Following up on reports that the nonprofit group, Americans for Job Security, has been avoiding the donor disclosure requirements on its “independent expenditure” filings to the FEC, the New York Times has written a bombshell of a piece that details the group’s numerous financial improprieties. AJS, it turns out, is something of a poster child for a growing trend of political groups masquerading as nonprofits under section 501 of the tax code in order to avoid campaign finance laws and shroud their donors and other political activities in secrecy.
The Times notes that few nonprofit groups, so far, have been more active during this election cycle than AJS, which spent $6 million on ads during the primaries and just indicated it’s paying close to $4 million more for ads directly attacking nine Democrats running for the House. The close ties between the group and a number of Republican operatives, combined with court documents obtained from a recent case against AJS in Alaska, however, raise some serious questions about whether the pro-jobs “issue advocacy group” is in fact anything more than a funnel for conservative donors looking to spend money anonymously on pet political causes and races:
The group’s Republican connections begin with location: While its public address is a drop box at a United Parcel Service store in Alexandria, Va., [the group's president] Mr. DeMaura actually works out of space that is sublet from a Republican consulting shop, Crossroads Media, whose other clients include the national Republican Party, the Republican Governors Association and American Crossroads, a Karl Rove-backed group raising millions to support Republican candidates.
Crossroads Media is run by Michael Dubke and David Carney, who along with several business groups helped start Americans for Job Security in 1997. Mr. Carney had been political director for President George Bush, and Mr. Dubke was the first executive director and then president of Americans for Job Security until April 2008, when Mr. DeMaura, recruited by Mr. Carney, took over.
Despite these well established ties, Stephen DeMaura (who is 25 and listed as the sole employee of AJS!) claims that all the calls the group makes about its multimillion dollar ad campaigns are made by him and him alone:
According to testimony in the Alaska case, the board meets once every two years, and there are no committees or written policies shaping decisions about ad campaigns. Mr. DeMaura said he made those calls. He disputed suggestions that he was influenced by the consultants with whom he shares an office.
“I work with them closely on a day-to-day basis, but we don’t discuss our work or coordinate anything,” he said. “It’s firewalled off.”
Meanwhile, AJS calls itself a business league and avoids all disclosure by reporting its contributions as “membership dues,” but a Times’ review of the group’s tax returns “shows membership revenue fluctuating wildly depending on election cycles — similar to the fund-raising of political committees that escalates during campaign season”:
“Membership dues and assessments” totaled $7 million in the 2004 presidential election, and dipped to $1.2 million the following year before climbing back to $3.9 million for the 2006 midterm elections. Then, in 2007, they plunged to zero before shooting up to $12.2 million for the 2008 presidential race.
Asked how it could have collected no dues in 2007, neither Mr. Dubke nor Mr. DeMaura offered an answer. Mr. DeMaura said that there is no set membership fee and that members are not required to pay annually.
“They can if they want,” he said.
AJS is perhaps the most egregious example of the phenomenon of political groups misrepresenting themselves on their tax filings in order to evade campaign finance regulations. But when the citizen watchdog group Public Citizen filed a complaint against the group in 2007, it never heard back from the IRS and an investigation recommended by FEC staff members was killed by its three GOP commissioners, who deadlocked the commission by voting against the idea.
With groups like AJS operating with total impunity, it’s no wonder that more and more similar outfits are following its lead this campaign cycle by registering as 501 nonprofit groups and then denying that any of its contributions were made with the express purpose of furthering its electioneering activities.