by Kim Barker
and Theodoric Meyer
For
a brief, giddy moment, Sean Noble—a little-known former aide to an
Arizona congressman—became one of the most important people in American
politics.
Plucked
from obscurity by libertarian billionaire brothers Charles and David Koch,
Noble was tasked with distributing a torrent of political money raised by the
Koch network, a complex web of nonprofits nicknamed the Kochtopus, into
conservative causes in the 2010 and 2012 elections.
Noble
handed out almost $137 million in 2012 alone — all of it so-called dark money
from unnamed donors — from his perch atop the Center to Protect Patient
Rights, a group run out of an Arizona post office box.
Much
of it was channeled to obvious destinations: Groups supporting Republican
presidential candidate Mitt Romney, for example.
But
with Noble as ringmaster, Koch money also poured into efforts that didn’t
surface until long after Election Day: To a political committee backing
Wisconsin Gov. Scott Walker against a recall attempt; to a group blaming
President Obama for high gas prices; even to a legal challenge to Arizona’s
redistricting plan.
“I must tell you that Sean Noble from your group has been
immensely helpful in our efforts,” a California multimillionaire wrote
to Charles Koch in October 2012, asking Koch to give several
million to support an anti-union initiative in the state. “Thanks for any
consideration.”
Noble
appears to have lost his central position in the Koch empire, undone by poor
election results and a California investigation that shined an unwelcome light
on some of the Center’s inner workings, insiders say.
But
his story shows how the Supreme Court’s landmark 2010 Citizens United ruling
has given rise to a new breed of power brokers who control a growing pool of money
raised in secret and spent to influence politics in ways that voters can’t
always trace.
Much
of Noble’s work in 2012 remained invisible to the public until the Center and
dozens of other Koch-backed nonprofits released their tax returns late last
year.
An
examination of those tax returns, along with court records and filings with the Federal Election Commission, shows that the
Center to Protect Patient Rights bent state election laws and federal tax rules
governing how such groups are supposed to operate.
Millions
of dollars the Center told the Internal Revenue Service it gave to other groups
only for “tax exempt education and social welfare purposes” were actually spent
on election ads and other political activities. Experts on nonprofit law said
it’s the donor’s responsibility to follow up on grants if they were not spent as
required.
One
of the biggest beneficiaries of the Koch network’s money was Sean Noble
himself, tax documents show. The Center paid
three firms owned by Noble almost $24 million for consulting and other services
in 2012—or more than $1 of every $6 it spent.
Sheila Krumholz, the executive director of the Center for Responsive
Politics, a nonpartisan watchdog group that has written extensively about the Koch network, said
disclosures from nonprofits come far too late to help voters and regulators.
“What we’re ending up with is information which is almost entirely
useless to the voters,” she said. “Because it’s come so far after the election,
so far after the fact that voters can barely remember what these organizations
were doing and on behalf of which candidates or parties.”
There’s no indication that Noble or the Center are under
scrutiny by authorities for violating tax or election laws.
For this story, ProPublica interviewed dozens of people about
Noble, from his high-school science teacher to fellow Republican operatives,
most of whom spoke on condition of anonymity, fearing possible backlash from
fellow conservatives or the Kochs.
Noble did not respond to questions from ProPublica.
In an email, Rob Tappan, spokesman for Koch Industries, did not respond to
specific questions from ProPublica about Noble or the Center, but acknowledged Noble
“was a consultant for Koch in the past and attended Koch seminars.” Tappan
likened Noble to Jim Messina, who was Obama’s campaign manager, and Paul
Begala, a chief strategist for Bill Clinton in his first presidential run.
Tappan said Noble was a consultant for “many other groups and issues.” (Read
his entire response here.)
Most
who know Noble, 43, saw him as an unlikely candidate to become the Kochs’ money
man.
“There were plenty of people who had a lot more actual campaign
experience,” said a Democratic
operative who knew Noble in Arizona. “That’s
a pretty big step up from Triple A to the majors, maybe Double A to the
majors.”
An
affable, handsome man with graying temples who favors jeans and eschews ties,
Noble had an aw-shucks demeanor. He liked watching Little League baseball games
with his family, leading his local Mormon ward and working tirelessly behind
the scenes on campaigns for minor politicians.
Over
the last two election cycles, though, Noble’s persona evolved. He flew first class, accumulated five
homes and sat near the
50-yard-line at the Super Bowl. He rubbed elbows with top conservatives, from Sarah
Palin to John McCain.
Even
if Noble’s role in the Koch network is over, his story illuminates larger
truths about how money changes both politics and the people who handle it.
“I
think Sean at the end of the day is an anecdotal story of something that’s
happening much bigger in the American electorate,” said a Republican consultant
who knows Noble. “Mr. Noble goes to Washington.”
***
Noble was an unusual choice for the Koch brothers. He overshared. His blog, called Noble Thinking, was a bizarre mix of personal
revelations (“I was a terrible dater”),
bragging about his connections (attending a dinner
“with a guest list that was right
out of the Who’s Who D.C.-New York power corridor”) and fears about Obama
(particularly, “the march toward socialized health care”).
The Kochs are known for valuing
discretion and control.
Noble’s
main credential was working for Arizona Rep. John Shadegg for more than 13
years, eventually becoming his in-state chief of staff. Though hardly a
household name, Shadegg was influential in the conservative wing of the
Republican Party.
The only known address for the Center to Protect Patient Rights is P.O. Box 72465 in Phoenix. The box costs $72 year, according to the U.S. Postal Service. Even though the group’s lawyer said the Center didn’t maintain a regular office, the Center paid $50,000 in 2012 for “occupancy” — a term usually used to mean rent. (Laura Segall for ProPublica)
“It’s important to understand the influence that John Shadegg had
within Republican and conservative circles at the time,” a Democratic operative
in Arizona told ProPublica. “That was his in.”
At some point, Noble met Randy
Kendrick, a lawyer by training who was on the board of the Goldwater
Institute, a bastion of libertarian
thought in the West. Kendrick and her husband, an owner of the Arizona
Diamondbacks, were big Shadegg donors. (The Huffington Post wrote about Kendrick and Noble
in 2013.)
In spring 2009, when it became clear that
Obama was pursuing a national health-care law, Kendrick turned to Noble for
help defeating it. Noble had recently left Shadegg’s office to launch a consulting
firm, Noble Associates, out of his Phoenix home.
“Sean got hooked up with Randy,” a
prominent Arizona Republican said in an interview. “He became her local guy to
manage everything. He became her political consultant.”
Kendrick was also close to the Koch
brothers. “Randy Kendrick is in the inner circle of the Koch brothers’
network,” a Republican consultant told ProPublica, adding that she pushed the
Kochs to back a new group targeting Obama’s health-care plan. As for Noble, “I
think they liked the fact that he hadn’t been a political consultant before.”
Noble was no slick
Washington insider. A self-described “hick
from Show Low,” Ariz., a town of about 11,000, Noble married a
woman he had met on his Mormon mission in Indiana and became a devoted father
of five. He had tried living in the nation’s capital once, moving his family
there for two years in the 1990s, only to move back to work in Shadegg’s
Phoenix district again. He was the type of guy who
said “good grief”and
meant it.
Noble
also had the right ideological background: He quoted Barry Goldwater, Ronald
Reagan and libertarian icon Ayn Rand. His first political memory was from 1976, when Jimmy Carter
was elected president and his mother started to cry, saying, “We’re going to be
beaten by the Soviets now.”
In
1994, when he was 24, Noble attended
Rush Limbaugh’s freshman orientation
in Baltimore for
the 73 Republican members of Congress who had gained office in the so-called
Republican Revolution. When he was 37, Noble was among the 2,200 mourners at William F. Buckley’s funeral at
St. Patrick’s Cathedral in Manhattan.
For years, Charles and David Koch, two of
the richest men in America, had helped form and support a network of
conservative think tanks, foundations and social welfare nonprofits that
pursued a libertarian agenda. They seeded the ground for the Tea Party, and
then cultivated the various groups that sprouted. In the 1980s, the Koch
brothers helped form the group that split
into two of the most influential conservative nonprofits now operating, Americans
for Prosperity and FreedomWorks.
The
Kochs raised money for their network in part at secretive semi-annual retreats.
The media wasn’t invited and attendees weren’t supposed to talk about them, a
kind of “Fight Club” for like-minded billionaires.
One donor who has attended the retreats
told ProPublica in an email that he had only a sketchy idea of how money raised
at the events was disbursed. He responded to questions on condition of
anonymity, saying he feared backlash from the Obama administration and the IRS and
adding that the Kochs resented any information from the events being disclosed.
“The people who attend these events have
ultimate respect for the Founding Fathers and the Constitution,” he wrote. “The
over-riding theme is that nothing worthwhile is achieved without hard work,
coupled with integrity and humility. … And the Kochs are not in this for any
personal gain whatsoever as all they seem to get is vilification.”
By spring
2009, Noble had landed a job within the Koch network. On April 16, the Center
to Protect Patient Rights was incorporated by a lawyer in Maryland who went on to work with other groups tied to
the Kochs. Noble was its executive director, documents show. According to the
group’s tax filings, he was paid no salary; his firm received $30,000 a month,
he said in a sworn deposition in 2013.
Noble registered his firm to lobby on the Center’s behalf, but otherwise
it flew beneath the radar. No one even seemed to know its precise name — the
incorporation documents called it the Center to Protect Patient Rights. In lobbying documents, Noble said he was working for the Center to Protect
Patients’ Rights.
Heather Higgins, a
longtime Koch ally, was the group’s initial secretary, and Dr. Eric Novack, who had led the fight
for a health-care proposition backed by Kendrick in Arizona in 2008, was the
treasurer. Novack acknowledged he didn’t know much about the group’s
activities.
“My only involvement was, we were starting something,” he said in an interview.
“They asked me because I was a body. I had no decision-making power. …I left very quickly.”
The usually voluble Noble,
a man who blogged so much that he once blogged about how he hadn’t blogged in two days, didn’t discuss the Center to Protect Patient
Rights publicly — ever. In a 2009 story in the Arizona Guardian, a political news website, Noble was described
only as working on “a national campaign opposed to President Barack Obama’s
healthcare initiative.”
In the 2013 deposition,
Noble wouldn’t even say who hired him because of confidentiality agreements. “I
can’t tell you who I do work for,” he responded to a lawyer’s question.
“Wait a minute,” the
lawyer said. “I asked how your salary got set, and you’re telling me that you
had a discussion with some people in 2009 and you’re refusing to tell me who?”
“I am,” Noble replied.
***
If not for the Supreme Court’s ruling on
Citizens United, Noble’s work for the Koch network might have ended as soon as
the fight over the health-care law was decided.
The decision helped to clear the way for
corporations and unions to contribute unlimited amounts of money to outside
groups — groups that operated independently from candidates’ campaigns
and parties, but were free to buy direct political ads or pay for a broad
spectrum of political activities.
“This is a total
game-changer for federal politics,” Noble blogged about the decision, adding that he believed races later that year
would likely be decided by outside interests. “Some will claim that this makes
politics more dirty. I don’t. Politics has always been pretty messy.”
“Seriously, this will
change campaigns in a big, big way,” he added.
In the Citizens United opinion, Justice Anthony
M. Kennedy said the influx of union or corporate cash would not corrupt
elections because of laws requiring outside groups to disclose their donors.
Voters could give appropriate weight to messages paid for by special interests.
But those laws didn’t apply to groups like
the Center
to Protect Patient Rights. As social welfare nonprofits, they didn’t have to
name their donors. And they could spend as much as they wanted on politics, as
long as, in the IRS’s view, social welfare remained their primary purpose.
After the Affordable Care Act became law in March 2010, the Center’s lobbying workrelated to health care ended, leaving Noble free to take on
new challenges. As it happened, a key job was open in the Kochs’ network. Matt
Schlapp, a former political director to President George W. Bush who had led
the Kochs’ election efforts as vice president of federal affairs for Koch
Industries’ lobbying arm, had recently left to form his own consulting firm.
Noble stepped in to fill the gap.
“My impression of the environment he found
himself in, with the changes in the federal law, it created enormous
opportunities,” said another Republican consultant who knows Noble. “He was in
the right time, right place.”
Noble
began attending twice-a-month strategy meetings in Washington, as one of the
people representing the Koch network alongside other conservative powerbrokers,
including top GOP strategist Karl Rove’s people, Politico
later reported.
One national conservative operative said he
heard about Noble and the Center in conversations in early 2010 about who was
doing what that year. “They were going to be the primary vehicle for the Koch
money, for the Koch network,” the operative told ProPublica.
In
late June, Noble attended the semi-annual Koch retreat at the St. Regis resort
in Aspen, Colo., along with Randy Kendrick and her husband, an event later
described in stories by Think Progress and The New York Times.
Noble
spoke on a panel called “Mobilizing
Citizens for November” with Tim Phillips from Americans for Prosperity, Mark
Mix from the anti-union nonprofit National Right to Work, and Karl Crow from
Themis Trust, a voter database group. Noble was the only panelist of the four listed
without an affiliation – there was no mention of his role at the Center
to Protect Patient Rights.
By that time, he had no need to advertise.
The Center had raised almost $62 million
in 2010, giving out $44.6 million in grants to 22 like-minded groups, most of which then turned around and
spent money on political activities.
The year brought huge gains for Republicans.
The GOP recaptured the majority in the House, gaining 63 seats, and added six
seats in the Senate. The party’s conservative wing did especially well: Almost
one-third of Tea Party candidates in the House
and half in the Senate won. Conservative dark money groups outspent liberal
ones by about 10-to-1, research by the Center for Responsive Politics shows.
Noble predicted the outcome on Twitter days before the election.
“It’s
official: 2010 will be an historic election for the GOP,” he wrote.
“Obama will
lose mojo,” he added.
***
As the 2012 presidential
election approached, the Kochtopus started adding new arms. Noble was a key player in
expanding the network’s complicated web of
nonprofits and limited liability companies.
At
the top of the network were groups such as the Freedom Partners
Chamber of Commerce, a trade association formed in late 2011, and the TC4 Trust, a social welfare
nonprofit that said in a filing to the IRS it would “focus on the advancement
of free markets, liberty and individual freedoms.” As is typical with such
groups, the identities of donors did not need to be disclosed.
Money
flowed from them to the Center,
which acted as a sort of clearinghouse, distributing grants to dozens of
smaller groups. Many of these nonprofits spent directly on politics, including
election ads. Some also made grants to yet another layer of groups. Not all of Freedom
Partners and TC4’s money flowed through the Center; they also gave some money
to smaller groups directly.
For
reasons that are not entirely clear, the Kochs then added another level of
complexity to this already opaque set-up.
A
dozen of the Koch-affiliated nonprofits included limited liability corporations
– LLCs – called “disregarded entities” that were considered part of the
nonprofits for tax purposes. Many of the 20 disregarded entities in the Koch
network had strings of letters for names: STN, POFN, SLAH, ORRA. Noble was the
first person consulting for the Kochs to create a disregarded entity that was
linked to one of the nonprofits. He called it SDN. Eventually, Noble changed
the name to Meridian Edition, one of two disregarded entities of the Center to
Protect Patient Rights.
This
additional layer made it even harder to follow the flow of cash through the
Kochtopus, political operatives and tax experts said. When the TC4 Trust, for
example, passed money to the disregarded entity of another Koch network group
– say, Americans for Prosperity — tax records showed the funds
going to a company called PRDIST, rather than to the much better known
Americans for Prosperity.
“I think it’s being used to disguise the
source of their money,” said Marcus Owens, who ran the Exempt Organizations
division for the IRS from 1990 to 2000.
The Koch network moved more than $204 million through
disregarded entities in the last half of 2011 and before the 2012 election,
according to tax documents filed last year. That included almost $115 million
in grants from Freedom Partners, the trade association, to Corner Table, the
Center’s second disregarded entity.
Noble helped to dispense this river of cash, sometimes with a
knowing wink. The Center gave $320,000 — all from undisclosed
contributors, of course — to a Colorado group called the Arioch Project.
The project’s original name? Patefacere — the present infinitive
of the Latin verb that means “to disclose.”
The
tangle of groups made it seem as though Koch money was being diffused broadly,
but tax records show it flowed into many smaller groups at a high level of
concentration. At least 20 nonprofits across the country received at least half
of their revenue from the Center, Freedom Partners or both.
Americans
for Responsible Leadership, a group run by a friend of Noble’s, got $24.7 million
in grants from the Center, or almost 98 percent
of its revenue.
Noble
helped to run or incorporate no less than three groups named American Commitment
at one point or another. One of them got almost 97 percent of its $11.7 million
in revenue in 2012 from the Center, Freedom Partners and Americans for
Responsible Leadership.
The
American Future Fund, which pulled in a
whopping $68 million in 2012, got more than 92 percent of that money from Freedom
Partners and the Center.
On
their 2012 tax returns, signed under penalty of perjury, the Center and Freedom Partners told the IRS they
were not engaged in politics, checking “no”to a question asking if they had
spent money to influence elections. Freedom Partnerssaid its grants were “subject to
express prohibitions or protections against the use of grant funds for
electioneering purposes.” The Center said that it gave
grants to groups for education and social welfare — not
politics.
Yet, in fact, more than $30 million
funneled through these groups ended up paying for political activities. According
to tax and FEC records, the American Future Fund poured at least $19.8 million
from the Center and Freedom Partners into elections. Americans for Responsible
Leadership spent at least $9.3 million received from the Center. American
Commitment spent at least $1.1 million of its grants from Freedom Partners and
the Center on politics.
No one from Freedom Partners, Americans for
Responsible Leadership or the American Future Fund returned calls and emails
asking for comment.
Phil Kerpen, the president of American
Commitment, told ProPublica that the allegation that American Commitment had
spent grant money earmarked for social welfare purposes on politics was
“false.” He described what the Center and Freedom Partners had said on their
tax returns as “general characterizations” of their grants.
“All our political expenditures were out of
our organization’s general treasury,” Kerpen said.
Nonprofit
experts said groups like the Center are supposed to make sure their money is
used as earmarked.
“The
grantor is responsible for how the grants are used because it’s the grantor’s
money,” said Lloyd Hitoshi Mayer, a law professor and associate dean at the University of Notre
Dame who specializes in nonprofits and campaign finance.
If
a grant is improperly administered, the group that gave it could become the
subject of an IRS audit.
In
some cases, voters had no way to know for more than a year after the election that
the Koch network, aided by the Center, was behind particular political
initiatives or messages – an outcome that underscored campaign-finance
watchdogs’ worst fears about the corrosive effects of dark money.
It wasn’t until this year, for example,
that Citizens for Responsibility and Ethics in Washington, a watchdog group, reported that Noble’s
Center
supplied all of the $80,000 raised in 2012 by
All Votes Matter. During the election, the group had worked to change rules
governing Pennsylvania’s electoral votes in ways that would benefit
Republicans.
The Center also
was a major backer of a
group that spearheaded an effort to register Americans in Israel to vote in
U.S. elections, supplying more than
half of its 2012 revenue, ProPublica found. The Koch network’s involvement
in this initiative did not surface at the time, even though The Times of Israel ran stories
spotlighting the group’s “I Vote Israel”
project and questioning its refusal to disclose its donors.
The Center’s involvement in a
contentious Arizona redistricting fight was also not known – until now. It provided $150,000
to a group called FAIR Trust—described as the “Fair
AZ Independent Redistrict” on the Center’s tax return—which hired lawyers
to sue Arizona’s redistricting commission in April 2012 to challenge new
legislative and congressional districts. The Trust, which also sent lawyers to
commission meetings, has repeatedly refused to identify its backers.
“Without knowing who they were
representing, you couldn’t really fairly evaluate what they were saying,” said
Linda C. McNulty, a Democratic member of the commission. “They clearly were
doing somebody’s bidding, but they wouldn’t say whose it was.”
David Cantelme, one of the lawyers who represents
the Trust, said he couldn’t talk about who hired him and had no information
about the grant from the Center.
Voters in Wisconsin also had
no idea the extent to which Koch network money fueled election ads urging them
to oppose the recall of Gov. Scott Walker.
Until late 2013, when the Center filed its
tax return, voters had no way of knowing that Noble’s group
supplied
virtually all of
the $510,230 raised in 2012 by the Coalition for American Values Action, another
social-welfare nonprofit. The Coalition then donated more than three-quarters
of that money to the PAC that paid for the ads. The PAC received no
contributions other than the Coalition’s.
The day of the recall vote, Noble’s blog linked to one of
the ads,
calling it “a fascinating approach to a unique situation.” “If the good people
of Wisconsin think like the folks in this ad, it’s going to be Walker by double
digits,” he wrote.
He didn’t mention the Center’s role in
funding the effort.
***
A hefty
chunk of the Koch network money that flowed through the Center in 2012 went to Noble’s
firms.
Noble’s earnings had risen swiftly as his ties to the Koch
brothers grew, tax filings and other records show. In 2008, the year before he
joined the Center, Noble earned almost $205,000, according to a later court
filing, from consulting and his work for Shadegg.
By 2010, the year of the midterms, he earned almost $640,000,
the filing said. He and his wife bought an investment property a couple miles
from their Phoenix home, according to the filing and property records.
At
the end of 2010, Noble established a second firm, DC London, to do “consulting and governmental affairs,” according to
incorporation documents. Its name was largely aspirational; on Twitter, Noble noted that
he’d never been to London. DC London opened an
office in downtown Washington and went on to hire almost 30 staff members in a
little more than two years.
Noble personally earned almost $2.3 million
in 2011, court records show, impressive for a non-election year. Much of his income
seems to have derived from having the Center to Protect Patient Rights hire his
firms. The Center paid more than $6.3
million
to DC London and Noble Associates for consulting, management and reimbursement
for “consulting expenses paid to consultants without markup.” Free Enterprise
America, another nonprofit run by Noble, paid DC London
almost $400,000 for consulting as well. (Noble did not disclose that he partly
owned DC London on that tax return, as required by the IRS.)
Noble
Associates bought a condo in Washington, D.C., in 2011 for $665,000, property
records show. The Nobles also bought a half-acre of land in Hurricane, Utah,
then built a 9,000-square-foot house on it, a gabled concoction with eight
bedrooms, eight bathrooms and five fireplaces.
Then
came 2012, a record-setter for
spending by dark money groups and Noble’s consulting businesses.
The Center paid a whopping $20.7 million
to DC London for “consulting & other services,” according to its tax
return. Of that, $15.8 million was for costs “reimbursed to DC London for the
Center’s program expenses without markup.” What costs DC London could have incurred
remain a mystery: The Center’s work mostly consisted of directing grants to
other nonprofits, and it doesn’t appear to have offered any programs. (The
Center also spent $50,000 on what its tax return described as “occupancy,” a
term usually used to mean rent, even though the Center’s lawyer told ProPublica in an email
that the group had no office.)
In addition, the Center paid consulting and
management fees of $270,000 to
Noble Associates and $2.8 million for “survey and phone programs” to Angler, a
company incorporated in October 2011 and run out of DC London’s office. Noble
was the president.
The Center disclosed its transactions with
Noble’s firms on its tax returns, as required.
After the disappointing 2012 election
results, many questioned how effectively the Koch network and other
conservative organizations had deployed their resources. Filings with the FEC
showed that conservative dark money groups had outspent liberal ones by at
least $276 million to $29 million, to little apparent effect.
One Koch donor, who wanted to remain
anonymous because he feared possible retribution from the IRS, said he had attended
one Koch retreat and had given to the Koch network for several years. He said he
remained impressed by the organization’s accomplishments in states such as Indiana,
Michigan and Wisconsin. He also said he didn’t think the Koch brothers would
tolerate a consultant steering such a large amount of money to himself.
“My guess is he’d be cut off pretty damn
quickly,” the donor told ProPublica.
The payments to Noble’s firms were unusual, campaign finance
experts said.
An analysis of tax returns
filed by 100 other politically active nonprofits, including all the groups
funded by the Koch network that have made their 2012 tax returns available, showed
just 19
hired consulting firms owned by employees or board members.
For
those 19 groups, the median payment to an employee-affiliated firm for
consulting or other services was $108,000, a tiny fraction of the millions paid
to Noble’s firms. For instance, the Republican Jewish Coalition paid $60,000
for consulting to the firm of then-board member and former White House
spokesman Ari Fleischer.
Most social-welfare nonprofits avoid insider transactions and
pay their leaders fixed salaries instead. GOP strategist Karl Rove’s Crossroads
GPS, one of the largest politically active dark money groups, raised almost
$180 million in 2012 and paid its top executive a salary of $538,000.
Owens, the former IRS official, said social
welfare nonprofits are not allowed to pay “excessive” benefits to people who
control the organization or to companies they run.
“That’s probably an excessive private
benefit right there,” Owens said, after ProPublica told him how much Noble’s
firms earned in 2012. “That’s a huge amount of contracts for someone in charge
to hand out to contractors he controls.”
Groups given grants by the Center to
Protect Patient Rights also started hiring Noble’s companies. The Center gave
grants to 25 nonprofits that reported political spending to the FEC or state
authorities during the 2012 election cycle. Of those groups, 10 hired Angler,
the company that operated from DC London’s office. The American Future Fund,
for instance, paid Angler $5.3 million,
mainly for social media advertisements. It’s possible that much of this money
went to companies such as Facebook and Twitter, with Angler keeping a smaller
commission.
American Commitment—which Noble was a
board member of until June 2012—paid Angler $168,000 in 2012
for “media production.” Kerpen, who Noble hired at American Commitment, said he
picked the group’s vendors based on merit, not because of Noble. “We’ve
actually never received a contribution from any donor that asked for a
particular vendor to be used,” Kerpen said.
Two groups that received grants from the
Center appear to have paid Angler hundreds of thousands of dollars just to use
a phone system to make calls to voters. The calls themselves were made by temps
hired separately through an agency.
It’s not clear how much Noble personally
earned in 2012, but his wife, Julie, estimated it was at least $3 million,
according to court filings.
She said Noble received other perks as
well. Noble Associates paid for his
cell phone and his Washington, D.C., mortgage. He charged most meals in
Washington to Noble Associates.
In the 2013 sworn deposition, Noble said the
election year was unprecedented.
“The way that
2012 went, we’re never going to see anything like that again,” he said.
***
Noble’s prime position in
the Koch network took a hit at the end of the 2012 campaign, when he and the
Center circumvented California election laws in an attempt to influence two
state ballot measures.
Noble first met California
political strategist Tony Russo in Las Vegas in October 2011, according to a recorded interview Russo later gave to
California investigators. Russo wanted Koch money for an effort to fight unions.
Noble agreed to help, paying hundreds of thousands of dollars to run focus groups, develop ads and reach out to voters, Russo said.
Russo hoped the Koch
network would do even more. Russo later said he and Noble spoke more than 18 times in the run-up to the election, meeting once in Washington.
Meanwhile, Russo and Jeff
Miller, another California consultant, raised $29 million from about 150
confidential donors to fight a proposition to raise taxes and to support another
one limiting unions’ political power. They transferred the money to a
Virginia-based trade association that had agreed to spend it on ads related to
the initiatives. But as Election Day drew closer, the association, Americans
for Job Security, balked at buying ads, worried that under California law, it would be required to disclose who had donated the funds for them.
Russo
said he approached Noble and offered to
transfer money from the Virginia group to the Center. In return, he asked Noble
to tap separate resources to help in California. Noble thought he
had groups that could help,
Russo recalled.
“He said, you know, get me your money,”
Russo said in his interview.
Americans for Job Security transferred
about $4 million to the Center on Sept. 10. On Sept. 13,
American Future Fund gave about $4 million to a California affiliate, the
California Future Fund for Free Markets, which was spending money on the
anti-union proposition.
Americans
for Job Security sent another $14 million to the Center on
Oct. 11. The Center then gave most of that money to Americans
for Responsible Leadership, run by Kirk Adams, a friend and former client of
Noble’s. On Oct. 15, Americans for Responsible Leadership sent $11 million to
the Small Business Action Committee, a PAC spending on the initiatives.
Within
days, a good governance group demanded a state
inquiry into the contribution.
Still,
Americans for Job Security gave another $6.5 million to the Center on Oct. 22. But no additional money from Koch-funded
groups flowed back into the California initiatives fight – at Noble’s
direction, Russo said.
California
had launched an investigation.
“The explanation was, your regulatory guys are going crazy and I just don’t
think we can do it,” Russo said.
California’s Fair Political Practices Commission sued Americans for Responsible Leadership on
Oct. 25, 2012, seeking to force the group to reveal its donors. Six days later, a Sacramento Superior Court judge ordered that
the group turn over the records to the state for an audit, saying that voters
could suffer “irreparable harm” if they didn’t know who was behind the
group before the election. Americans for Responsible Leadership appealed. The
case made its way to the California Supreme Court, which on Nov. 4 unanimously
ordered Americans for Responsible Leadership to turn over its records.
The next day, just before the election,
Noble and Adams sent letters to the Small Business Action Committee as part of
a settlement with regulators, admitting they had funneled money
from Americans for Job Security to the Small Business Action Committee.
The state then accused the groups of money
laundering based on their efforts
to disguise the original source of the $11 million transferred to the Small Business
Action Committee in October.
In his interview with investigators, Russo
said he was “shocked” by the admission from
Noble, because he believed that the money came from a pool of money
unrelated to the funds Americans for Job Security passed to the Center.
Miller said he felt “just completely screwed” by Noble’s admission.
“I’m not sure how their network works, to
be perfectly frank,”
Miller later told investigators in a recorded interview. “But when he, when he
started to get in the shit storm, he panicked and lied to you all about how it
was done to protect his organizations. That’s what I think happened. I don’t
know that, though. That’s what I think happened. I think that he panicked and
to prevent your agency from opening up his books, he made, he lied.”
In total, the Virginia trade association had
sent $24.5 million to the Center. Only $15 million ended up going to California
for the propositions, which conservatives ended up losing by a large margin.
State
regulators eventually slapped
Americans for Responsible Leadership and the Center with a record fine, $1
million.
Individual
donors to the effort were never disclosed, although the redaction was so poor,
it was possible to determine that they included financier Charles Schwab,
California philanthropist Eli Broad and Gap Chairman Bob Fisher, but not the
Kochs or their companies.
Initially,
it appeared that the California Attorney General’s office might open a criminal
investigation into the donations. But the investigation never moved forward;
Noble was never interviewed in the case.
As
part of an agreement with the state, Adams and Noble were able to write off the
$11 million transferred through their organizations to the Small Business
Action Committee as a simple mistake. The failure to disclose the original
source of the funds “was inadvertent, or at worst negligent,” their stipulation with
California’s attorney general and campaign finance regulators said.
Yet Noble and the lawyers he worked with were
hardly new to campaign finance. Attorneys at Holtzman
Vogel Josefiak, based on the East Coast, were national
experts in dark money groups and election law, representing everyone from
Crossroads GPS to the American Future Fund.
A lawyer and a paralegal there had helped
incorporate two of Noble’s consulting firms and several Koch-connected
social-welfare nonprofits, as well as handling the Center’s application for
tax-exempt status to the IRS. Another Holtzman Vogel lawyer had even helped
incorporate and dissolve the California Future Fund for Free Markets, the
nonprofit that spent money on the anti-union measure.
“I would assume, given the high
skill level at Holtzman Vogel, that their lawyers were familiar with
California’s campaign finance law requirements,” said Paul S. Ryan, senior
counsel at the Campaign Legal Center in Washington. “They’re good lawyers.”
***
The California investigation, coupled with
poor election results, weakened Noble’s influence on the Koch network and
shrank the Center’s role within it.
“There were growing rumors, frustration, through 2010, 2011 and
2012, that Sean was controlling everything, that it was too insular, that it
was all about who Sean liked and knew,” a top national conservative operative
familiar with the Koch network told ProPublica.
Noble’s life was also changing in other
ways. No longer was he the Arizona outsider who blogged about serving as the Mormon bishop in his ward, who preferred Waffle House to Washington’s pricey eateries, and who praised his wife for earning “sainthood for tolerating my work schedule.”
In
April 2013, Noble filed for divorce. Though his wife of more than 20 years was
a homemaker raising their five children, he argued in filings that she deserved
no spousal maintenance. After they separated, he bought a condo in Phoenix for himself
for $510,000 and another for his parents for $181,500.
Noble had become involved with Elissa Scannell, a
former scheduler for Shadegg who was his partner at DC London, records filed as part of the divorce case show. Just before the
2012 election, the two flew to see the World Series. According to documents
submitted by his wife, Noble spent more than $7,700 for a vacation for himself
and Scannell in the Bahamas over New Year’s 2013. That March, he paid more than
$3,600 for a trip for him and Scannell to Hawaii, records show.
Noble’s
life with Scannell was centered in Washington, D.C., a city he once described
as a “cesspool” on his blog. He posted a photograph
to Facebook
the night after the Jingle Ball in December, of the two of them alongside singer
Enrique Iglesias.
The Koch network was changing, too. In
2013, it gave greater prominence to Freedom Partners, which has
supplanted the Center as its primary distributor of cash to other groups.
Because
Freedom Partners is a trade association, this move also helped the network
sidestep IRS proposed limits on political activity by social
welfare nonprofits. Those would define political spending as expenditures
reported to the FEC and grants to other tax-exempt groups involved in elections,
unless they specifically say the money won’t be spent on politics.
The
dark money strategies Noble helped pioneer at the Center are likely to play a
substantial role in the upcoming midterms. Targeted blasts of spending by
outside groups could have far more effect on this year’s smaller slate of
congressional and local races than they had on 2012’s megabuck national and statewide
contests, campaign finance experts said.
Months
after the 2012 election, Freedom Partners hired a new president, Marc T. Short,
a longtime political operative and former Koch
employee
who tended Ronald Reagan’s ranch in California in
his 20s. He is 43, the same age as Noble – and some say the most likely
heir to Noble’s role.
The Kochs convened their first 2014 retreat for big donors at a
resort near Palm Springs, Calif., in late January. On the agenda: Centralizing
control and creating a more coordinated approach to winning elections, as opposed
to the piecemeal one from past years, according to
Politico. The Kochs plan to back candidates in
primaries, to make sure that Republicans that agree with their philosophy make
it to the general election.
Noble
was not among the consultants listed on a one-page agenda for the meeting obtained by Mother Jones. Short and others
from Freedom Partners were.
Noble’s biggest known client in recent months has been Arizona’s
largest electric utility, Arizona Public Service, which DC London worked for in
a contentious
fight over solar energy.
In a strange twist, the face of the
pro-solar side was Barry Goldwater Jr., the son of Noble’s idol.
Last September, at a panel for a Republican
conference in Michigan, Noble,
wearing jeans, a light blue button-down shirt and a dark suit jacket, talked
about the failures of the 2012 election. He said the Obama campaign won because
of having so many people on the ground, knocking on doors and personally
talking to people.
In the future, Noble said,
conservative candidates needed to work harder to connect with voters,
particularly young ones. Candidates also needed to face their critics.
“Ultimately, I think what
we have to teach our candidates—and this is why I will never be a
candidate—is that you just have to—you have to deal with it, I mean
you have to take the arrows, you got to have thick enough skin that you can get
in the game, you know, and do that kind of thing,” Noble said. “I would never
do that because I’ve watched it up close.”
For more on the Koch brothers’ influence on politics, read our guide. And for more on the influence of money in politics, read the top questions from our Q&A on Dark Money in the 2012 campaign.
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