It’s an ‘independent’ PAC, led by Tom Foley’s treasurer

CT Mirror

Tom Foley

A tangle of shared donors, consultants and a prominent Washington, D.C., law firm links Republican gubernatorial candidate Tom Foley to two independent-expenditure groups, raising a question of illegal coordination should either group air ads to influence the 2014 race for governor.

The groups, Voters for Good Government and Citizens for Democracy, share a common DNA: The records custodian of both is James E. Tyrrell III of Clark Hill, a D.C. law firm whose other political clients include Foley and the super-PAC that spent $142 million supporting Mitt Romney in 2012.

The president of Citizens for Democracy is Foley’s campaign treasurer, Larry J. Lawrence of Greenwich. Thomas Peterffy, a billionaire from Greenwich, is an original funder of both independent-expenditure groups, as well as a Foley donor and a supporter of the think tank Foley founded after his loss in the 2010 gubernatorial race, the Connecticut Policy Institute.

Foley’s relationship to Voters for Good Government was detailed last fall in a settlement with the State Elections Enforcement Commission, which rebuked him for using the group to pay for an early poll that the commission says should have been a campaign expenditure. But the existence of Citizens for Democracy and its ties to Foley, his campaign and Voters for Good Government was not widely known until now.

Voters for Good Government paid Chris Cooper, now Foley’s campaign spokesman, $17,133 to advise Foley last year. Citizens for Democracy paid $43,850 to Doug McAuliffe Strategic + Creative, a media strategy firm based in Alexandria, Va., that advised Foley’s gubernatorial campaign in 2010 and is performing the same role in 2014. The payments were disclosed to the IRS in January.

The exact nature of the roles the two “527s,” the shorthand for political action groups organized under Section 527 of the IRS code, will play in the 2014 campaign is a mystery.

Over the past two weeks, Foley and Tyrrell have declined to answer detailed inquiries from The Mirror about Foley’s relationship with the independent groups, the purpose of their payments to Foley’s campaign consultants, or any plans for them to play a wider role in his 2014 campaign.

The questions are significant. While Foley’s campaign is constrained by Connecticut’s tight contribution and spending limits, the 527s are free to accept unlimited contributions and make unlimited expenditures.

By design or happenstance, abbreviations used by Tyrrell in year-end reports he made to the IRS in January on behalf of both groups obscured a financial relationship between Voters for Good Government, Citizens for Democracy and McAuliffe, the Foley media strategist.

VFGG, as Foley refers to the group, contributed $30,000 last year to Citizens, which otherwise would have lacked the funds to pay McAuliffe the $43,850. In its January filing, VFGG listed the recipient of the $30,000 in contributions as “C for D,” providing only a post office box as an address. Foley and Tyrell refused requests by The Mirror to fully identify C for D.

“Voters for Good Government doesn’t comment on its political spending,” Tyrrell said in an email. “All information was reported compliant with IRS rules.”

The Mirror eventually was able to identify Citizens for Democracy by cross-checking all 527 groups for which Tyrrell is the custodian of records.

The discovery prompted a string of questions put to Cooper and Tyrrell. Did the work McAuliffe performed for Citizens relate to Foley’s campaign? Did Foley play any role in the creation of the group? Did he discuss it with Lawrence, who is president of Citizens and treasurer of his campaign? Who made the decision for VFGG to contribute $30,000 to Citizens?

To those questions and more, Cooper answered in two sentences that echoed Tyrrell’s email: “Tom was involved with VFGG and C for D. Both organizations were properly filed and are compliant with all state and federal laws that apply to them.”

Voters for Good Government and Citizens for Democracy each were created in the fall of 2012. VFGG made an immediate splash, raising $479,500 in an eight-day period from Oct. 22 to Nov. 2, 2012. It quickly spent $306,120, mostly on negative mail and television ads aimed at helping Republicans win a half-dozen Democrat seats in the state Senate.

After raising $25,000 from Peterffy and $5,000 from Jeffrey Jay, another Greenwich businessman, before the 2012 election, Citizens for Democracy appeared to go dormant, spending no funds or drawing public notice.

VFGG and Foley came to the attention of the State Elections Enforcement Commission on April 22, 2013, after a Republican named Anthony Santino filed a complaint questioning the source of a new poll Foley was circulating to show his relative strength against potential GOP rivals and Gov. Dannel P. Malloy, the Democrat who narrowly beat Foley.

The complaint asked how Foley could have a poll, since he had filed no candidate committee and therefore had no legal way to raise or spend money to promote his candidacy?

On May 15, 2013, the commission voted to open an investigation. It eventually would learn that Foley had a written a $15,504 check on the VFGG account for a poll conducted by his 2010 pollster, The Tarrance Group.

While the SEEC investigated Foley and VFFG, the Citizens for Democracy came out of dormancy. On July 19, 2013, it accepted its first contribution since the previous fall: $10,000 from VFGG. On the same day, Citizens paid $22,350 to McAuliffe, the media strategist for Foley.

A month later, two similar transactions, again on the same day: On Aug. 15, 2013, a $20,000 contribution was recorded from VFGG, and $21,500 was paid to McAuliffe. The only other expense incurred by Citizens in 2013 was a $2,500 fee paid to Clark Hill the day after Christmas.

Doug McAuliffe did not respond to requests for comment about the work paid for by Citizens for Democracy.

Cooper was more forthcoming. At first as an unpaid volunteer, Cooper said, he handled press relations as Foley raised his profile by testifying at the General Assembly in favor of ethics reforms.

“I worked with him on his messaging, some strategies for policy issues to be used as Republican issues against Malloy, just general strategies so far,” Cooper said.

Cooper said he began advising Foley last spring, when the undeclared candidate was promoting conflict-of-interest legislation at the General Assembly, an issue he later would promote as a candidate. VFGG reported paying Cooper $9,677 on Aug. 1 and $7,500 on Nov. 20.

On Oct. 16, 2013, the elections-enforcement commission accepted a settlement with Foley. A document written by the commission and signed by Foley described him as the treasurer of VFGG, but Cooper said this week that Foley never was treasurer, though he had the authority to sign checks.

According to Cooper, Foley no longer is active with Voters for Good Government. Foley is unaware of any plans by VFGG to participate in the race for governor, but sees no bar to it doing so, Cooper said.

Under state law, there is a rebuttable presumption of illegal coordination if an outside political group shares staff or consultants with a candidate and then makes what elections officials consider to be “express advocacy,” such as an ad promoting the candidate or attacking his opponent.

“It can raise issues of coordination. So it would be something we would be looking at if a complaint was filed on that,” said Michael Brandi, the executive director and general counsel of the State Elections Enforcement Commission.

If independent groups coordinate with a campaign, they essentially are circumventing limits on contributions to candidates, said Karen Hobert Flynn, the vice president of the national campaign-finance watchdog, Common Cause.

“We need to be looking at the kind of ties these outside entities have to a candidate,” Hobert Flynn said. “Are they raising money? Do they serve on the board? Are they sharing staff?”

Foley, 62, is an independently wealthy businessman who was a major fundraiser for President George W. Bush, who rewarded Foley by naming him ambassador to Ireland. In 2010, he largely self-funded his $12.8 million campaign.

But this year, Foley is seeking to qualify for Connecticut’s voluntary public financing program, as are most of his five GOP rivals. If the party’s eventual nominee accepts public financing, he or she will have to limit spending on the general-election campaign to little more than $6 million.

With tight spending limits imposed on the candidates, independent-expenditure groups can be even more influential in Connecticut than states with no limits, Hobert Flynn said.

Coordination with an independent group would “make a mockery of public financing,” she said.

Malloy, the state’s first governor to win with public financing, is not formally declaring his candidacy until May, but he has said he would participate again in the voluntary program.

The governor’s only known tie to an independent expenditure group is the Democratic Governors Association. He has aggressively raised money for the DGA, which is certain to support his re-election with television ads.

Two of Foley’s competitors for the GOP nomination, Danbury Mayor Mark Boughton and state Sen. John McKinney of Fairfield, said they have had conversations with only one independent group, the Republican Governors Association.