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Once a warrior against dark money, Secretary of State Reagan does an about-face

Secretary of State Michele Reagan, shown here at the Arizona Republican Party's election night event (Photo by Arren Kimbel-Sannit, Arizona Capitol Times)

Secretary of State Michele Reagan, shown here at the Arizona Republican Party’s election night event (Photo by Arren Kimbel-Sannit, Arizona Capitol Times)

Back when she was a lawmaker and chair of the Senate Elections Committee, Arizona Secretary of State Michele Reagan made it her top priority to hold political campaigns accountable and shine a light on dark money.

As a senator, Reagan was one of the loudest and most consistent voices at the Capitol calling for more transparency in campaign spending and more accountability from elected officials.

She sponsored legislation to “ban dark money in Arizona” and make it a felony to attempt to hide the source of campaign cash by first passing it through multiple companies. Another one of her bills would have given the Arizona Citizens Clean Elections Commission more authority to crack down on campaign finance violations.

As a candidate for secretary of state, she promised to usher in an era of sunlight in political spending.

But her former Senate colleagues who fought alongside her to end dark money and increase transparency in the election process say when she won the job, something changed. So do some of her critics.

The one-time dark money foe and transparency crusader did a complete about-face, her critics argue, and is now ushering in an era of anonymity in political spending and immunity for campaign scofflaws.

Democratic Sen. Steve Farley of Tucson said he’s been watching Reagan’s transformation from a fellow warrior in the fight against dark money, to an election official who “encourages anonymity and lack of prosecution for dark money” – and it has been “disturbing.”

“It seems like when it comes to election law, we’re looking at a Dr. Reagan and Mrs. Hyde situation,” he said.

Chuck Coughlin, a longtime Republican lobbyist and political operative, said that since ascending to the Seventh Floor, Reagan has pushed bills that will deregulate campaign finance and increase corruption in Arizona.

“At the end of the day, I think she has failed the voters of Arizona up to now,” Coughlin said.

Since Reagan became secretary of state in 2015, her office has spearheaded successful efforts to rewrite state law to protect dark money groups from disclosure at the state level. The office said it wouldn’t enforce rules requiring independent expenditure groups, often with undisclosed donors, to notify candidates of last minute attacks. And the office joined in a lawsuit against Clean Elections to protect a dark money group from disclosing its spending.

Reagan declined an interview for this article. Her spokesperson, Matt Roberts, said in an email that she was at a conference in town and was too busy this week. When a reporter offered to delay the article an extra week if Reagan would agree to an interview, her spokesman didn’t respond.

DARK MONEY BILL

During her time in the Senate, Reagan was the staunchest Republican critic of dark money at the Capitol.

In 2014, she authored a bill, co-sponsored by a host of Democrats, to make it a felony for campaign groups to use the common tactic of moving money between so-called “convenience corporations” to attempt to hide the source of campaign cash.

anti-dark-money-2-webIn a joint press release with Farley announcing the bill, Reagan said that because of the U.S. Supreme Court decision in Citizen’s United, Arizona faced a serious question: “Are elections for sale in Arizona?” she asked. “If so, do we have a right to know who the buyer is? I think so. The dark money loophole in Arizona needs to be closed.”

When her Senate Elections Committee heard the anti-dark money bill, Reagan chided her fellow Republican lawmakers for their tepid, seemingly insincere, support.

“As candidates, when you go out there, you put your name on everything you do. You accept a dollar, you spend a dollar, you disclose it. And yet somebody can come in and oppose you, support you, love you, hate you, spend unlimited amounts of money to affect your race, and you’ll never know who they are,” she said at a committee hearing on February 18, 2014.

“How is that a system that the public can trust? Do you honestly think the public is going to stand for this?”

The committee approved her bill, but Reagan sensed it would be an uphill battle to get it any further. She pleaded with her fellow lawmakers to help her beat the powerful lobbyists who were fighting the legislation.

“Their clients do not want us to see what they’re doing. And you should have a problem with that. Because the six million Arizona residents have a problem with it. It is wrong,” she said.

Senate President Andy Biggs ultimately killed the bill by not allowing it to proceed.

Looking back, Farley said he still thinks Reagan was genuine in her belief that anonymous campaign spending was wrong back when they were pushing the anti-dark money bill together in 2014.

But he can’t square that with what Reagan has done since being elected as secretary of state.

“In my line of business, you run into a lot of people who aren’t genuine. And she had me fooled, if that was the case. I think she genuinely wanted to do something about this. And somehow she changed her mind. Is it because she had the experience of needing the money during the campaign, is that what explains it?” he said.

ON THE CAMPAIGN TRAIL

Campaigning to become the state’s top elections official later that year, Reagan distinguished herself in the three-way Republican primary by touting her attempts to rid the state of dark money.

She promised to continue the fight if elected, insisting that it is indeed the state’s right and responsibility to regulate dark money.

“The Supreme Court did not OK dark money… The Citizens United decision specifically said unlimited amounts in campaigns will be OK and acceptable because there will be disclosure. And the ‘because there will be disclosure’ part is very important,” she said in a televised debate on July 1, 2014.

“(The Citizens United ruling) left it up to the states to provide disclosure. Arizona does not have disclosure. And there is where you see the dark money.”

Despite the onslaught of dark money spent against her, she won the GOP primary.

Then, in the general election against Democrat Terry Goddard, the same powerful dark money interests she had warned her colleagues in the Senate about started coming to Reagan’s aid.

Suddenly, she no longer thought it was possible for the state to go after dark money groups.

“We learned a lot by running that legislation, and we learned where there’s things that we can do and things that we can’t do. There’s a lot of things that you can’t do on a state level,” Reagan told the Arizona Capitol Times on October 13, 2014.

“And when I hear people talk about things that they’re going to do with dark money, if they’re not including what has to be done on a federal level, as well, in conjunction with what’s going to happen on the state level, then I think that it’s kind of being misleading,” she added.

The about-face has continued since she took office, fueled in large part by the philosophy of the man she appointed as her elections director, Eric Spencer – a former lawyer at Snell & Wilmer, which represents several dark money groups.

ON THE 7TH FLOOR

As secretary of state, Reagan hasn’t proposed any legislation to crack down on dark money. In fact, Reagan acknowledges that she’s given up on even trying.

“You know, quite frankly a lot of the dark money problems are going to have to be solved with the IRS or federal government,” she told PBS “Arizona Horizon” host Ted Simons on June 18, 2015.

“I have not found one state that has been able to find that, that magic bullet. And I don’t know – and there are some states quite frankly that don’t want to find it because, you know, it is up to those individual legislatures,” she added.

pro-dark-money-1-webCoughlin, the Republican operative, noted that for a state that prides itself on bucking the federal government, Arizona has been quick to claim that only the federal government has authority to go after dark money groups.

“The hypocrisy of suggesting that we rely on the federal government to enforce our campaign finance laws when you have a state Legislature and a governor who have committed themselves to states’ rights is laughable. It’s transparently corrupt,” he said.

And other states have had some success in shining a light on dark money.

California, for example, has aggressively attempted to force dark money groups to disclose their donors, and even approved a bill to bolster its political watchdog agency’s ability to enforce campaign finance disclosure from dark money groups.

“If there was any wiggle room for dark money groups to operate in California, it’s likely gone now,” Mother Jones magazine wrote last year, after California closed one of its few remaining dark money loophole.

Reagan’s critics say she has not just given up on stopping dark money groups, she’s actively helping them skirt disclosure.

The first bill to come out of the Secretary of State’s Office after Reagan took over in 2015 redefined what constitutes a “political committee” in state law, after the old definition was ruled unconstitutional.

But Democrats slammed that bill as creating a big loophole for dark money groups.

That same year, Reagan’s office intervened in a lawsuit on behalf of a dark money group that Clean Elections was attempting to force to disclose its spending.

Reagan’s office asserted that the commission had overstepped its bounds in going after the Legacy Foundation Action Fund, and that only her office has the authority to enforce campaign spending laws.

Clean Elections has maintained the people of Arizona gave it the authority to crack down on noncompliant political committees when voters created the commission in 1998.

Reagan and the Legacy Foundation Action Fund eventually lost that case, after a Court of Appeals ruling in November that the group had missed the deadline to appeal a lower court ruling against it.

But in stepping in against Clean Elections, critics say Reagan has abandoned the ideals of transparency that she so recently held dear, and embraced dark money.

But Reagan has called that “absolutely false,” noting that since she came into the office, she has gone after two dark money groups – not to get them to disclose their donors, but to simply force them to register as political groups and disclose their spending.

PRO-DARK MONEY BILL

This year, Reagan’s office threw its weight behind re-writing Arizona’s campaign finance statutes, making that their priority bill for the year.

Among the many provisions in Reagan’s SB1516 – legislation sponsored by her ally in the Senate, Republican Adam Driggs, but drafted by Spencer – was a change to all but hand over enforcement of dark money groups in Arizona to the federal government and IRS, which rarely, if ever, takes action.

Coughlin said SB1516, and a trailer bill that went with it, “were in complete contradiction to her stated desire in the campaign to have more disclosure. And I believe both of them will open the door to further corruption in the Arizona political system.”

“It further empowers dark money organizations, which there’s no way of knowing under the statute now who’s influencing our election system. It could be people out of the state, outside of the country or worse. It could legitimately be organized crime and we wouldn’t know,” he said.

Among the many selling points of the bill as originally proposed was that it would require candidates to report their campaign’s income and expenses more frequently – reporting quarterly, or eight times during a two-year election cycle, instead of six times.

The reports would be spread more evenly over the two-year election cycle, but during an election year, when the vast majority of transactions happen, the number of required reports actually decreased.

But an amendment added by Driggs eliminated half the reports, leaving voters with only four campaign finance reports per election cycle.

That means voters still don’t know how much was spent in the election this year. Instead of filing post general election reports in early December, as candidates have for years, candidates won’t file their next report until mid-January.

Additionally, the bill removed criminal penalties for certain types of political corruption crimes, including making a political contribution in another person’s name or knowingly filing a false campaign finance report. The Secretary of State’s Office said it plans to reintroduce penalties for those kinds of crimes in legislation next year.

Farley lamented that instead of strengthening the existing corruption laws, the bill actually scaled them back.

“This whole rewrite of campaign laws allows people to do stuff that’s blatantly illegal. Or even the stuff that stays illegal, it makes it so hard to prosecute or punish them, people are just going to do it anyway,” he said.

“I haven’t heard anyone in the general public saying we need to overhaul our election laws to make it easier to cheat. Maybe in the circles she now runs in, there are a lot of people calling for that,” Farley said.

TRANSPARENCY WEBSITE

Although Reagan wouldn’t talk to the Capitol Times regarding her evolved position on dark money, she did tell “Horizon” host Simons about it last year, saying that while she now realizes she can’t crack down on dark money groups, she can still increase transparency in campaign finance.

“I decided, I think quite wisely, to say I’m going to focus on the things that I can work on and actually have an impact on right now,” she said.

During her 2015 appearance on the show, Reagan repeatedly deflected questions about cracking down on dark money by touting a new website, seethemoney.az.com, that would allow voters to track campaign spending.

For a full year, Reagan bragged about the upcoming website, describing it as an immediate alternative to full disclosure from dark money groups that will “revolutionize the way people understand political spending,”

She repeatedly promised it would be online in time for the 2016 election. Instead, voters encountered her current campaign finance website. Much like her promises to crack down on dark money, the new website simply never happened.

Reporter Jeremy Duda contributed to this story.

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