VOL. 127 | NO. 240 | Monday, December 10, 2012
Shadowy Tennessee Donor Behind Record Campaign Contributions
JACK GILLUM & STEPHEN BRAUN | Associated Press
WASHINGTON (AP) – A lawyer in Tennessee who is mysteriously linked to millions of dollars in campaign contributions steered to congressional candidates doubled his investments in the weeks before Election Day and quietly funneled $6.8 million more to a prominent Tea Party group, according to new financial statements filed with the government.
William Rose of Knoxville previously told The Associated Press that his business was a "family secret" and he was not obligated to disclose the origin of what now amounts to more than $12 million that he routed through two companies he recently created. Rose did not immediately return phone calls from the AP on Friday. He previously complained that phone calls and emails from reporters were irritating.
The money went to the Tea Party's most prominent "super" political committee, FreedomWorks for America, which spent it on high-profile congressional races. The $12 million accounted for nearly all of the group's money. Executives at FreedomWorks also did not immediately respond to requests for an explanation.
The contributions are a glaring example of the murkiness surrounding who is giving money to politicians in modern elections, shaped by new federal rules allowing unlimited and anonymous donations. The law has allowed wealthy executives, corporations and other organizations to establish shell companies and mail drops to disguise the source of the money they give to political groups and politicians. But the mysterious donations linked to Rose by far eclipse any suspicious amounts paid to support the campaigns of President Barack Obama and Republican Mitt Romney.
Rose made the latest $6.8 million in contributions even as the AP and Knoxville News Sentinel were jointly investigating $5.2 million in suspicious donations traced to one of his shadowy companies during October. That company, Specialty Group Inc., filed incorporation papers in September less than one week before it gave FreedomWorks several contributions worth between $125,000 and $1.5 million each. Specialty Group appeared to have no website describing its products or services. It was registered to a suburban Knoxville home.
Rose last week renamed the company Specialty Investments Group Inc. That firm and Kingston Pike Development Corp. – which Rose also registered and owns – were used to steer the latest $6.8 million in contributions to FreedomWorks. Among other amounts, FreedomWorks spent more than $1.8 million of the money on Connie Mack's unsuccessful Senate campaign in Florida and a similar amount opposing Tammy Duckworth, who was elected to Congress in Illinois.
Financial statements that FreedomWorks filed with the Federal Election Commission did not cite any business address for Kingston Pike, but business records indicate that Rose registered the company one day after he created Specialty Group.
Under U.S. law, corporations can give unlimited sums of money to outside groups supporting candidates, but not if their sole purpose is to make campaign contributions.
Rose said in a statement last month that he formed Specialty Group to buy, sell, develop and invest in a variety of real estate ventures and investments. He declined interview requests from the AP over three weeks and complained in his statement that reporters had contacted his ex-wife and business colleagues.
"The business of Specialty Group is my family secret, a secret that will be kept – as allowed by applicable law – for at least another 50 years," Rose said in his statement.
FreedomWorks is among the most prominent organizations supporting the conservative Tea Party and was headed for years by former GOP House Majority Leader Dick Armey. Armey recently left the group in exchange for $8 million in payouts over 20 years from an outside benefactor, Richard J. Stephenson, according to a confidential agreement obtained by the AP. Stephenson is a prominent fundraiser and founder and chairman of the Cancer Treatment Centers of America.
The source of the money linked to Rose is unclear. Rose identified himself as Specialty Group's chief executive, president and general counsel, but there was no evidence that the company or Rose could afford to give away $12 million. Rose owes $3,700 in property taxes on his Knoxville home.
The Supreme Court cleared the roles of super PACs in legal cases that included its landmark Citizens United ruling, which greatly expanded the limits and sources of money in politics. But even justices who supported increased giving – which the court has equated with free speech – said that citizens deserve to know who was behind money given to politicians.
"I think Thomas Jefferson would have said the more speech, the better," Justice Antonin Scalia said in July. "That's what the First Amendment is all about, so long as the people know where the speech is coming from."
Determining who is behind the money hasn't always been easy to determine.
One company dissolved In summer 2011 shortly after giving $1 million to a super PAC supporting Romney. It turned out to have been formed by Ed Conard, a Romney supporter who once worked with the former Massachusetts governor at the private equity firm Bain Capital.
Months later, a $400,000 gift from a limited liability partnership was traced to a fund connected with Boston-based Hellman Jordan Management. The firm eventually acknowledged that a married couple who had raised money for Romney had received the $400,000 as part of an unspecified investment disbursement and instructed Hellman Jordan to give it the super PAC supporting Romney.
Contact the Washington investigative team at DCinvestigations@ap.org
Follow Jack Gillum on Twitter at www.twitter.com/jackgillum
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