MADISON – A conservative group at the center of a John Doe investigation into Gov. Scott Walker’s 2012 recall campaign should be prosecuted for violating Internal Revenue Service laws and have its tax-exempt status revoked, according to a complaint filed Monday by the liberal Center for Media and Democracy.
The Wisconsin Club for Growth filed as a tax-exempt 501(c)4 “social welfare” organization in 2011 and 2012, telling the IRS that it spent $0 for political purposes.
But according to the complaint, Club for Growth spent almost all of the more than $20 million it raised to help elect Republican candidates in the Wisconsin Senate and gubernatorial recall elections.
Andrew Grossman, a lawyer for Club for Growth, chided the liberal center for “trying to silence political speech.”
“If they want to waste their money on filing a frivolous complaint for a blip of news coverage, that’s their business,” Grossman said. “The Wisconsin Club for Growth is proud of its record of speaking out on the issues that matter to Wisconsin.”
As evidence the complaint presents documents accidentally made public as part of a federal lawsuit Club for Growth and director Eric O’Keefe filed against the John Doe prosecutors.
In court filings, prosecutors said emails obtained during the investigation showed Walker campaign advisers discussing how to use Club for Growth as a hub for raising millions of dollars in undisclosed contributions and disbursing it to dozens of conservative political groups.
“This is the first time we have had internal communications and financial records demonstrating a tax-exempt group’s explicit and extensive role in influencing elections,” said Brendan Fischer, a lawyer for the group filing the complaint. “This evidence directly contradicts WiCFG’s assertions to the IRS that it operated primarily to advance social welfare and engaged in zero political activity.”
According to IRS rules, such groups are allowed to engage in political activity, so long as it’s not their primary focus.
The complaint says Club for Growth spent $9.1 million on broadcast ads “identifying candidates for elective office in Wisconsin, discussing their qualifications and airing close to election day in Wisconsin’s 2011 and 2012 recall elections.” That amount is an estimate by the Wisconsin Democracy Campaign, which tracks political ad spending.
The Club also gave another $9.6 million to political groups, such as the political arm of Wisconsin Manufacturers & Commerce, which in turn spent money to help defend Republicans fend off recall challengers. That figure comes from the John Doe investigation records.
According to IRS forms, the group’s total spending was $20.6 million in 2011 and 2012.
The John Doe investigation has been on hold since a judge overseeing the probe rejected the lead prosecutor’s legal theory that when so-called issue advocacy groups coordinate with political campaigns, it becomes express advocacy. That decision has been appealed to the state Supreme Court.
The federal lawsuit, seeking to end the investigation on grounds it violated the Club for Growth’s free speech right to engage in unregulated issue advocacy, was rejected by the 7th Circuit Court of Appeals.
Though those cases have largely argued over the definition of issue advocacy vs. express advocacy, IRS rules are different than Wisconsin election law in that their definition of political activity isn’t limited to groups expressly advocating for the election or defeat of a candidate.