'Dark money' ties raise questions for Sen. Joni Ernst

Brian Slodysko | Associated Press

WASHINGTON — An outside group founded by top political aides to Sen. Joni Ernst has worked closely with the Iowa Republican to raise money and boost her reelection prospects, a degree of overlap that potentially violates the law, documents obtained by the Associated Press show.

Iowa Values, a political nonprofit that is supposed to be run independently, was co-founded in 2017 by Ernst's longtime consultant, Jon Kohan. It shares a fundraiser, Claire Holloway Avella, with the Ernst campaign. And a condo owned by a former aide — who was recently hired to lead the group — was used as Iowa Values' address at a time when he worked for her.

Political nonprofits are often referred to as “dark money” groups because they can raise unlimited sums and are not required to reveal their donors. But they must take steps to keep their activities separate from the candidates they support. Additionally, while such tax-exempt groups can do political work, they can’t make it their primary purpose.

The documents reviewed by the AP, including emails and a strategy memo, not only make clear that the group’s aim is securing an Ernst win in 2020, but they also show Ernst and her campaign worked in close concert with Iowa Values.

Ernst is hardly the first politician to push campaign finance law boundaries. But the revelation could complicate her efforts to fend off a Democratic challenger in a closely watched race next year.

“The truth is, our campaign is completely separate and independent from any outside organization," Ernst senior adviser Brook Ramlet said in a statement. “Our campaign always has and always will act in full compliance with and in the spirit of the law.For the AP to suggest otherwise, is the definition of fake news.”

Campaign finance law states that candidates and their “agents” can't solicit, direct or spend contributions that exceed federal limits, even if the donations are made to an outside group. Those limits currently prevent donors from giving more than $2,800 to a candidate and $5,000 to a political action committee per election.

In July, Holloway Avella requested “an investment of $50,000” from a donor after Ernst made an introduction. She made clear in an email, which was obtained by the AP, how much a contribution of that size could help.

“As a follow up to our introduction by Senator Ernst, I am reaching out to you on behalf of Iowa Values,” she wrote.

“As you may have seen, an outside group on the left ... recently launched a six-figure ad buy in media markets across the state attacking Senator Ernst on her vote to repeal Obamacare,” she continued. “The purpose of our group, Iowa Values, is to push back against these type of negative attacks.”

Separately, a strategy memo states the group will use door-knocking, as well as TV, radio and digital advertising, to build a “firewall” that could be the difference “between winning and losing in 2020 for Senator Ernst.” The group is targeting about 120,000 Iowans who “lean Republican on the issues” but abandon the party at times over “the tone of the GOP.”

Taken together, some legal experts say the documents offer proof that the effort violates the spirit of campaign finance and tax law, if not the letter of it.

“It seems like pretty strong evidence” that the $50,000 request was for an “illegal donation” while it's “clear that the goal of Iowa Values is to reelect Joni Ernst, which may violate its tax-exempt status,” said Brendan Fischer, an attorney with the nonpartisan Campaign Legal Center in Washington.

He also said the documents pulled back the curtain on how dark money works.

“This is a striking example of how secret campaign money operates,” Fischer said. “The big donors that bankroll a dark money group like Iowa Values remain hidden from the public, but the politician that benefits knows where the money is coming from.”

Still, it’s far from certain that the Federal Election Commission, or the IRS, will find that the groups broke the law.

The FEC often gridlocks along partisan lines. And after a recent resignation, the panel doesn’t have enough members to legally meet for conducting business. Similarly, the IRS has shown little appetite for cracking down on political spending groups that push the limits.

“There’s a real disconnect between the principles behind the law and how they are enforced,” said Larry Noble, a former general counsel to the FEC who served under both Republican and Democratic administrations. Noble said he would need more details before assessing whether Ernst’s campaign broke the law. But, he added: “The bottom line is that this is really questionable.”

Dan Petalas, a former FEC attorney, said that the “law is undecided” but that his personal view is the fundraising was permissible because Holloway Avella said she was requesting the $50,000 on behalf of Iowa Values, not the campaign.

In a statement, Iowa Values executive director Derek Flowers said the organization has “systems and controls in place to make certain that it complies with all laws” and is “careful to follow all requirements that limit how much of its activities can be focused on supporting candidates.”

What’s undeniable is the close connection between Ernst and the group.

Kohan, a former Ernst deputy chief of staff who is now a general consultant to her campaign, was paid $120,000 to serve as executive director of Iowa Values for two years, according to the group's tax filings. He left the group earlier this year. Jamestown Associates, where he is a named partner, also collected an additional $101,000 from Ernst’s campaign in the years he served as executive director.

Holloway Avella raised about $520,000 for Iowa Values in 2017 and 2018, tax records show. The group lists her Arlington, Virginia, office as one of its business addresses and paid her about $60,000. Ernst paid her an additional $363,000 those years, record show.

The group listed a Waukee, Iowa, condo owned by Flowers as another business address in 2017, records show. Flowers was campaign manager during Ernst’s 2014 Senate primary. A company called Midland Strategies, which has been paid $145,000 by Ernst since 2013, also listed Flowers’ condo as a business address. Flowers succeeded Kohan as the group's executive director this year.

After Ernst launched her reelection campaign, Holloway Avella was deeply involved with both operations.

Holloway Avella's website lets prospective donors request to host a fundraiser for the senator. And invitations for several recent Ernst events list her as an organizer, including two held in September at Bistro Bis, a French eatery a few blocks from the U.S. Capitol.

Around the same time, Holloway Avella was seeking donations for Iowa Values from prominent Ernst supporters, like dieting entrepreneur Jenny Craig and San Francisco philanthropist Diane “Dede” Wilsey. Craig previously gave $30,000 to Ernst; Wilsey donated $46,000.

A legal compliance letter Holloway Avella sent to donors underscored the delicate terrain.

Iowa Values’ mission “is to educate the public about common-sense solutions to various public policy issues of national importance,” it stated. “It was not formed by any federal candidates or agents of candidates or at the direction or request of any candidates or an agent of a candidate.”