This story was updated at 5:42 p.m.

The billionaire brothers Charles and David Koch filed a lawsuit Wednesday for control of the Cato Institute, a libertarian think tank in Washington.

The lawsuit exposes a power struggle for one of Washington’s premiere policy centers, which has been funded by millions in contributions from the Koch brothers’ foundations since its founding in 1974.

Cato was divided between four shareholders: the two Koch brothers, Cato president Ed Crane, and former Cato chairman William Niskanen, according to the lawsuit filed Thursday in a court in Johnson County, Kansas.

At the heart of the dispute is the fate of the shares owned by Niskanen, who died in October at age 78 of complications from a stroke. The Koch brothers believe that they have the option to buy Niskanen’s shares, while Cato officials believe that the shares belong to Niskanen’s widow, Kathryn Washburn, according to the complaint.

Washburn, who is named in the suit along with Cato and Crane, referred questions to Cato.

Crane released this written statement:

“Charles G. Koch has filed a lawsuit as part of an effort to gain control of the Cato Institute, which he co-founded with me in 1977. While Mr. Koch and entities controlled by him have supported the Cato Institute financially since that time, Mr. Koch and his affiliates have exercised no significant influence over the direction or management of the Cato Institute, or the work done here.

“Mr. Koch’s actions in Kansas court yesterday represent an effort by him to transform Cato from an independent, nonpartisan research organization into a political entity that might better support his partisan agenda. We view Mr. Koch’s actions as an attempt at a hostile takeover, and intend to fight it vehemently in order to continue as an independent research organization, advocating for Individual liberty, limited government, free markets and peace.”

Cato is one of the largest think tanks in Washington, with a $39 million budget in 2011, according to its tax form. It espouses an ideology of limited government and free-market economics.

The Koch brothers, owners of the privately-held energy company Koch Industries, are prominent donors to conservative causes, including the nonprofit Americans For Prosperity. That group is a major backer of the tea party movement and has run millions of dollars worth of television advertising targeting President Obama.

Obama’s reelection campaign, in turn, has targeted Koch Industries in response. In a letter asking supporters for money, Obama campaign manager Jim Messina charges Americans For Prosperity is a front for the Koch brothers energy interests. He even goes so far as to say that the company is inflating gas prices and trying to “destroy” Obama before election day.

In a response to Messina, Koch’s president of government affairs wrote that Americans for Prosperity has “has tens of thousands of members and contributors from across the country and from all walks of life.”

Download the court documents.

Correction: The original version of this story referred to the Cato Institute as libertarian. Through the editing process, Cato was mislabeled as conservative. This inaccuracy was corrected and properly identifies the Cato Institute as libertarian.

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