Aamer Madhani

USA TODAY

CHICAGO — A federal appeals panel expressed skepticism Tuesday about weighing in on a dispute over whether an investigation of Wisconsin Gov. Scott Walker and his aides' dealings with independent political groups before Wisconsin's 2012 recall election should proceed.

"I don't understand why the federal courts are being brought in at a micro-level," said Judge Diane Wood of the U.S. 7th Circuit Court of Appeals.

Wood's comments came as prosecutors in the probe made their case to the three-judge panel that they should be allowed to continue the campaign-finance investigation even after two lower courts dismissed prosecutors' arguments and temporarily shut down the probe.

Prosecutors have said Walker, who is in the midst of a tight re-election battle as he seeks a second term and is a potential 2016 presidential contender, is not a target of the investigation. No one has been charged in the probe.

At the heart of the case, prosecutors from five Wisconsin counties are raising questions about whether Walker and his top aides circumvented state law by raising money and coordinating spending by a dozen outside groups during the recall election. The recall was spurred after Walker successfully shepherded legislation that ended collective bargaining for most public employees in the state.

Prosecutors say independent groups' fundraising and spending amounted to in-kind campaign contributions that should have been reported to the state Government Accountability Board. They argued that coordination between independent groups and campaigns results in the groups being considered campaign subcommittees, which would have forced the groups to report their spending and contributions.

The Wisconsin Club for Growth, a conservative group at the center of the tussle, counters that it didn't expressly ask voters to elect or defeat a candidate, so its actions were permissible.The prosecutors asked the appeals court to dismiss a federal lawsuit by the Wisconsin Club for Growth, which contends its free speech rights are being violated in the probe.

After the hearing, David Rivkin, the political group's attorney, expressed cautious optimism that the appeals court would rule in his client's favor.

"I think all judges in the panel expressed considerable discomfort from the nature of the investigation and how it evolved," Rivkin said. "Also, all the judges have not expressed much concern about our constitutional argument, namely that the theory the prosecutors are using represents an unconstitutional infringement on our First Amendment-protected associational, expressive rights."

Joe Russell, who represented the special prosecutor in the probe, declined to comment after Tuesday's hearing.

In May, U.S. District Judge Rudolph Randa temporarily halted the investigation, ruling that prosecutors incorrectly interpreted campaign-finance law.

In court documents released last month, aides appear to suggest Walker told donors they could make unlimited donations to the Wisconsin Club for Growth without having the gifts publicly disclosed.

"As the governor discussed ... he wants all the issue advocacy efforts run through one group to ensure correct messaging," Walker fundraiser Kate Doner wrote to campaign adviser R.J. Johnson in April 2011. "We had some past problems with multiple groups doing work on 'behalf' of Gov. Walker, and it caused some issues ... The governor is encouraging all to invest in the Wisconsin Club for Growth."

While polls show that Walker is knotted in one of the most competitive gubernatorial races in the country, the court battle appears to have had minimal impact on his standing with voters in Wisconsin. The governor faces Democrat Mary Burke, a former bicycle company executive and former state Commerce secretary, who hasn't pressed the issue in her campaign.

In a Marquette Law School poll in August, 54% of respondents said the investigation was "just more politics" and 45% said it was "really something serious."

Campaigning in Wisconsin Dells on Sunday, Walker said he wasn't overly concerned about the 7th Circuit ruling.

"The bottom line is last year a court of appeals judge here in the state of Wisconsin — highly respected and non-partisan judge with no connection to me whatsoever — dismissed the arguments at the state level," Walker said. "So regardless of what happens at the federal level, they've already been dismissed by a judge at the state level."

The panel did not say when it will rule. Even if it allows the investigation to resume, a state judge who blocked the probe this year could keep it on hold.







