DENVER, Colorado (CNN) -- On a Sunday morning just weeks before the presidential election, Priscilla Linsley opened her local Denver newspaper and discovered a DVD inside.

"I was shocked at the content and horrified that this had been in my Sunday paper," said Linsley, a 74-year-old Democrat, who watched about half of the video before throwing it in the trash.

"I have Muslim friends and respect Islam as a religion and felt that this was really hateful," said Linsley.

The hourlong film on DVD, "Obsession: Radical Islam's War Against the West," was made by Israeli filmmaker Raphael Shore and shows disturbing, sometimes violent images.

Rima Barakat Sinclair, who is Muslim and a Republican, was so angry she called her local lawmakers in Denver. Watch voters reaction to the DVD »

"It is riddled not only with misleading facts but outright fabrication," said Barakat Sinclair.

In September, some 28 million of the "Obsession" DVD's were distributed as advertising inserts in 70 newspapers, primarily in critical swing states such as Colorado, Florida and Ohio.

It was paid for by the Clarion Fund, a nonprofit group established by the film's Israeli producer with the goal of exposing what it calls the threat of radical Islam. The Clarion Fund was created in 2006, the same year "Obsession" was released.

"Our focus is to educate with our movies and raise awareness, not influence elections," said Gregory Ross, a Clarion spokesman.

But Larry Sabato, a political observer and director of the Center for Politics at the University of Virginia, said it's naïve to think such a video won't influence undecided voters.

"It's pretty obvious that the group sponsoring it wants people to think more about terrorism, about national security, about Middle East politics and maybe less about the economy," said Sabato. "Well, that obviously favors one side -- the Republicans."

Because a number of Americans still believe, incorrectly, that Democratic presidential candidate Sen. Barack Obama is a Muslim, political observers said they believe the DVD plays directly into that misperception.

Clarion said neither the campaign of GOP candidate Sen. John McCain or of Obama had anything to do with the DVD that has outraged some Muslim groups. Nihad Awad, executive director of the Council on American Islamic Relations, called the film anti-Muslim and politically motivated. Holding up promotional material that came with the video, Awad pointed out, "It says clearly that, 'It's our responsibility to ensure that we can all make an informed vote in November.' "

The Council on American-Islamic Relations, or CAIR, a group that includes some Democratic donors, has filed complaints with the Internal Revenue Service and Federal Elections Commission, saying Clarion has violated its tax-exempt status.

"A nonprofit organization getting involved in political campaigning, promoting candidates and scaring people and influencing voters for the election in November is something that needs to be looked into seriously," said Awad.

The Clarion Fund would not say who its donors are or how much they are giving. A records search comes up empty.

Muslim advocates from the Islamic relations council said the money is coming from the prominent Jewish educational group Aish Hatorah, which has headquarters in Israel.

"It seems that this campaign is well funded and directed by a foreign entity to influence the U.S. presidential elections," Awad said.

Clarion's spokesman called it "totally ludicrous."

"We do not accept donations from foreign entities. The accusations by CAIR are totally unfounded," said Ross. "We are responding to the FEC complaint. However, there is no substance to that whatsoever."

Aish Hatorah denied donating money to Clarion for its DVD campaign, though a spokesman said the filmmaker and other Clarion staffers worked for Aish Hatorah. The filmmaker, Raphael Shore, is employed by Aish Hatorah. His brother, Rabbi Ephraim Shore, is listed as an executive with the organization.

Clarion will soon release its latest film, "The Third Jihad," narrated by M. Zuhdi Jasser, who is president of the American Islamic Forum for Democracy. He describes himself as a devoted, peace-loving Muslim.

"It's always interesting how the Islamist organizations that have a certain political agenda claim 'victim' and yet they always want to attack the messenger, rather than dealing with the message," said Jasser.

He said groups such as the Islamic council should "condemn not only terrorism as an action, but the goals of the Islamic state and what Islamists would do if they were a majority and name Hezbollah, Hamas, and other terrorist organizations by name."

As for people like Barakat Sinclair who received the DVD, she said newspapers should have known better.

"If this DVD was produced and mass distributed by the KKK or an anti-Semitic organization, would it be included? Or rejected, rightfully so?" she said.

Linsley agreed and said newspapers should have made it clear the DVD was part of an ad campaign and not an editorial decision.

The FEC and IRS would not comment on the specifics of the case, but said they investigate all complaints.

All About U.S. Presidential Election • Barack Obama • John McCain • Islam