High Court Could Eye Wisconsin Campaign Finance Probe

Money & Politics Report provides comprehensive behind-the-scenes coverage of campaign finance, lobbying, and government ethics issues at the federal, state, and local levels.

By Michael J. Bologna

Sept. 21 — U.S. Supreme Court intervention in a case dealing with possible campaign finance violations by Wisconsin Gov. Scott Walker (R) remains “a long shot,” despite new evidence the governor was involved in a fundraising scheme involving undisclosed contributions during a 2012 recall election, legal scholars and election law practitioners told Bloomberg BNA.

Many in the campaign finance world are eagerly awaiting the Supreme Court’s response to a petition for certiorari filed by a group of Wisconsin district attorneys objecting to a 4-2 ruling by the Wisconsin Supreme Court in July 2015. The state court ruling shut down the prosecutors' “John Doe” criminal probe of possible illegal coordination between Walker and two dozen conservative advocacy organizations (Chisholm v. Two Unnamed Petitioners , U.S., No. 15-1416, petition for a writ of certiorari 4/27/16 ).

The Supreme Court court is expected to make a decision on whether to hear the case in a matter of days or weeks. The court’s opening conference is scheduled for Sept. 26 and news on cases accepted for review will follow.

Under Wisconsin’s John Doe investigation statute, prosecutors are granted extraordinary powers to compel testimony and maintain secrecy in certain types of criminal investigations.

The conduct at the heart of the recent campaign finance probe made headlines across the country in recent days with the leak of 1,500 pages of previously secret documents describing Walker’s coordination with Wisconsin Club for Growth (WiCFG), the primary 501(c)(4) political action group that supported Walker during a state recall campaign.

But the bombshell revelations of active coordination between Walker and WiCFG are not expected to influence the way the Supreme Court views the case, legal experts said. The lack of a ninth justice, following the death of Justice Antonin Scalia, also raises doubts about the court’s willingness to take on a complicated, politically-charged case during the upcoming term.

`Long Shot.'

Richard L. Hasen, a professor of law and political science at the University of California Irvine and author of the frequently-cited Election Law Blog, said the one question that may catch the court’s fancy involves whether one or more members of the Wisconsin Supreme Court should have recused themselves under a previous Supreme Court precedent established in a case known as Caperton v. Massey. The court ruled in that case that a West Virginia justice should have recused himself from a matter involving a major contributor supporting his campaign.

Evidence developed by the Wisconsin district attorneys found WiCFG and other organizations targeted in their probe contributed roughly $10 million since 2007 to elect four of the Wisconsin Supreme Court justices participating in the court's July 2015 decision, which halted the John Doe probe.

“It’s a long shot and it’s even a longer shot because of the 4-4 Supreme Court split,” Hasen said in an interview Sept. 20. “They might be reluctant to take anything controversial. But I do think the issue of judicial recusal is one that could actually turn into a decision to take the case.”

Brendan Fischer, associate counsel to the Washington D.C.-based Campaign Legal Center, agreed.

“Recusal is something the court has addressed more consistently in recent years. You had both John Roberts (in Williams-Yulee v. Florida Bar) and Anthony Kennedy (in Caperton v. Massey) express concerns about it,” Fischer said.

In the Williams-Yulee ruling, the Supreme Court has upheld a Florida rule barring candidates in state judicial elections from personally soliciting campaign contributions The court's 5-4 ruling that a state ban on judges asking for campaign money does not violate the First Amendment was especially noteworthy because Chief Justice John Roberts was the swing vote creating a court majority to turn back a constitutional challenge (3999 Money & Politics Report, 4/30/15)

Recusal Argument

The Wisconsin prosecutors’ petition before the Supreme Court highlights two questions for possible consideration.

The recusal question before the court asks, “is the state as a litigant in an adversary proceeding entitled to a hearing before a panel of impartial justices, free of bias as required in Caperton?”

The prosecutors presumably framed their question around the specific conduct of certain members of the Wisconsin Supreme Court, who benefited from the Walker/WiCFG fundraising efforts. Most details of this conduct, however, were redacted from the petition.

Secondly, the prosecutors asked the court to reverse portions of the Wisconsin Supreme Court’s July 2015 decision that prohibited the state from placing any limits on coordination between candidates and outside groups that do not fund messages of “express advocacy” for or against candidates.

The state supreme court found that candidate-controlled expenditures for issue advocacy promoting a candidate, but published by purportedly independent groups are entitled to First Amendment protection because such expenditures are “conduct which the state is not permitted to regulate.” The prosecutors argued the court’s ruling permits unlimited candidate-controlled expenditures by these independent groups, funded with unlimited anonymous contributions, constituting “the very undoing of campaign disclosure requirements.”

The prosecutors argue that the Wisconsin Supreme Court’s ruling interferes with the long-standing interpretation and application of campaign finance law established in Buckley v. Valeo, 424 U.S. 1 (1976), which held governments are entitled to regulate coordination between candidates’ campaigns and ostensibly independent groups. This ruling was supported by subsequent Supreme Court decisions, including the more-recent Citizens United v. FEC, 558 U.S. 310, 360 (2010).

Previously Secret Documents

The public’s understanding of fundraising and coordination during Walker’s 2012 recall election expanded significantly on Sept. 14 with the publication of an extensive examination in The Guardian US. The lengthy article was developed from previously secret documents used by the prosecutors, including 1,500 pages of emails between Walker, WiCFG officials and campaign officials, financial records and copies of canceled checks.

Matthew Rothschild, executive director of the Wisconsin Democracy Campaign, said The Guardian story and the documents fill in many of the redacted portions of court documents describing the John Doe probe.

“The picture that emerges from the Guardian story is sleazier than almost anyone in Wisconsin, even Walker’s harshest critics, ever imagined,” Rothschild said. “No wonder Walker’s buddies on the Wisconsin Supreme Court never wanted these emails to see the light of day.”

Six Takeaways

Rothschild pointed to six takeaways from The Guardian story and the leaked documents:

  •  Walker jetted across the country to raise millions of dollars on behalf of CFG and other conservative advocacy groups. The funds were then used to benefit Walker during the recall race, Republican state senators challenged in 2011 recall races, conservative judges seeking seats on the Wisconsin Supreme Court, and Republican candidates in general election races in 2012. Such coordination was widely considered illegal until the Wisconsin Supreme Court’s July 2015 ruling.
  •  Walker appears to have raised funds while working on behalf of the state.
  •  WiCFG and other 501(c)4 groups may have violated federal tax code rules governing their tax exempt status. Rothschild’s group filed a complaint with the Internal Revenue Service Sept. 20 raising this question.
  •  Some of the direct contributions from corporations could conflict with directives drawn from the Citizens United decision, which held such giving cannot be done in coordination with a candidate.
  •  Former Wisconsin Supreme Court Justice David Prosser may have coordinated with outside groups during the 2011 election.
  •  And, the dark money campaign featured “pay-to-play” themes.
  •  On the last point, The Guardian pointed to a $750,000 donation from a manufacturer who produced lead used in paint. Quickly after the election, Republican lawmakers passed and Walker approved at least three laws that effectively immunized lead makers and paint companies from past and future claims of lead paint poisoning.

Investigation Was `Baseless.'

Walker’s campaign waived off The Guardian story and stressed that the state supreme court had shut down the John Doe investigation as “baseless.”

“As widely reported two years ago, the prosecutor’s attorney stated that Governor Walker was not a target. Several courts shut down the baseless investigation on multiple occasions, and there is absolutely no evidence of any wrongdoing,” Joe Fadness, a spokesman for the campaign, said in a statement.

Despite the stunning revelations, Hasen, Fischer and other court watchers said The Guardian’s reporting and the documents would not likely influence the Supreme Court’s decision to review the Wisconsin high court’s ruling.

`Brazen' Scheme

Brent Ferguson, counsel for the democracy program at New York University’s Brennan Center for Justice, said the essential legal questions before the court would not be affected by the revelations because the court’s review is already limited. Moreover, the court is likely familiar with much of the information found in the leaked documents.

At the same time, Ferguson said the Wisconsin document dump seems to beg for a reexamination of the campaign finance climate in the aftermath of the Citizens United decision. Ferguson, who helped draft the Brennan Center’s amicus brief seeking review by the court, said the Walker/WiCFG fundraising scheme suggests independent money can play an important role in a corrupt scheme.

“Even if you were to buy the Supreme Court’s assumption that no corruption can be caused by independent spending, most of the spending probably isn’t independent,” he said. “We don’t really know the degree to which candidates work with these groups, but we at least know that this happened.”

Ferguson added that the Walker/WiCFG scheme “was so brazen, it’s probably not that rare.”

Hasen agreed the Wisconsin situation raises important campaign finance questions the court could address, but observed the time may not be right for such a review. Hasen placed his bet on an examination of the recusal questions with Justice Kennedy supplying the swing vote for a review.

Hasen added that the leaked documents suggest a particularly troubling fact pattern around Judge Prosser.

“The issue perhaps most likely to be of interest to five justices on the Supreme Court is the question of whether Judge Prosser and other justices should have recused themselves on grounds that they were the direct beneficiaries of some of this spending,” Hasen said. “I think the disclosure of how much Prosser benefitted really highlights to the public what kind of due process problem there might have been in the case and perhaps makes it a bit more likely the Supreme Court would hear it and do something about it.”

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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