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Friday, May 3, 2013

Open Secrets: American Commitment’s Missing Millions

April 26, 2013 1:20 PM

Part of a series about the funding behind politically active tax-exempt organizations that don’t disclose their donors. You can read the other stories in the series here.

There's little doubt that American Commitment is an aggressive advocate for Republican interests and candidates. Last year it told the Federal Election Commission it spent just under $2 million on ads in four races -- the presidential, and Senate contests in Ohio, Virginia and Arizona.

A quick check of YouTube shows the group spent millions more on ads that didn't have to be reported, because of when they ran and the words they used. ("Tell Tammy Baldwin to stop putting special interests ahead of Wisconsin," rather than, "Don't elect Tammy Baldwin," for instance.)

American Commitment is also a nonprofit 501(c)(4) “social welfare” organization under the tax code. Information about such groups is scarce by definition. They don’t have to disclose their donors, unlike almost any other type of organization that advocates for or against candidates.

But American Commitment’s history and funding are especially murky. Other groups with its name — but different IRS identification numbers — have appeared and disappeared. And millions of dollars designated for one or another of the groups operating under the name American Commitment seem to have vanished.

A tangled tale

Sometime in late 2009 or early 2010, a 501(c)(4) group called TC4 Trust — about which wrote several months ago — gave $3.8 million to another 501(c)(4) with a Phoenix address. The recipient’s name, however, is smudged on TC4′s IRS form 990, where it had to report any grants that it made to other organizations.

But there’s a clue: TC4 made another $5.5 million grant the following year to a group called American Commitment

Between August 2009 and June 2011, then, TC4 gave more than $9 million to this group.
The hitch? No 501(c) organization (or 527 group) with that EIN has ever filed a tax form 990, according to IRS data. Even given the delayed filing deadlines that allow these nonprofits to send their forms in long after their activity has occurred, the American Commitment group on the receiving end of TC4′s largesse would have reported many months ago.

Fast forward to the American Commitment that was active in the 2012 elections. This group claimed — upon filing its first and only 990 to date, in November 2012 — that it wasn’t formed until 2011, meaning it couldn’t have received contributions in 2009 or 2010.

Coincidentally or not, it, too, was started in Arizona, like the more mysterious group of the same name. This American Commitment reported receiving just $216,500 in revenues in 2011, the year covered by the 990, and it lists an EIN that is clearly different from the one attached to the earlier American Commitment that appeared in the TC4 Trust filings.

Are there two organizations with the same name? Apparently not: A search of IRS data listing all 990s filed over the last several years reveals only one American Commitment — the one with the EIN reported by the group active in the recent elections.

To add to the puzzle, there briefly was a third American Commitment, in addition to the mystery group from the TC4 filings and American Commitment itself. This third organization also had an Arizona link: It was started, like the current American Commitment, by Sean Noble, an Arizona-based Republican operative. Noble runs the Center to Protect Patient Rights — a “shadow money mailbox” in Phoenix whose existence first reported in 2012.

According to Virginia business records and IRS filings, this third group soon changed its name to Free Enterprise America. In its first 990, FEA stated that it was “initially called American Commitment,” but it had “no activity in 2010 no revenues or expenses and no return was therefore filed.”

Under the second name, it received $3.6 million from Noble’s CPPR. And it made grants totaling $5.2 million in 2011 to other nonprofits — including ones that received money from CPPR, such as the 60 Plus Association and Americans for Tax Reform.One of the recipients of Free Enterprise America’s funds was the main American Commitment group; its grant was for $103,000. The missing millions All of these name games might be of little interest except for the fact that millions of dollars appear to be unaccounted for.

What happened to the $9.3 million that went from TC4 Trust to the mystery American Commitment group is unclear. If it had been given to the newer, currently active American Commitment, it should have shown up on the current group’s 990. But that form indicated only $216,500 in receipts. And the mystery group filed no 990s indicating where the money might have gone.

In addition, Noble’s CPPR gave the currently active American Commitment $1.6 million in 2011, using the latter group’s correct EIN — money that also should have shown up on American Commitment’s 990 covering that year. In 2012, control of the active American Commitment, now in Washington, D.C., was transferred to Phil Kerpen – who, like Noble, has strong ties to conservative billionaires David and Charles Koch.

Tax lawyer Marcus Owens, a former chief of the exempt organizations division at the IRS, says the disappearance of the money raises serious questions. “It’s impossible to imagine a circumstance in which all the form 990s are accurate,” he said, referring to the filings by TC4 Trust, the current American Commitment, and CPPR. Owens described two complicated, “possible, partial” hypothetical explanations involving, in one case, an entity acting as an agent for another, and in the other, organizations using different accounting systems (cash or accrual) that would lead to different filing schedules.

But, Owens said, “neither seems to be the case in this situation.”

“An alternative analysis is that the implausible reporting was intended to mislead the IRS and other law enforcement,” said Owens.

OpenSecrets Blog tried multiple times to contact Phil Kerpen, head of American Commitment; Sean Noble, head of CPPR and the founder of Free Enterprise America and American Commitment; and Michael Hartz, an attorney who is the trustee for TC4 Trust. None of them responded to messages.

American Commitment Web 3.jpgThe links between the various groups run still deeper. In 2011, American Commitment made a grant of $70,000 to a group called Americans for Responsible Leadership. ARL also received more than $900,000 from CPPR.

ARL was implicated, along with CPPR, in what the California Fair Political Practices Commission described as “campaign money laundering” after the group, which sent funds to an organization campaigning on two state ballot initiatives, came under court order to reveal its donors.

At least three of the groups in this story — Americans for Responsible Leadership, Center to Protect Patient Rights, and the current American Commitment — are clients of the Virginia law firm HoltzmanVogelJosefiak, which also represents other well-known politically active nonprofits like Crossroads GPS and American Future Fund.

And TC4 Trust apparently has links to the firm, as well. On its 990s, it listed more than $700,000 in payments over two years to something called “PLRC GROUP LLC” for “consulting.”  According to Virginia state records, PLRC is located at the same Warrenton, Va., address — down to the suite number  – as HoltzmanVogelJosefiak.
Jason Torchinsky at HoltzmanVogelJosefiak declined an interview, saying we would have to talk with the firm’s clients individually… MORE>>