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Mystery Health Care Group Funneled Millions to Conservative Nonprofits

shadow7.pngThis is the seventh story in an exclusive series about the funding behind politically active tax-exempt organizations that don’t disclose their donors. You can read the other stories in the series here.

A secretive, well-funded group whose name gives the misleading impression that it is solely focused on health care issues gave more than $44 million in 2010 to other tax-exempt groups, many of which spent millions on TV ads attacking Democrats running for the House and Senate and have begun spending for the same purpose this year.

None of the groups — including eight of the most politically active nonprofits in 2010 — disclose their donors, and the role of the Center to Protect Patient Rights (CPPR) in funding them has not previously been reported.

Based in Arizona, CPPR provided large grants to a cluster of well-known conservative organizations that operate under section 501(c)(4) of the tax code, which classifies them as “social welfare” groups and allows them to keep their funding sources from public view. Politics is not supposed to be their primary purpose, although critics say many of the organizations have stretched the rules too far.

FutureFund2.jpgAmerican Future Fund received the largest grant from CPPR, a total of $11.7 million for “general support.” That amount exceeded the nearly $10 million the group told the Federal Election Commission it spent supporting or opposing Democratic candidates in ads in the midterm elections (“independent expenditures”) or broadcasting slightly less explicit appeals close to election day (“electioneering communications”). In fact, the gift was more than half of the $23.3 million the group raised all year.

American Future, which is based in Iowa, ran a series of hard-hitting ads against Democratic candidates around the country in 2010 that left little doubt where the group stood, even when the ads didn’t refer to the election. “With the biggest tax cut in American history looming, [Bruce] Braley was the deciding vote to adjourn the house. Instead of fighting for lower taxes, Braley went home,” one ad, which ran in October 2010, said of the Iowa Democrat. “Tell Braley: Don’t vote to raise taxes on Iowa families.”
Layers of Anonymity

The donors to the Center to Protect Patient Rights are almost entirely unknown. Such tax-exempt organizations must detail the groups to whom they gave grants, but not the sources of their own funds. A small grant of $200,000 came to CPPR from American Action Network, yet another 501(c)(4), according to the Form 990 tax return that American Action filed with the Internal Revenue Service this week.

And if its donors are unknown, so is much else about CPPR. According to its own 2010 tax return, which was filed last November, it is run by Sean Noble, who is listed as its director, president and executive director. Noble describes himself on his Twitter account as a “PR/Political consultant, conservative strategist/operative, former GOP Hill chief of staff, blogger, proud father, fighting for liberty.” Noble was chief-of-staff to former Republican Rep. John Shadegg of Arizona, for whom he worked for 13 years, and since then has worked as a political consultant and in public relations.

Noble took no salary from CPPR, but his firm, Noble Associates, was paid $340,000 by the group for “management services.” Noble was also paid $10,000 to lobby for the group.

He is currently managing partner of DC London Inc., a political consulting firm that offers robo-calling and other services. CPPR’s other director and secretary is Courtney Koshar, an anesthesiologist in the Phoenix area.

The organization’s mission, as listed on the tax form, is “Building a coalition of like-minded organizations and individuals, and educating the public on issues related to health care with an emphasis on patients rights. Engaging in issue advocacy and activities to influence legislation related to health care.”

Noble did not return our calls seeking comment. But in a piece last year, Politico described Noble as a “Koch operative,” referring to the wealthy conservative brothers from Koch Industries who have been instrumental in funding a conservative network of groups. OpenSecrets Blog has been unable to confirm the Koch connection independently.

Adding to the confusion is the fact that CPPR’s name is almost exactly the same as that of another group, the Coalition to Protect Patients’ Rights, a group that organized lobbying efforts against health care overhaul proposals being debated in Congress in 2009. And CPPR gave the Coalition $205,000 in 2010. Further, the records for both groups were listed as being stored at the same Glendale, Ariz., address by a woman who describes herself as an employee of DCI Group, a lobbying firm practiced in manufacturing “grassroots” campaigns for the tobacco industry and others that has handled public relations for the Coalition.

But the Coalition’s spokesman, physician and lawyer, Donald Palmisano, told OpenSecrets Blog he’d never heard of the other group, as did a publicist with DCI Group.

The second-largest grant from CPPR, $5.6 million, went to Americans for Limited Government, also for “general support,” as were all the CPPR gifts. That amounted to more than half the group’s $9 million budget for 2010. The creation of libertarian real estate mogul Howard Rich, Americans for Limited Government distributes money to its own large network of 501(c)(3) and (c)(4) organizations. One such group, Colorado at Its Best, in turn funded a group called Clean Government Colorado in 2008, which backed a ballot initiative that critics said would limit the ability of public employees’ unions to make political contributions. In 2010, ALG funded a group called Alaskans for Open Government, which in turn provided money to another group backing an “anti-corruption” ballot initiative. The Alaska group eventually ran into trouble over failing to disclose its own sources of funding.

Americans for Job Security received $4.8 million from CPPR. That group, which is a 501(c)(6) business association under the tax code, spent about $9 million in the 2010 elections expressly attacking Democrats and running electioneering ads, according to Center for Responsive Politics figures. It has a history of running attacks on Democrats dating back to the late 1990s.

grover.jpgOther beneficiaries of CPPR funding included anti-tax maven Grover Norquist’s Americans for Tax Reform, which received $4.2 million and spent about that amount on independent expenditures in 2010, almost all against Democrats; Americans for Prosperity, which has strong ties to Charles and David Koch and which received close to $2 million from CPPR and spent a little less than that on negative issue ads mentioning candidates close to the election; and Club for Growth, which received $690,000 from CPPR and spent more than $8 million on independent expenditures against Democrats in 2010, as well as against some Republicans in primary contests.

All these groups may have spent more — and in some cases definitely did so — on political ads that escaped reporting requirements. For instance, according to its 990 form, American Future spent a total of $21.4 million in 2010, of which $14.7 went to “media services,” indicating possible spending on ads that was greater than the $10 million it reported to the Federal Election Commission.

This table shows all the recipients of CPPR grants in 2010:

Non-Profit 2010 CPPR Grant
American Future Fund $11,685,000
60 Plus Assn $8,990,000
Americans for Limited Government $5,585,000
Americans for Job Security $4,828,000
Americans for Tax Reform $4,189,000
Revere America $2,300,000
Americans for Prosperity $1,924,000
US Health Freedom Coalition $1,430,000
Susan B Anthony $1,025,000
Club for Growth $690,000
Americans United for Life Action $559,000
The Institute for Liberty $457,000
American Energy Alliance $250,000
Coalition to Protect Patient Rights $205,000
Freedom Vote $200,000
Protect Your Vote $100,000
Hispanic Leadership Fund $47,000
Americans United for Life $45,000
Tea Party Patriots $30,000
Common Sense Issues Coalition $25,000
Common Sense Issues $10,000
Concerned Women 4 America $4,500
 

Another recipient of CPPR’s money is Freedom Vote, a 501c4 based in Columbus Ohio that was created by Republican operatives in 2010 to finance get-out-the-vote operations usually done by the party. The group had a total income of $1.3 million that year, according to its 990; $200,000 of it came from CPPR. Another $900,000 came from Crossroads GPS.

Jim Nathanson, who identified himself as Freedom Vote’s executive director, told OpenSecrets Blog that the group is still active and planning on participating in the 2012 election, but said the organization is “still in the planning, formulating stage. We are doing things, but nothing is finalized.” Asked whether the group is fundraising, Nathanson said it is, but wouldn’t go into details. “It probably wouldn’t be appropriate to say anything, simply because things are not fully developed.”

Links Between Grantees

The tax documents of American Action, the Center to Protect Patient Rights and some other politically active groups — especially on the Republican side, where such groups are more prevalent — make it plain that a number of deep-pocketed donors are willing to help finance tax-exempt groups that spend at least a portion of their resources attacking the other party. Many seem to prefer remaining anonymous and hence prefer making gifts to c(4)s rather than super PACs. Each super PAC must disclose its donors.

Some of the groups receiving CPPR funds did, in fact, concentrate on health care, or at a minimum on opposition to the Patient Protection and Affordable Care Act signed into law by President Obama on March 23, 2010. One of those, the US Health Freedom Coalition, was given $1.4 million by CPPR and bankrolled a proposition on the Arizona ballot in 2010 rejecting the requirement in the federal health care overhaul that all individuals have health insurance. (It passed).

sbalogo.jpgSeveral of the recipients of funds from CPPR are anti-abortion groups: the Susan B Anthony List, Americans United for Life and Americans United for Life Action received a total of $1.85 million. Another $35,000 went to two arms of an organization called Common Sense Issues, which had used controversial “push-polling” to help former Arkansas Gov. Mike Huckabee’s presidential bid in 2008. In 2010, it asked candidates to sign a pledge to oppose taxpayer funding of abortion and ran ads in a number of House and Senate races.

Some of the recipients of CPPR’s largesse are linked in another way: they use the same vendors. For instance, five of the groups, led by Americans for Limited Government and the American Future Fund, paid a total of about $7.5 million to a Phoenix firm called Direct Response for telecommunications and direct mail.

Mentzer Media made more than $25 million in 2010 from four CRRP grant recipients plus American Crossroads and Crossroads GPS, the super PAC and 501(c)(4) linked to Karl Rove. The American Future Fund paid Mentzer the largest sum, $10 million.

Mentzer is being used this year by the pro-Mitt Romney super PAC Restore Our Future, and in 2004 made more than $18 million running the Swift Boat Veterans for Truth attacks on the war record of Democratic presidential candidate John Kerry.

Staff at the Democratic Congressional Campaign Committee were unaware of CPPR, though they are highly familiar with its grantees, many of which ran ads against the House candidates the DCCC was supporting in 2010. “Voters have a right to know who is behind the ads they see so they can evaluate the claims,” said Deputy Executive Director Jennifer Crider, criticizing the fact that some 501(c)(4) organizations are extremely active on the political front but, unlike other political organizations, don’t have to release the names of their donors.

The DCCC’s former chairman, Rep. Chris Van Hollen of Maryland, recently won a lawsuit challenging an FEC rule that allowed groups like those funded by CPPR to avoid dislcosing their donors when they ran electioneering communications ads. This month an appellate court refused to stay the decision. It’s unclear, though, what that means for disclosure in this cycle. There’s evidence that groups have responded to the ruling by not running ads that fit the definition of electioneering communications.

Staff Writer Russ Choma contributed to this post.

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