Outside spending, dark money fuel attack ads in race for Arizona governor

Conservative groups backed by dark money or yet to be-disclosed funding sources are trading blows on the airwaves now that a pro-Christine Jones IE began airing ads attacking Doug Ducey for his own alleged ties to dark money ads.

The Better Leaders for Arizona ad blasts Ducey, Arizona’s state treasurer, for failing to “take responsibility for ads smearing candidates like Jones and former Mesa Mayor Scott Smith — the two candidates considered Ducey’s closest adversaries in the GOP gubernatorial election.

The independent expenditure group is particularly critical of a May ad, launched by Veterans for a Strong America, which took Jones to task for voicing her support of former U.S. Secretary of State Hillary Clinton just months after a deadly 2012 terrorist attack on the U.S. consulate in Benghazi.

DC London, a consulting firm run by Ducey ally Sean Noble, produced the Veterans for a Strong America ad.

“Doug Ducey fails to take responsibility for his dark money cronies smearing Christine Jones with false attacks,” a voiceover in the Better Leaders for Arizona ad states.

The ad goes on to highlight reports of franchise failure rates at Cold Stone Creamery, where Ducey once served as CEO. It also highlights reports of Ducey failing to pay property taxes in 2008 and 2009 and failing to appear in court for more than a dozen traffic violations.

“Doug Ducey uses fright groups to smear his opponents, while (he) acts as if he’s above the law,” the ad states.

The Paradise Valley-based conservative group spent $775,000 on the ad, according to a report filed with the Secretary of State on July 2.

The source of funding for the three-quarter of a million dollar ad buy will remain unknown, at least until the next campaign finance reports are due — no later than Aug. 22, four days before primary ballots close.

But Virginia Simpson, a former Paradise Valley vice mayor and the group’s treasurer, pushed back against the “dark money” label, arguing that to describe her IE group as such is inaccurate and glosses over a key difference between dark money organizations and political committees that fully disclose their funders.

“We are not a dark money group. If you read our last month’s report — we reported our donors,” she said.

In fact, Simpson said her group will disclose its contributors for the public to see in the next reporting period, just as other political committees would. That’s a crucial difference, she said, insisting that dark money organizations hide their contributors behind often untraceable layers, which isn’t the case for Better Leaders for Arizona.

The Secretary of State’s Office said Better Leaders for Arizona is a registered IE political committee and is subject to regular reporting requirements, including disclosure of its funders. The group’s August report will show if the group’s funding came from actual individuals or PACs — or from dark money organizations, whose funding sources themselves are often untraceable.

Better Leaders for Arizona had reported roughly $5,000 cash on hand as of May 31, with roughly $10,000 in contributions solely from Friends of the Majority, a federal super PAC that spent almost $750,000 against Rep. David Schweikert in the primary contest between Schweikert and former Congressman Ben Quayle two years ago.

Simpson said none of the money from Friends of the Majority went to pay for its electioneering activities in the governor’s race.

Simpson also said the contribution was an error, as the money was intended to go to federal races. The money was transferred to another PAC — the Congressional Leadership Fund in Washington, D.C. — that engages in federal elections, Simpson said.

“This small amount was never utilized for any promotion or media activity by BLA, which undertook no advocacy activity until other funds were contributed for use in the 2014 gubernatorial race,” she said, adding, “BLA regrets and apologizes for the error.”

The ad was posted online by Martz Parsons, a company owned by former GoDaddy CEO John Parsons.

Jones was formerly the executive vice president of GoDaddy.

Warning to television stations
Melissa DeLaney, spokeswoman for the Ducey campaign, dismissed the allegations in the ad as “old news.”

“Voters can see through these kinds of contrived attacks and judge them for what they are — a regurgitation of claims lobbed by a liberal Democrat in the 2010 treasurer’s race,” DeLaney said. “They didn’t stick then and they won’t stick now.”

And Ducey’s attorney, Michael Liburdi, sent a letter to station managers in Phoenix and Tucson, including KNXV, KPHO, KSAZ and KPNX, warning them that airing the Better Leaders for Arizona ad could make the station liable for “distributing defamatory messages.”

In the letter, Liburdi says there are several errors in the “materially false, misleading and damaging” attack ad: Ducey has always appeared in court when properly cited; Ducey has no outstanding property tax bills (Ducey said in 2010 all bills have since been paid) and Ducey has no responsibility over individual Cold Stone franchises, which are owned and operated independently.

“BLA has severely manipulated, falsified, and distorted or otherwise ignored the record,” Liburdi wrote, later telling the station managers that “you are hereby put on notice that the advertisement is false and misleading.”

Liburdi also denied the ad’s accusations that the Ducey campaign has illegally coordinated with independent expenditure committees.

In May, Noble told the Arizona Capitol Times that Veterans for a Strong America asked him to produce the ad. DC London had worked with the group in the past, producing a 2012 ad accusing President Obama of politicizing the raid that killed terrorist leader Osama bin Laden.

In 2012, a nonprofit conservative advocacy group run by Noble, the Center to Protect Patient Rights, donated $937,000 to Veterans for a Strong America, according to the center’s tax filings.

Noble said his firm was only involved in the production of the ad, and that it did not raise any money for the group, though he said that could change.

“We haven’t at this point but that’s certainly a possibility,” Noble said.

Noble and DC London have produced ads for two other groups that have attacked Ducey’s opponents. The Legacy Foundation Action Fund ran ads referring to Smith as “Obama’s favorite mayor” and another group, Conservative Leadership for Arizona, ran ads accusing Jones of lying about her resume.

Attorneys for Smith filed a complaint with the Secretary of State’s Office over the Legacy Foundation Action Fund ad. The complaint claims that the Ducey campaign coordinated with the fund and another group in an effort to research and produce the ad.

The complaint alleges that a recent hire by the Ducey campaign had previously been contracted by an unnamed nonprofit or private company to conduct opposition research on behalf of the Legacy Foundation Action Fund ad, and that one of Ducey’s media consultants also worked as a contractor for the group.

Ducey’s campaign denied the allegations of illegal coordination.

A more recent ad attacking Smith was also funded by a group with ties to Ducey. The 60 Plus Association launched an ad in June that likens Smith to President Obama and former Vice President Al Gore for his support of a United Nations emission reductions agreement.

Like the Legacy Foundation Action Fund, the 60 Plus Association also has strong ties to Noble. One non-profit group Noble founded sent the Virginia-based group nearly $11 million in the run up to the 2010 election.

Anonymous speech vs. full disclosure
The onslaught of outside spending in the governor’s race inevitably fueled the long-running debate over the advent of well-funded dark money groups that are now threatening to subsume campaigns’ narratives.

The debate has centered on the value of the competing aspects — between anonymous speech and full disclosure — to America’s experiment in democracy. One camp argues that forcing entities — whether corporations or individuals — to disclose their identity when engaging in electioneering has only chilled speech, but allowing them to speak through their money forces voters to assess the value of the message rather than the credibility of the messenger.

But the other camp counters that in practice, dark money groups have had a corrosive effect on elections — that they’re playing an expensive shell game without having to face any accounting, while their resources give them an unfair edge over regular voters

“As predicted, dark money is in the process of consuming Arizona’s 2014 elections,” said longtime lobbyist Chris Herstam. “Secret campaign contributions laundered through shell nonprofit organizations are as bad as anonymous blogging by elected officials or utilizing government facilities as a campaign office. It’s sleazy activity designed to deceive the voters, and its having a corrosive effect on our election process.”

Herstam said candidates who refuse to denounce “dark money” that’s assisting their campaigns shows their lack of ethical values — a malady that he said will “likely infect the office they are seeking.”

He also rejected the assertion that anonymous speech should be welcome in today’s elections since it is part of the country’s heritage, a concept that was present at America’s founding and which enabled the Founding Fathers to successfully argue for the adoption of the U.S. Constitution.

“I find it amusing that those individuals claiming ‘anonymous spending’ is a freedom of speech (that was) utilized in the Revolutionary War are personally making big bucks laundering the secret cash and funneling it into independent expenditures,” Herstam said. “Give me a break. It’s 2014, and we are not at war with the British.

Herstam’s remedy is full disclosure of campaign contributions.

But others said the benefits of mandatory disclosure have often been exaggerated while the value of anonymous speech is minimized.

They said disclosure’s declared great goal, which is to avoid corruption or its appearance, remains merely theoretical while greatly burdening campaigns, which are compelled to spend considerable resources on reports.

Attorney Kory Langhofer, who represents Smith in the former mayor’s complaint against Ducey, said mandatory disclosure chills political speech, a worrisome proposition in a democratic setting.

“Anonymity, on the other hand, is very useful in certain circumstances.  Individuals opposing incumbents or ‘front runners,’ for example, are much more likely to express their opinions if anonymity is an option,” he said. “Or where an audience has strongly held ideas about a debate or a speaker, anonymity helps clarify rather than obscure a message. Most criticisms of anonymity are based more on instinct than evidence.”