Nonprofits Behind Attack Ads Prompt Senate Probe

WASHINGTON —  With a few weeks to go before the November election, polls showed that Democrat William Yellowtail Jr. enjoyed a slim lead in the congressional race for Montana’s only House seat. Then a hard-hitting television commercial began playing in the Big Sky State, and his fortunes abruptly changed.

“Who is Bill Yellowtail?” the ad began. “He preaches family values, but he took a swing at his wife. And Yellowtail’s explanation? He only ‘slapped’ her, but ‘her nose was broken.’ ”

Yellowtail, seeking to become the first Native American congressman from Montana, was soundly defeated by his Republican opponent, who condemned the attack while denying any knowledge of it.

The advertisement was not placed by the Republican Party, but rather by one of a cluster of obscure nonprofit groups that ostensibly are not involved in supporting or opposing candidates but that weighed in during the last national political campaign--sometimes with notable effect.

The groups, in some cases, took shots at Democratic candidates too sensitive for an opponent to try himself. They brought in resources beyond those that a Republican candidate had raised. And they provided--unlike overt political organizations--total anonymity and no monetary limits for their donors.

As such, the groups appeared to serve as a kind of a shadow Republican campaign--one whose activities, now coming to light, may help switch some of the focus of questionable political tactics from Democratic to GOP ranks. Already, six organizations have received subpoenas from a Senate committee probing suspect political activity during the 1996 elections.

Meanwhile, other revelations have drawn new attention to political action committees with a pattern of suspicious giving to Republican candidates. Examples include committees giving a donation to a GOP candidate right after receiving an identical sum from a contributor--a person who happened to have already given the legal limit to that candidate.

In the congressional probe, pressed by the Democratic minority of the Senate panel, investigators plan to explore whether the nonprofit groups’ activities were independent of Republican candidates’ campaigns, as required by law.

Charles Lewis, head of the nonprofit Center for Public Integrity, said the politically tinged activities of charities and nonprofit groups show the “hopeless” state of the current campaign disclosure laws and the lack of high moral ground for either party.

“These organizations that are tax-exempt are subsidized in some fashion by the American people, and they are working for partisan ends,” Lewis said. “The hiding of the money is reprehensible. . . . We need to know how the money is washing through the system and whose money it is.”

Federal law allows nonprofit groups distinct benefits for agreeing to advocate only positions, rather than specific candidates, and to stay separate from the political parties. Unlike the parties, they may accept as much money from whomever they like and may keep their donor lists secret.

Both parties have been testing the restrictions for some time, but some of the Republican-affiliated organizations appeared to have become exceptionally bold. Their boards of directors and memberships are dotted with Republican officials and consultants, and their activities seemed in some cases to run parallel to Republican campaigns.

Representatives of some of the groups insist they got no closer to the line than the AFL-CIO did last year with its $35-million advertising blitz that echoed Democratic campaign themes. GOP leaders bitterly denounced the AFL-CIO ads at the time.

“There are just no indications whatsoever that these organizations have done anything illegal or immoral,” said E. Mark Braden, a Washington lawyer who represents three of the groups that received subpoenas. “It just isn’t there.”

But the argument may be put to the test as the Republican-led congressional hearings prepare to excoriate questionable Democratic fund-raising and methods.

In one case, even some Republican-oriented directors of one nonprofit group--the Coalition for Our Children’s Future Inc.--resigned in protest earlier this year over what they considered undue involvement by the group in 1996 congressional and legislative races.

Five of the six Republican-leaning groups that recently received subpoenas were involved in politically related activity during the final weeks of last year’s elections. Sometimes they chimed in together.

For example, in California’s Central Valley, the Coalition for Our Children’s Future joined Citizens for Reform in running commercials that targeted Rep. Calvin M. Dooley (D-Visalia) for criticism.

The coalition pounded Dooley, alleging that he was soft on the death penalty, even though the congressman said he had voted for the death penalty 28 out of 29 times.

Dooley said the organizations, which he branded “phantom entities,” attempted “to come in and buy the election in the last two weeks” of the campaign in his largely Democratic district. “There was no way to identify where they were receiving their money,” Dooley said, estimating the groups spent $250,000 on commercials.

“They supposedly were not advocating for my opponent, but any objective analysis would lead anyone to conclude [otherwise],” Dooley said.

The congressional election in Montana further exemplifies the close proximity between advocating ideas and advancing candidates.

Yellowtail, a self-described “Indian cowboy” and longtime cattle rancher who had served as an Environmental Protection Agency regional director in the Clinton administration, had won a four-way Democratic primary convincingly despite revelations that he had slapped his first wife during an argument in the 1970s.

Yellowtail’s Republican opponent, Rick Hill, pledged not to engage in personal mudslinging. But then Citizens for Reform weighed in with its “wife-beating” ad campaign.

In a statement issued on election day, Yellowtail called the organization “a poorly disguised Republican front group. . . . These people are the bottom feeders of our political system.”

Citizens for Reform spent about $2 million late in the 1996 race to air advertisements in 15 districts spread across 10 states, said the group’s president, Peter Flaherty. The group was created in June to promote “social welfare” on a “nonpartisan basis,” according to incorporation papers.

Flaherty said the Yellowtail spot was “an exception” to the group’s advertising elsewhere, which he said generally focused on term limits, a balanced-budget amendment to the Constitution and other political topics. “We are interested in issues,” he said.

Flaherty did not back away from the assault on Yellowtail, though. “If more wife-beaters are out there as public figures, we are going to expose them, and they better watch out.”

Asked whether his group would attack any Republican wife-beaters who might turn up, Flaherty said: “It’s not up to us to do the job of people who have a liberal ideology.”

The Coalition for Our Children’s Future was formed in May 1995, also to advance a prime conservative issue--a balanced federal budget. The group has been touted often by top Republican officials.

In November 1995, former Republican National Committee Chairman Haley Barbour noted that the coalition had spent $2 million in advertising and planned to spend $2 million more the next month. Meanwhile, one of the Republican Party’s rising stars--Sen. Fred Thompson of Tennessee, who is now leading the Senate committee investigating the campaign financing controversy--made a commercial for the coalition advocating a balanced budget.

But the coalition ran into trouble last year after it spent a reported $700,000 to run ads in congressional and legislative races in five states. Two directors resigned when they learned of the expenditure.

“Obviously, the shell of the coalition was used for a mission of which we were kept in the dark. . . ,” said Debbie Steelman, a founding director and Republican activist. “We did not find out where the money came from, we did not find out who made it happen and why it happened.”

J. Curtis Herge, the coalition’s MacLean, Va., attorney, declined to comment. But people present at a coalition meeting said he took responsibility for approving the ads, defending them as acceptable because they didn’t specifically endorse or oppose any candidate.

Days before this meeting, the group gained a new director: Barbour, who joined weeks after leaving his party post. He did not return phone calls to his office.

Working with some of the Republican-leaning groups was Triad Management Services Inc., a private company whose records have also been subpoenaed in connection with its election activities.

Operated by Carolyn Malenick, a former fund-raiser for unsuccessful Virginia Senate hopeful Oliver L. North, Triad officials say the group helps direct donors to Republican candidates and oversees several tax-exempt organizations, including Citizens for Reform and Citizens for the Republic Education Fund Inc. Records of both groups also were subpoenaed.

Triad sought to counteract organized labor’s independent campaign in districts of vulnerable Republicans. With the help of Lyn Nofziger, a former aide to President Reagan, Malenick formed Citizens for the Republic Education Fund and spent about $3 million to air TV ads in various contested districts.

Nofziger said that Malenick handled most of the work and that the group’s activities were legal. “Every one of those things was run by a lawyer to make sure it was in line with what you could do. . . . This has nothing to do with campaigns,” he said. “Candidates were not told we were doing it.”

Another nonprofit organization whose records were subpoenaed has a clear GOP link. The group, the National Policy Forum, was established in 1993 by Barbour as a way to attract new ideas from beyond the Beltway. Barbour said it never engaged in any election or campaign activity.

A subpoena was also issued for Americans for Tax Reform, an anti-tax group that in the weeks before the election received $4.6 million from the Republican National Committee to send out millions of pieces of mail.

“I look forward to testifying,” said Grover Norquist, president of Americans for Tax Reform and an ally of House Speaker Newt Gingrich (R-Ga.). “The bottom line is that we didn’t do any political activity. . . . It was issue advocacy.”

Questions have also arisen about the activities of some political action committees, which, unlike nonprofits, are allowed to directly help candidates. The questions focus on whether some donors used PACs to pass through contributions to a candidate after the donor had given the individual legal limit. The practice is not explicitly illegal, but quite controversial.

Last year, the Conservative Campaign Fund PAC--whose chairman, Peter Flaherty, also runs Citizens for Reform--donated $2,500 to Republican Al Salvi’s losing Illinois Senate campaign, according to federal campaign-finance records. Five days earlier, Salvi’s mother had donated the same amount to the PAC. Marita Salvi had already reached her maximum individual contribution limit to her son’s campaign, so she would have been prohibited from making a direct donation.

Likewise, Robert Riley Jr. had reached the legal limit of donations to the Alabama congressional campaign of his father. Just before the primary, records show, the son gave four separate donations to political action committees, including Flaherty’s group. Three of the four groups turned around and gave the candidate’s campaign $1,000. A fourth donated $500.

“We are confident we have done nothing wrong,” Flaherty said. “There’s nothing surprising about conservative donors giving to conservative PACs and conservative candidates.”

Times researcher Janet Lundblad contributed to this story.