Money and Democracy

Published — November 23, 2015

Watchdog asks for criminal probe of conservatives tied to nonprofit

Same group sues FEC over failure to act against ‘dark money’ group active in 2010


A political watchdog is calling for a criminal investigation of three prominent conservatives in connection with their involvement with a “dark money” nonprofit that last month avoided punishment from the Federal Election Commission.

Citizens for Responsibility and Ethics in Washington is also suing the Federal Election Commission for failing to act against the now-defunct nonprofit, even though agency lawyers concluded that the group broke the law in 2010.

The so-called dark money group spent most of the $4.8 million it raised on campaign ads —contrary to what it reported to the Internal Revenue Service.

The request for an investigation, dated Monday, names the alleged architects of the Commission for Hope, Growth and Opportunity: William Canfield, now general counsel for pro-Carly Fiorina super PAC CARLY for America; Scott Reed, senior political strategist for the U.S. Chamber of Commerce and Wayne Berman, a senior adviser for Blackstone Group, a global investment firm, who also serves as national finance chairman for presidential candidate Marco Rubio.

Berman, Canfield and Reed did not respond to requests for comment.

The Center for Public Integrity reported on the nonprofit earlier this month when the FEC closed its five-year investigation into the group, prompting the public release of 227 pages of legal documents.

Plagued by gridlock, the commissioners decided not to take action against the group, voting 3-3 on whether to pursue sanctions. The deadlock occurred even though lawyers with the federal agency determined the group’s purpose was primarily political — a violation of IRS rules that that state such “social welfare” nonprofits may not make politics their primary activity.

CREW has also filed a lawsuit against the FEC demanding that it reopen and re-examine the case. CREW called the original dismissal “arbitrary, capricious, an abuse of discretion, and contrary to the law.”

The watchdog group is asking U.S. Attorney Channing D. Phillips to determine whether the trio violated federal law by lying to the government about their involvement with the nonprofit, thus obstructing the investigation.

Berman, Canfield and Reed told FEC lawyers during the investigation that they had limited involvement with the nonprofit. Berman, for example, said he offered advice on a “voluntary basis.”

But Michael Mihalke, of political consulting firm Meridian Strategies LLC, told FEC investigators that he — along with Reed and Berman — split a “fundraising commission” of $1.1 million. The money was what remained from a large-scale ad blitz in key 2010 House races.

“It appears that these operatives deliberately misled the government about their role in CHGO to throw investigators off the trail of the organization’s violations of campaign finance law,” argued CREW’s Executive Director Noah Bookbinder in a statement. “If they were telling the truth about their roles to the FEC, how did they end up with all that money?”

The request for an investigation by CREW calls the representations the three prominent conservatives gave FEC lawyers about their role with the nonprofit “blatantly evasive.”

A spokesman for the FEC declined to comment.

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