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WaPo: $12M TN ‘Mystery Donor’ Involved in a Super PAC Coup

The $12 million in secret donations funneled from two new Tennessee companies to the FreedomWorks super PAC (most recent previous post HERE) grew out of an internal feud within the tea party-oriented PAC, the Washington Post reports.
The mystery donation involves Richard J. Stephenson, described as “a reclusive Illinois millionaire,” and Richard K. “Dick” Armey, a former House majority leader ousted as FreedomWorks chairman in a September “coup” wherein a pistol was produced at one point.
Stephenson, the founder of the for-profit Cancer Treatment Centers of America and a director on the FreedomWorks board, agreed to commit $400,000 per year over 20 years in exchange for Armey’s agreement to leave the group.
The episode illustrates the growing role of wealthy donors in swaying the direction of FreedomWorks and other political groups, which increasingly rely on unlimited contributions from corporations and financiers for their financial livelihood. Such gifts are often sent through corporate shells or nonprofit groups that do not have to disclose their donors, making it impossible for the public to know who is funding them.
In the weeks before the election, more than $12 million in donations was funneled through two Tennessee corporations to the FreedomWorks super PAC after negotiations with Stephenson over a preelection gift of the same size, according to three current and former employees with knowledge of the arrangement. The origin of the money has not previously been reported.
These and other new details about the near-meltdown at FreedomWorks were gleaned from interviews with two dozen current and past associates, most of whom spoke on the condition of anonymity in order to talk freely.
…According to public records, FreedomWorks received more than $12 million before the election from two corporations based in Knoxville, Tenn.: Specialty Investments Group and Kingston Pike Development. The firms were established within a day of each other by William S. Rose III, a local bankruptcy lawyer.
Rose, who could not be reached for comment, has said publicly he would not answer questions about the donations. But according to three current and former FreedomWorks employees with knowledge of the donations, the money originated with Stephenson and his family, who arranged for the contributions from the Tennessee firms to the super PAC.
Brandon, FreedomWorks’ executive vice president, told colleagues starting in August that Stephenson would be giving between $10 million and $12 million, these sources said. Brandon also met repeatedly with members of Stephenson’s family who were involved in arranging the donations, the sources said.
Stephenson attended a FreedomWorks retreat in Jackson Hole, Wyo., in August at which a budget was being prepared in anticipation of a large influx of money, according to several employees who attended the retreat. At the retreat, Stephenson dictated some of the terms of how the money would be spent, the employees said.
“There is no doubt that Dick Stephenson arranged for that money to come to the super PAC,” said one person who attended the retreat. “I can assure you that everyone around the office knew about it.”

Criminal Investigation Sought of TN $12 Million Mystery Donor

By Jack Gillum, Associated Press
WASHINGTON — Two election watchdog organizations on Thursday urged the Justice Department and Federal Election Commission to investigate more than $12 million in campaign contributions that were mysteriously funneled through two little-known companies in Tennessee to a prominent tea party group. The origin of the money, the largest anonymous political donations in a campaign year filled with them, remains a secret.
The watchdog groups said routing the $12 million through the Tennessee companies appeared to violate a U.S. law prohibiting the practice of laundering campaign contributions in the name of another person. They also said the lawyer in Tennessee who registered the companies, William S. Rose Jr. of Knoxville, may have violated three other laws by failing to organize each company as a political committee, register them as political committees and file financial statements for them with the government.
Rose did not return a telephone message, text message and email from The Associated Press and could not otherwise be reached immediately for comment. He previously told AP that his business was a “family secret” and he was not obligated to disclose the origin of the $12 million routed through Specialty Investments Group Inc. and Kingston Pike Development Corp. Business records indicate that Rose registered Kingston Pike one day after he created Specialty Group, in the final weeks before Election Day. Rose previously complained that phone calls and emails from reporters were irritating.
The watchdog organizations, the Campaign Legal Center and Democracy 21, said a criminal investigation by the Justice Department was necessary “because the integrity of U.S. elections depends on the effective enforcement of the nation’s campaign finance laws.” They noted that, although the FEC traditionally enforces campaign finance laws and imposes civil fines for violations, the Justice Department can conduct criminal investigations of “knowing and willful” violations under the 1971 Federal Election Campaign Act. Violations could carry up to 5 years in prison. The groups separately urged the FEC to investigate.

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Mystery Money from Knoxville Donor Now Totals $12 Million

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 most of the $20 million the group raised this year.
FreedomWorks did not respond to requests from the AP for an explanation, although CEO Matt Kibbe told Mother Jones magazine Friday, “I don’t know about these (donations). It’s the first time I’ve heard.” When AP asked FreedomWorks weeks ago to explain the source of Rose’s earlier contributions, a spokesman for the group declined to discuss the money and said his group adheres to the law in disclosing information about donors.
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.

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Ramsey, Some Other Legislators, Open to ‘Tweaking’ Greenbelt Law

As an auctioneer and a cattleman, Lt. Gov. Ron Ramsey is familiar with Tennessee’s Greenbelt Law and believes the property tax break is working as it should in the “overwhelming majority” of cases — he suspects at least 90 percent.
At the same time, he said, “I’m sure there are incidences across the state where there are unintended consequences.”
Although many legislators see no problem with the law, even praise it, Ramsey, as presiding officer of the state Senate, is willing to consider “tweaking” it to prevent abuses.
For example, the law now requires that a property produce $1,500 in gross “agricultural income” annually to qualify for greenbelt status, a figure unchanged for 20 years. Research by the News Sentinel and The Commercial Appeal of Memphis for a recent series of articles also indicates the provision is difficult to enforce.
“Maybe that’s too low,” said Ramsey of the $1,500 threshold in an interview. “We could look at raising that or, even better, make it so the local governments may police it more.”

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