Sunday, August 14, 2011

Koch Brothers' Slow Poisoning of America

Original Link:

By Chet rooted right here in North Dakota.

The tiny Summer tourist town of "Medora" sits in the Badlands of Western North Dakota, about 25 miles from the Montana border. It's a seasonal tourist town, the county seat of Billings County, ND. Population: 50 to 100, approximately. I'm guessing closer to 50. It's about the size of the Democratic-NPL caucus in the North Dakota legislature and it supported John "Get off my lawn" McCain 3 to 1 in the 2008 election.

Named after the wife of French nobleman Marquis de Mores, Medora is known regionally for its summertime nightly productions of the "Medora Musical," a folksy, patriotic, taste of 1950s-era Americana. The musical is presented in a comfortable, modern outdoor amphitheater naturally cut into the side of a Badlands butte, with the colorful shadows of the sunset spread out across more badlands above and behind the stage and set. Take the whole family to the musical after eating oil-boiled steaks and corn-on-the-cob at the "pitchfork fondue" in the picnic shelter at the top of the butte. At the musical, expect a juggler or balancing act, some cowboy yodelling, a fair amount of polka and two-steppin', and a mostly-accurate lesson about the history of the town. (The musical, like Theodore Roosevelt did himself, typically exagerates how much time Roosevelt spent in North Dakota.) The last two times I was there, we also got to watch a short video clip of then President George W. Bush welcoming me to the musical. After the show, drive down the winding road on the other side of the pitchfork fondue and you'll pass by the "Chateau de Mores" before turning right onto Pacific Street, the road that takes you back into Medora.

In downtown Medora you'll find several gift shops, a great book store, an ice cream shop, a nice playground for toddlers, mini-golf, a couple small restaurants, museums and a hotel. If instead of heading downtown you continue down Pacific Street, headed towards the rodeo grounds on the west end of town, you'll pass the Iron Horse Saloon (or Boots Bar & Grill [it'll always be the Iron Horse to me]) and then the "mini-mall," a collection of shops and snack bars connected a la "strip mall" but with a rustic, old-west boardwalk with a rail for hitchin' the horse you rode in on.

One of the shops in the mini-mall is the Rushmore Mountain Taffy and Gift Shop. Like virtually every other retail store in town, the taffy shop closes when the Musical shuts down for the "Winter" right around Labor Day and will open back up again some time just before Memorial Day.

You wouldn't know it by looking at the taffy shop from the outside -- or inside, for that matter -- but for several years now, it has been the legal home to "The Franklin Center for Government and Public Integrity," a multi-million dollar right-wing non-profit set up for the sole purpose of facilitating indoctrination of Americans through the creative use of old-fashioned, right-wing misinformation and fake, slanted "news."

The Franklin Center (FC) is a non-profit organization that uses a "post office box" in the United Parcel Service Store in Bismarck. The UPS Store provides a mail forwarding service to the folks at the Franklin Center. But the taffy shop, until very recently, was FC's "official" mailing address. North Dakota law requires nonprofits to have a "physical address," too, so citizens have a place to go if they want to ask for a copy of records nonprofits have to make available for public inspection, or to serve court papers on the organization.

"The registered office is the physical address (not just a post office box number) where the registered agent is available to receive service during regular business hours. Since the address of the registered office is often used for mail delivery, a post office box number must be included in the address if mail is not delivered to the physical address."

ND Secretary of State

For its first two years of operation, FC used the UPS Store PO Box and the seasonal Medora taffy store addresses somewhat interchangeably. Either way, good luck getting a copy of those public records if you want to inspect them. And you are never going to find the Franklin Center's executive director in Medora to serve papers on him.


The Franklin Center's Executive Director is a guy named Jason Stverak. Good luck finding Stverak -- the Center's only known North Dakota employee -- in North Dakota. He lives on the East Coast. And by "East Coast," I do not mean "Fargo." He lives in New Jersey or Virginia or somewhere really East.

Stverak's name may sound familiar to you; he used to be the Executive Director for the North Dakota Republican Party. He quit that gig back in about 2007 to become Rudy Giuliani's North Dakota state campaign director. That didn't go so well. Then in January of 2009, he formed the Franklin Center (FC) with the help and money of the Chicago-based "Sam Adams Alliance" (SAA) and the former state Republican Party directors who've graduated to its staff.

The Franklin Center was officially incorporated in North Dakota in January of 2009. The Secretary of State (SOS) 2009 filings list a Texas attorney's address -- actually a "caging" operation -- as the organization's mailing address and the local UPS Store mail-forwarding service PO Box as it's physical address. In its first public federal tax filing, FC lists the address of the seasonally-opened Medora taffy shop owned by Stverak's father in Medora as its "physical" address. Because North Dakota non-profits are required, by state law, to have a physical address.

In a nonprofit corporation filing FC turned in (late) to the North Dakota Secretary of State's Office a couple weeks ago, FC informed the Secretary of State for the State of North Dakota that the Medora address is no longer its physical address. Its new physical address is the Post Office Box 176 at the UPS Store in Bismarck. Legal requirements be damned.

The Texas lawyer/caging operation, coincidentally, also does legal work for "Club for Growth," Alan Keyes' "Declaration Foundation," the CPAC sponsoring "Young Americas Foundation," the "Minuteman" militia people, the "Traditional Values Coalition," and a whole host of mostly far right-wing fringe organizations. It appears the lawyer -- Maureen E. Otis -- operates her law office out of an organization she leads called "American Caging."

The Franklin Center raised about $3 million in its first year of operation, 2009.

You read that right.

For you headline-writing copy editors out there, here's your headline:

"THREE MILLION DOLLARS raised by a little North Dakota non-profit based in a taffy shop in tiny town of Medora"

A source tells me most or all of FC's money comes from the Koch brothers. (My source's information is consistent with the information from a Playboy story that was scrubbed from the internet almost immediately after publication, but salvaged by a writer for the Atlantic.) FC's tax records for 2009 show FC disbursed a bunch of this Koch money (nearly $700,000) in the form of grants to a variety of state-based, right-wing "news" services. These services univerally approach stories from the far right. FC is behind, for example, "" and a variety of state-based ""-type websites in lots of states, but --today -- they also fund other outfits,including in North Dakota,, in Oklahoma.

In its first year, FC sent $200,000 to "Missouri News Network" and $150,000 to "Tennessee Watch". They've given money to fake "news" bloggers in Wyoming, New Mexico, Montana, Hawaii, Nebraska, Texas, Alaska, Maine, West Virginia, California, Washington, New Hampshire... all over, really. As noted, they gave away nearly $700,000 in grants to these "news" bloggers during their first year. I can't wait to see their Form 990 for 2010. Stverak brags the organization funds these right wing political hacks in more than 40 states., the North Dakota version of the Franklin Center's fake "news" service, made the news a month or so ago. A story in the Grand Forks Herald originated with a Plains Daily blog post about the University of North Dakota using a UND Foundation aircraft to ferry people to and from Bismarck to (among other things) testify on issues relevant to the University. Plains Daily's capitol beat "reporter" -- the author of the UND plane story -- is Kate Bommarito. Before becoming a fake "journalist," Kate worked on Kevin Cramer's 2010 Republican Party campaign for the U.S. House. She has been active in North Dakota Republican Party politics for quite a while. Her husband, I'm told, is Mike Bommarito, a former ND GOP executive director. When Kevin Cramer's campaign for Congress was caught buying support of delegates to the GOP convention by paying convention fees a couple years ago, the Bommarito family name came up as the conduit for some of those payments.

Plains Daily has been credentialed to use "press" space in the "Press Room" in North Dakota's Capital. There's an interesting national debate happening all over the country about whether bloggers like the ones at PlainsDaily should get such space in capitol news rooms. The question is "should partisan bloggers or news sites be given 'press' credentials in state houses?" It's an important debate you won't find in a local newspaper. It's an important debate that obviously never took place in North Dakota before Plains Daily was credentialed in the capitol.

I asked Dale Wetzel -- Bismarck's main AP reporter -- how PlainsDaily got space in the capitol news room. Here's a bit of his response: does have space in the press room. It has one of the 10 carrels in the press room (there is also other space that is used by reporters). It was assigned by me.

Interestingly, there is a state law on this topic, 48-08-03 [Click here]. I don’t know when it was approved, but it has been on the books for as long as I have been here (Sept 1984).

The PlainsDaily person, Kate Bommarito, is here almost every day and uses the space to work. I don’t keep track of what she does, but she sometimes covers the same things I do. She uses a laptop and usually brings a small video camera and tripod.

As I understand it the PlainsDaily site is part of the WZFG-AM station in Fargo, The Flag, which is a member of AP. The PlainsDaily site posts AP stories, according to the Google alerts I get. I don’t look at the site regularly.

One real media person told me they thought Plains Daily could be cited as a legitimate news source because they are or the Franklin Center (who funds Plains Daily) is funded by the Pew Charitable Trusts. "The Pew Charitable Trusts do not give out money to partisan hacks," was the implied message conveyed to me.

I called the Pew Center folks. Among other things, I was able to confirm -- with the help of helpful staff at Pew -- that no Pew money goes to either the Franklin Center, or to Plains Daily. I do not know who started a rumor (if it's out there) that FC or Plains Daily is funded by Pew, but they are not.

I also separately asked Amy Mitchell, Deputy Direcor of the Pew Research Center's Project for Excellence in Journalism, about these mysteriously funded, agenda-driven non-profits funding online news services. Here's what she said

It is important to know the background of the mission and funding of these types of organizations. Clearly in the traditional press there has been a diminishing in the resources devoted to state level / local level government reporting. Local newspapers have had to cut back on their staff. It has left a void. These new nonprofit-funded online sources are saying they’re coming in to fill that void. Clearly there is a need. The question that arrises, as a news organization, you need to know where you are coming from, who is reporting for you, and let your consumers know.

Asked why non-profit funded online outlets are any different from the local paper, when most people don't know who owns the local newspaper, Mitchell said, "The issue isn't whether they know; the issue is, 'Is the information available?' Even if people are choosing to not obtain it, is it available?' There is with all news organizations a responsibility to be transparent with your consumers."

There's lots of very interesting information in the Medora-based non-profit's 2009 IRS Form 990. For example, The Franklin Center spent nearly $500,000 on attorney fees their first year. They spent $236,000 on conferences/conventions/meetings. Another $74,000 on travel. They had 15 employees who received a total of $450,000 in combined compensation. The form lists three directors: (1) Rudie Martinson (Director and Secretary). Rudie is a very liberterian lobbyist for North Dakota's Hospitality Association and a former Assistant State Director for the North Dakota Chapter of the Koch brother's funded astroturf group, Americans for Prosperity; (2) Doug Loen (Director). I'm not sure who Doug is. The only Doug Loen I could find is a lawyer for the South Dakota Department of Corrections. I do not know if that's the same Doug Loen; and (3) Jason Stverak (President and Chairman). The tax form lists the Medora taffy shop address as the "physical address" of the "person who possesses the books and records of the organization." That -- they've told the IRS -- is FC's physical address. (Check out the Franklin Center's 990 form by clicking here.)

I ran into FC board member Rudie Martinson (the Center's only known human connection to North Dakota anymore) a couple weeks ago at a "Fun Caucus" gathering in downtown Bismarck on a Thursday night. I tried to ask Rudie some questions about the Franklin Center. He declined to answer any of my questions, referring me to the organization's headquarters. Asked how I reach them, Rudie was kind enough to give me his business card. What address is given on the business card? 127 S. Peyton St., Suite 200... Alexandria, Virginia. That's "Old Town" Alexandria, an area of Alexandria just across the river from Washington, D.C., right on the Potomac River. (See photo of their front door, below). Close enough to lobby the U.S. Congress, and far, far away from the Medora International Airport. Even the Franklin Center's only known human connection has a Northern Virginia area code on his business card.

There are numerous stories about these fake "news" bloggers out there, too. Read, for example, this great report from Harvard University, entitled "Ants at the Picnic: A Status Report on News Coverage of State Government," (read the whole thing, but especially starting about half-way down page 23). And this. And this. This. This. This. And This. When one (or two) North Dakota media editors decided to reject the garbage work of North Dakota's bought-and-paid-for Franklin Center "news" blog, they could have pointed to any of these stories. They coudl have done their own research. Instead they just called the Plains Daily "irresponsible to the extreme." Had they done their legwork, our local media could have provided some facts to help the people understand "why" and "how" Plains Daily is so irresponsible. They could have helped legislators to understand why North Dakota needs stronger non-profit organization disclosure requirements and some "teeth" to the laws we do have.

I may be writing about things many of you already know, but I'm including this so I know everyone is on the same page. Non-profit organizations have to file an IRS Form 990. "Form 990 is an annual reporting return that certain federally tax-exempt organizations must file with the IRS. It provides information on the filing organization's mission, programs, and finances." ( "

Schedule B 990 (Schedule of Contributors) is used by organizations that are exempt from paying income tax. It is filed in conjunction with Form 990, 990-EZ, or 990-PF and provides the names and addresses of contributors to the organization." ( Schedule B is the only part of the 990 that is exempt from disclosure under FOIA. The tax code requires disclosure of this info only to the IRS so the IRS can cross-check against taxpayers' claimed deductions for charitable giving. Failure to provide the required Schedule B information can result in a $100 per day fine, up to $50,000, for a donor with significant donation income. I believe they can also lose their tax exempt status.

Rather than complying with that tax code disclosure requirement, FC and SAA both have chosen to submit what I'll characterize as being an "objection" to the Schedule B requirement. Here is what their submission (a "Schedule O"; which is not exempt from FOIA) says (and it's nearly identical for both the FC and SAA 990s):

"The [organization] does not provide specific identifying information on its donors on the ground that such disclosure may chill the donors' First Amendment right to associate in private with the organization. NAACP v. Alabama, 357 U.S. 449 (1958); International Union UAW v. National Right to Work, 590 F.2d 1139, 1152 (D.C. Cir. 1978). While the other information has been provided on this Schedule B, actual identities have been protected by assigning a number or letter to each donor listed."

I've read those two federal cases and I don't think either of them says what FC and SAA say they say. I've also done some looking on Westlaw and find nothing supporting their position. But I'm not a tax or non-profit organizations lawyer. There are, however, two more-recent U.S. Supreme Court cases NOT cited by FC and SAA, that I think cast a lot of doubt on the objection. (Read this, this and this.) I've contacted a few different attorneys, nationally, who have done some work in this area. One pointed out that the two cases cited by by SAA and FC relate, ironically, to protections for groups engaging in political activity, and a 501(c)(3) nonprofit is not supposed to be engaging in political activity.

If FC and SAA are correct, then there should be a First Amendment right for political parties to also refuse to disclose to the IRS, the FEC and state Secretaries of State where they get their large donations.The cases I link to in the previous paragraph appear to reject this notion, thus leaving FC and SAA high and dry. But maybe their goal is to litigate this issue. Maybe it's their goal to get first amendment privacy/secrecy protection for political parties, so they -- too -- can raise funds in secret.

I need to throw this out there in the interest of full disclosure, too. One of the non-profit attorneys I spoke to noted that there are non-profits on both ends of the idealogical spectrum that make similar claims of confidentiality for their donors. I trust what he told me, but I looked (not a lot, but some) and found none that lean to the left that refuse to disclose donors to the IRS. This type of conduct -- whether done by left-leaning or right-leaning organizations -- seems like an invitation for everybody to pick and chose which IRS laws they want to follow.

There are all kinds of other juicy morsels I've learned about the Franklin Group, too: Here are some examples:

(1) I requested a full copy of the Franklin Center file from North Dakota's Secretary of State's office. I picked up the records on a Tuesday. When I left my office Tuesday, to go get the forms, FC's status on the ND Secretary of State's website was "not in good standing" When I got back home after work the same day I checked the Secretary of State's website again. This time FC showed up as "Active and In Good Standing. They had apparently, coincidentally, filed their 2011 non-profit report the exact same day I started snooping around in it. How does that happen?

(2) Franklin Center has a contract with a fundraising company called "Clearword Communications," a D.C. based fundraising firm. Coincidentally, Clearword does fundraising for FreedomWorks and a bunch of other far right wing, corporate-funded organizations.

(3) The ND Secretary of State forms filed by the Franklin Center on that Tuesday a few weeks ago -- FC's state 2011 non-profit disclosure forms -- show that it has now officially abandoned the Medora taffy shop address. (Click here.) It now uses as its address, exclusively, the UPS Store Post Office Box mail forwarding service. Sadly, no more taffy and right-wing ideology quick-stops in Medora.

(4) The form filed with the SOS a few weeks ago is filled out by a James Skyles. On the form, Skyles gives a daytime phone number starting with "847." That's a Chicago, Illionois, area area code. Skyles, on his LinkedIn page, lists his current employment as "Principal at Skyles Law Group, LLC" and past employment as "Director of Operations at Franklin Center for Government and Public Integrity." Skyles is a graduate of the "Ave Maria School of Law," the Dominos-Pizza-founder-funded, scandal-plagued (lawsuits brought against the school by several former professors, questions about funding and administration salaries, etc.), private, right-wing Catholic law school that used to be in Ann Arbor, Michigan, but that moved to Naples, Florida. I don't think I've ever bumped into Skyles here in Bismarck.

(5) The Franklin Center was set up by Stverak with the assistance of a gentleman named Eric O'Keefe, the director of the Sam Adams Alliance. O'Keefe was also was a presenter at the Koch brothers' secretive, invitation-only seminar in Palm Springs, California, in January of 2011. Glenn Beck also presented. I'm not sure who that makes look bad: O'Keefe, or Beck.

(6) O'Keefe's wife, Leslie Graves, runs the Lucy Burns Institute, a non-profit that supports transparency in government. An interesting fact: The Sam Adams Alliance (run by O'Keefe) felt it was important to disclose in its IRS Form 990 (click here to read it) that O'Keefe is married to Graves. On its "Schedule O" (2009), it disclosed that "the Sam Adams Alliance entered into a contract with Lucy Burns Institute (LBI) which provided LBI with sponsorship for Ballotpedia and Judgepedia." The disclosure goes on to note that neither O'Keefe nor Graves receive any compensation from Sam Adams or Lucy Burns, respectively. What it does not disclose is that Sam Adams Alliance gave millions of Koch brothers dollars to the Franklin Center in 2009, and then the Franklin Center turned around and gave $43,412.56 to the Lucy Burns Institute in 2009. The slippery ways these people move their money around just amazes me. The Koch brothers' m.o. is to give millions to one organization and then have that organization spread the money around to dozens of other right-wing organizations. That makes it impossible to figure out where their money is really going. One day you may learn that an organization like Sam Adams Alliance or Franklin Center get their money from 10 or 20 other similar organizations, but when you try to figure out where those donors get their money, you'll see that it comes from 10 or 20 other right-wing organizations. When you are theh multi-billionaire oil company-owning Koch brothers, you can create a massive web of 501(c) organizations and use them to spread around a few hundred million dollars, and nobody will ever figure out what you're funding. Organizations in your web can file "conflict of interest" disclosures when it's convenient, and then launder your money through some other 501(c) organization without anybody ever really noticing. If you're filthy rich, infinitely corrupt, and trying to manipulate public opinion without behing held accountable... it's brilliant.

(7) Some of the documents submitted to the Secretary of State were signed by Stverak in front of a Notary Public named "John Tsarpalas." (Click here to read it.) Tsarpalas, a past president of the Sam Adams Alliance and currently CEO of "Think Freely Media" yet another mysteriously-funded 501(c)(3) non-profit, used to be the director of the Illinois Republican Party.

It seems to me the goal of some of these non-profits is to create an ever-moving target. Sure, one day the Franklin Center will be exposed as a right-wing money-laundering operation for the billionaire Koch brothers, but then the Franklin Center will disappear and the Koch money will be laundered by "Think Freely Media" or some other right-wing operation run by the former Republican Party executive director for some other state. By the time Think Freely's 990 form becomes public 2 years from now, there'll be some new astro-turf front group -- or a hundred of then -- through which the Koch brothers and their ilk will launder their nearly-untraceable money.

The thing American billionaire oligarchs like the Koch brothers fear more than anything else is a strong middle class. They have made it their mission to "educate" the middle class to believe two things: (1) one day, you, too, can be a billionaire and these huge tax breaks for the billionaire Koch brothers you are blindly supporting now will benefit you once you, too, hit the lottery, and (2) giving tax breaks to billionaires helps regular people because the billionaires will invest more in small businesses, and inject more money into the economy. One day you, too, will inherit billions from your idealogue billionaire father and be able to spend $324 million dollars to manipulate public opinion.

What they don't tell you is that the odds of you becoming a billionaire are about the same as your odds of hitting the Power Ball. The odds of tax breaks for billionaires like the Koch brothers helping regular people like you are even worse.

The Franklin Center / Sam Adams Alliance / Koch brothers arrangement is an argument for strong state and/or federal disclosure laws for these types of shadowy, politically charged non-profit organizations. Right now an organization like the "Franklin Center" can "set up camp" (and by "camp" I mean "a post office box") in North Dakota, and run a non-profit out of here without even being here, adding to the ever growing list of trouble soiling our states formerly good name. It is my opinion they are violating North Dakota's laws by being "from her" but not "being here." But nobody is going to do anything about it. Even if they did, it would be a token of law enforcement, not real law enforcement.

We deserve strong disclosure laws for shadowy non-profit organizations that pretend to be from here, break our laws, and are not.

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