anything like that."

In the case of the Center to Protect Patient Rights, which their reporting shows bent state and federal laws in the 2012 elections, one man wielded enormous power in the Kochs' network, doling out almost $137 million in 2012. That man, Sean Noble, previously a longtime staffer to Arizona Rep. John Shadegg, saw his fortunes change dramatically as a power broker in the Koch network. And as his influence skyrocketed, his personal earnings spiked, too, increasing from $200,000 a year to an estimated $3 million in 2012.

“Sean seemed to recognize sort of that this was a windfall year for him," Meyer said. "In a court deposition that we got as part of the story, he said that there will never be another year like 2012.”

Indeed, Noble’s luck shifted with an investigation into the CPPR's dealings in California in 2012, ultimately resulting in a record $1 million fine for violating California election laws in an attempt to influence two state ballot measures. “Sean Noble suddenly finds himself in a place that I think no political operative wants to be," Engelberg says, "which is that he himself becomes the story.”

Still Engelberg says, it's fair to question the effect of even a hefty fine -- one the CPPR had no trouble paying -- when it comes after the money has been spent and, presumably, affected people's votes: “Can we draw from this that there’s no effective way to deal with these kinds of things in the moment?” he says. “I mean, a year or two later, who cares?”

In midterm elections -- typically marked by lower turnout and less political energy, Barker says, there's the potential for dark money to have an even bigger impact.

“I think you’re going to see the liberals trying to use dark money much more than they have in the past,” she says, particularly to attack candidates who play down the dangers of climate change. She predicts that political groups will move away from social welfare nonprofits, with the IRS now showing a willingness to crack down on them. They will likely move toward trade associations, LLCs, and even simple companies and businesses, Barker says, “formed specifically for the purpose of funneling money into politics, because this is what Citizens United said. It said corporations, unions and nonprofits can spend money on politics; you cannot silence them. They have the right of free speech.”

She continues: “So why not just form a company? Form an LLC. Form it in Delaware. Have some lawyer form it for you, not say who’s behind it. And then spend that money on politics. The only thing this means is that you don’t get the tax break. You’ve got to pay the taxes. But you can spend that money on politics and nobody’s ever going to know where it’s coming from."

The question now, Barker says, is not whether all this dark money does in fact change the outcome at the ballot box, but rather, what happens after it helps elect someone. Without the disclosure of donors, there’s no longer a way for the public to connect the dots between political spending and elected leaders' actions in office. 

“Tell me that the politician doesn't know who’s spending this money," Barker says. "I don’t believe that.”

You can hear this podcast on SoundCloud, iTunes and Stitcher.

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