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.
What is racketeering?
Racketeering is a type of organized crime in which the perpetrators set up a coercive, fraudulent, extortionary, or otherwise illegal coordinated scheme or operation (a “racket”) to repeatedly or consistently collect a profit.
The Racketeer Influenced and Corrupt Organizations Act (RICO Act) and state racketeering laws were established to target organized crime. These laws allow prosecution of a group or individual that commits two criminal acts associated with racketeering activity within a 10-year period. Both RICO and Ohio’s own corruption law have expanded to include numerous types of other crimes.
Detailed RICO definitions and requirements can be found in the U.S. Department of Justice’s Manual’s Section 9-110.00, Organized Crime and Organized Crime and Racketeering.
What is a 501(c)(4) non-profit organization?
According to the IRS, 501(c)(4) designation is given to tax-exempt, social welfare organizations which must not be organized for profit and must be operated exclusively to promote social welfare. These groups are allowed to take part in politics, as long as politics do not become the primary focus. In practice, these groups must spend less than 50 percent of their money on politics. If they adhere to this rule, they can influence elections, which is usually done through advertising.
Organizations with 501(c)(4) status are regulated by the IRS, not the Federal Elections Commission (FEC); tax-exempt 501(c)(4)s do not need to disclose the source of donations, unlike a political action committee (PAC).
Multiple 501(c)(4) organizations were established, allegedly, by the racketeering enterprise. The enterprise filtered funds from FirstEnergy, through Generation Now to the network of pass-through tax-exempt organizations. A few examples of these 501(c)(4)s include:
- Generation Now
- Empowering Ohio’s Economy
- Partners for Progress
In this case, $60M was contributed by FirstEnergy and none of it went to a social welfare benefit.
FBI: Multiple groups involved in Ohio $60M corruption scheme, Associated Press, August 5, 2020.
Interested in learning more about IRS designation of these organizations? See: IRC 501(c)(4) Organizations.
Who was charged in this federal racketeering case?
- Larry Householder – former speaker of the house, pleaded not guilty
- Matt Borges – former Ohio Republican Party chair, pleaded not guilty
- Neil Clark – lobbyist, pleaded not guilty, died by suicide
- Jeffrey Longstreth – Householder adviser, managed Generation Now bank accounts, pleaded guilty
- Juan Cespedes – lobbyist, orchestrated payments to Generation Now, pleaded guilty
- Generation Now – a non-profit used to hide FirstEnergy lobbying
What is “Team Householder”?
Larry Householder needed support to become Speaker of the House, so he allegedly created a plan to support 21 candidates in 2018 who ran for house seats in the primaries and general elections. Millions of dollars went to support “Team Householder” candidates and to attack their opponents, and the strategy was very successful. Once elected, all backed candidates voted for Householder to become Speaker. All but one voted for House Bill 6.
Who is Team Householder, the candidates Larry Householder recruited to help him become Ohio House Speaker? Cleveland.com, July 24, 2020.
How were arrests in this federal racketeering case made?
Federal officials held a press conference in Columbus, Ohio on July 21, 2020 to discuss the public corruption racketeering conspiracy involving $60 million dollars. Ohio House speaker and four others have been arrested in the case. “This is likely the largest bribery, money laundering scheme ever perpetrated against the people of the state of Ohio,” U.S. Attorney David DeVillers said at the news conference. “This was bribery, plain and simple. This was a quid pro quo. This was pay to play.”
GOP Ohio House speaker arrested in connection to $60 million bribery scheme, The Washington Post, July 22, 2020.
What is the Ohio Legislative Service Commission?
The Ohio Legislative Service Commission was created in 1953 as a nonpartisan agency providing the Ohio General Assembly with services such as: drafting, research, budget development and fiscal analysis, training, and other services. Until the late 1990s, records were available for public inspection. However, in 1999, Ohio legislators passed a law to close the records from public review.
Groups want to open bill-writing records — and honor reporter Jim Siegel, Columbus Dispatch, (November 22, 2020).