Liberal group uses John Doe records to target Walker-linked nonprofit

A liberal Madison-based group filed a complaint with the Internal Revenue Service on Monday asking it to strip Wisconsin Club for Growth of its nonprofit status for spending millions of dollars to help Gov. Scott Walker and other Republicans during the recall elections.

The complaint is based in large part on records released as a result of Wisconsin Club for Growth's federal lawsuit aimed at stopping a secret John Doe investigation of the group. The suit has since been thrown out.

"I'm certain they'll spend a lot of money fighting an IRS investigation just like they spent a lot of money fighting the John Doe," Brendan Fischer, general counsel for the left-leaning Center for Media and Democracy, which filed the complaint. "But I think we have a really strong case here."

Not so, said a representative for Wisconsin Club for Growth.

Andrew Grossman, a lawyer with the Washington, D.C.-based firm Baker Hostetler, suggested the complaint is little more than a publicity stunt. It is being filed a little more than a week before Walker squares off against Democrat Mary Burke in a tightly contested race.

"But if they want to waste their money on filing a frivolous complaint for a blip of news coverage, that’s their business," Grossman said via email on Sunday. "The Wisconsin Club for Growth is proud of its record of speaking out on the issues that matter to Wisconsin."

"Hear, hear," added R.J. Johnson, a longtime adviser to Wisconsin Club for Growth and the Walker campaign.

According to a copy of the 25-page complaint, the center asserts that officials with Wisconsin Club for Growth misled federal regulators by saying they are a social welfare group that spent nothing on campaign activities in 2011 and 2012.

In reality, Fischer states in the complaint that the conservative group spent an estimated $9.1 million on ads promoting political candidates during the recall races and funneled another $9.6 million to other groups that then spent the cash on campaign ads.

Wisconsin Club for Growth spent a little more than $20 million in the two-year span.

It is not unusual in election years for liberal and conservative groups to attack each other, with some even going to the IRS to try to bring the hammer down on a political foe. 

IRS officials have themselves come under sharp criticism in recent years for their intense scrutiny primarily of tea party and other conservative groups applying for tax-exempt status, prompting investigations of the agency. 

What makes his group's complaint different from the others, Fischer said, are the internal emails and other records collected on Wisconsin Club for Growth as part of the John Doe investigation.

Many of those documents were accidentally made public by court officials as a result of a federal lawsuit filed by the conservative group and one of its directors, Eric O'Keefe, in an attempt to block the probe, which was initially launched by Democratic Milwaukee County District Attorney John Chisholm.

The suit was tossed on appeal, but the John Doe investigation remains on hold under a state order.

In the complaint, Fischer builds a case that mirrors that laid out by prosecutors. 

Fischer, who authored the document, alleges that Walker worked closely with Wisconsin Club for Growth, encouraging groups and individuals to give money to the conservative outfit run by Johnson. In addition, the center contends that the pro-business advocacy group helped coordinate spending with a dozen other conservative organizations.

Among the biggest donations was $700,000 that was secretly given in 2011 and 2012 by Gogebic Taconite, which hopes to build a massive open-pit iron mine in northern Wisconsin. Then Wisconsin Club for Growth spent nearly $1 million targeting a state senator opposed to the mine.

Walker has said he played no role in soliciting the donation. In 2013, the governor signed a bill passed by the Republican-led Legislature that eased environmental regulations for iron mining.

The complaint says Wisconsin Club for Growth deceived regulators by engaging "primarily in political campaign activities during those years and substantially operated for the private political benefit of the Walker campaign and the Republican Party and the private financial benefit of a top funder. It thus should not be entitled to tax-exempt status."

Grossman, the attorney for the conservative group, said this should be seen as a First Amendment issue.

"It’s ironic that an outfit calling itself the Center for Media and Democracy would spend its time trying to silence political speech," Grossman said.

Fischer said that's a misreading of the issue. Wisconsin Club for Growth, he said, has been caught "cheating."

"This is about corruption, not speech," Fischer said via email. "WiCFG’s abuse of the tax code deprived Wisconsinites of their right to know who is bankrolling our elected officials, blocking the ability of the public and the press to track whether secret million-dollar donors later receive special treatment.”

The center is itself a tax-exempt nonprofit that is underwritten by such groups as the Grodzins Fund, the Rockefeller Family Foundation and the Schumann Center for Media and Democracy. A list of its current and past funding sources is available on its website.