'Dark Money' Playing Role In North Hills Senate Race, And Contests Statewide

Oct 31, 2018

Between the two of them, state Senate district 38 candidates Jeremy Shaffer and Lindsey Williams raised more than $1.5 million in campaign contributions between June and October. That is a huge sum for a western Pennsylvania state legislative race. 

But it understates the amount of money being invested in the district’s North Hills suburbs and the East End of Pittsburgh. 90.5 WESA has learned that outside money is also playing a role, thanks to what might be called a campaign-finance turducken: a Democratic so-called "super PAC" spending  $1.4 million from a statewide "dark money" organization.

A Philadelphia-based political committee, the Pennsylvania Fund for Change, has sent mailers depicting Shaffer and 30th state House district Republican candidate, Lori Mizgorski, as foes of education spending. On a website, the Fund says its goal is to let voters know “where their representatives stand on the most important issues like our economy, our schools, and our health care.” It acknowledges being active in over a dozen other legislative districts, mostly in the eastern part of the state.

The Fund was first registered as both a state committee and a federal super PAC earlier this year. Those registrations allow it to spend unlimited sums on behalf of candidates for state office, provided the money is spent independent of the candidates’ own campaigns.

But until this week, the Fund's finances were completely opaque, to the irritation of Republicans. In a conference call last week, state Republican Party chairman Val DiGiorgio said, “These groups are spending millions of dollars without Pennsylvanians knowing … how they are being influenced and who’s doing it. … Voters deserve to know who is spreading these lies in Pennsylvania.”

Financial records for the Fund did not become available until after a financial reporting deadline on Friday — the last deadline before the Nov. 6 election. They were sent by mail rather than submitted electronically, a tactic that, while legal, often serves to delay the release of information.

That paperwork, which 90.5 WESA reviewed and reports here for the first time, shows the Fund brought in $2,540,800 since April. It has spent more than $2 million. (It’s difficult to quantify how much support Williams, or any other candidate, has received. Most of the Fund's spending has gone to Virginia-based Deliver Strategies, a political consulting firm that specializes in political mailers. The reports do not specify spending in any given district.)

The Fund's supporters include national Democratic allies like the AFL-CIO and Emily’s List, which supports candidates who favor abortion rights. Together, three such groups gave $525,000. Many other contributors are Pennsylvania law firms.

But 56 cents of every dollar the Fund has raised cannot be traced at all. That’s because $1,424,000 of it comes from PA Alliance Action, a committee for which the Pennsylvania Department of State has no records at all.

On Tuesday, GOP party spokesman Jason Gottesman said the appearance of PA Alliance Action in the Fund's report made Democratic spending even murkier.

“Based on what you’re telling me, this goes to the heart of the secrecy of this organization,” Gottesman said. “The Democrats are employing a do-anything, say-anything to win strategy, and using a shadowy [political committee] like this to be their henchman.”

Aubrey Montgomery, a Philadelphia political consultant, confirmed that PA Alliance Action was a client. She said the group was a 501(c)(4) “social welfare organization” that “works to advance progressive values.”

As a non-profit, she said, Alliance Action “does not have any obligation to file with the Department of State, nor is it in violation of any law.”

501(c)(4) groups are a popular vehicle for what is known as “dark money." IRS rules which shield the identity of those who contribute to nonprofits allow the groups to conceal who pays for their advocacy. Such groups have become a fixture of federal politics and, increasingly, of campaigns at the state level – much to the concern of transparency advocates.

Still, Montgomery said Republican criticisms of Alliance Action were “laughable.”

“The current campaign finance system is one they invented and have benefited massively from, with so-called ‘dark money’ groups such as the Koch Brothers' network funding much of their work. Progressive groups should make no apologies for fighting back against their right-wing agenda."

The Fund for Change, which has made use of the Alliance Action money, sounded a similar note. While it declined on-record comment, a source familiar with its operations said it had disclosed its finances as required by law. “If the Republicans — who have benefitted from the current campaign finance system for years — don't like it, they could have used their majorities in the Legislature to change the law," the source said. "It's hypocritical that they'd complain about a system they've benefitted from just because others are now using it."

To be sure, the Fund for Change is not the only group to have spent money in the 38th Senate district under murky circumstances. As 90.5 WESA first reported Oct. 15, another fledgling committee called the “North Hills Republican Club” has been acting on Shaffer’s behalf, paying for lawn signs branding Democrat Williams as a “socialist.” It has also apparently paid for robocalls in the district.

90.5 WESA identified the Club’s treasurer as Shaffer’s campaign manager, Carlton Fogliani. Financial records filed last week confirm that Fogliani is also the Club’s sole source of support. The Club reports no contributions at all, but $5,635.23 in “in kind” donations from Fogliani, in the form of yard signs and “research” provided by his consulting firm.

That prompted a riposte from the Williams camp. In a statement, Williams said, “Creating a 'separate' organization is just another way that Jeremy and his campaign manager have ... attempted to make this campaign about smears and dirty politics.”

Williams said there was no comparison between the Fund for Change and the North Hills Republican Club. The Fund for change, she said, “is a true independent political organization. … Campaigns are legally not permitted to coordinate with them."

For its part, Shaffer’s campaign told 90.5 WESA last week that the Fund for Change shows Williams is “being backed by Philadelphia dollars, with a goal of stripping funds from our schools and transferring them to Philadelphia.” That’s a reference to the Shaffer camp’s contention that Williams’ support for a “fair funding” formula for education would help some school districts at the cost of others. (Democrats deny the formula would be implemented that way.)

The Fund's role has also become a campaign issue in state House district 30, which overlaps much of the 38th  Senate district. Republican House candidate Lori Mizgorski has complained of mailers that lump her in with Shaffer as a foe of education spending. She complained of the mailers repeatedly during an Oct. 11 debate with Democrat Betsy Monroe.

Monroe said the law barred her from telling the Fund what to do.

“It’s a reality of our political world right now that there are outside PACs that do things that candidates have no control over,” she said.

While Gottesman acknowledged that candidates can’t control PACs, he said, “If you benefit from something, you also have a right to say ‘I don’t agree with this.’ The fact that they don’t distance themselves from these organizations show they don’t have a problem using the benefits.”