More than half the outside spending in Pennsylvania’s Senate GOP primary race was funneled through a chain of groups that haven’t disclosed the original source of the funds. The financial gymnastics appear designed to avoid revealing the donors behind campaign advertisements while adhering to the letter of campaign finance law. Furthermore, a lobbyist for a Fortune 500 energy company played a role in the scheme. OpenSecrets Blog has written about Freedom Fund for America’s Future, a super PAC that spent about $175,000 on ads attacking Republican candidate Tom Smith in the primary campaign. Because of a loophole in the disclosure schedule, Freedom Fund didn’t have to disclose its donors until after the April 24 primary election. Freedom Fund’s report to the Federal Election Commission last weekend showed that almost all the money it spent — at least $165,000 — came from another super PAC: Fight for the Dream. And Fight for the Dream, while registered with the FEC as of April 26, has disclosed almost nothing other than being registered to a UPS mailbox in an Allentown, Pa., shopping mall. OpenSecrets Blog has learned that the box is rented by Wayne Woodman — a former finance co-chairman for Steve Welch, Smith’s opponent in the primary. Woodman confirmed in an interview that he organized Fight for the Dream. Asked why the group hadn’t submitted a response, now overdue, to an FEC request for additional information or filed a quarterly report that would disclose its donors, Woodman referred us to Anthony Ferate, who he said was his legal counsel. Ferate — who is also a lobbyist for Devon Energy, a natural gas and oil company based in Oklahoma, and is counsel to the Oklahoma Republican Party — said in an interview that the filing had been sent to the FEC, and he forwarded us a copy. (Several hours after OpenSecrets Blog received the copy, the report appeared on the FEC’s website). But that report shows that the entirety of Fight for the Dream’s funding came from a group called Restore the Dream — which uses the same UPS mailbox as Fight for the Dream.

Here the chain ends, though: Restore the Dream is a 501(c)(4) social welfare nonprofit (so called because of a provision of the Internal Revenue Code), and doesn’t have to disclose its donors. OpenSecrets Blog has written about politically active 501(c) groups in its continuing “Shadow Money Trail” series. Restore the Dream will have to file a Form 990 report with the IRS, but not until 2014, and even then it won’t have to reveal its donors.

When asked if the Restore the Dream and Fight for the Dream pass-throughs were designed to avoid disclosing donors, Ferate maintained that the organizations were above board.

“This was set up within federal election laws,” he said. “I would disagree that there’s anything to question about transfers between super PACS. In fact, the Democrats are coordinating between their super PACs.”

Woodman denied direct responsibility for the manner in which the groups were set up, and said there was no link between the groups and his work on Welch’s campaign.

“The structure of this thing was given through legal counsel,” he said in a phone interview.

To recap, then: Woodman, after resigning from his position in Welch’s campaign, set up the super PAC Fight for the Dream and the nonprofit Restore the Dream in April with the help of Ferate, his legal counsel. Restore the Dream made transfers to Fight for the Dream totaling $174,800 on April 11, 19 and 20. One day after each transaction, Fight for the Dream gave the money to Freedom Fund for America’s Future, which used those funds to make nearly all of its $175,000 in ad buys against Welch’s opponent Smith on April 19 and 20.

The transactions between the two super PACs and the nondisclosing nonprofit provide a stark example of how disclosure requirements are sometimes rendered meaningless. By law, super PACs must reveal their donors to the public via their reports to the FEC. But when the donor is ultimately another group or an LLC that is under no legal mandate to say where its money is coming from, voters actually learn very little.

Even though Freedom Fund reported its donors in accordance with FEC regulations, the real source of its funding — in fact, the largest source of outside spending in the Pennsylvania Senate race — is still effectively unknown.

Smith, a former coal company owner who self-financed his campaign to the tune of $5 million, survived Freedom Fund’s attacks, which highlighted Smith’s history as a Democrat and accused him of raising taxes as a local official. He defeated Welch, who was backed by Pennsylvania’s Republican governor and the state party, and several other candidates in the primary and faces Democratic incumbent Sen. Bob Casey in November.

According to both Woodman and Ferate, Fight for the Dream’s efforts did not end with Welch’s defeat, and the group will continue to raise and spend money on political campaigns.



For permission to reprint for commercial uses, such as textbooks, contact the Center: Feel free to distribute or cite this material, but please credit the Center for Responsive Politics.For permission to reprint for commercial uses, such as textbooks, contact the Center: [email protected]

·

·

·

·

·

·

Support Accountability Journalism At OpenSecrets.org we offer in-depth, money-in-politics stories in the public interest. Whether you’re reading about 2020 presidential fundraising, conflicts of interest or “dark money” influence, we produce this content with a small, but dedicated team. Every donation we receive from users like you goes directly into promoting high-quality data analysis and investigative journalism that you can trust. Please support our work and keep this resource free. Thank you. Support OpenSecrets ➜

Read more OpenSecrets News & Analysis: