IRS Complaint Filed Against Michigan GOP Sham “Social Welfare” Group

“The disastrous Citizens United decision opened up the floodgates for dark money groups to spend on politics. But there are still some limits to the amount of spending and secrecy these groups are permitted—and too many brazenly ignore these modest limits.” — Noah Bookbinder, Executive Director of Citizens for Responsibility and Ethics in Washington

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Photo source: Sterling Corporation website

A prominent Michigan Republican “social welfare” group is among ten organizations targeted for legal action over engaging in political activities not reported to the IRS. The watchdog group Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint against Michigan Citizens for Fiscal Responsibility (MCFR), a 501(c)4 spinoff of the Sterling Corporation, for failure to disclose $290,000 in political spending in the 2014 election cycle.

Social welfare groups which file under 501(c)4 status are prohibited from engaging in significant political spending, and what little direct or indirect spending they do make must be reported on an IRS Schedule C. The CREW complaint filed with the Commissioner of the IRS alleges that Steve Linder, president of MCFR, filed a false report omitting significant contributions to two political groups.

The Michigan-based Super PAC, Hardworking Americans Committee, spent just shy of a million dollars in 2014 trying to influence Michigan House and Senate races. Their Federal Elections Commission report for that year indicated the receipt of three contributions from MCFR totaling $155,000.

Plus, the Republican State Leadership Fund, a self-described “caucus of Republican state leaders… whose mission is to elect down-ballot, state-level Republican officeholders” reported to the IRS they received MCFR contributions to the tune of $135,000 in 2014.

Yet, the tax report for that year filed by MCFR, and signed by Linder, indicated there were no “direct or indirect political campaign activities on behalf of or in opposition to candidates for public office.” The CREW complaint asserts that Linder is an experienced political fundraiser who has previously demonstrated a detailed knowledge of applicable tax law, and therefore must have been acting willfully when omitting the expenditures.

The name Michigan Citizens for Fiscal Responsibility may sound familiar to some readers. The group is the spawn of the Sterling Corporation — a GOP mothership with ties to multiple political organizations and operatives. The Senate Majority 2014 PAC, the West Michigan Preservation Fund, and the Moving Michigan Forward Fund II, all shared an address with Sterling in the previous election cycle and had similar contribution profiles — all giving to the Hardworking Americans Committee.

Linder is the president of the Sterling Corporation, working alongside political operative and senior counsel, Bob LaBrant. The two are up to their chins in Michigan’s dark money machine — and they’re mighty proud of it!

LaBrant recently penned a braggadocious memoir titled PAC Man, a compendium of his shrewd use of Super PACs to ensure GOP dominance in Lansing. There’s a Facebook post from several days ago where the Sterling Corporation promoted an article about LaBrant’s prowess, then became the sole party to “like” the post, and followed-up with an excerpt quote describing how LaBrant gamed the system. (And yes, they “liked” their comment too.)

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Back in 2012, another Sterling generated PAC, Citizens for Fiscal Responsibility, spent thousands attempting to invalidate petition signatures collected by Stand Up for Democracy — the group behind the successful referendum to repeal Michigan’s emergency manager law. Although the PAC failed in its mission to keep the question off the ballot, Michigan lawmakers, with the blessing of Gov. Snyder, re-enacted the law, claiming the electorate didn’t fully understand what they had done.

The IRS complaint filed against Linder demands a full investigation, and if found guilty of a potential felony, the imposition of the full penalty of the law — steep fines, including significant incarceration should apply. Noah Bookbinder, of CREW, cautions:

“These groups have demonstrated a clear disregard for the law. If the government does not act, it will send a signal to dark money groups that no laws or limits apply to them and it is open season for secret money in our elections.”

Even with the possibility of Linder being fitted for an orange jumpsuit, the GOP department of skullduggery will remain alive and well in Michigan for the 2016 election cycle.

DSCN0444Amy Kerr Hardin

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