The king of Arizona dark money, Sean Noble, has finally been checked. The Federal Election Commission (FEC) just agreed to a massive fine for three Koch network-funded groups for illegally hiding the source of the funding for their political ads, as originally alleged by a 2014 Citizens for Responsibility and Ethics in Washington (CREW) complaint.
The 60 Plus Association (which agreed to pay $50,000 in a conciliation agreement with the FEC), the American Future Fund ($140,000) and Americans for Job Security ($43,000) spent millions of dollars in 2010 from the Center to Protect Patient Rights (CPPR, now known as American Encore), the Koch brothers’ main funding group at the time, on ads targeted by CPPR without disclosing the source of the money.
The groups claimed the money was for general expenses and not specific ads, so they were not required to disclose their donors. However, Sean Noble, who was the central figure in distributing Koch money in 2010 and 2012, told the National Review in 2014 that he was deeply involved with producing the ads and selecting their targets—meaning the groups were required to disclose the source of the funds. The FEC’s investigation found that Noble’s consulting firm even helped produce and place the ads for the groups.
“These rules provide some of the only windows into the funding of dark money groups, but the FEC almost never penalizes groups that break them,” CREW Executive Director Noah Bookbinder said. “It is hard to overstate how significant this is.”
To understand the magnitude of these fines, in the first five months of this year, the FEC gave out $273,000 in conciliation agreement civil penalties for an average penalty of $15,000. The penalties in this case alone totaled $233,000.
“This is the largest fine the FEC has collected from groups active in post-Citizens United elections,” Bookbinder said. “This case sends an important signal that groups that brazenly disregard the law will be held accountable. We hope this is a sign of things to come and the FEC will continue to hit dark money groups with major penalties for violating the law.”
This is the second highest penalty ever given in a case brought by CREW.
Background on Koch groups fined by FEC for failing to disclose donors:
Facing an investigation based on a complaint CREW filed in 2014, three groups funded by the Koch brothers’ network recently settled with the Federal Election Commission (“FEC”), agreeing to pay a total of $233,000 for violating federal campaign finance law. The groups, American Future Fund (“AFF”), American for Job Security (“AJS”), and the 60 Plus Association (“60 Plus”), illegally failed to disclose that millions of dollars used to pay for their 2010 election ads came from the Koch’s main cash distributor, the Center to Protect Patient Rights (“CPPR”).
• Sean Noble formed CPPR, a section 501(c)(4) tax-exempt organization, in 2009. News reports closely link CPPR to the Koch brothers, with one describing the group as a “major cash turnstile for groups on the right.” Noble also served as the Kochs’ political consultant and attended their retreats. In 2014, Noble changed the group’s name to American Encore.
• CPPR made large grants to numerous organizations in 2010, including giving $11.6 million to AFF, $8.9 million to 60 Plus, and $4.8 million to AJS. Those groups all spent millions of dollars on House races in 2010, paying for independent expenditure ads that expressly advocated electing Republicans or defeating Democrats, or for electioneering communications that ran close to election day.
• A 2014 news report based on interviews with Noble revealed Noble and CPPR’s extensive involvement with the ads. Noble and CPPR selected the races to run the ads in, researched and produced them, and decided when to run them. Noble’s consulting firm also secretly received millions of dollars from the three groups, working as an undisclosed subcontractor to vendors who produced the ads.
• Under FEC rules, groups that are not required to disclose all their donors because they don’t qualify as political committees still must disclose donors who made contributions for the purpose of furthering a reported independent expenditure or electioneering communication.
• Despite the contributions from CPPR and Noble’s direct involvement in making and broadcasting the ads, AJS, AFF, and 60 Plus all told the FEC they did not receive any contributions earmarked for spending on them.
• CREW filed an FEC complaint against the three groups in May 2014. This week, the FEC released conciliation agreements with the groups showing that after the agency found reason to believe all of them violated the law, each settled the case. The fines totaled $233,000.
• Although the Koch brothers’ network is no longer closely associated with Noble, he continues to use American Encore just as he used CPPR to secretly fund political activities in Arizona and elsewhere. In 2014, for example, American Encore gave millions of dollars to groups active in the race for Arizona governor, including the Legacy Foundation Action Fund, the Arizona Free Enterprise Club, Veterans for a Strong America, and even 60 Plus.