An Iowa dark money group that popped up before the June 2018 primary has refused to comply with the Federal Election Commission's request to disclose the names of its donors.
"WE WILL BE FOLLOWING THE FEC DISCLOSURE REQUIREMENTS"
Iowans for a Progressive Tomorrow spent a combined $49,431.88 on three direct mail pieces that urged thousands of Democrats to support Eddie Mauro, one of three candidates in the third Congressional district primary. Other than the group's logo and the "paid for" notice, the mailings were virtually indistinguishable from Mauro's campaign materials, using similar talking points and sometimes even the same photos. Here's one of the three pieces from the outside group (click here to view the others):
Here are images from Mauro campaign mailings around the same time:
Before the primary election, Iowans for a Progressive Tomorrow president Rocky Sposato told Bleeding Heartland the group would "follow all the current laws around having a 501(c)(4) and independent expenditures." Later in June, Sposato made clear he would “not talk about financing of Iowans for a Progressive Tomorrow. As I indicated before, we will be following the FEC disclosure requirements. I don’t believe we’re required to disclose our sources of funding under FEC, or IRS law.”
Federal law states that anyone making at least $250 in independent expenditures during a calendar year must identify on FEC filings “each person who made a contribution in excess of $200 to the person filing such report for the purpose of furthering the reported independent expenditure.” But enforcement of that provision has been lax.
"PLEASE AMEND YOUR REPORT TO PROVIDE THE MISSING INFORMATION"
Strangely, Iowans for a Progressive tomorrow submitted three second-quarter reports, rather than listing all independent expenditures on the same filing. Each report noted the cost of one mailing but gave no information about contributions.
The omission drew the attention of Jamie Sikorsky, a campaign finance analyst in the FEC's Reports Analysis Division. After a routine review of Iowans for a Progressive Tomorrow's filings, she wrote to Sposato in December to point out three deficiencies.
Sikorsky's letter demanded a response by January 8, warning, "Failure to comply with the provisions of the Act may result in an enforcement action against the entity."
Sposato informed the FEC in late December that Iowans for a Progressive Tomorrow "has amended the schedule 5-E to include the aggregate calendar year-to-date total." (At this writing, that number is absent from the forms available here, here, and here. Perhaps the latest filings haven't been uploaded; FEC staff have been digging their way out of a huge backlog following the five-week government shutdown.)
As for disclosing donors, Sposato wasn't budging.
Your request assumes that simply because we reported independent expenditures that a contribution also should have been reported. That is not a correct assumption. Many people may give to an organization for reasons unrelated [to] independent expenditures. As you noted in the RFAI [request for additional information], itemization is required for each contributor who donated more than $200 to further the independent expenditure(s). No contributions accepted by Iowans for a Progressive Tomorrow were solicited or received "for the purpose of furthering the reported independent expenditure." See 11 C.F.R. § 109.10(e)(l)(vi). Accordingly, Iowans for a Progressive Tomorrow had not [sic] contributions to report.
Please note that we are aware of the FEC guidance dated October 4, 2018, which directs reporting entities to identify each person who made contributions in excess of $200 within the calendar year, together with the date and amount of such contribution for all independent expenditures made after September 18, 2018.
Sposato told me in June, "our primary purpose is to advocate for progressive policy.” Under federal tax law, electioneering cannot be the "primary activity" of any social welfare group claiming 501(c)(4) status. So Iowans for a Progressive Tomorrow needs to spend a bit more than $49,431.88 on non-election advocacy during its fiscal year (not necessarily concurrent with the 2018 calendar year).
If the group had been engaged in a wide range of activities, its donors might plausibly have contributed for some purpose other than pro-Mauro advertising.
However, I have found no evidence Iowans for a Progressive Tomorrow has done anything substantive since the primary. The group's website has only a landing page, which hasn't changed since last May. Its Facebook page has featured just two posts from May 2018. Neither got any "likes" or shares.
Shortly before the November election, I asked Sposato what Iowans for a Progressive Tomorrow was doing in the way of voter engagement or education. He reminded me that four months earlier, "I asked you to have coffee and chat about what I had planned for the future. You didn’t respond and now that ship has sailed. I have no comment."
After reading Sposato's correspondence with the FEC analyst, I reached out again last week.
I was surprised to see you are claiming Iowans for a Progressive Tomorrow received no contributions "for the purpose of furthering the reported independent expenditure."
I have seen no sign that your organization engaged in any activity that could require any significant spending, other than those direct mail pieces. For what other purpose could your contributors possibly have been donating?
What tangible actions did Iowans for a Progressive Tomorrow undertake during 2018, other than financing three direct mailings in support of Eddie Mauro?
"Please remind your readers that I offered transparency at the outset when I asked to meet with you over coffee to explain what we were doing," Sposato wrote back. "You did not give me the courtesy of a response."
Mea culpa. I didn't make those plans because Sposato had ruled out discussing his group's funding sources, which were my main interest. But best journalism practices would have involved hearing out his pitch, or at least replying to the invitation.
The FEC doesn't comment on specific cases, so I was unable to confirm whether Sikorsky has referred this matter to the commission for further investigation and possible enforcement. I sought insight from someone with a deep understanding of the process.
"IT'S DOUBTFUL THEY WOULD DO ANYTHING ABOUT IT"
Larry Noble is a former general counsel to the FEC. When four or more commissioners approve an investigation of a possible campaign finance violation, the general counsel's office conducts the investigation. I wondered, would a probe validate the claim that donors did not give to Iowans for Progressive Tomorrow for the specific purpose of making independent expenditures? Would the group need to demonstrate other activities that cost money during 2018? Or would it be sufficient for Sposato to assert that no one donated for that reason?
This is a complicated issue. For a long time, three republican commissioners took the position that a 501(c)(4) organization did only [have] to report contributors who specifically gave for an independent expenditure. Under this theory, these commissioners required evidence that the contributor knew the purpose of the contribution was to fund an IE. Absent that, they refused to vote for enforcement.
However, many (including me) thought this interpretation of the law was far too narrow. Ultimately, a court rejected their narrow view and the FEC issued guidance in October 2018 requiring the reporting of all contributors who gave in excess of $200 in the year an IE was made. The organization refers to this change in its letter, implying it will follow it in the future.
Here's the case summary of the federal court ruling. The FEC guidance indicates that "the Commission will enforce the statute for independent expenditures made on or after Sept. 18, 2018" and will require disclosure of all people who contributed at least $200 within a calendar year "for reports due after Sept. 18, 2018."
All of Iowans for a Progressive Tomorrow's spending to influence an election occurred during the second quarter of 2018. Reports on those expenditures were due last July.
Anyone who suspects a campaign finance reporting violation can file an FEC complaint. But would it be a waste of time for someone to challenge this lack of disclosure, given that the FEC guidance may apply only to later reports? Noble delivered the cold, hard truth.
The court ruled the FEC had [been] interpreting the law wrong so, in theory, they were require to file the name of the contributors before. The FEC issued its new policy. But, in practice, it's doubtful they would do anything about it.
Sposato's group may lie dormant indefinitely, since Mauro isn't poised to run for office in 2020. Rather, he is leading a new political action committee aimed at defeating U.S. Senator Joni Ernst and winning back the state legislature.
Disclosure rules are supposed to guarantee transparency on election spending by outside groups. But the identity of those who gave generously to send Mauro to Congress may remain a mystery forever. That's not what I would call a progressive tomorrow.
Appendix 1: December 4, 2018 letter from FEC analyst Jamie Sikorsky
Appendix 2: December 26, 2018 response letter from Rocky Sposato
Appendix 3: Portion of my June 2018 e-mail correspondence with Rocky Sposato
Appendix 4: My October 2018 correspondence with Rocky Sposato in its entirety
Appendix 5: Part of my February 2019 correspondence with Rocky Sposato
Top image: Front side of a direct mail piece funded by Iowans for a Progressive Tomorrow, which reached Democrats in the third Congressional district shortly before the June 2018 primary.