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Dark Money Group Caught in Lie to the IRS

Joseph Hines

The Government Integrity Fund is a 501(c)4, a dark money group with a wildly misleading name. The Fund has been making a big splash in Ohio, spending a million dollars in advertisements against Senator Sherrod Brown. 

Justin Elliott's recent report in ProPublica reveals the extent of the Fund’s duplicity. Elliott uncovered the Government Integrity Fund's IRS filings, in which the group’s lawyer marks that “no” it does “not plan to spend any money attempting to influence the selection, nomination, election, or appointment of any person to any Federal, state, or local public office or to an office in a political organization?” in their application for nonprofit status. Huh?

There’s more evidence of evasion in the IRS filing.

The Fund’s IRS application did provide other clues about its intentions. In one section of the form, the Fund said its budget for 2011 was $78,000. It then projected a budget of $6.7 million for 2012, an election year, before going back down to $50,000 for 2013, a nonelection year.

Why do the Fund's lawyers feel so comfortable lying to the IRS? ProPublica interviewed a tax attorney, who argues:

[T]he IRS typically wouldn’t scrutinize a group’s spending until it files a tax return — and in the case of the Fund, the return covering 2012 could be filed as late as November 2013. If the IRS found that the Fund was improperly taking advantage of its status as a social welfare group, it could impose a fine and make the group operate as a political organization that does have to report donors.

The implications are clear: Elections are being bought by dark money groups and the government is powerless to stop it. In Million-Dollar Megaphones, Adam Lioz explored the difficulty in revealing their 501(c)4 sources. Lioz wrote:

[R]ight now, even by diligently searching FEC filings, a citizen cannot know exactly how few people or institutions are responsible for how many decibels in the public debate over the 2012 elections.

The Government Integrity Fund’s lie to the IRS underscores the lack of transparency.

Senator Brown is engaged in the political fight of his life, facing a vigorous challenge from Republican Josh Mandel. Coincidentally, of course, the Fund is headed by Mandel’s former campaign manager, Jonathan Petrea. The amount of money being spent in the campaign is staggering. According to the Associated Press, the candidates themselves have raised $25 million dollars, “more than the entire amount spent in each of the state’s last two Senate races.” The state’s awash in outside spending.

Crossroads GPS, an independent group associated with Republican strategist Karl Rove, the Chamber and other Mandel backers have spent a combined $15 million against Brown, and plan to spend $6.7 million more before November.

Accounting for outside money, the Ohio Senate race has shaped up to be the most expensive in the country. Even given the big players involved, the opacity of the Government Integrity Fund stands out. Empowering the IRS to be more discerning with what organizations receive nonprofit status would be a good start in turning back the tide on dark money. Right now, the watchdogs are blind.