What is Dark Money, How Did We Get Here, & How Can We Finally Fix this Problem?
At the press conference following Larry Householder’s arrest by the FBI, US Attorney David M. DeViller pointed out an obvious problem that created the conditions for the $60 million scheme to establish Householder as Speaker of the Ohio House of Representatives and bailout nuclear and coal plant operations (House Bill 6): “Dark money is a breeding ground for corruption.”
Householder’s arrest, and the information about how money was funneled and spent, has created an opportunity to address a decades old problem — dark money.
What is Dark Money?
“Dark money,” sometimes called secret money, refers to spending to influence elections or other political outcomes where the source of money is not disclosed. Often dark money organizations are specifically established as 501(c)(4) nonprofits with the IRS to avoid transparency.
The 2010 Citizens United v. FEC ruling established the First Amendment rights of corporations, including nonprofits. The U.S. Supreme Court determined that corporations could not be prohibited from engaging in political speech like TV ads or mailers.
Justice Anthony Kennedy, now retired, writing for the majority surprisingly expressed no concerns about corruption:
“The appearance of influence or access, furthermore, will not cause the electorate to lose faith in our democracy. By definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate.”
However, it is important to note that Kennedy also highlighted the importance of transparency in the funding of political expenditures:
“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
Following Citizens United, many states controlled by both Republican and Democratic politicians passed stronger campaign finance disclosure rules so everyone knows who is trying to influence their votes. Unfortunately, Ohio was not one of them.
A Good Start in 2010
In 2010, former state Senator — now Lieutenant Governor — Jon Husted sponsored a bill that would have required corporations, nonprofits, and labor organizations that spend money in our elections to file statements itemizing all political spending (often called “independent expenditures”) and specifying who paid for that advertising. Husted’s bill, Senate Bill 240, would have also prohibited a foreign corporation from donating funds to election activities in Ohio and imposed fines on corporations that violated the ban.
A Bipartisan, Unanimous Senate Vote
In May 2010, SB 240 passed unanimously out of the Ohio Senate, but never moved in the Ohio House. Many legislators who sponsored SB 240 are still elected officials, including Ohio Lieutenant Governor Jon Husted, Auditor Keith Faber, and Congressman Bob Gibbs. Several state legislators who voted for the bill still serve in the Ohio General Assembly, including Representative Bill Seitz (R-Cincinnati), Senator Kirk Schuring (R-Canton), Senator Tim Schaffer (R-Lancaster), Senator Teresa Fedor (D-Toledo), and Representative Fred Strahorn (D-Dayton).
In 2010, after the Senate passed SB 240, the Ohio House of Representatives never considered the bill. It’s been a decade now, but requiring the disclosure of the funding source for all political ads has not been seriously considered by either chamber of the Ohio General Assembly since Citizen United.
Yes, the Ohio Election Commission has encouraged corporations that pay for independent expenditures to voluntarily disclose activities. But voluntary disclosure is clearly not adequate. While there were articles about the nonprofit Generation Now and its likely connection to FirstEnergy Solutions, Generation Now and other nonprofits associated with Householder were not required to report the source of their funding, leaving Ohioans in the dark on who was really behind their ads.
It’s Time to Shine a Light on Dark Money in Ohio!
Common Cause Ohio is calling upon the Ohio General Assembly to finally bring Ohio’s campaign finance laws up to date. Voters deserve to know who is funding political advertisements. Without enhancing disclosure, deep-pocketed groups can and will continue to distort the truth ruthlessly, leaving Ohio voters without recourse.
Requiring strong disclosure rules is supported by a bipartisan super majority among voters. A November 2019 poll commissioned by the nonpartisan Campaign Legal Center found that 83% of voters support requiring that contributions to organizations that spend money in elections to be publicly disclosed, including 85% Democrats, 83% of Independents, and 81% of Republicans. Similarly, a 2015 poll of 2016 election primary voters found 91% of Democrats and 91% Republicans agree that outside groups that run campaign ads should have to disclose where their funding comes from.
Better Late than Never
Senate Bill 347 (SB 347) sponsored by state Senator Nathan Manning (R-North Ridgeville)
Co-sponsored by Senators Andrew O. Brenner (R-Powell), Jay Hottinger (R-Newark), Matt Huffman (R-Lima), Stephen A. Huffman (R-Tipp City), Stephanie Kunze (R-Hilliard), Larry Obhof (R-Medina), Bob Peterson (R-Washington Court House), Michael A. Rulli (R-Salem), and Tim Schaffer R-Lancaster)
On July 30th, less than ten days after Larry Householder’s arrest, Senator Manning introduced Senate Bill 347. On September 1st, he provided sponsor testimony before the Senate Government Oversight and Reform Committee and described the bill as doing the following:
- Prohibiting foreign corporations from making this type of political communications and adding a ﬁne equal to three times the amount expended.
- Requiring the reporting of independent expenditures of $500 or more.
- Specifying that independent expenditures of $10,000 or more made between a ﬁling deadline and a general election be classiﬁed as “electioneering communication”.
- Increasing the threshold to $500 for all independent expenditures to include a disclaimer that it was not produced by the candidate’s campaign.
Senator Manning shared an example of secret money in 2018 during his testimony. He noted that dark money ads supported his mother’s (Rep. Gayle Manning) campaign but caused her distress because they were unfair to her opponent.
House Bill 737 (HB737) sponsored by Gayle Manning (R-North Ridgeville) and Jessica Miranda (D-Forest Park) Co-Sponsored by Representatives Gil Blair (D-Weathersfield), Kristin Boggs (D-Columbus), Rick Carfagna (R-Genoa), Mark Frazier (R-Newark), Dave Greenspan (R-Westlake), Diane V. Grendell (R-Chesterland), Stephen D. Hambley (R-Brunswick), Adam Holmes (R-Nashport), James M. Hoops (R-Napoleon), J. Kyle Koehler (R-Springfield), Laura Lanese (R-Grove City), Gary Scherer (R-Circleville), Dick Stein (R-Norwalk), Casey Weinstein (D-Hudson), Thomas West (D-Canton)
On July 27th, Representatives Gayle Manning and Jessica Miranda introduced HB 737 and on August 31st the bill was referred to the Ohio House State and Local Government Committee.
“Now more than ever, Ohioans have seen first-hand how dark money can influence the decisions that impact our lives,” said Ohio Secretary of State Frank LaRose in response to the Householder Enterprise and the introduction of House Bill 737. “I’m hopeful that this legislation will be a positive first-step towards finding the solutions necessary to get voters the transparency they deserve, and I look forward to working with Reps. Manning and Miranda to incorporate concepts that my team and I have been working on.”
The sponsors of the bill have expressed interest in exploring amendments to the bill.
Transparency is key to a healthy and strong democracy. Here are a few ways that Senate Bill 347 and House Bill 737 could be improved:
- The bill should require the disclosure of the original sources of funding of independent expenditures. Ohioans should be able to follow the money and trace spending. Otherwise, wealthy special interests will attempt to avoid disclosure by creating pop-up shell groups.
- Ohioans should have access to information while they are watching TV or reading an advertisement that came in the mail. Simply providing the name of a nonprofit or an entity doesn’t give voters the tools that they need. So many names are similar to Generation Now and completely innocuous. At minimum, disclaimers should provide contact information but true public disclosure would include three top funders of the advertisement or promotional materials.
- While transparency is important, candidates should not coordinate with activities paid for by corporate funds. Ohio law needs to be strengthened to establish clear boundaries between candidates and independent expenditures. This can be done by prohibiting fundraising for independent expenditures by candidates and their staff and family.
Clearly, Justice Kennedy did not envision the kind of coordination that led to the Householder Enterprise.
The Campaign Legal Center took a deep dive into HB737 and provided some detailed analysis. This analysis also addresses House Bill 739, which was introduced on July 29th by Reps. Bride Rose Sweeney (D-Cleveland) and Allison Russo (D-Upper Arlinton). Co-sponsors of this legislation include Kristin Boggs (D-Columbus), Janine R. Boyd (D-Cleveland Heights), Juanita Brent (D-Cleveland), Richard Brown (D-Canal Winchester), Randi Clites (D-Ravenna), Erica C. Crawley (D-Columbus), Jeffrey Crossman (D-Parma), Tavia Galonski (D-Akron), Paula Hicks Hudson (D-Toledo), Brigid Kelly (D-Cincinnati), Bernadine Kennedy-Kent (D-Columbus), Michele Lepore-Hagan (D-Youngstown), Mary Lightbody (D-Westerville), Beth Liston (D-Dublin), Joe Miller (D-Amherst), Jessica Miranda (D-Forest Park), John Patterson (D-Jefferson ), Phil Robinson (D-Solon), Michael Sheehy (D-Oregon), Michael Skindell (D-Lakewood), Kent Smith (D-Euclid), Lisa Sobecki (D-Toledo), Emilia Stong Sykes (D-Akron), Casey Weinstein (D-Hudson ), and Thomas West (D-Canton).
On August 4th, Senator Teresa Fedor introduced Senate Bill 349 to address the dark money loophole. Co-sponsors include Nickie Antonio (D-Lakewood), Stephanie Kunze (R-Hilliard), Tina Maharath (D-Columbus), and Sandra R. Williams (D-Cleveland).
So far, hearings have not been held for House Bill 737, House Bill 739, and Senate Bill 349.
Want more information about the Householder Enterprise and its connection to dark money? Check out:
- Dark Money Facilitates Multimillion Dollar Scheme by Patrick Llewellyn of the Campaign Legal Center
- Bribery Charges in Ohio Illuminate the Dangers of Dark Money by Professor Ciara Torres-Spelliscy
Doug Livingston of the Akron Beacon Journal created a graphic that looks at contributions from Householder’s campaign, Growth & Opportunity PAC and Hardworking Ohioans, Inc. (both of which investigators identified as controlled by Householder and the FirstEnergy PAC by Ohio House districts): https://public.flourish.studio/visualisation/3328129/