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Secret donors pour millions of dollars into Crossroads GPS

April 17, 2012|By Matea Gold
  • Crossroads GPS spent $1.7 million earlier this month to run an ad in six presidential swing states attacking President Obama's energy policy.
Crossroads GPS spent $1.7 million earlier this month to run an ad in six presidential… (Crossroads GPS )

WASHINGTON -- Crossroads GPS, a conservative nonprofit group that is one of the most prominent critics of President Obama, raised nearly $77 million in its first 19 months from a small cadre of secret donors, including two dozen who wrote checks of $1 million and more.

The organization, founded in part by GOP strategist Karl Rove, received two single donations worth $10 million each between June 1, 2010 and the end of 2011, according to newly filed tax documents the group released Tuesday. It is impossible to know who gave the money, as the group simply listed each individual contribution and left blank the areas on the form for the names and addresses of the donors.

Crossroads GPS reported the identity of the donors to the IRS, as required, but does not have to reveal them publicly.

As a 501(c)4 social welfare organization, Crossroads GPS cannot make political activity its primary purpose, unlike its sister "super PAC," American Crossroads. Both are able to accept unlimited donations from both individuals and corporations.

Together, the two groups have emerged as the most muscular new players in the political landscape, aiming to spend $300 million this year to promote conservatives and defeat Obama.

Graphic: A look at super PAC spending during the primaries

As a tax-exempt group, Crossroads GPS ostensibly faces more limits on its political activity, but it is free to run so-called “issue ads” that stop short of calling for the election or the defeat of a candidate. 

Earlier this month, Crossroads GPS spent $1.7 million to run one such ad in six presidential swing states attacking Obama’s energy policy.

Campaign finance reform advocates argue that the organization is essentially a political player hiding behind its tax status. Democracy 21 and the Campaign Legal Center on Tuesday repeated their calls to the IRS to investigate Crossroads GPS’s tax status, as well as that of several others, including the conservative group American Action Network and Priorities USA, a tax-exempt group affiliated with a pro-Obama super PAC.

“It is essential that the IRS act to stop the farce that Crossroads GPS is a ‘social welfare’ organization,” Fred Wertheimer, president of Democracy 21, said in a statement. “Karl Rove and Crossroads GPS are thumbing their nose at the American people. They are injecting secret, million dollar and multi-million dollar contributions into federal elections in direct conflict with the basic right of citizens to know the donors financing campaign expenditures to influence their votes.”

Crossroads GPS spokesman Jonathan Collegio said the group carefully hews to its nonprofit role, saying it only spends “a portion of its resources on political activity that furthers its social welfare mission.”

He said its donors “are individuals and businesses that support its vision of lower taxes and smaller government.”

“Environmental groups and labor groups have been airing ads promoting their causes and targeting politicians for years, but the brunt of Wertheimer’s criticism focuses on conservative groups engaging in the same activity,” Collegio said.

In 2010 and 2011, Crossroads GPS spent at least $43 million on media, according to its tax documents. It also doled out nearly $16 million in grants to an array of conservative organizations, including $4 million to Grover Norquist’s Americans for Tax Reform and $2.75 million for the Center for Individual Freedom, a group that was originally launched more than a decade ago by former tobacco industry executives who sought to counter government restrictions on smoking. After getting involved in an eclectic range of causes over the years, the center emerged as a player in the 2010 midterm elections, spending at least $2.5 million on negative ads against about 10 Democratic members of Congress.

The fund-raising success of Crossroads and its super PAC counterpart was reflected in the robust compensation paid to the groups’ president, Steven Law, a former general counsel of the U.S. Chamber of Commerce and deputy secretary of the Department of Labor. Over the 19-month period, Law earned $1.09 million in salary and bonuses from the two groups, the tax records show.

The Tribune Washington Bureau/Los Angeles Times reported in February that many political operatives are reaping financial rewards as super PACs and their nonprofit kin have proliferated with little oversight. 

matea.gold@latimes.com

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