Offering Donors Secrecy, and Going on Attack

Offering Donors Secrecy, and Going on Attack
By JIM RUTENBERG, DON VAN NATTA Jr. and MIKE McINTIRE
Copyright by The New York Times
Published: October 11, 2010
http://www.nytimes.com/2010/10/12/us/politics/12donate.html?th&emc=th



The American Future Fund, a conservative organization based in Iowa, has been one of the more active players in this fall’s campaigns, spending millions of dollars on ads attacking Democrats across the country. It has not hesitated to take credit for its attacks, issuing press releases with headlines like “AFF Launches TV Ads in 13 States Targeting Liberal Politicians.”

Like many of the other groups with anodyne names engaged in the battle to control Congress, it does not have to identify its donors, keeping them — and their possible motivations — shrouded from the public.

But interviews found that the group was started with seed money from at least one influential Iowa businessman: Bruce Rastetter, a co-founder and the chief executive of one of the nation’s larger ethanol companies, Hawkeye Energy Holdings, and a rising force in state Republican politics. And hints of a possible agenda emerge from a look at the politicians on the American Future Fund’s hit list. Most have seats on a handful of legislative committees with a direct say in the ethanol industry.

Mr. Rastetter had long been mentioned as a likely backer of the group, and he has now acknowledged through his lawyer that he indeed provided financial support at its inception roughly two years ago. The lawyer, Daniel L. Stockdale, said Mr. Rastetter had not given since, adding, “He does not feel that he should reveal the size of prior contributions.”

The American Future Fund, organized under a tax code provision that lets donors remain anonymous, is one of dozens of groups awash in money from hidden sources and spending it at an unprecedented rate, largely on behalf of Republicans. The breadth and impact of these privately financed groups have made them, and the mystery of their backers, a campaign issue in their own right.

Through interviews with top Republican contributors and strategists, as well as a review of public records, some contours of this financing effort — including how donors are lured with the promise of anonymity — are starting to come into view.

In part, political operatives have reconstituted the vanguard of reliable Republican contributors who helped elect George W. Bush and support Swift Boat Veterans for Truth, which attacked the Vietnam record of his opponent in 2004, Senator John Kerry. But as with the American Future Fund, the effort also appears to include business interests focused on specific races.

Bradley A. Blakeman, a longtime Republican operative and a senior aide in the Bush White House, said, “Donors are the usual suspects that have helped Bush, as well as some fresh faces.”

No Names Attached

Stoking the flow of dollars has been the guarantee of secrecy afforded by certain nonprofit groups. Mel Sembler, a shopping mall magnate in St. Petersburg, Fla., who is close to the Republican strategist Karl Rove, said wealthy donors had written six- and seven-figure checks to Crossroads GPS, a Rove-backed group that is the most active of the nonprofits started this year. Republicans close to the group said that last week, the group received a check for several million dollars from a single donor, whom they declined to identify.

“I think most people are very comfortable giving anonymously,” Mr. Sembler said. “They want to be able to be helpful but not be seen by the public as taking sides.”

Republicans involved in Crossroads say the groups owe their fund-raising success to a hope that a Republican Congress would undo some of the Obama administration agenda. But they also credit their fund-raising strategy.

When Mr. Rove and Ed Gillespie, the former Republican chairman, began their efforts last spring, they first helped set up a group called American Crossroads under a tax-code provision that requires the disclosure of donors. It took in several seven-figure contributions from high-profile donors, including Trevor Rees-Jones, president and chief executive of Chief Oil and Gas, and Robert Rowling, chief executive of TRT Holdings.

Then in June, Mr. Rove and Mr. Gillespie helped organize Crossroads GPS under the provision that allows donors to give anonymously. A Republican operative who speaks frequently with Mr. Rove said the public donations, revealed over the summer, were used as “a way to energize others to give large amounts anonymously.”

The operative added, “It has worked like a charm.”

The surge of anonymous money is the latest development in corporate America’s efforts to influence the agenda in Washington, following rules enacted several years ago banning large, unregulated gifts to political parties. Democrats first established so-called third-party groups that could legally accept unlimited money from business and unions, though most had to disclose donors. Now, as new laws and a major Supreme Court decision have removed barriers to corporate giving, Republican operatives have embraced the use of nonprofit issue groups that can keep donors’ identities secret.

At Crossroads, some large contributors are motivated to give in part because appeals are coming directly from Mr. Rove, a senior Republican fund-raiser said. Republicans close to American Crossroads and Crossroads GPS, which are focusing on 11 Senate races, say they met their fund-raising goal of $52 million last week and could raise as much as $70 million before Election Day.

“They’re going to keep raising money,” Mr. Blakeman said. “And the donors are motivated.”

The U.S. Chamber of Commerce, which does not identify its corporate members, spent $10 million over the last week on advertisements, mostly against Democrats, records show. The chamber will most likely meet its fund-raising goal of $75 million, more than double what it spent on the 2008 campaign, Republican operatives say.

Advocate for Ethanol

The American Future Fund has not spent quite as much. But Democrats say that at $6 million and counting, it has advertised enough to make a difference in crucial states.

Almost since the organization’s inception, Democrats in Iowa have suspected the involvement of Mr. Rastetter. Now confirmed, his role offers a glimpse of what is probably just one of many undisclosed interests to have been involved in the American Future Fund.

Mr. Rastetter began his corn-based ethanol company, Hawkeye, in 2003, after making his fortune with a pork production company, Heartland Pork. Hawkeye quickly became one of the nation’s largest ethanol producers, and Mr. Rastetter became an outspoken advocate for ethanol, helping to start a new trade group, Growth Energy, that supports its increased use at fuel pumps and tariffs on foreign producers. As his stature grew, so did his position as a Republican donor, and potentially as a candidate himself.

Speculation of a candidacy increased in 2007, when Nick Ryan, who managed former Representative Jim Nussle’s losing 2006 campaign for Iowa governor, registered with the state as a lobbyist for four Rastetter businesses, including Hawkeye.

After Mr. Ryan helped establish a political committee called Team Iowa, Mr. Rastetter was the largest donor in federal tax records, listed as giving $100,000. After Mr. Rastetter started his family foundation, Mr. Ryan became one of four board members.

And when Mr. Ryan started the American Future Fund, Mr. Rastetter provided “seed money,” but nothing more, said Mr. Rastetter’s lawyer, Mr. Stockdale. He declined to name an exact figure but put the amount at less than 5 percent — or less than $374,025 — of the nearly $7.5 million the group collected in 2008.

He added that “Mr. Rastetter has never exercised any decision-making authority” or held any official role with the group. (Records show that Mr. Rastetter did, however, give the maximum $5,000 to the fund’s related political action committee in December 2009.)

Chuck Larson, a former ambassador to Latvia who lives in Iowa and is friendly with Mr. Rastetter, said Mr. Rastetter kept his political giving separate from his business or personal interests. “This is an individual who has been very successful in life and is not motivated by financial gain but by making a difference in Iowa and making a difference in the country,” Mr. Larson said.

Mr. Rastetter and Mr. Ryan did not respond to numerous telephone messages.

At its formation, the American Future Fund proclaimed a broad mission “to provide Americans with a conservative and free market viewpoint.”

At times, its activities also seemed to dovetail with the interests of the ethanol industry.

Among the first politicians it supported with advertising was Senator Norm Coleman, Republican of Minnesota and a co-chairman of the Senate Biofuels Caucus, during his losing 2008 re-election campaign.

Later that November, it focused on an unexpected target: the Indy Racing League.

In a radio advertisement, the fund attacked a deal the racing association struck to power Indy cars with sugar-based ethanol from Brazil, portraying it as a slight to American producers.

The campaign may have seemed odd for a group promoting free-market principles. But days earlier, ethanol executives, including Mr. Rastetter, had met with racing officials to unsuccessfully demand that they abandon the Brazilian deal.

Mr. Stockdale said Mr. Rastetter had no role in the radio ad. Mr. Ryan had been along for the Indy Racing meeting as well, Mr. Stockdale said, “and the decision by the fund to sponsor the radio campaign was made after Mr. Ryan attended the meeting.”

Mr. Stockdale said Mr. Ryan had not received any compensation from Mr. Rastetter since the first quarter of 2009, though they remain “good friends.”

Signs of an Energy Focus

Certainly in the last two years the American Future Fund has broadened its activities, along with its donor base, raising millions more as it held a conservative lecture series and ran ads against the Democratic health care bill.

Most of its advertisements this year have focused on generic fare like stimulus spending and health care. But suggestions of an energy-related agenda have peeked through.

Of the 14 “liberal” politicians singled out in a list it released last month, nearly every incumbent sits on a panel with a say over energy or agriculture policy. Five sit on the Agriculture Committee; four others are on related committees with say. One candidate was a staff member on a related panel.

Sorting out the Future Fund’s possible motivations is hardly straightforward, given how complicated the politics of the heavily subsidized ethanol industry have grown in recent years.

For instance, the industry has had its own differences over what form subsidies should take. Growth Energy, the trade group that includes Mr. Rastetter’s company, recently created waves by calling for subsidies to be eventually phased out — but only after some are diverted toward projects like the construction of gas pumps that would let consumers choose how much ethanol they want in their fuel.

While many of the Democrats that the fund has gone after explicitly support extending the subsidies in one form or another, the industry over all has expressed frustration that, with a December expiration looming, the Democratic Congress has not moved to do so yet.

Mandy Fletcher Fraher, a spokeswoman for the fund, dismissed ethanol and agriculture policy as a motive behind its advertising. “We’re targeting liberal spending policies,” she said, noting that the fund was equally focused on competitive races.

Democrats expressed frustration that there was no way to know why they were on the receiving end of the fund’s barrage.

Officials at the Democratic Congressional Campaign Committee said they had been trying to figure out whether the fund had an eye on the coming deliberations over the next farm bill, with its implications for alternative energy.

One target, Representative Bruce Braley, Democrat of Iowa, a member of the Energy and Commerce Committee, noted the pattern of the attacks and said, “Iowans and the American people are pretty smart, and I think they can put things like that together.”

Yet Mr. Braley said he was at a loss over his place on the list. For instance, he views himself as having a strong record with the ethanol industry.

Last Friday, he said, he sought answers at the American Future Fund’s official address, but found only a rented mailbox. “We did not find anyone working at their office,” he said, “though I did have a nice conversation with a woman named Kathy who was working at the UPS store.”