State Tells Dark Money Group That Violated Law To Pretend Super PAC Existed

More Than 500 Days After Complaint Against Nonprofit Running Election Ads, State Says Work On Complaint Is Still 'Active'

 

By CRAIG MAUGER

Executive Director, Michigan Campaign Finance Network

 

In the fall of 2014, one of Michigan’s most active dark money groups slipped up and blatantly violated campaign finance law. What’s played out since raises questions about how our laws are being enforced, how long that process takes and how we can add transparency to the process.

The Michigan Jobs and Labor Foundation is a 501(c)(4) organization that says its focus is “to promote issues that concern jobs and labor” in Michigan. In reality, the group, which doesn’t have to disclose its donors, appears to spend much of its time helping Republican candidates.

Foundation officials listed on tax filings include employees of the firm Sterling Corp., which does extensive consulting work for the Senate Republicans.

Under Michigan law, groups, like Michigan Jobs and Labor Foundation, can run TV ads touting individual candidates without disclosing donors as long as those ads don’t specifically tell viewers to vote for the candidates in question. These types of ads are commonly known as “issue ads” because they don’t expressly advocate for the election of someone.

In the fall of 2014, Michigan Jobs and Labor Foundation was running so-called “issue ads” for two Republican Senate candidates, Ken Horn and Dale Zorn, who were both in competitive races. The problem was the ads featured logos at the end that said “Dale Zorn For State Senate” and “Ken Horn For State Senate.”

The logos crossed the line between issue advocacy and electioneering and should have required donor disclosure. After the ads aired, Democrats filed complaints with the Michigan Secretary of State, noting that the ads were paid for by a nonprofit group that doesn't disclose its donors. The complaints came Sept. 24, 2014, and Oct. 3, 2014.

For nearly a year and half, one of the Democrats who filed the complaints said he had no idea what type of repercussions were unfolding and how the situation was being handled behind the scenes. And there were no updates posted on the Secretary of State’s “resolved complaints” page to signal a resolution had been reached.

In January, the Michigan Campaign Finance Network (MCFN) filed a Freedom of Information Act (FOIA) request for documents related to the complaint. The Secretary of State’s Office said it would respond by Feb. 11 with a final answer. Six days after that deadline, on Feb. 17, a Secretary of State employee responded, indicating the FOIA request had been approved, at least in part.

“The responsive documents will be sent to you under separate cover, free of charge,” the employee wrote in an email.

MCFN sent the employee multiple questions about how and when the documents would be sent. As of Monday, Feb. 29, now 18 days past the deadline, MCFN still had not received them.

However, at some point in mid-February, a link emerged on the Secretary of State’s website, including the Michigan Jobs and Labor Foundation complaint among the state’s list of “resolved complaints.”

According to the documents, the Secretary of State’s Office acknowledged that it believed a violation occurred. The most recent document in those suddenly included on the website was from March 2, 2015, nearly a year before the file was published on the online list.

On top of that, the documents revealed that the Secretary of State’s Office told the Michigan Jobs and Labor Foundation that it needed to file paperwork to create a Super PAC that would then be credited with being the source of the ads. Upon, the filing of those documents, the Secretary of State’s Office said an “informal” resolution would be found for the situation.

The foundation created a Super PAC in 2015 and credited the newly created Super PAC, which didn’t exist in 2014, for the ads that ran in the fall of 2014. And where did the money come from? Well, it came from a $17,696 donation from the nonprofit Michigan Jobs and Labor Foundation to the Super PAC version.

Along with the creative paperwork, the foundation had to pay $2,300 in fines for reports that were filed late, months after the November 2014 election.

According to one FOIA response from the Secretary of State's Office, a complaint from Daniel Opsommer against the Michigan Jobs and Labor Foundation remains active — 514 days after it was first submitted. In addition, there have been 482 days since the November 2014 election.

As Opsommer has argued, the Secretary of State’s Office could have pushed the nonprofit to open its books and to designate donations for the costs of the campaign ads.

“This precedent essentially throws out what little campaign finance law we have in this state,” Opsommer said last week. “Now you can just create a nonprofit and raise corporate money without having to report your donors and use this dark money to produce campaign ads knowing that all you will have to do is file one of the most poorly compiled campaign disclosures I've ever seen.”

According to other groups’ disclosures posted online, we do know that corporations like Dow Chemical, Pfizer, Exelon and CVS have donated to the Michigan Jobs and Labor Foundation in the past.

We also know, according to disclosures, that the Michigan Jobs and Labor Foundation, which in Michigan can’t make direct contributions to candidates, gave $150,000 on Oct. 22, 2014, to the Republican State Leadership Committee, which works to elect GOP state officials nationally.

A day later, on Oct. 23, 2014, the Republican State Leadership Committee gave $5,000 to one such official in Michigan, Secretary of State Ruth Johnson, whose office later handled the complaint against the foundation.

The SOS’s decision to require the Michigan Jobs and Labor Foundation to act like a Super PAC existed in 2014 was at least more stringent than what the foundation’s own lawyers proposed.

In a letter in November 2014, Charles Spies and Andrew Richner told the Secretary of State’s Office that they believed the complaints against the foundation should be dismissed because the logos at the end of the ads were an accident.

“The communications were not made for the purpose of influencing an election,” the attorneys wrote of the ads that featured two Republican candidates who were in contested races just weeks before the election, “and an inadvertent and unauthorized action by a media vendor should not reflect on the organization as a whole.

“We respectfully request that you consider the special circumstances and use your administrative discretion to dismiss this allegation.”

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