California Campaign Finance Case Echoes Despite Koch Denials of Any Involvement

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By Kenneth P. Doyle  

June 2 — California's campaign finance enforcement action involving the "Koch network" of conservative nonprofit groups is still reverberating months after it was first disclosed, with recent testimony at a U.S. Senate hearing, a new California law to increase disclosure by nonprofits and congressional Democrats' continuing focus on all things Koch.

After a fierce pre-election court battle and a lengthy investigation, California's Fair Political Practices Commission (FPPC) made headlines nationwide last October when it imposed a $1 million fine on two nonprofit organizations, which the FPPC said in a press release were "operated as part of the `Koch Brothers' Network' of dark money political nonprofit corporations."

It was the first time groups linked to Koch Industries Inc. and the company's leaders, Charles and David Koch, had been named in such a high-profile campaign finance enforcement action.

An analysis of tax documents by the nonprofit watchdog Center for Responsive Politics found that a "constellation of Koch-linked groups … churned hundreds of millions of dollars into elections" in 2012. But this funding has been provided mainly through nonprofit groups that don't fully report their finances. That makes precise tracing of the groups' activities difficult.

The FPPC investigation discovered that more than $15 million spent on a California initiative campaign in 2012 originated from a group of wealthy Californians who didn't want their identity known. In order to skirt state disclosure rules, the money was funneled through a series of out-of-state nonprofit groups—including groups described by the FPPC as part of the Koch network—before coming back to the Golden State to pay for political ads and other efforts in the initiative campaign.

The California agency said in a legal settlement and press release that money from undisclosed donors was used in an attempt to defeat a California ballot initiative—known as Proposition 30—to increase state taxes and to support another measure—Proposition 32—to limit the power of unions to collect political contributions (207 DER A-24, 10/25/13)(3625 Money & Politics Report, 10/25/13).

Koch: `Not Involved.'

Despite the FPPC's assertions and the news headlines indicating that the Koch network played a role in the episode, Koch's involvement has been denied persistently by Koch Industries spokesmen and others.

Mark Holden, senior vice president and general counsel of Koch Industries Inc., responded to questions about the involvement of the company and Charles and David Koch, which he, like other Koch officials, referred to as a single entity.

"I don't believe we ever denied `knowledge' of the California ballot initiatives," Holden told Bloomberg BNA in a May 2 e-mail. "Rather, we have said clearly and consistently that we were not involved in any of the activities, either directly or indirectly, that the FPPC investigated."

Koch supporters have suggested the FPPC's reference to the Koch network was an overblown effort by state regulators to garner headlines.

Ann Ravel, the former chairwoman of the California agency rebutted that recently. Ravel told Bloomberg BNA that the FPPC's reference to Koch was justified based on the sworn testimony of a key witness in the agency's campaign finance investigation, who said he reached out to the Koch network for help with the California ballot campaign.

Also, while Koch officials have denied involvement in direct funding for the ballot campaign efforts in California, they have refused to answer questions about whether Koch funded the organizations actually fined by the FPPC. These included an obscure but well-financed Arizona-based nonprofit called the Center to Protect Patient Rights (CPPR), which handled the $15 million funneled to California political groups that sponsored ads and messages in the ballot campaign.

CPPR and another Arizona-based group, Americans for Responsible Leadership (ARL), agreed to pay the $1 million fine, though a stipulation between them and the FPPC said the groups' violations of California disclosure laws were "inadvertent, or at worst negligent." The stipulation also said CPPR's donors "did not know or have reason to know" their money would be used in the California ballot campaign.

When Holden was asked again whether Koch funded CPPR—either directly or through another nonprofit called Freedom Partners—he reiterated in a follow-up e-mail that "Koch was not involved directly or indirectly in funding any of the activities at issues [sic] in California that were the subject of the FPPC investigation."

Koch Introduced Noble

That May 27 e-mail capped a series of exchanges over several months in which Koch spokespersons were asked by Bloomberg BNA about Koch's role in the matter investigated by the FPPC.

In the e-mail exchange, Holden acknowledged that Koch was aware of the ballot campaign in California, but indicated that didn't mean the company or its leaders were involved in it. Holden also acknowledged that "a Koch employee" made an introduction between Anthony Russo, the consultant heading the California campaign, and Sean Noble, the head of CPPR.

Noble was described by Russo, the main witness in the FPPC probe, as the key operative of the Koch network of nonprofit groups. Russo, a political consultant with the firm Russo Miller & Associates in Sacramento, Calif., told investigators that Noble was Koch's "outside consultant," according to a transcribed interview. Russo said he was introduced to Noble by two Koch employees, who said "that's who I should be meeting with."

Holden also acknowledged that the FPPC probe uncovered an e-mail indicating Charles Koch, himself, was asked directly for money to support the California effort. According to the e-mail, which was made public by the FPPC, Koch was solicited by a donor who knew him well enough to see him on a golf course.

Holden said, however, that Koch's receipt of an e-mail proved nothing.

Nonprofits Increasing Impact

The activities of the Koch network of nonprofit groups are similar to those undertaken by others. These include a network of wealthy liberal donors known as the Democracy Alliance, which also helps provide money to non-disclosing nonprofit groups. The activities of all such groups across the political spectrum have become more and more important in politics at all levels as recent court decisions have held that their ability to intervene directly in campaigns is protected by the First Amendment.

Koch Industries and its leaders, especially, have the money for significant political impact. Charles and David Koch have a combined worth of more than $100 billion and are tied for fifth place on the Bloomberg Billionaires ranking of the world's wealthiest people. Their Wichita, Kan.-based company is one of the largest closely held businesses in the world, with diverse interests including oil refining, pipelines, commodities trading and others.

For much of the last year, Democrats led by Senate Majority Leader Harry Reid (D-Nev.) and others have railed against what they have called Koch efforts to "buy America" by funding political ads attacking Democratic Senate candidates and favoring Republicans.

Republicans have fired back, condemning Reid's attacks as an "assault on the right to free speech."

A key exhibit in the case made by Democrats and other critics against Koch has been the FPPC enforcement case.

Response to Supreme Court

The California case has become a centerpiece of efforts by congressional Democrats and others to push for measures to bolster campaign finance regulation in the wake of recent Supreme Court rulings that have diminished the regulation of money in politics.

Ravel headed the FPPC during the recent investigation and now holds a Democratic seat on the Federal Election Commission. She was called recently to testify about the California case before the Senate Rules and Administration Committee. The April 30 hearing, which focused largely on nondisclosure by nonprofit groups that spend money on campaigns, included a high-profile call by retired Supreme Court Justice John Paul Stevens to bolster campaign regulation through a constitutional amendment (3751 Money & Politics Report, 5/1/14)(84 DER A-24, 5/1/14).

Meanwhile, California lawmakers passed and Gov. Jerry Brown (D) signed May 14 a measure (S.B. 27) to set tough requirements for nonprofits spending money on campaigns to disclose their donors. The measure is now the most far-reaching disclosure law in the country, according to the FPPC (94 DER A-11, 5/15/14)(3761 Money & Politics Report, 5/15/14).

Capping the Democrats' efforts, Reid, the Senate majority leader, announced May 15 in a floor speech laced with Koch criticism that the Senate would consider this summer a constitutional amendment to bolster the ability of Congress and the states to regulate campaign money (95 DER A-1, 5/16/14)(3762 Money & Politics Report, 5/16/14).

Koch Network More Active

The proposed amendment, which even its supporters acknowledge is unlikely to become part of the Constitution anytime soon, responds to the Supreme Court's 2010 ruling in Citizens United v. Federal Election Commission and subsequent court decisions, which held that the First Amendment shields campaign money from much, if not all, regulation.

Despite the continuing interest in the California enforcement case, one thing the case apparently hasn't impacted is the operation of the politically active nonprofit organizations associated with the Koch network. These groups are as active as ever, spending tens of millions of dollars on political ads in states with key Senate races in 2014. The most visible of the Koch-funded groups, Americans for Prosperity, has already announced millions of dollars in political ad spending and reportedly has plans to spend more than $100 million before the November 2014 congressional elections.

Another thing that hasn't changed is the forceful denials from officials of Koch Industries Inc. that their company, or Charles and David Koch, had anything to do with the matters investigated by the FPPC.

Holden, Koch Industries' general counsel, said that no Koch money actually went to support the California effort, so Koch wasn't involved. Koch may have been asked for help, and Charles Koch may have been contacted personally by one of the donors to the California effort and asked to provide "several million" dollars, as depicted in the e-mail made public by the FPPC. However, that "does not show that any involvement by Koch in the ballot initiatives or the issues investigated by FPCC," Holden said.

`Hi Charles.'

Holden didn't say whether or how the e-mail solicitation to Charles Koch was answered, though it came from someone apparently familiar enough to begin an e-mail with: "Hi Charles."

The name of the sender was redacted in the copy of the e-mail made public by the FPPC, but the message was complete. The sender told Koch he had "called you several times this morning to talk to you about" Proposition 32, the California ballot measure restricting unions.

"It will be a big deal in California but also for the nation if we get this prop passed," the e-mail said, adding that the effort had a target budget of $65 million and that $58 million already had been raised about a month before the election in November 2012. The sender said he had given $7 million to the cause and told Koch: "It would be great if you could support the final effort with several million."

The e-mail also praised "Sean Noble from your group" as "immensely helpful in our efforts."

It concluded: "I look forward to seeing you on a golf course soon—probably after the election."

While Koch officials have never said whether or how Charles Koch responded to the e-mail solicitation, they have suggested Koch wouldn't back any effort to try to silence unions or anyone else seeking to participate in the political process. Immediately following the settlement of the FPPC enforcement case last year, a Koch Industries spokeswoman, Melissa Cohlmia, said in a statement Koch was "definitively not involved" in the anti-union Proposition 32 effort.

Cohlmia's initial statement didn't address Proposition 30—the tax increase initiative backed by Brown—but later statements from Koch officials denied involvement in the campaign for either of the ballot initiatives.

Ravel: No Donors Probed

Holden and other Koch officials say their insistence that Koch wasn't involved in the California matter has been bolstered by Ravel, the former head of the FPPC, itself. Ravel, who was appointed by Brown to lead the state campaign finance commission, left the FPPC to join the Federal Election Commission last fall, where she is now a Democratic commissioner and vice chairwoman of the agency.

Koch officials repeatedly have pointed to Ravel's comments in media interviews after the FPPC enforcement case, in which she said that the California commission found no evidence of direct contributions from Koch to the California ballot measure effort.

Holden said Ravel's comments were "consistent with our position that we were not involved" with the California matter.

Ravel told Bloomberg BNA, however, that her statements about direct Koch contributions didn't necessarily address whether Koch knew about or was involved in the matter investigated by California. In a phone interview and e-mail exchange in May, she said that the FPPC didn't try to identify or pursue any of the donors to the groups that were fined by the agency.

The stipulation settling the enforcement matter said the groups fined by the California agency, CPPR and ARL, would not have to face "the further expense of an audit."

Ravel said that the California agency cited involvement of the Koch network when it announced the enforcement case based on the statements of Russo, the California political consultant. Russo told investigators in a 107-page, transcribed interview that he worked closely with the Koch network in the California effort.

Ravel said that the FPPC was justified in characterizing the groups fined by the agency as part of the Koch network because it was relying on Russo's testimony. She said that Russo testified after a grant of immunity from prosecution by the office of California Attorney General Kamala Harris (D).

"We weren't investigating the Koch brothers," Ravel said, adding that the FPPC's focus was on how money from undisclosed sources "got to California" to influence ballot campaigns.

"It was not in the purview of our investigation" to look at the background of these groups further, Ravel said.

Asked directly whether she believed the Kochs were involved in the California matter, Ravel said it seemed as if they knew about it. She added, however, that "they still may or may not have been involved in the decision to send the CPPR/ARL money," which was at the heart of the enforcement case.

Following Wisconsin Plan

In his interview with staff attorneys and investigators of the FPPC and the California attorney general's office, Russo mentioned "Koch," "Koch model," or "Koch network" at least a dozen times, according to the transcript released by the FPPC. Mentioned even more often in the interview was Noble, who Russo said was Kochs' key political consultant.

Russo described how he tried to put together a multimillion-dollar political effort relying on wealthy California donors, some of whom also were donors to the Koch network of nonprofits. At the suggestion and with the help of some of these donors, Russo said, he reached out to Koch for help and advice.

He said the donors wanted to organize a "California Comeback Plan" for conservatives, along lines they said were used by the Koch network in Wisconsin and other states to increase conservative influence over state government.

Russo said he was first introduced to Noble in 2011 by two Koch employees, including Michael Lanzara and another man whose name he couldn't remember.

Discussing his initial contacts, Russo said he asked Noble: "Would you guys be interested in engaging in this type of fight in California? We didn't talk about how. So it was more about just, is this something of interest to you? It followed in the steps of Wisconsin."

Asked by FPPC's enforcement chief, Gary Winuk, about Noble's response, Russo said: "Very favorable. He thought they would be interested."

Cliff Zall, of the California attorney general's office, then asked Russo: "When you say they, I mean, he thought the Koch Network would be interested in helping, you know, fight a similar effort that was fought in Wisconsin here?"

Russo said: "Yeah."

Russo: Luntz, McCarthy Brought In

Russo said Noble became involved in the California effort, eventually providing access to and paying for "hundreds of thousands of dollars" worth of consulting and message work by top Republican consultants, including top pollster Frank Luntz and advertising guru Larry McCarthy, famous for the "Willie Horton" ads in the 1988 presidential race that pitted then-Vice President George H.W. Bush against Democrat Michael Dukakis.

Luntz and McCarthy couldn't be reached for comment by Bloomberg BNA.

Russo indicated this work became a basis for a political strategy in California, which focused, at least initially, on the Proposition 30 and Proposition 32 initiatives on the ballot in November 2012.

Part of the plan was to run television "issue ads" and other messages not directly calling for votes in the ballot campaign. This effort was funded by some of the California donors who didn't want their names to become public. By

October of 2012, $29 million was raised for the issue-ad effort from 150 donors, according to the FPPC.

The FPPC never made all the donors' names public, but it released what Ravel and other officials called a "poorly redacted" list that included high-profile Californians. Included were some Democrats and others who didn't want to be associated with an effort opposed to Brown, the California governor, and the state's powerful government employee unions.

Russo Asks Noble for Help

Russo said the plan to run issue ads included sending money to a Virginia-based nonprofit called Americans for Job Security (AJS), which was expected to pay for ads in California. But AJS became wary of liability under the state's complex campaign finance laws and backed out of a direct role. This is when Russo said he called on Noble for help in providing the money needed for the California issue-ad campaign.

According to Russo, after a flurry of phone calls, text messages and e-mails among Russo, Noble, and Steven DeMaura, the head of AJS, nearly $25 million was transferred out of AJS to CPPR. Subsequently, the FPPC found, the $25 million was given to other groups, including ARL and yet another Iowa-based called the American Future Fund (AFF). Ultimately, more than $15 million was transferred to groups inside California to pay for political ads and messages related to the 2012 ballot campaign.

AFF provided the first payment of just over $4 million to a newly created group called the California Future Fund. Then, $11 million was provided by CPPR, through ARL, to a California ad sponsor called the Small Business Action Committee (SBAC).

In a separate, transcribed interview with California investigators, DeMaura of AJS confirmed that he agreed with Russo and his consulting firm partner, Jeff Miller, for AJS to receive the contributions for California issue ads from donors who didn't want their names disclosed. Then, AJS's lawyers raised doubts about whether ads running close to an election would be treated as issue ads, rather than "express advocacy," requiring disclosure of the donors, he said.

DeMaura told the investigators he approved the transfer of money from AJS to CPPR at the request of Russo and without even speaking about the transaction to Noble, the head of CPPR. DeMaura said CPPR was "the largest conservative group I knew of" and added, "I think there was some consideration that Sean [Noble] was—through CPPR was already involved in California or aware of our efforts in California."

Pre-Election Settlement With Regulators

Russo said he also expected another $10 million—representing the balance of the AJS money collected from California donors—to be sent back to California for the ballot measure campaign, but this never occurred.

In late October, the FPPC received a complaint charging that the $11 million provided by ARL to the California SBAC's PAC violated state disclosure laws. The state agency attempted to audit the transaction to verify compliance but ARL resisted, leading to a court battle that ended in a dramatic hearing by the California Supreme Court days before the Nov. 6, 2012, election.

"There wasn't another infusion [of money], I think, because all the litigation started in California," Russo told the investigators. "We always thought we would get more."

Russo said Noble offered to send $10 million back to AJS, but Russo said AJS couldn't take the money back. Ultimately, he said, Noble decided not to send the final $10 million.

The election occurred shortly afterward and Russo's side didn't prevail on either of the ballot measures they were interested in. Russo said he never talked to Noble after the election.

When the California Supreme Court ruled in favor of the regulators in the pre-election litigation, CPPR entered into a settlement stating that the money funneled to California by CPPR had come from AJS (214 DER A-11, 11/6/12)(3384 Money & Politics Report, 11/6/12). This led to a probe of AJS, the Virginia-based nonprofit; however, FPPC regulators ultimately decided AJS didn't violate California law and decided instead to fine only the groups led by Noble—CPPR and ARL.

Russo indicated he was shocked by the pre-election settlement, which relied on a letter from Noble saying the money for the California effort came from AJS. The main point of using the Koch network groups, Russo said, was that they had large amounts of money and could say, reliably, that they were using their own funds to finance their activities, rather than passing money through from someone else.

Naming AJS as the source of the money used in California was Noble's way of deflecting attention from CPPR, Russo suggested. Noble said that "he couldn't tolerate an audit of CPPR," Russo told the investigators.

Though DeMaura said he was familiar with CPPR, Russo told investigators he had never even heard of CPPR or ARL before an $11 million payment from these groups was wired to California's SBAC PAC to support the ballot campaign effort in the fall of 2012.

Russo said, however, that he knew that the money came in response to his messages to Noble asking for help. When SBAC asked for more information about its mysterious benefactors, Russo called Noble to vouch for the contribution.

Holden: Russo Not in Conflict With Koch

While Russo's interview with California investigators referred to the Koch network repeatedly, Holden, the general counsel of Koch Industries, told Bloomberg BNA: "Nothing in that interview conflicts with what we have said."

Holden asserted that Russo told the FPPC that "the only involvement of anyone from Koch in the matter was an introduction that was made by a Koch employee between Mr. Russo and Sean Noble."

Holden said this occurred after one of the California donors dealing with Russo "also attended a Koch seminar, [and] encouraged Mr. Russo to reach out to the Koch employee to ask for an introduction to Mr. Noble."

He continued: "More importantly, for purposes of what the FPPC's investigation was supposed to be about, Mr. Russo stated that neither Mr. Noble nor anyone else said that the contributions at issue in the investigation came from Koch. Nor did Mr. Russo claim that CPPR was a `Koch group.' Mr. Russo said he assumed Koch was involved, but there is no factual evidence cited in the interview that Koch was involved and, indeed, Koch was not involved."

Groups Little Known

Despite the millions of dollars they handled in recent years, little was known publicly about CPPR and ARL at the time of the California enforcement case.

The watchdog group Center for Responsive Politics first began reporting on CPPR in May 2012, after studying the organization's tax forms filed with the Internal Revenue Service. CPPR's finances were almost entirely secret, but the watchdog group noted that the nonprofit had millions of dollars and was headed by Noble, described in a Politico news report at the time as a "Koch operative."

More information about CPPR became available in subsequent months, including the fact that the nonprofit received $115 million in funding from yet another nonprofit called Freedom Partners Chamber of Commerce. Freedom Partners raised more than $250 million in its first year of operation and provided nearly all of it in grants to politically active conservative groups before the 2012 election, according to IRS filings (3599 Money & Politics Report, 9/18/13)(181 DER G-4, 9/18/13).

Freedom Partners said its money came from more than 200 unidentified donors in amounts ranging up to $25 million each.

Three of the five members of the board of directors of Freedom Partners are current and former Koch Industries executives, including Richard Fink, Koch's executive vice president and member of the company's board of directors, according to the organization's website.

Koch Industries acknowledged Freedom Partners in a statement last year, soon after the nonprofit's existence was first reported in Politico. The Koch statement said Freedom Partners was "a non-profit, non-partisan business league that promotes the benefits of free markets and a free society."

Koch said Freedom Partners "operates independently of Koch Industries, and educates the public about a broad range of issues." Both Koch and Freedom Partners have denied multiple requests to disclose more information about the nonprofit's donors or to state whether Koch provides funding for Freedom Partners.

CPPR Decisions

Noble himself didn't respond directly to Bloomberg BNA's request for comment but did respond through a spokesman. The spokesman, Kevin Sheridan, said he couldn't provide any information about the matter investigated by the FPPC.

Sheridan and others did confirm, however, that Noble remains as head of CPPR, which recently rebranded itself as American Encore.

Also responding to inquiries about Noble and CPPR was Sacramento attorney Malcolm Segal, who told Bloomberg BNA in a phone interview that he represented CPPR in the settlement of the California enforcement case.

Segal's comments echoed those of the spokespersons for Koch Industries, including his insistence that "none of the money" in the FPPC matter came from the Koch brothers.

If the question is what relationship the Kochs had to the California matter, he said, "the answer is `none.' "

Asked whether donors from the Koch network influenced the decisions of CPPR, Segal said CPPR was controlled by an independent board of directors. He said the funding relationship between the CPPR and the Koch network wasn't significant because CPPR ultimately was responsible for its actions.

As a legal matter, he said, "there is a world of difference between saying something is `related to' or `connected to' and the reality of a transaction."

American Encore

Noble's current work for American Encore is somewhat different from the work of CPPR, according to the nonprofit's current website. For example, the organization is involved in overt sponsorship of political messages, rather than moving tens of millions of dollars to and from other organizations, as CPPR did.

Also, according to Sheridan, Noble has said the new organization is expected to have a smaller budget than CPPR—more on the order of $10 million annually. That's a fraction of the more than $100 million that was collected by CPPR and funneled to other conservative groups.

The group's website indicated that American Encore remains committed to criticizing Democrats for support of President Barack Obama's health-care law, which was the focus of CPPR. The renamed organization also has a broader focus, however, that includes messages supporting free speech and opposing efforts to regulate politically active groups.

A key target of this latter effort, American Encore indicated, is the controversial rule recently proposed by the IRS, which would define and restrict politicking by tax code Section 501(c)(4) organizations.

Nonprofits on both the right and left side of the political spectrum have said the IRS proposal could restrict their involvement in politics and policy debates. If adopted, the rule could also force more of this activity to be done by other types of entities, including regulated political action committees, which must disclose their finances.

Origin of CPPR

Although Noble didn't speak to Bloomberg BNA, he did provide an interview for a recent article in the National Review, which also recounted the history of CPPR.

Noble became an "advisor to the Koch Brothers" after working on Capitol Hill as chief of staff to then-Rep. John Shadegg (R-Ariz.), the article said. In 2009, he came up with a strategy for an "anti-Obamacare assault" on congressional Democrats that helped result in a Republican takeover of the House in 2010.

Noble developed the plan during a Koch network donor conference, in which he enlisted key backing from Randy Kendrick, a prominent donor passionately opposed to the president's health-care legislation, the National Review article said. The discussion between Noble and Kendrick was the origin of CPPR as a vehicle to be used to provide funding and coordination for multiple nonprofits nationwide sponsoring ads opposing Obama's health care law.

The advertising messages were honed by Luntz and McCarthy, the top GOP consultants who Russo said also helped shape the California efforts in 2012. The money for the effort came from Kendrick and the other wealthy donors of the Koch network. The ads in 2010 targeted House Democratic incumbents and eventually succeeded in unseating dozens of them, the National Review recounted.

While CPPR has changed its name and its focus, the anti-health-care law effort continues, the article said. The charge is now being led by the nonprofit Americans for Prosperity, and it is targeting mainly incumbent Senate Democrats. Noble is confident the continued focus on health care will give Republicans control of the Senate in 2014, just as it did in the House in 2010, the National Review article said.

"Democrats are going to lose twice over it," he is quoted as declaring.

AFP Picks Up Mantle

This year, Americans for Prosperity, or AFP, is sponsoring a barrage of political ads now running on television in the key battleground states that will decide control of the Senate in November. A recent analysis in the Cook Political Report of ad data provided by Kantar Media Group said AFP is running more than twice as many ads as the main pro-Democratic super PAC, the Senate Majority Fund. And, these ads are linked to a decrease in poll ratings for incumbent Democrats, the analysis said.

These current AFP ads focus on criticizing Democrats for support of the president's health-care law or praising Republicans for their opposition to the health law, though some ads mention the Keystone XL oil pipeline or other issues.

Democrats, led by Reid, have blasted the AFP ads, in apparent hope of countering their effects on voters or persuading wealthy Democratic donors to enlist in the battle. Reid has taken to the Senate floor almost daily to criticize "the Koch brothers" as the main force behind the massive ad campaign, which he contends seek to win the Senate majority for Republicans.

One question not answered either by the ads, themselves, or the critics is precisely how much the Kochs have to do with shaping them, as well as paying for them.

The touchstone of the Koch network's efforts, as well as others that rely on non-disclosing nonprofit organizations is that, unlike ads from candidate campaigns, political parties and regulated PACs, the sponsors aren't required to disclose their donors. Since the Citizens United Supreme Court ruling, this is true even for nonprofit ads that engage in overt campaign advocacy. It is impossible to know who actually is funding the ads, how many donors there are, and the relative ranking of the donors.

That isn't true for donors who funnel their money through entities, like super PACs—which report to the FEC. For example, it's known that Sheldon Adelson, the top Republican donor of disclosed contributions, gave nearly $100 million to super PACs in the 2012 election. Meanwhile, Fred Eychaner, the top Democratic donor of disclosed money, gave more than $14 million.

No one knows, however, how much the Kochs have given to politically active nonprofits, nor who their allied donors are, nor how involved they are in dictating the groups' messages.

Nondisclosure allows for deniability. The donors can disavow the actions of groups that are criticized or subjected to enforcement action, and usually no one can prove the donors gave the groups money.

Nondisclosure also means, however, there is no way to prove or disprove the charges by Reid and other critics, who charge that the Koch brothers have become the controlling force of Republican efforts to take control of the Senate in 2014.

So, the dollars—and the attacks—continue to flow.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com
To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com