Campaign 2010

Mar 21, 2011

Hypocrite of the Week: American Crossroads, A New Paradigm of Hypocrisy on Transparency

The Democratic Congressional Campaign Committee named American Crossroads as the Hypocrite of the Week for claiming to value a “new paradigm for transparency” while they continue to accept large, undisclosed, secret contributions. American Crossroads formed a partner organization, Crossroads GPS, to avoid further disclosure.  Independent groups have filed complaints with the IRS over Crossroads’ lack of disclosure. One Republican operative even said that American Crossroads’ strategy of accepting anonymous donations “worked like a charm.”

American Crossroads Claims To Support ‘A New Paradigm of Transparency’. “Third, setting a new direction for America means a new paradigm of transparency. Politicians and the subculture that supports them want government to be a “black box” to its citizens: unknowable, inscrutable, and above all, unaccountable. [American Crossroads Website, accessed 3/17/11]

American Crossroads is Like the RNC ‘Without the Disclosure’. “According to election law expert and Loyola Law School Professor Richard Hasen, “Karl Rove has launched American Crossroads: It's like the Republican National Committee without the disclosure mandate federal law imposes on the RNC.” [Slate, 4/6/10]

“Karl Rove’s American Crossroads has built a new paradigm of hypocrisy when they claim that transparency and openness is one of their values but it’s clearly one they only preach, not practice,” said Jesse Ferguson of the Democratic Congressional Campaign Committee. “American Crossroads should start following their own values statements and disclose the millions in shady, shadowy, unaccountable money that they’ve pulled in to influence elections. Until they do, their pledge of transparency but lack of disclosure makes American Crossroads the hypocrite of the week.”

Background

Crossroads GPS Not Required to Regularly File Finances. While reports filed with the FEC and the Internal Revenue Service show that American Crossroads has raised a total of about $6.7 million between its late March creation and the end of July, American Crossroads GPS is not required to regularly report its finances – and won’t be required to reveal its donors at all. That’s because – unlike the original Crossroads, which was initially registered under Section 527 of the IRS code and this month changed its registration to become a PAC – GPS is registered under section 501(c)4 of the IRS code, which allows donors anonymity, but also restricts the aggressiveness of the group’s ads. [Politico, 8/21/10]

Crossroads GPS, a 501(c)4 Formed to Avoid Disclosure. Crossroads GPS was incorporated under section 501(c)4 of the IRS code. That section of the code requires far less disclosure and allows groups to withhold information on individual donors, which Law conceded was appealing for some of GPS’s donors. “I wouldn’t want to discount the value of confidentiality to some donors,” said Law. But, he added, “the genesis of it from our perspective was that there are a number of things that are priorities for us that seemed to fit more into a 501(c)4 than a 527, such as doing very legislatively focused issue advocacy activity which we will be undertaking in the next few months” and also “building out a very substantial grassroots activist network that we plan to organize both around issues and geographically, that we can deploy along with our advertising strategy.” [Politico, 6/30/10]

  • Group Won’t Need to Disclose Finances Until May 2011. The group likely won’t have to disclose any of its finances until May 2011 at the earliest. [Politico, 6/30/10]

Operative: Crossroads GPS Organized to Allow Donors to Give Anonymously, A Strategy That “Worked Like a Charm.” In June, Rove and 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.” [New York Times, 10/11/10]

Watchdogs Filed Complaint With IRS for Violating Tax Laws Limiting Political Activities of Nonprofit Groups. Two campaign-finance watchdogs, Democracy 21 and the Campaign Legal Center, asked the Internal Revenue Service to investigate Crossroads GPS for allegedly violating U.S. tax laws limiting the political activities of nonprofit groups. In a complaint alleges the group is using its nonprofit status to shield the identities of its wealthy donors. The complaint says "the group was organized to participate and intervene in the 2010 congressional races while providing donors to the organization with a safe haven for hiding their role." [Washington Post, 10/05/10]

Rove “Founded” American Crossroads, A Political Action Group.  In June 2010, the Washington Post reported “Corporations are being urged by fundraisers to use the shared megaphone of the U.S. Chamber of Commerce and American Crossroads, a political action group founded this year by former Bush White House deputy Karl Rove. Together, the two groups and an affiliate of American Crossroads, the American Action Network, have pledged to raise $127 million, most of it from business interests, to elect GOP candidates in 2010.” [Washington Post, 6/1/10]

  • Rove Not Listed On Disclosure Documents For “American Crossroads” With IRS.  According to documents filed with the IRS, Karl Rove is not listed as the custodian of records or contact person for American Crossroad political organization.  [IRS, Accessed 6/2/10]

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