Dark money, lies and disclosure in the JeffCo school board race

Groups opposed to the recall of three conservative Jefferson County Board of Education members are doing their best to keep under wraps how much they’re spending on opposition mailers or TV time. And these groups are getting help in hiding that spending from an industry that normally advocates for the public’s right to know: Denver’s broadcast TV stations.

The Colorado Independent has so far been able to tie at least $261,000 in advertising to the groups that either directly advocate against the recall or in favor of actions taken by the board majority. All but $41,000 comes from groups that are not required by either state or federal law to disclose donations or how they spend their money. And it’s just the tip of the iceberg.

The Federal Communications Commission (FCC) grants licenses to broadcast TV stations and radio as a matter of public interest. Along with the license is the requirement that the broadcast organizations disclose political speech purchased, including ad buys.

But just try to find out how much is being spent by these groups on TV time, and you run into a stone wall at most of Denver’s TV stations. And according to Colorado Ethics Watch, TV stations have a vested interest in keeping those numbers secrets.

The Jefferson County Board of Education election includes a ballot question to recall three members of the board: John Newkirk, Julie Williams and Ken Witt. All three were elected in 2013 in a low-turnout election, with just 43 percent of the county’s 413,00 registered voters participating. Out of 178,000 ballots cast, more than 40,000 declined to vote on the school board races, meaning only one-third of eligible voters decided the new board majority.

The pro-recall side has been mostly transparent in disclosing how much is being collected and spent. It’s largely come through the candidate committees and from three organizations: Jeffco United, Jeffco United Forward and Jeffco United for Action, which has raised the most money for the election. The latter has so far revealed contributions of $252,305, with $146,000 of that going to Black Diamond Outreach for collecting signatures for the recall petitions. Critics claim that paying organizations to collect signatures flies in the face of the intent of such measures, which is that they are supposed to be citizen-led.

Among the biggest contributors to Jeffco United for Action: former Jeffco superintendent Cindy Stevenson, who kicked in $3,000.  Stevenson also gave money to five candidates backed by Jeffco United, for a total of $7,650, as of October 15. Another big donor: former Jeffco board member Hereford Percy, who kicked in $4,250 to the five candidates and to Jeffco United for Action.

The largest donation to Jeffco United for Action, however, came from Jeffco United, which in July contributed $97,000.

Jeffco United Forward, which also advocates for the five candidates, took in $31,138, as reported in its October 20 filing. However, more than $13,000 of that was in contributions with no identified donor, some in the hundreds of dollars. Spokesperson Lynea Hansen said those donations, which ranged from $10 to $250, were primarily for yard signs, for which the group charged $10 each; and for “getting out the word.” Hansen said Jeffco United Forward, as an “independent expenditure committee” under Colorado law, does not have to itemize donations of $250 or less.

On the anti-recall side, transparency is the exception rather than the rule. And those who are spending the most are ably assisted by three Denver broadcast TV stations that have a vested interest in keeping that spending secret.

Only CBS Denver (KCNC) freely disclosed ad buys made by two organizations advocating either in favor of the actions taken by the school board or to encourage Jeffco voters to vote against the recall.

The two organizations are Colorado Independent Action, Inc. and Kids are First Jeffco. The latter is a project of the Independence Institute; the former shares a mailing address with the Independence Institute, and ad buys are signed by Amy Oliver Cooke, the institute’s vice president.

Colorado Independent Action is registered in the business database of the Secretary of State as a non-profit, although the registration does not say how it is classified for Internal Revenue Service purposes. The organization is not registered as a committee of any kind in the Secretary of State’s campaign finance database, only as a contributor of $10,000 to Kids are First Jeffco. That’s the only contribution Kids are First Jeffco has received so far, according to the October 15 report. And only $1,000 was spent, to Colorado PRFRS for robocalls, the report stated. That company is owned by Cameron Lynch of Lakewood, who is well known in Republican circles for demographic research. He also reportedly helped state Republicans draw congressional boundary maps in 2011.

Colorado Media Group, part of Walt Klein Advertising, made the ad buys on behalf of both groups. According to FCC files, those buys were made to CBS Denver (KCNC), 7News Denver (KMGH), 9News (KUSA) and Channel 20 (KTVD), which is part of KUSA.

CBS Denver got $50,965 for ads that ran in August and September. Kids are First Jeffco paid  $17,290 for ads that ran through Monday, according to the station. While that exceeds the $10,000 the group has so far reported, the ad buys were made after the end of the Oct. 15 reporting period.

But no amount of calls, emails or even in-person requests would get the other three stations to divulge the amount they got from those two groups.

At 9News, “Lawrence,” who would not give his last time, declined to reveal that spending, claiming the station didn’t have to because those races are not of “national interest.” That means races at the federal level, like President, U.S. Senate or U.S. House of Representatives.

Brad Remington, vice president and general manager of KMGH, through an email, referred all questions to the station’s corporate owners, EW Scripps of Cincinnati.

Luis Toro, executive director of Colorado Ethics Watch, told The Independent that broadcast TV stations have a vested interest in keeping dark money under wraps.

“TV stations are the biggest winners in the post-Citizens United world,” Toro said. “They have every incentive to go along with the dark money groups that pay them so much.”

Citizens United was the 2010 U.S. Supreme Court decision that said corporations were people, and hence they could make contributions in political campaigns and issues just like people. It’s opened the floodgates of millions, perhaps billions of dollars, in dark money: contributions and spending that doesn’t have to be disclosed to the public.

Dark money is the term used to describe non-profit organizations that don’t have to disclose their contributors or spending. Under Internal Revenue Service rules, these groups, known as “social welfare” organizations, must have non-political activities as their primary purpose. That’s been interpreted to allow up to 49 percent of their spending to be on political speech.

There’s two other pieces of the dark money advertising issue: How much is being spent on cable or satellite TV networks and on social media buys.

In addition to the broadcast TV advertising, both Colorado Independent Action and Kids are First Jeffco bought air time through Comcast, which can more precisely target neighborhoods in the metro area, such as in Jefferson County.

Jon Caldara of the Independence Institute would not share the amount spent, stating that the Institute hasn’t disclosed its spending for years and isn’t going to start now. Jeffco United estimates total spending at about $450,000, a figure Caldara disputed in an interview with Sandra Fish, which was published by Colorado Public Radio last week. “I wish I had half of that,” Caldara told CPR.

Today, Colorado Ethics Watch released a series of Comcast documents that shows Colorado Independent Action bought at least $31,000 in air time through Comcast (one document doesn’t say how much was spend on an ad buy).  Add that to the more than $51,000 in TV time, and the total is $82,000, not including ad time bought through the three TV stations that would not release ad buy information.

Kids are First bought $24,000 in ad time from Comcast; combined with the KCNC buy, the total is $41,290. For both Independence Institute-affiliated groups, the total rises to at least  $111,998.

Caldara has not yet responded to a call for comment.

Another dark money group, Americans for Prosperity, is running videos on social media in support of the actions of the Jeffco board: “Accountability” and “Grateful,” both which can be found on YouTube. The AFP Foundation also put out three mailers in the past month in support of the board majority reforms and is running TV and cable ads as well. In the CPR report, AFP estimated it would spend less than $250,000 on those ads and mailers.

The Colorado Ethics Watch documents details $132,314 in Comcast buys for Americans for Prosperity and tied to the Jeffco recall. Another $8,624 was spent in Douglas County.  

The grand total for the Jeffco recall from the AFP, Kids are First Jeffco and Colorado Independent Action is at least $261,602.00.

The AFP Foundation is a 501(c)3, which under IRS rules does not have to disclose its political spending so long as it is done in a non-partisan manner. AFP, a 501(c)4, is under the IRS’s “social welfare” classification, and not required to disclose political spending so long as it isn’t the group’s chief purpose. It’s generally accepted that this can be as much as 49 percent of an organization’s spending.

Social media, the new frontier in campaign spending, is an even greater problem. According to The Atlantic, “social media is regarded as another subset of Internet communications; in 2006, the Federal Elections Commission concluded that finance laws apply to web advertisements and messages that appear on the sites of political organizations, but beyond those two categories, other types of Web-based activities go ungoverned by and large by federal law.”

The advent of dark money at the school board level is a new development for policy personnel at the Sunlight Foundation in Washington, which tracks campaign finance spending, including dark money.

Foundation policy analyst Richard Skinner said that disclosures of dark money spending has never been a priority for TV stations. It’s mostly “we have to keep [these documents]’ for legal purposes” kinds of explanations, he said. “No one will ever get fired at a TV station for failing to keep FCC files.” He blames the FCC in part for that, which he said has weak regulations with little or no enforcement.

But some states are fighting back. Montana, California and redder-than-red Texas now have rules or laws requiring more disclosure of contributions and spending by dark money groups. Montana’s bill had bipartisan sponsorship in the legislature and the state’s Democratic governor signed it into law in May.

The Texas Ethics Commission is pushing for more disclosure in that state, although their actions are opposed by Texas Governor Greg Abbott. According to the San Antonio Express-News, the commission this month passed a rule taking on one of the biggest loopholes in campaign finance spending: the so-called “magic words” test that defines whether an ad is directly advocating for a candidate or merely making statements of support for actions taken by a candidate or group.  The Texas rules apply to any group spending money in Texas 30 days before an election.

California has the strongest and oldest laws, administered by its Fair Political Practices Commission. And they aren’t afraid to use them.

In 2012, the commission reached a settlement with two out-of-state groups that gave $11 million to a California political action committee that opposed a tax hike ballot measure supported by Gov. Jerry Brown. The commission ordered the California group, the Small Business Action Committee, to return the $11 million donation. Another $1 million was levied against the out-of-state groups, Americans for Responsible Leadership and the Center to Protect Patient Rights, both based in Arizona, for violations of the state’s campaign finance laws, according to the Los Angeles Times. Both groups are tied to the political network operated by David and Charles Koch.

Colorado Independent Action and Kids are First Jeffco, through the Independence Institute, also are tied to the Koch brothers. According to a 2013 report from the liberal Center for Media and Democracy, the Institute has received money from Donors Capital Fund, which receives money from Donors Trust, which is funded by the Koch brothers. The liberal Center for Public Integrity also reported in 2013 that Donors Trust is a funder of the Independence Institute.


Correction 10/30/15: This story initially stated there were 178,000 voters in Jefferson County. There are actually 413,000. 

Photo credit: Nick Ares, Creative Commons, Flickr