Dark money buys state supreme court races

Lax disclosure laws are allowing out-of-state interest groups to heavily influence in-state elections

Topics: The Center for Public Integrity, Dark Money, North Carolina, Iowa, Mississippi, Federal Communications Commission, ,

The Center for Public Integrity is a non-profit, independent investigative news outlet. For more of its stories on this topic go to publicintegrity.org.

This story has been corrected since it was originally published.

The Center for Public Integrity Sam Ervin IV must have been feeling pretty good about his chances of winning the North Carolina Supreme Court last fall.

He had name recognition — his grandfather was the legendary senator who led the Watergate investigation — and a poll released less than a week before Election Day showed him leading his opponent, incumbent Justice Paul Newby by 6 points, 38-32.

But on the Friday before the election, “Justice for All NC” — an independent political committee  whose funding came  mostly from out of state — dropped a TV ad depicting a scowling Ervin and asking: “Sam Ervin. Can we trust him to be a fair judge?”

Ervin lost the race by 4 points, 52 percent to 48 percent.

“As far as I know,” says Ervin, “there had never been an attack ad in a North Carolina judicial race.”

North Carolina’s supreme court election was arguably decided by groups like Justice for All — secretive nonprofits, unaffiliated with a candidate, whose money came from out of state.

Independent groups accounted for at least $2.59 million in spending to influence North Carolinians’ supreme court vote with more than half the total ultimately coming from groups outside the state, according to a Center for Public Integrity analysis.

And North Carolina is not alone.

The Center for Public Integrity examined 10 high-profile state supreme court elections in 2012 and 2013 where outside spending was a factor. At least a third of the $11.7 million spent by independent groups — collected from campaign finance reports, tax records and documents filed with the Federal Communications Commission — originated outside the election states, mostly from Washington, D.C.-based organizations.

Tracking all outside spending is nearly impossible thanks to lax state disclosure rules, as well as a loophole in the federal tax code that allows politically active nonprofits to run attacks ads without disclosing who funds them.



Out-of-state influence likely helped decide races in North Carolina, Iowa and Mississippi.

The influence of nonprofits and super PACs has changed the nature of state supreme court races, formerly shielded, at least in part, from the influence of money and partisan politics. Now, in many states, justices are involved in bare-knuckle partisan brawls similar to those that characterize non-judicial elections.In the 10 state races analyzed by the Center, national political groups were active directly or indirectly in seven. Seventy-five percent of the outside money could be traced to the long-running battle between trial lawyers and business interests.

Trial lawyers helped carry the day in Florida, Louisiana and Oklahoma, while the U.S. Chamber of Commerce says it was successful in North Carolina, Michigan, Ohio and Mississippi.

***

In North Carolina, supreme court campaigns are mostly funded by taxpayers to spare candidates from having to raise significant money and appear beholden to individuals, companies or interest groups that may face them in court. The outside money in last fall’s race overwhelmed the public finance system, rendering it largely irrelevant.

Justice for All NC, which spent $1.7 million to influence the race, got 68 percent of its money, or $1.2 million, from the Washington, D.C.-based Republican State Leadership Committee. The group in 2010 spearheaded a Republican effort to elect GOP state legislators, who would determine the boundaries of congressional districts following the U.S. Census.

The U.S. Chamber of Commerce’s Institute for Legal Reform gave $3.5 million to the RSLC in 2012, making it the largest single donor to the national Republican group last year. The Institute, a major foil of trial lawyers, lobbies for legislation that would mandate lower damage awards in civil trials.

The anti-Ervin ad was just one part of what appeared to be a coordinated effort between a network of groups with ties to the D.C. area to defeat Ervin and keep Newby on the bench. Officials from RSLC did not return calls seeking comment.

The D.C. money arrived early and stayed late.

In August, the Washington, D.C.-based nonprofit Judicial Crisis Network gave $75,000 to pay for radio ads supporting Newby. The group doesn’t disclose its donors.

Starting in October, another group, the N.C. Judicial Coalition, which received $1.5 million from Justice for All NC, blanketed the state with TV ads featuring a banjo player crooning about Newby’s tough stance on crime.

The North Carolina arm of Americans for Prosperity, the northern Virginia-based group tied to billionaire industrialists Charles and David Koch, spent $225,000 on mailers in late October calling on Newby to “keep standing up for taxpayers.”

The icing on the cake was the attack ad against Ervin just days before the election.

Ervin too had help from outside groups, though they spent only $71,500 on his behalf.

The ultimate provenance of much of this money is a mystery to the public. Those in the know aren’t talking and the disclosure rules in state campaign finance laws and federal tax codes mean they are not required to.

“The average voter doesn’t need to trace every dollar to figure out whether to vote for a candidate,” says Judicial Crisis Network’s chief counsel, Carrie Severino.

***

In Michigan, the Judicial Crisis Network spent more than $1 million on a last-minute attack ad against Democratic supreme court candidate Bridget Mary McCormack. The ad featured the mother of a slain soldier chastising McCormack for “volunteer[ing] to help free a terrorist.”

McCormack wound up receiving the most votes in her race.

Because of Michigan’s lax disclosure rules, the group did not have to report any of its spending to state election officials. Instead, a watchdog group, Michigan Campaign Finance Network, collected filings from local TV stations to calculate the group’s spending.

Teri Johnson, the mother who appeared in the ad, says she was never told who paid for them.

“I don’t know anything about the finances behind it,” she says.

McCormack says her campaign did not know who was behind the Judicial Crisis Network attack, or why she had been targeted among a field of other liberal candidates.

Regulatory filings show that the group has several ties to well-connected conservative political operatives.

It shares office space in Washington, D.C., with Grover Norquist’s anti-tax group, Americans for Tax Reform.

Gary Marx, the Judicial Crisis Network’s president, is executive director of the Faith and Freedom Coalition, evangelical powerbroker Ralph Reed’s advocacy organization.

Treasurer Neil Corkery holds the same title for the National Organization of Marriage, the largest anti-gay marriage group in the country. The group spent at least $148,000 in Iowa’s state supreme court race last year.

Tax filings show that the Wellspring Committee, a social welfare organization run by Neil Corkery’s wife Ann, gave the Judicial Crisis Network $350,000 in 2010 and another $170,000 in 2011, making it by far the largest donor to the group.  Judicial Crisis Network’s total revenue in fiscal 2010, which ended on June 30, 2011, was $382,453. Wellspring also doesn’t name its donors.

Neither Marx nor the Corkerys returned calls seeking comment.

***

In Iowa, 57 percent of the money spent in a retention election for Justice David Wiggins came from groups backed primarily by out-of-state donors.

Conservative groups, including Colorado-based Focus on the Family, the D.C.-based National Organization for Marriage and the Pennsylvania-based Patriot Voices run by former presidential candidate Rick Santorum, spent $225,000 trying to toss Wiggins from the bench. None of these groups disclose their donors.

In 2010, conservatives successfully unseated three of Wiggins’ former colleagues after the high court voted unanimously in favor of gay marriage.

Wiggins won, thanks in large part to $115,000 spent by another non-disclosing nonprofit, the gay-rights group Human Rights Campaign.  Spokesman Fred Sainz says his group was determined to counter the conservative money being spent trying to unseat Wiggins.

“Our goal was to ensure that the campaign in Iowa had the resources that it needed to campaign effectively,” says Sainz, who said the HRC is funded largely by small-dollar donors.

***

The fallout from the 2010 Iowa election spread to Florida last year, where conservatives unhappy with a high court ruling to invalidate a ballot initiative challenging the Affordable Care Act took steps to oust three justices. Two tea party groups, including Americans for Prosperity, spent small amounts in a campaign against the judges, and the Republican Party of Florida urged its members not to retain the justices.

The initiative was opposed by a coalition of trial lawyers, unions and others who spent more than $3.2 million through a group called Defend Justice from Politics. The total was tops among outside groups that spent money on state supreme court elections last year. Former President Bill Clinton even recorded a robocall for the group.

America Votes, a D.C.-based, union-backed group, contributed $300,000 to Defend Justice, making it the single biggest donor. Nine Florida law firms each gave $100,000 or more.

“The one thing we learned from Iowa was that they were ill-prepared and non-funded and we were not going to allow that to happen in Florida,” says Neal Roth, a Miami attorney and former head of the state’s trial lawyer association. Voters retained the three justices — R. Fred Lewis, Barbara Pariente and Peggy Quince.

The spending on the other side was a fraction of that raised in support of the judges. One group, Tallahassee-based Restore Justice, only raised $75,000. An official for Americans for Prosperity estimates they spent less than $100,000.

Slade O’Brien, the Florida director of Americans for Prosperity, says he was looking to deter “judicial activism and legislating from the bench.” Despite the loss — the justices were retained with about two-thirds of the vote — O’Brien claims his group enjoyed a strong return on a modest investment.

“Now there’s a level of scrutiny, they can’t just toil away in anonymity,” O’Brien says.

Roth said the money raised by his group showed that out-of-state groups will find a stiff challenge in the Sunshine State.

“Don’t come to Florida again, because it isn’t going to work,” he says.

Trial lawyers also prevailed in Oklahoma, where their spending helped retain four justices, and in Louisiana, where the Republican candidate they supported won the seat.

***

In Mississippi, out-of-state organizations helped tilt the field toward the winning candidate.

Improve Mississippi, funded heavily by a state physicians’ political action committee, state business groups and the D.C.-based Americans for Tort Reform, reported spending $350,000 in support of Josiah Coleman in his race against Flip Phillips in a race that is technically non-partisan.

Coleman’s other backer, the northern Virginia-based Law Enforcement Alliance of America, did not disclose its donors or spending.

Coleman won with 58 percent of the vote, even though Phillips’ campaign raised more money than Coleman’s.

The LEAA spent at least $188,000, according to records filed by Memphis television stations with the Federal Communications Commission. The ads portrayed Phillips as a greedy trial attorney. The total does not reflect amounts spent in smaller markets.

One Memphis station, Fox Broadcasting-affiliate WHBQ,  refused to provide information about how much LEAA spent for ad time it bought in the two weeks leading up to the election.

Founded in 1991 with support from the National Rifle Association, which has long been a partial financial backer, the LEAA frequently pays for attack ads against state-level candidates.

Several observers in Mississippi, including former supreme court justices, believe that the U.S. Chamber of Commerce is supplying the money behind the LEAA’s attack ads.

Mississippi had a reputation as one of the most plaintiff-friendly jurisdictions in the country when in 2000 the U.S. Chamber spent $1 million trying to influence the state supreme court elections.

The out-of-state influence bothered many in the state, including then-Chief Justice Lenore Prather, whom the Chamber supported, according to published accounts during that election.

She asked the Chamber to stop running its ads, a request that was ignored. State officials later sued the Chamber over its refusal to disclose who paid for the ads. A federal judge ordered the disclosure, but the ruling was overturned on appeal.

In 2002, the Chamber issued what The Wall Street Journal dubbed a “call to arms” to Mississippi voters and referred to the state as a lawsuit “Mecca.” But unlike two years prior, no ads identified as being paid for by the chamber ran on state TV. Instead, the state was blanketed by ads paid for by the Law Enforcement Alliance of America.

The LEAA also ran attacks ads in 2008 against then-state Supreme Court Justice Oliver Diaz, whom the U.S. Chamber had targeted in 2000.

Diaz says he believes Chamber money was behind the push polls, mailers and radio and TV ads that the LEAA sponsored.

“The ads that the U.S. Chamber ran against me in 2000 were extremely similar [to the ones] that the LEAA ran against me in 2008,” says Diaz, who also notes that the attacks in both races were launched right before the election.

The LEAA was also active in Texas that year, running attack ads against the Democratic attorney general candidate. A state court there has ordered the LEAA to reveal the donors who funded those ads, a ruling that’s currently being appealed to the Texas Supreme Court.

No one from the Chamber or the LEAA responded to requests for comment.

In Montana, a mysterious outside group called the Montana Growth Network helped sway the course of that judicial race as well.

***

Earlier this year in Wisconsin, pro-business groups spent nearly $700,000 in the state supreme court race, helping incumbent Justice Patience Roggensack cruise to victory over challenger Ed Fallone.

State supreme court races were expensive affairs in recent years in Wisconsin, but this year’s contest was more subdued as liberal groups didn’t spend much to back Fallone.

The state arm of Club for Growth, an anti-tax group, spent at least $287,000 on TV ads supporting Roggensack’s bid, according to FCC records. The group is not required to disclose its donors.

The National Association of Realtors, based in Chicago, spent at least $206,000 supporting Roggensack via the organization’s state chapter.

After the 2010 Citizens United U.S. Supreme Court decision, the Realtors association began charging its members a $1 fee to pay for ads and other political efforts in an initiative it called “My Realtor Party,” according to Bill Malkasian, president of political strategic planning.

***

State supreme court candidates backed by deep-pocketed outside spending groups weren’t always successful.

Partnership for Ohio’s Future, an affiliate of the Ohio Chamber of Commerce, spent more than $1.1 million in a losing effort to help Republican Justice Robert Cupp win re-election.

The organization didn’t disclose its donors, but in past years the U.S. Chamber has been a major contributor, according to the watchdog group Ohio Public Action.

Tax records show the local chamber gave the group $500,000 in 2012, and tobacco giant Reynolds American Inc. reported giving $100,000 to the group last year.

***

Back in North Carolina, Newby was the final brick in the red wall Republican outside groups began building in 2010, when they took control of both chambers of the state legislature for the first time in more than 100 years.Sympathetic justices on the court would lock in new voting districts approved by the majority, and boost the chances that laws passed by the Republican lawmakers, and signed by the new Republican governor, would stand up to any challenges.

Democrats and other groups, including the state’s NAACP chapter, have sued to undo the Republican-led redistricting effort, and tried unsuccessfully to block Newby from voting on the matter.

Republican Gov. Pat. McCrory this year named Raleigh retail magnate Art Pope as the state’s budget director.

Pope is a board member of the Koch-backed Americans for Prosperity. A nonprofit political group he founded and helps fund, Civitas Action Inc., used a $75,000 donation from the Judicial Crisis Network to buy radio ads to keep Newby on the bench.

One of Pope’s top priorities: doing away with the state’s public financing of judicial races.

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