This story was updated on May 7, 2014 2:00 p.m.
For a brief, giddy moment, Sean Noble—a little-known former aide to an Arizona congressman—became one of the most important people in American politics.
Plucked from obscurity by libertarian billionaire brothers Charles and David Koch, Noble was tasked with distributing a torrent of political money raised by the Koch network, a complex web of nonprofits nicknamed the Kochtopus, into conservative causes in the 2010 and 2012 elections.
Noble handed out almost $137 million in 2012 alone -- all of it so-called dark money from unnamed donors -- from his perch atop the Center to Protect Patient Rights, a group run out of an Arizona post office box.
Much of it was channeled to obvious destinations: Groups supporting Republican presidential candidate Mitt Romney, for example.
But with Noble as ringmaster, Koch money also poured into efforts that didn’t surface until long after Election Day: To a political committee backing Wisconsin Gov. Scott Walker against a recall attempt; to a group blaming President Obama for high gas prices; even to a legal challenge to Arizona’s redistricting plan.
“I must tell you that Sean Noble from your group has been immensely helpful in our efforts,” a California multimillionaire wrote to Charles Koch in October 2012, asking Koch to give several million to support an anti-union initiative in the state. “Thanks for any consideration.”
Noble appears to have lost his central position in the Koch empire, undone by poor election results and a California investigation that shined an unwelcome light on some of the Center’s inner workings, insiders say.
But his story shows how the Supreme Court’s landmark 2010 Citizens United ruling has given rise to a new breed of power brokers who control a growing pool of money raised in secret and spent to influence politics in ways that voters can’t always trace.
Much of Noble’s work in 2012 remained invisible to the public until the Center and dozens of other Koch-backed nonprofits released their tax returns late last year.
An examination of those tax returns, along with court records and filings with the Federal Election Commission, shows that the Center to Protect Patient Rights bent state election laws and federal tax rules governing how such groups are supposed to operate.
Millions of dollars the Center told the Internal Revenue Service it gave to other groups only for “tax exempt education and social welfare purposes” were actually spent on election ads and other political activities. Experts on nonprofit law said it’s the donor’s responsibility to follow up on grants if they were not spent as required.
One of the biggest beneficiaries of the Koch network’s money was Sean Noble himself, tax documents show. The Center paid three firms owned by Noble almost $24 million for consulting and other services in 2012—or more than $1 of every $6 it spent.
Sheila Krumholz, the executive director of the Center for Responsive Politics, a nonpartisan watchdog group that has written extensively about the Kochnetwork, said disclosures from nonprofits come far too late to help voters and regulators.
“What we’re ending up with is information which is almost entirely useless to the voters,” she said. “Because it’s come so far after the election, so far after the fact that voters can barely remember what these organizations were doing and on behalf of which candidates or parties.”
There’s no indication that Noble or the Center are under scrutiny by authorities for violating tax or election laws.
For this story, ProPublica interviewed dozens of people about Noble, from his high-school science teacher to fellow Republican operatives, most of whom spoke on condition of anonymity, fearing possible backlash from fellow conservatives or the Kochs.
Noble did not respond to questions from ProPublica.
In an email, Rob Tappan, spokesman for Koch Industries, did not respond to specific questions from ProPublica about Noble or the Center, but acknowledged Noble “was a consultant for Koch in the past and attended Koch seminars.” Tappan likened Noble to Jim Messina, who was Obama’s campaign manager, and Paul Begala, a chief strategist for Bill Clinton in his first presidential run. Tappan said Noble was a consultant for “many other groups and issues.” (Read his entire response here.)
Most who know Noble, 43, saw him as an unlikely candidate to become the Kochs’ money man.
“There were plenty of people who had a lot more actual campaign experience,” said a Democratic operative who knew Noble in Arizona. “That’s a pretty big step up from Triple A to the majors, maybe Double A to the majors.”
An affable, handsome man with graying temples who favors jeans and eschews ties, Noble had an aw-shucks demeanor. He liked watching Little League baseball games with his family, leading his local Mormon ward and working tirelessly behind the scenes on campaigns for minor politicians.
Over the last two election cycles, though, Noble’s persona evolved. He flew first class, accumulated five homes and sat near the 50-yard-line at the Super Bowl. He rubbed elbows with top conservatives, from Sarah Palin to John McCain.
Even if Noble’s role in the Koch network is over, his story illuminates larger truths about how money changes both politics and the people who handle it.
“I think Sean at the end of the day is an anecdotal story of something that’s happening much bigger in the American electorate,” said a Republican consultant who knows Noble. “Mr. Noble goes to Washington.”
Noble was an unusual choice for the Koch brothers. He overshared. His blog, called Noble Thinking, was a bizarre mix of personal revelations (“I was a terrible dater”), bragging about his connections (attending a dinner “with a guest list that was right out of the Who’s Who D.C.-New York power corridor”) and fears about Obama (particularly, “the march toward socialized health care”).
The Kochs are known for valuing discretion and control.
Noble’s main credential was working for Arizona Rep. John Shadegg for more than 13 years, eventually becoming his in-state chief of staff. Though hardly a household name, Shadegg was influential in the conservative wing of the Republican Party.
“It’s important to understand the influence that John Shadegg had within Republican and conservative circles at the time,” a Democratic operative in Arizona told ProPublica. “That was his in.”
At some point, Noble met Randy Kendrick, a lawyer by training who was on the board of the Goldwater Institute, a bastion of libertarian thought in the West. Kendrick and her husband, an owner of the Arizona Diamondbacks, were big Shadegg donors. (The Huffington Post wrote about Kendrick and Noble in 2013.)
In spring 2009, when it became clear that Obama was pursuing a national health-care law, Kendrick turned to Noble for help defeating it. Noble had recently left Shadegg’s office to launch a consulting firm, Noble Associates, out of his Phoenix home.
“Sean got hooked up with Randy,” a prominent Arizona Republican said in an interview. “He became her local guy to manage everything. He became her political consultant.”
Kendrick was also close to the Koch brothers. “Randy Kendrick is in the inner circle of the Koch brothers’ network,” a Republican consultant told ProPublica, adding that she pushed the Kochs to back a new group targeting Obama’s health-care plan. As for Noble, “I think they liked the fact that he hadn’t been a political consultant before.”
Noble was no slick Washington insider. A self-described “hick from Show Low,” Ariz., a town of about 11,000, Noble married a woman he had met on his Mormon mission in Indiana and became a devoted father of five. He had tried living in the nation’s capital once, moving his family there for two years in the 1990s, only to move back to work in Shadegg’s Phoenix district again. He was the type of guy who said “good grief”and meant it.
Noble also had the right ideological background: He quoted Barry Goldwater, Ronald Reagan and libertarian icon Ayn Rand. His first political memory was from 1976, when Jimmy Carter was elected president and his mother started to cry, saying, “We’re going to be beaten by the Soviets now.”
In 1994, when he was 24, Noble attended Rush Limbaugh’s freshman orientation in Baltimore for the 73 Republican members of Congress who had gained office in the so-called Republican Revolution. When he was 37, Noble was among the 2,200 mourners at William F. Buckley’s funeral at St. Patrick’s Cathedral in Manhattan.
For years, Charles and David Koch, two of the richest men in America, had helped form and support a network of conservative think tanks, foundations and social welfare nonprofits that pursued a libertarian agenda. They seeded the ground for the Tea Party, and then cultivated the various groups that sprouted. In the 1980s, the Koch brothers helped form the group that split into two of the most influential conservative nonprofits now operating, Americans for Prosperity and FreedomWorks.
The Kochs raised money for their network in part at secretive semi-annual retreats. The media wasn’t invited and attendees weren’t supposed to talk about them, a kind of “Fight Club” for like-minded billionaires.
One donor who has attended the retreats told ProPublica in an email that he had only a sketchy idea of how money raised at the events was disbursed. He responded to questions on condition of anonymity, saying he feared backlash from the Obama administration and the IRS and adding that the Kochs resented any information from the events being disclosed.
“The people who attend these events have ultimate respect for the Founding Fathers and the Constitution,” he wrote. “The over-riding theme is that nothing worthwhile is achieved without hard work, coupled with integrity and humility. ... And the Kochs are not in this for any personal gain whatsoever as all they seem to get is vilification.”
By spring 2009, Noble had landed a job within the Koch network. On April 16, the Center to Protect Patient Rights was incorporated by a lawyer in Maryland who went on to work with other groups tied to the Kochs. Noble was its executive director, documents show. According to the group’s tax filings, he was paid no salary; his firm received $30,000 a month, he said in a sworn deposition in 2013.
Noble registered his firm to lobby on the Center’s behalf, but otherwise it flew beneath the radar. No one even seemed to know its precise name — the incorporation documents called it the Center to Protect Patient Rights. In lobbying documents, Noble said he was working for the Center to Protect Patients’ Rights.
Heather Higgins, a longtime Koch ally, was the group’s initial secretary, and Dr. Eric Novack, who had led the fight for a health-care proposition backed by Kendrick in Arizona in 2008, was the treasurer. Novack acknowledged he didn’t know much about the group’s activities. “My only involvement was, we were starting something,” he said in an interview. “They asked me because I was a body. I had no decision-making power. …I left very quickly.”
The usually voluble Noble, a man who blogged so much that he once blogged about how he hadn’t blogged in two days, didn’t discuss the Center to Protect Patient Rights publicly — ever. In a 2009 story in the Arizona Guardian, a political news website, Noble was described only as working on “a national campaign opposed to President Barack Obama’s healthcare initiative.”
In the 2013 deposition, Noble wouldn’t even say who hired him because of confidentiality agreements. “I can’t tell you who I do work for,” he responded to a lawyer’s question.
“Wait a minute,” the lawyer said. “I asked how your salary got set, and you’re telling me that you had a discussion with some people in 2009 and you're refusing to tell me who?”
“I am,” Noble replied.
If not for the Supreme Court’s ruling on Citizens United, Noble’s work for the Koch network might have ended as soon as the fight over the health-care law was decided.
The decision helped to clear the way for corporations and unions to contribute unlimited amounts of money to outside groups — groups that operated independently from candidates’ campaigns and parties, but were free to buy direct political ads or pay for a broad spectrum of political activities.
“This is a total game-changer for federal politics,” Noble blogged about the decision, adding that he believed races later that year would likely be decided by outside interests. “Some will claim that this makes politics more dirty. I don’t. Politics has always been pretty messy.”
“Seriously, this will change campaigns in a big, big way,” he added.
In the Citizens United opinion, Justice Anthony M. Kennedy said the influx of union or corporate cash would not corrupt elections because of laws requiring outside groups to disclose their donors. Voters could give appropriate weight to messages paid for by special interests.
But those laws didn’t apply to groups like the Center to Protect Patient Rights. As social welfare nonprofits, they didn’t have to name their donors. And they could spend as much as they wanted on politics, as long as, in the IRS’s view, social welfare remained their primary purpose.
After the Affordable Care Act became law in March 2010, the Center’s lobbying workrelated to health care ended, leaving Noble free to take on new challenges. As it happened, a key job was open in the Kochs’ network. Matt Schlapp, a former political director to President George W. Bush who had led the Kochs’ election efforts as vice president of federal affairs for Koch Industries’ lobbying arm, had recently left to form his own consulting firm.
Noble stepped in to fill the gap.
“My impression of the environment he found himself in, with the changes in the federal law, it created enormous opportunities,” said another Republican consultant who knows Noble. “He was in the right time, right place.”
Noble began attending twice-a-month strategy meetings in Washington, as one of the people representing the Koch network alongside other conservative powerbrokers, including top GOP strategist Karl Rove’s people, Politico later reported.
One national conservative operative said he heard about Noble and the Center in conversations in early 2010 about who was doing what that year. “They were going to be the primary vehicle for the Koch money, for the Koch network,” the operative told ProPublica.
In late June, Noble attended the semi-annual Koch retreat at the St. Regis resort in Aspen, Colo., along with Randy Kendrick and her husband, an event later described in stories by Think Progress and The New York Times.
Noble spoke on a panel called “Mobilizing Citizens for November” with Tim Phillips from Americans for Prosperity, Mark Mix from the anti-union nonprofit National Right to Work, and Karl Crow from Themis Trust, a voter database group. Noble was the only panelist of the four listed without an affiliation – there was no mention of his role at the Center to Protect Patient Rights.
By that time, he had no need to advertise. The Center had raised almost $62 million in 2010, giving out $44.6 million in grants to 22 like-minded groups, most of which then turned around and spent money on political activities.
The year brought huge gains for Republicans. The GOP recaptured the majority in the House, gaining 63 seats, and added six seats in the Senate. The party’s conservative wing did especially well: Almost one-third of Tea Party candidates in the House and half in the Senate won. Conservative dark money groups outspent liberal ones by about 10-to-1, research by the Center for Responsive Politics shows.
Noble predicted the outcome on Twitter days before the election.
“It’s official: 2010 will be an historic election for the GOP,” he wrote.
“Obama will lose mojo,” he added.
As the 2012 presidential election approached, the Kochtopus started adding new arms. Noble was a key player in expanding the network’s complicated web of nonprofits and limited liability companies.
At the top of the network were groups such as the Freedom Partners Chamber of Commerce, a trade association formed in late 2011, and the TC4 Trust, a social welfare nonprofit that said in a filing to the IRS it would “focus on the advancement of free markets, liberty and individual freedoms.” As is typical with such groups, the identities of donors did not need to be disclosed.
Money flowed from them to the Center, which acted as a sort of clearinghouse, distributing grants to dozens of smaller groups. Many of these nonprofits spent directly on politics, including election ads. Some also made grants to yet another layer of groups. Not all of Freedom Partners and TC4’s money flowed through the Center; they also gave some money to smaller groups directly.
For reasons that are not entirely clear, the Kochs then added another level of complexity to this already opaque set-up.
A dozen of the Koch-affiliated nonprofits included limited liability corporations -- LLCs – called “disregarded entities” that were considered part of the nonprofits for tax purposes. Many of the 20 disregarded entities in the Koch network had strings of letters for names: STN, POFN, SLAH, ORRA. Noble was the first person consulting for the Kochs to create a disregarded entity that was linked to one of the nonprofits. He called it SDN. Eventually, Noble changed the name to Meridian Edition, one of two disregarded entities of the Center to Protect Patient Rights.
This additional layer made it even harder to follow the flow of cash through the Kochtopus, political operatives and tax experts said. When the TC4 Trust, for example, passed money to the disregarded entity of another Koch network group -- say, Americans for Prosperity -- tax records showed the funds going to a company called PRDIST, rather than to the much better known Americans for Prosperity.
“I think it’s being used to disguise the source of their money,” said Marcus Owens, who ran the Exempt Organizations division for the IRS from 1990 to 2000.
The Koch network moved more than $204 million through disregarded entities in the last half of 2011 and before the 2012 election, according to tax documents filed last year. That included almost $115 million in grants from Freedom Partners, the trade association, to Corner Table, the Center’s second disregarded entity.
Noble helped to dispense this river of cash, sometimes with a knowing wink. The Center gave $320,000 — all from undisclosed contributors, of course — to a Colorado group called the Arioch Project. The project’s original name? Patefacere — the present infinitive of the Latin verb that means “to disclose.”
The tangle of groups made it seem as though Koch money was being diffused broadly, but tax records show it flowed into many smaller groups at a high level of concentration. At least 20 nonprofits across the country received at least half of their revenue from the Center, Freedom Partners or both.
Noble helped to run or incorporate no less than three groups named American Commitment at one point or another. One of them got almost 97 percent of its $11.7 million in revenue in 2012 from the Center, Freedom Partners and Americans for Responsible Leadership.
The American Future Fund, which pulled in a whopping $68 million in 2012, got more than 92 percent of that money from Freedom Partners and the Center.
On their 2012 tax returns, signed under penalty of perjury, the Center and Freedom Partners told the IRS they were not engaged in politics, checking “no”to a question asking if they had spent money to influence elections. Freedom Partnerssaid its grants were “subject to express prohibitions or protections against the use of grant funds for electioneering purposes.” The Center said that it gave grants to groups for education and social welfare — not politics.
Yet, in fact, more than $30 million funneled through these groups ended up paying for political activities. According to tax and FEC records, the American Future Fund poured at least $19.8 million from the Center and Freedom Partners into elections. Americans for Responsible Leadership spent at least $9.3 million received from the Center. American Commitment spent at least $1.1 million of its grants from Freedom Partners and the Center on politics.
No one from Freedom Partners, Americans for Responsible Leadership or the American Future Fund returned calls and emails asking for comment.
Phil Kerpen, the president of American Commitment, told ProPublica that the allegation that American Commitment had spent grant money earmarked for social welfare purposes on politics was “false.” He described what the Center and Freedom Partners had said on their tax returns as “general characterizations” of their grants.
“All our political expenditures were out of our organization’s general treasury,” Kerpen said.
Nonprofit experts said groups like the Center are supposed to make sure their money is used as earmarked.
“The grantor is responsible for how the grants are used because it’s the grantor’s money,” said Lloyd Hitoshi Mayer, a law professor and associate dean at the University of Notre Dame who specializes in nonprofits and campaign finance.
If a grant is improperly administered, the group that gave it could become the subject of an IRS audit.
In some cases, voters had no way to know for more than a year after the election that the Koch network, aided by the Center, was behind particular political initiatives or messages – an outcome that underscored campaign-finance watchdogs’ worst fears about the corrosive effects of dark money.
It wasn’t until this year, for example, that Citizens for Responsibility and Ethics in Washington, a watchdog group, reported that Noble’s Center supplied all of the $80,000 raised in 2012 by All Votes Matter. During the election, the group had worked to change rules governing Pennsylvania’s electoral votes in ways that would benefit Republicans.
The Center also was a major backer of a group that spearheaded an effort to register Americans in Israel to vote in U.S. elections, supplying more than half of its 2012 revenue, ProPublica found. The Koch network’s involvement in this initiative did not surface at the time, even though The Times of Israelran stories spotlighting the group’s “I Vote Israel” project and questioning its refusal to disclose its donors.
The Center’s involvement in a contentious Arizona redistricting fight was also not known – until now. It provided $150,000 to a group called FAIR Trust—described as the “Fair AZ Independent Redistrict” on the Center’s tax return—which hired lawyers to sue Arizona’s redistricting commission in April 2012 to challenge new legislative and congressional districts. The Trust, which also sent lawyers to commission meetings, has repeatedly refused to identify its backers.
“Without knowing who they were representing, you couldn’t really fairly evaluate what they were saying,” said Linda C. McNulty, a Democratic member of the commission. “They clearly were doing somebody’s bidding, but they wouldn’t say whose it was.”
David Cantelme, one of the lawyers who represents the Trust, said he couldn’t talk about who hired him and had no information about the grant from the Center.
Voters in Wisconsin also had no idea the extent to which Koch network money fueled election ads urging them to oppose the recall of Gov. Scott Walker.
Until late 2013, when the Center filed its tax return, voters had no way of knowing that Noble’s group supplied virtually all of the $510,230 raised in 2012 by the Coalition for American Values Action, another social-welfare nonprofit. The Coalition then donated more than three-quarters of that money to the PAC that paid for the ads. The PAC received no contributions other than the Coalition’s.
The day of the recall vote, Noble’s blog linked to one of the ads, calling it “a fascinating approach to a unique situation.” “If the good people of Wisconsin think like the folks in this ad, it’s going to be Walker by double digits,” he wrote.
He didn’t mention the Center’s role in funding the effort.
A hefty chunk of the Koch network money that flowed through the Center in 2012 went to Noble’s firms.
Noble’s earnings had risen swiftly as his ties to the Koch brothers grew, tax filings and other records show. In 2008, the year before he joined the Center, Noble earned almost $205,000, according to a later court filing, from consulting and his work for Shadegg.
By 2010, the year of the midterms, he earned almost $640,000, the filing said. He and his wife bought an investment property a couple miles from their Phoenix home, according to the filing and property records.
At the end of 2010, Noble established a second firm, DC London, to do “consulting and governmental affairs,” according to incorporation documents. Its name was largely aspirational; on Twitter, Noble noted that he’d never been to London. DC London opened an office in downtown Washington and went on to hire almost 30 staff members in a little more than two years.
Noble personally earned almost $2.3 million in 2011, court records show, impressive for a non-election year. Much of his income seems to have derived from having the Center to Protect Patient Rights hire his firms. The Center paid more than $6.3 million to DC London and Noble Associates for consulting, management and reimbursement for “consulting expenses paid to consultants without markup.” Free Enterprise America, another nonprofit run by Noble, paid DC London almost $400,000 for consulting as well. (Noble did not disclose that he partly owned DC London on that tax return, as required by the IRS.)
Noble Associates bought a condo in Washington, D.C., in 2011 for $665,000, property records show. The Nobles also bought a half-acre of land in Hurricane, Utah, then built a 9,000-square-foot house on it, a gabled concoction with eight bedrooms, eight bathrooms and five fireplaces.
Then came 2012, a record-setter for spending by dark money groups and Noble’s consulting businesses.
The Center paid a whopping $20.7 million to DC London for “consulting & other services,” according to its tax return. Of that, $15.8 million was for costs “reimbursed to DC London for the Center’s program expenses without markup.” What costs DC London could have incurred remain a mystery: The Center’s work mostly consisted of directing grants to other nonprofits, and it doesn’t appear to have offered any programs. (The Center also spent $50,000 on what its tax return described as “occupancy,” a term usually used to mean rent, even though the Center’s lawyer told ProPublica in an email that the group had no office.)
In addition, the Center paid consulting and management fees of $270,000 to Noble Associates and $2.8 million for “survey and phone programs” to Angler, a company incorporated in October 2011 and run out of DC London’s office. Noble was the president.
The Center disclosed its transactions with Noble’s firms on its tax returns, as required.
After the disappointing 2012 election results, many questioned how effectively the Koch network and other conservative organizations had deployed their resources. Filings with the FEC showed that conservative dark money groups had outspent liberal ones by at least $276 million to $29 million, to little apparent effect.
One Koch donor, who wanted to remain anonymous because he feared possible retribution from the IRS, said he had attended one Koch retreat and had given to the Koch network for several years. He said he remained impressed by the organization’s accomplishments in states such as Indiana, Michigan and Wisconsin. He also said he didn’t think the Koch brothers would tolerate a consultant steering such a large amount of money to himself.
“My guess is he’d be cut off pretty damn quickly,” the donor told ProPublica.
The payments to Noble’s firms were unusual, campaign finance experts said.
An analysis of tax returns filed by 100 other politically active nonprofits, including all the groups funded by the Koch network that have made their 2012 tax returns available, showed just 19 hired consulting firms owned by employees or board members.
For those 19 groups, the median payment to an employee-affiliated firm for consulting or other services was $108,000, a tiny fraction of the millions paid to Noble’s firms. For instance, the Republican Jewish Coalition paid $60,000 for consulting to the firm of then-board member and former White House spokesman Ari Fleischer.
Most social-welfare nonprofits avoid insider transactions and pay their leaders fixed salaries instead. GOP strategist Karl Rove’s Crossroads GPS, one of the largest politically active dark money groups, raised almost $180 million in 2012 and paid its top executive a salary of $538,000.
Owens, the former IRS official, said social welfare nonprofits are not allowed to pay “excessive” benefits to people who control the organization or to companies they run.
“That’s probably an excessive private benefit right there,” Owens said, after ProPublica told him how much Noble’s firms earned in 2012. “That’s a huge amount of contracts for someone in charge to hand out to contractors he controls.”
Groups given grants by the Center to Protect Patient Rights also started hiring Noble’s companies. The Center gave grants to 25 nonprofits that reported political spending to the FEC or state authorities during the 2012 election cycle. Of those groups, 10 hired Angler, the company that operated from DC London’s office. The American Future Fund, for instance, paid Angler $5.3 million, mainly for social media advertisements. It’s possible that much of this money went to companies such as Facebook and Twitter, with Angler keeping a smaller commission.
American Commitment—which Noble was a board member of until June 2012—paid Angler $168,000 in 2012 for “media production.” Kerpen, who Noble hired at American Commitment, said he picked the group’s vendors based on merit, not because of Noble. “We’ve actually never received a contribution from any donor that asked for a particular vendor to be used,” Kerpen said.
Two groups that received grants from the Center appear to have paid Angler hundreds of thousands of dollars just to use a phone system to make calls to voters. The calls themselves were made by temps hired separately through an agency.
It’s not clear how much Noble personally earned in 2012, but his wife, Julie, estimated it was at least $3 million, according to court filings.
She said Noble received other perks as well. Noble Associates paid for his cell phone and his Washington, D.C., mortgage. He charged most meals in Washington to Noble Associates.
In the 2013 sworn deposition, Noble said the election year was unprecedented.
“The way that 2012 went, we’re never going to see anything like that again,” he said.
Noble’s prime position in the Koch network took a hit at the end of the 2012 campaign, when he and the Center circumvented California election laws in an attempt to influence two state ballot measures.
Noble first met California political strategist Tony Russo in Las Vegas in October 2011, according to a recorded interview Russo later gave to California investigators. Russo wanted Koch money for an effort to fight unions. Noble agreed to help, paying hundreds of thousands of dollars to run focus groups, develop ads and reach out to voters, Russo said.
Meanwhile, Russo and Jeff Miller, another California consultant, raised $29 million from about 150 confidential donors to fight a proposition to raise taxes and to support another one limiting unions’ political power. They transferred the money to a Virginia-based trade association that had agreed to spend it on ads related to the initiatives. But as Election Day drew closer, the association, Americans for Job Security, balked at buying ads, worried that under California law, it would be required to disclose who had donated the funds for them.
Russo said he approached Noble and offered to transfer money from the Virginia group to the Center. In return, he asked Noble to tap separate resources to help in California. Noble thought he had groups that could help, Russo recalled.
“He said, you know, get me your money,” Russo said in his interview.
Americans for Job Security transferred about $4 million to the Center on Sept. 10. On Sept. 13, American Future Fund gave about $4 million to a California affiliate, the California Future Fund for Free Markets, which was spending money on the anti-union proposition.
Americans for Job Security sent another $14 million to the Center on Oct. 11. The Center then gave most of that money to Americans for Responsible Leadership, run by Kirk Adams, a friend and former client of Noble’s. On Oct. 15, Americans for Responsible Leadership sent $11 million to the Small Business Action Committee, a PAC spending on the initiatives.
Within days, a good governance group demanded a state inquiry into the contribution.
Still, Americans for Job Security gave another $6.5 million to the Center on Oct. 22. But no additional money from Koch-funded groups flowed back into the California initiatives fight – at Noble’s direction, Russo said.
California had launched an investigation.
“The explanation was, your regulatory guys are going crazy and I just don’t think we can do it,” Russo said.
California’s Fair Political Practices Commission sued Americans for Responsible Leadership on Oct. 25, 2012, seeking to force the group to reveal its donors. Six days later, a Sacramento Superior Court judge ordered that the group turn over the records to the state for an audit, saying that voters could suffer “irreparable harm” if they didn’t know who was behind the group before the election. Americans for Responsible Leadership appealed. The case made its way to the California Supreme Court, which on Nov. 4 unanimously ordered Americans for Responsible Leadership to turn over its records.
The next day, just before the election, Noble and Adams sent letters to the Small Business Action Committee as part of a settlement with regulators, admitting they had funneled money from Americans for Job Security to the Small Business Action Committee.
The state then accused the groups of money laundering based on their efforts to disguise the original source of the $11 million transferred to the Small Business Action Committee in October.
In his interview with investigators, Russo said he was “shocked” by the admission from Noble, because he believed that the money came from a pool of money unrelated to the funds Americans for Job Security passed to the Center.
Miller said he felt “just completely screwed” by Noble’s admission.
“I’m not sure how their network works, to be perfectly frank,” Miller later told investigators in a recorded interview. “But when he, when he started to get in the shit storm, he panicked and lied to you all about how it was done to protect his organizations. That’s what I think happened. I don’t know that, though. That’s what I think happened. I think that he panicked and to prevent your agency from opening up his books, he made, he lied.”
In total, the Virginia trade association had sent $24.5 million to the Center. Only $15 million ended up going to California for the propositions, which conservatives ended up losing by a large margin.
State regulators eventually slapped Americans for Responsible Leadership and the Center with a record fine, $1 million.
Individual donors to the effort were never disclosed, although the redaction was so poor, it was possible to determine that they included financier Charles Schwab, California philanthropist Eli Broad and Gap Chairman Bob Fisher, but not the Kochs or their companies.
Initially, it appeared that the California Attorney General’s office might open a criminal investigation into the donations. But the investigation never moved forward; Noble was never interviewed in the case.
As part of an agreement with the state, Adams and Noble were able to write off the $11 million transferred through their organizations to the Small Business Action Committee as a simple mistake. The failure to disclose the original source of the funds “was inadvertent, or at worst negligent,” their stipulation with California’s attorney general and campaign finance regulators said.
Yet Noble and the lawyers he worked with were hardly new to campaign finance. Attorneys at Holtzman Vogel Josefiak, based on the East Coast, were national experts in dark money groups and election law, representing everyone from Crossroads GPS to the American Future Fund.
A lawyer and a paralegal there had helped incorporate two of Noble’s consulting firms and several Koch-connected social-welfare nonprofits, as well as handling the Center’s application for tax-exempt status to the IRS. Another Holtzman Vogel lawyer had even helped incorporate and dissolve the California Future Fund for Free Markets, the nonprofit that spent money on the anti-union measure.
“I would assume, given the high skill level at Holtzman Vogel, that their lawyers were familiar with California’s campaign finance law requirements,” said Paul S. Ryan, senior counsel at the Campaign Legal Center in Washington. “They’re good lawyers.”
The California investigation, coupled with poor election results, weakened Noble’s influence on the Koch network and shrank the Center’s role within it.
“There were growing rumors, frustration, through 2010, 2011 and 2012, that Sean was controlling everything, that it was too insular, that it was all about who Sean liked and knew,” a top national conservative operative familiar with the Koch network told ProPublica.
Noble’s life was also changing in other ways. No longer was he the Arizona outsider who blogged about serving as the Mormon bishop in his ward, who preferred Waffle House to Washington’s pricey eateries, and who praised his wife for earning “sainthood for tolerating my work schedule.”
In April 2013, Noble filed for divorce. Though his wife of more than 20 years was a homemaker raising their five children, he argued in filings that she deserved no spousal maintenance. After they separated, he bought a condo in Phoenix for himself for $510,000 and another for his parents for $181,500.
Noble had become involved with Elissa Scannell, a former scheduler for Shadegg who was his partner at DC London, records filed as part of the divorce case show. Just before the 2012 election, the two flew to see the World Series. According to documents submitted by his wife, Noble spent more than $7,700 for a vacation for himself and Scannell in the Bahamas over New Year’s 2013. That March, he paid more than $3,600 for a trip for him and Scannell to Hawaii, records show.
Noble’s life with Scannell was centered in Washington, D.C., a city he once described as a “cesspool” on his blog. He posted a photograph to Facebook the night after the Jingle Ball in December, of the two of them alongside singer Enrique Iglesias.
The Koch network was changing, too. In 2013, it gave greater prominence to Freedom Partners, which has supplanted the Center as its primary distributor of cash to other groups.
Because Freedom Partners is a trade association, this move also helped the network sidestep IRS proposed limits on political activity by social welfare nonprofits. Those would define political spending as expenditures reported to the FEC and grants to other tax-exempt groups involved in elections, unless they specifically say the money won’t be spent on politics.
The dark money strategies Noble helped pioneer at the Center are likely to play a substantial role in the upcoming midterms. Targeted blasts of spending by outside groups could have far more effect on this year’s smaller slate of congressional and local races than they had on 2012’s megabuck national and statewide contests, campaign finance experts said.
Months after the 2012 election, Freedom Partners hired a new president, Marc T. Short, a longtime political operative and former Koch employee who tended Ronald Reagan’s ranch in California in his 20s. He is 43, the same age as Noble – and some say the most likely heir to Noble’s role.
The Kochs convened their first 2014 retreat for big donors at a resort near Palm Springs, Calif., in late January. On the agenda: Centralizing control and creating a more coordinated approach to winning elections, as opposed to the piecemeal one from past years, according to Politico. The Kochs plan to back candidates in primaries, to make sure that Republicans that agree with their philosophy make it to the general election.
Noble was not among the consultants listed on a one-page agenda for the meeting obtained by Mother Jones. Short and others from Freedom Partners were.
Noble’s biggest known client in recent months has been Arizona’s largest electric utility, Arizona Public Service, which DC London worked for in a contentious fight over solar energy. In a strange twist, the face of the pro-solar side was Barry Goldwater Jr., the son of Noble’s idol.
Last September, at a panel for a Republican conference in Michigan, Noble, wearing jeans, a light blue button-down shirt and a dark suit jacket, talked about the failures of the 2012 election. He said the Obama campaign won because of having so many people on the ground, knocking on doors and personally talking to people.
In the future, Noble said, conservative candidates needed to work harder to connect with voters, particularly young ones. Candidates also needed to face their critics.
“Ultimately, I think what we have to teach our candidates—and this is why I will never be a candidate—is that you just have to—you have to deal with it, I mean you have to take the arrows, you got to have thick enough skin that you can get in the game, you know, and do that kind of thing,” Noble said. “I would never do that because I’ve watched it up close.”
Update: May 7, 2014 2:00 p.m.The watchdog group Citizens for Responsibility and Ethics in Washington, or CREW, filed complaints May 7 with the FBI and the IRS against Sean Noble and the Center to Protect Patient Rights, which at some point in recent months changed its name to American Encore. The complaints say that Noble falsely claimed on tax returns that the Center did not engage in political activity in 2010, citing a March 2014 interview Noble gave to the National Review Online in which Noble talked about the group’s extensive political activities. CREW also filed complaints with the FEC and the FBI against the 60 Plus Association, the American Future Fund and Americans for Job Security for failing to disclose that the Center paid them to air political advertisements.