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Video: Funds for attack ads often secret

By Michael Isikoff National investigative correspondent
NBC News
updated 11/1/2010 1:45:08 PM ET 2010-11-01T17:45:08

While President Obama and other Democrats have excoriated Republican "front groups" for using secret money to pay for attack ads, Democratic political committees have begun doing something similar: collecting cash from outside nonprofit groups that don't disclose their contributors and using the money to pay for negative campaign commercials, campaign records show.

One group, Patriot Majority PAC — a Democratic political committee that has run a hard-hitting $1.7 million attack ad campaign against Sharron Angle, the Republican candidate for Harry Reid's Senate seat in Nevada — has gotten one of its largest donations, $250,000, from a liberal nonprofit that doesn’t release the names of any of its contributors, the records show.

Another newly formed political committee, America's Families First Action Fund, which is running negative commercials against Republicans in House races across the country, recently got $1 million from a closely related nonprofit affiliate, the records show. Both organizations were set up over the summer by Democratic strategists, who emphasized in a memo to donors that contributions to the nonprofit could be kept anonymous.

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These operations illustrate how Democrats have belatedly tried to mimic some of the same GOP money-raising tactics they have sharply criticized, exploiting a controversial Supreme Court ruling earlier this year that allows unlimited contribution to political committees from corporations, labor unions and wealthy individuals. These donations can be kept concealed from the public if made to outside nonprofits, which can either run campaign ads directly or — as the Democratic groups are doing — make contributions to other political committees that run ads on their own.

"It's opened this huge loophole (where) you can launder money though these groups that don't disclose and get it into the campaign," said Bill Allison, editorial director of the Sunlight Foundation, a nonpartisan group that tracks campaign spending. "We've seen this happening on both sides of the aisle."

The activities of Patriot Majority PAC are especially noteworthy because they have been focused almost entirely on Nevada, where Reid, the Senate majority leader, is locked in a tight re-election battle with Angle, a Tea Party favorite. When President Obama campaigned in Nevada on behalf of Reid recently, he made the issue of "secret" campaign cash one of his principal themes.

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"All across America, they are pouring hundred of millions of dollars into a bunch of phony front groups running negative ads," Obama said about outside Republican groups. "Have you seen some negative ads out here? You don't even know who's sponsoring these ads."

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Republican groups spearheaded by Karl Rove, former President George W. Bush's political adviser, had been at the forefront of the GOP attacks against Reid. One group, American Crossroads, which discloses donors, has spent $1.2 million on campaign ads in the state, according to records compiled by the Sunlight Foundation. Another closely related nonprofit, Crossroads GPS, which describes itself as a "grassroots advocacy organization", has spent $3.5 million in Nevada on ads attacking Democrats, including $2.5 million on one that depicts Reid as a "champion of liberal special interests" in Washington. 

Patriot Majority PAC is using some of the methods on the Democratic side. The group was founded last year by Craig Varoga, a veteran Democratic strategist who once served as chief spokesman for Reid. On its website, which bears a logo of a Revolutionary-era Minuteman, the group describes itself as dedicated to promoting "patriotic" policies that "strengthen our national security," "support our troops" and "create jobs."

In fact, campaign records show, it has been spending virtually all of its money on negative campaign ads in Nevada, including one that compares Angle's position on Social Security to that of the late Chilean dictator — and "human rights violator" — Gen. Augusto Pinochet. While attacking Angle's statements about Social Security, it flashes film of menacing-looking military troops marching through the streets.

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As a political action committee, Patriot Majority PAC's donors have to be publicly reported to the Federal Election Committee. Those disclosures show the group has collected large sums from a collection of special interest groups, including $805,000 from labor unions; $375,000 from two Las Vegas casino companies (Harrah's and MGM Resorts International); $100,000 from a political action committee run by trial lawyers; and $75,000 from Clean Energy, a California-based natural gas company founded by Texas energy mogul T. Boone Pickens. (Reid last year cosponsored legislation to give tax credits for natural gas. The proposal was heavily promoted by Pickens, who appeared with the Senate majority leader at a press conference announcing the introduction of the bill.)

But Patriot Majority PAC also got another significant donation from a group that doesn't disclose its donors: the VoteVets Action Fund, a New York-based nonprofit that has been running attack ads against Republicans across the country. The group recently announced plans to spend $4 million on this year's election — all of which is aimed at boosting Democratic candidates. But much like Crossroads GPS, the group cofounded by Rove, VoteVets refuses to make any information available about the source of its donations.

Varoga did not respond to questions from NBC News about the donations to Patriot Majority, saying only that his group has done "independent ads this year in Nevada opposing Sharron Angle's candidacy" and is active in a "handful" of other congressional races.

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Jon Soltz, chairman of VoteVets, said there is "no comparing" his group's efforts to those of Rove.

"The vast majority of our donations come online to help our mission of supporting those who support us, however we can," he said.

Robin Swanson, a spokeswoman for America's Families First Inc., the nonprofit non-disclosing affiliate that recently gave $1 million to its affiliated political group, said that her group does make donations to political groups that have a "mission and values aligned with ours."

"To use a broad brush to compare us to the variety of groups on the right created expressly to impact elections and engaged in electioneering activities, simply because we happen to share the same tax status, is like comparing FOX News to a local cable access program because they are both on TV," she said.

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