BREAKING: Noble's Dark Money Washing Machine Cycled $5.1M Into Arizona Governor Race, Corp. Commission Issues In 2014, New Tax Filings Show (#50ShadesOfDarkMoney)

(UPDATE, 1:10pm: Sean Noble responded to Arizona's Politics with the following statement (in its entirety): "I have never been involved in Corporation Commission races either inside any campaign or the outside." It is entirely possible that AE's involvement detailed in the article was limited to the solar/net metering issue.The article has been adjusted accordingly, and further details have been requested.  Also have changed headline to remove reference to ACC "race".)

A new tax filing from Sean Noble's "American Encore" washing machine shows that he did, indeed, run the dark money portion of Doug Ducey's Arizona gubernatorial campaign, funneling money to various groups which - combined with AE's own ads - resulted in more than $3.3M in anonymized spending. The groups that received grants from AE also spent heavily on the Corporation Commission race, supporting Justin Pierce for Secretary of State and on the solar/net metering issue.

Through all of these transactions, Noble's personal companies netted more than $1.8M, and American Encore retained nearly $3.5M going into the quiet 2015 year (ready to spend this year).

The sources of the $5.4M contributed to American Encore in 2013-14 are entirely secret, leading to the use of the term "dark money." Arizona's Politics has previously offered its definition of dark money and scored organizations on its #50ShadesOfDarkMoney spectrum. AE is a solid dark 50 on the scale.

American Encore is a 501(c)(4) social welfare organization. Its required IRS filing for 2014 was made this past November and just became publicly available this month. (That is part of the problem with the patchwork of disclosure laws - untimely disclosures which organizations can take advantage of.)

AE started 2014 off with $8.5M in the bank, and brought in $3.2M during the year. Of the $7.9M spent during the year, most - $5.1M was either directly spent in Arizona or went to groups that have been focused on Arizona races. Here is the breakdown.

Arizona Governor's Race

Sean Noble has worked with now-Governor Doug Ducey for the past several years. While he was the main money man for the nationally-prominent Koch brothers' political operation, he also was the dark money conduit for then-Treasurer Ducey's organization opposing the renewal of a 1% sales tax to help fund education. The Noble operation anonymized $925,000 for that Ducey campaign.

During the 2014 gubernatorial campaign, it was widely assumed that Noble was not joining the Ducey campaign so that he could operate the anonymized independent expenditures. Arizona's Politics and others detailed the links between Noble and some of the committees which popped up. This tax filing confirms those connections.

First up was a mysterious group out of Iowa which began an odd $173,000 attack on then-Mesa Mayor Scott Smith; he was widely seen as a top candidate for the GOP nomination. Legacy Foundation Action Fund. At the time, Arizona's Politics sketched out the data points that might connect LFAF to Noble.

The 990 shows that American Encore did, in fact, give LFAF $880,000 in 2014 (and $25,000 in 2013). In addition to the $173,000 for the TV ad, LFAF is apparently using some of the rest of the money for legal expenses being incurred in their ongoing battle with the Arizona Clean Elections Commission, which is now pending in the Court of Appeals.*

The following month, another new (to Arizona) organization popped up with another unusual attack. Veterans For a Strong America ("VSA") started up an ad campaign hammering Christine Jones - another top candidate for the GOP gubernatorial nomination. Jones was lambasted for saying positive things about Hillary Clinton and later for misleading voters about her military service. Arizona's Politics asked VSA to explain who was funding its involvement (they declined), and pointed out the past connections to Noble.

We now know that, in fact, American Encore gave a total of $275,000 to VSA in 2014. As VSA filed no 2014 reports with the Arizona Secretary of State, the FEC (it had filed its 2012 anti-Obama spending), or the IRS (its status has been revoked), we cannot tell what happened to the rest of AE's money.

American Encore gave $450,000 to the well-known Arizona Free Enterprise Club ("AZ FEC") during 2014. The AZ FEC also ran a $150,000 TV ad hammering Smith two weeks before the primary. However, because AZ FEC poured a total of $1.7M into statewide and legislative races in 2014, and because it, too, does not disclosed sources of money, it is not (yet) provable as to whether the AE grant was for the Governor's race or for the Corporation Commission race (see below).

AE's longtime close collaborator - the 60 Plus Association - also received the most money from AE. In 2014, the grant(s) was/were $1,845,000; the year before, $529,000 was transferred. 60 Plus spent more than $1.6M on Arizona elections that year, and was also involved in the 2013 Corporation Commission battle between APS and solar companies (solar/net metering). $1,332,000 was spent on the Governor's race - mostly ($752,000) before the GOP primary in August.

After the primary battle was over and Ducey came out on top, Noble's American Encore felt it could take a lead in the general election campaign. AE spent $1,437,670. Most of it was "pro-Ducey", as 60 Plus took the negative route, spending $578,000 hammering Democratic nominee Fred DuVal.

Arizona Corporation Commission

Noble's and American Encore's influence on the Arizona Corporation Commission race and its related matters (i.e. the GOP primary for Secretary of State, solar/net metering) is ony slightly cloudier than on the Governor's race.**  However, the AE tax filings and other research do provide valuable data points, and when combined with an unusual admission from APS, it would appear that Noble served as a money funnel for this race, too. Noble tells Arizona's Politics that he was "not involved"; it is entirely possible that AE's involvement detailed below was limited to the solar/net metering issue. (Arizona's Politics has requested further details.)

As discussed, AE granted $450,000 to the Free Enterprise Club and nearly $2.4M to 60 Plus Association. Those groups did not spend all of those monies on the Governor's race. 60 Plus was active in 2013 in the solar/net metering, and AZ FEC spent $453,250 on the ACC election (almost exactly the amount it received from AE).  AZ FEC also dumped $752,447 in an unsuccessful attempt to secure the GOP Secretary of State nomination for Justin Pierce, son of ACC Commissioner Gary Pierce.

Finally, AE gave a total of $1,546,000 to Prosper, Inc. ($1.3M in 2013 and $220K in 2014). Those grants made up nearly all of Prosper's revenues in those years***. The 501(c )(4) was led by former Arizona House Speaker Kirk Adams. Adams is now Governor Ducey's Chief of Staff. Prosper, Inc. took a lead role on the pro-APS position in the solar/net metering battle of 2013.

(Ducey, Adams and Noble also teamed up on the best-known dark money sagas of the 2012 election. Ducey chaired the committee opposing the continuation of the state sales tax for education, Noble was the committee's chief political consultant and Adams headed up dark money behemoth Americans for Responsible Leadership, the source for most of the committee's funds. AE's predecessor, the Center to Protect Patient's Rights, and ARL were the key cogs in the Koch brothers' political money operation that year.)

Significantly, APS acknowledged to the Arizona Republic's Ryan Randazzo in 2013 that it had provided money to both Prosper, Inc. and 60 Plus - and, potentially other groups - through Sean Noble. 

The questions of APS' political contributions through Sean Noble and elsewhere**** are again in the news, as ACC Commissioner Robert Burns has issued a letter requiring them to detail their expenditures. The AE 990, along with other IRS filings reported on here and elsewhere, provide clues.

***

SIDE NOTE #1: As noted, Noble's American Encore used to be the linchpin of the Koch brothers' political money network. Articles after the 2012 election noted that he no longer held the dark money wizard title for the operation. The tax filings show this was true, although Noble does retain some ties. In 2013, AE "granted" the Kochs' Americans For Prosperity $225,000, and added $40,000 in 2014.

SIDE NOTE #2: 60 Plus Association also poured $305,624 in advertising into the Arizona Secretary of State campaign, hammering Democratic nominee Terry Goddard. Goddard had made dark money disclosure the centerpiece of his campaign, and has now launched an initiative effort to amend the Arizona Constitution to require disclosure of original sources of money.

  American Encore 990 2014

*LFAF has many apparent discrepancies between its public filings with the IRS and the FEC, as well. The $905,000 from AE does not appear to be properly accounted for. (An article for a future date.)

** One of the purposes of anonymizing money and laundering it through different groups, after all.

***As Arizona's Politics reported, former Arizona Senator Jon Kyl - and, Ducey "mentor" did contribute $10,000 to Prosper

****As Arizona's Politics uncovered, APS funneled at least $425,000 to support Mark Brnovich's Attorney General campaign and at least $50,000 to support Ducey.

*****Arizona's Politics would like to give a shout-out to Guidestar, Foundation Center, and Citizen Audit for making the IRS filings of these organizations easily findable on the internet. Phoenix attorney Paul Weich greatly contributed to the researching and writing of this article. Links and copies of related documents/filings available upon request.

We welcome your comments about this post. Or, if you have something unrelated on your mind, please e-mail to info-at-arizonaspolitics-dot-com or call 602-799-7025. Thanks.

FACT CHECKING THE FACT CHECKS: Pearce, Arizona Republic, Rep. Steve King All Get "F's"; Arizona Republic's "Illegal Immigrants and Crime" - Wimpiest Fact Check Ever?

Arizona's Politics hearts Fact Checking (in case you had not yet noticed).  And, given the responses to several Fact Check articles on this site, I am not alone in loving accountability when a candidate/officeholder tells a whopper.  However, much of the benefits of good (and well-distributed) fact-checking can be completely undone by wimpiness in expressing an opinion as to the truth or falsity of the item being checked.

Now, it is unlikely that the reporters at the Arizona Republic/Channel 12/Cronkite School are the individuals determining what the final rating of a statement is.  Especially, when it is an ASU journalism school student doing the reporting.  Because it is hard to imagine that an award-winning student reporter who has already demonstrated a journalist's (good) strong principles would do the reporting that he has on State Sen. Russell Pearce's (R-LD18) use of statistics and still come up with a finding of "inconclusive."

Background: Pearce sends out a fund-raising, get-your-attention e-mail for "Ban Amnesty Now".  In it, he states as fact that "an estimated 9,000 American citizens are killed every year by illegal aliens.  That's 25 American citizens per day killed by illegal aliens, averaging 12 by stabbings and shootings and 13 by DUI and related crimes."

Student reporter Vaughn Hillyard did a thorough job trying to track down ANY backup for Pearce's stats.  He learned that Pearce attributes it to a report released by conservative Rep. Steve King (R-Iowa) in 2006.  Interestingly, Hillyard learns that King's office has tried, but cannot find a copy of their report.  Nor, can they figure out how they came up with the numbers.

Hillyard tracks down a GAO (Government Accountability Office) report from 2005 - which King has apparently asked the GAO to update - and finds that it does not support the Pearce/King numbers.  Hillyard checks the FBI's uniform crime report, two organizations that study immigration, and the Department of Homeland Security - none of which has wanted to and/or been able to come up with such a number. For good measure, the reporter reaches an author/university professor in the area, who flat-out states that the statistic "is complete fabrication."

"The Finding" from the Arizona Republic? "INCONCLUSIVE".  Wow.  Even the source's office says that they cannot find the report or back it up.

The Republic published that bold fact check in the paper on September 21 - it was on the website a couple of days before that.

Interestingly, just as Arizona's Politics was researching this article last Friday, we found that the Republic had removed the Fact Check from its database.  Completely gone, no explanation.

Today, we were going to research THAT, when we re-checked and found that an UPDATED version was posted last night.

King's office apparently found the missing report, and learned that it does NOT include the statistic in question.  So, alas, the new version adds another nail in the coffin yet retains the "INCONCLUSIVE" finding!

So, does the "inconclusive" finding have any justification?  After all, a Congressman must have had something to back up his trumpeting of an inflammatory number, right?  It comes down to that old adage of "you can't prove a negative," and the legal version of who has the burden of proof.

The Republic has obviously determined - for whatever reason - to give Pearce the benefit of the doubt and to take on the burden of disproving anything Pearce might say.  Even though Pearce and King (and other like-minded individuals) are using the statistic to alarm people, the Republic does not believe that the legislators have the burden of proving their numbers with verifiable information.

Is this a standard determination for others doing fact checking?  No.  While the major fact checkers are accustomed to being criticized from all sides for their difficult calls, they consistently put the burden on the person making the claim in dispute.

The most recent example is likely this one where PolitiFact gave comedian/pundit Bill Maher an unqualified "False" rating for repeating a statement that he had just read in an Associated Press news report.  The claim (that we still have some natural gas pipelines in the U.S. made from wood) is disputed, but Maher got a false rating for innocently repeating it.  Here is the very relevant final paragraph, with the spot-on final sentence:

Does this establish conclusively that there is no wooden pipe currently in use? No -- it's impossible to prove that without exposing every inch of the 2 million-plus miles of natural gas pipe in the country. We also can see why Maher would have trusted an AP report (if that's what he did) since we, too, tend to give the AP a high degree of credibility. Still, if you eliminate the AP's claim of existing wood pipe, since Kocher now disputes it, we see no evidence that wood pipe is currently being used. And since the burden of proof for the Truth-o-Meter falls on the speaker, we rate Maher's claim False.  (underlining added)

That is the ONLY place that the burden of proof should rest for a Fact Check!  A Fact Checker must be bold enough to call a statement without proof "FALSE".  I doubt that a fact check reporter - student or otherwise - would do all the checking that was done in this case, only to conclude that the reporting was inconclusive;  an editor or publisher could/would do that. 

Arizona's Politics will, therefore, hand out the following grades:
1) State Sen. Russell Pearce: "F" for False.
2) Rep. Steve King: "F" for Failing to Find report... or supporting data.
3) Student Reporter Vaughn Hillyard: "A" for Accurately tracking down every possible source of
      supporting data.
4) Arizona Republic: "F" for their Feeble Fact Check "Finding".  (And, a "W" for Wimpiness,
      and a "Q" for the Questionable removal of first story.)

Disclosure: Arizona's Politics has NO connection with any of the parties mentioned in this story.

We welcome your comments about this post. If you have something unrelated on your mind, please e-mail to info-at-arizonaspolitics-dot-com. Thanks.