UNREGULATED GROUPS WIELD MILLIONS TO SWAY VOTERS

By Stephanie Simon

Oct. 30, 2006 12 AM PT

Times Staff Writer

STERLING, COLO. — Unions, corporations and wealthy individuals have pumped nearly $300 million this year into unregulated political groups, funding dozens of aggressive and sometimes shadowy campaigns independent of party machines.

The groups, both liberal and conservative, air TV and radio spots, conduct polls, run phone banks, canvass door-to-door and stage get-out-the-vote rallies, with no oversight by the Federal Election Commission. Set up as tax-exempt “issue advocacy” committees, they cannot explicitly endorse candidates. But they can do everything short of telling voters how to mark their ballots.

Because they can accept unlimited donations from any source, the committees -- known as 527s -- have emerged as the favored vehicle for millionaires and interest groups seeking to set the political agenda.

“It’s become the new way to do business in politics,” said Pete Maysmith, a national director of Common Cause, a nonprofit that lobbies for more transparency in campaign finance.

Named for a section of the IRS code, 527s have been around for years but became a political force in 2004 after the Bipartisan Campaign Reform Act of 2002 -- also known as the McCain--Feingold Bill -- limited donations to political parties. Groups such as Swift Boat Veterans for Truth on the right and America Coming Together on the left contributed $600 million that year, with a heavy focus on the presidential race.

The cash flow is lower this year because it’s a midterm campaign, but 527s and a related type of organization known as 501(c)s have expanded their reach. With the Nov. 7 election days away, the groups are flooding the airwaves in state and local races as well as congressional contests.

By far the largest chunk of unregulated money -- nearly $60 million -- comes straight out of union treasuries and is used mostly to benefit Democratic candidates and causes. Conservatives are fighting back with multimillion-dollar donations from a California TV executive and the Texas developer who financed the Swift Boat ads.

In California, unregulated funds -- mostly donated by New York developer Howard S. Rich -- are bankrolling the campaign for Proposition 90, which would limit the government’s ability to seize private property. In Missouri, such money paid for a celebrity-studded TV ad opposing a ballot initiative on stem-cell research.

In Ohio, a 527 has run some of the most provocative radio spots of the campaign season, with an African American announcer accusing Democrats of “decimating our people” by promoting abortions of “black babies.” Another group funded by black Republicans has bought airtime on radio stations in Maryland and Florida to assert that Democrats “have bamboozled blacks” and want to keep them in poverty.

‘Yeah, right’

Here in eastern Colorado, a 527 called Coloradans for Life has raised more than $1 million to oppose Republican Rep. Marilyn N. Musgrave -- spending nearly as much on the race as the Democratic candidate. A radio ad championing “the unborn” gave many voters the impression the group was an anti-abortion organization attacking Musgrave from the right. In fact, it’s funded by three millionaire liberals.

At a recent reception for rural Republicans, chiropractor Philip Pollock rushed up to Musgrave to complain about what he called the “underhanded, back-door” tactic.

“I just heard those ads. Coloradans for Life -- totally ridiculous,” he said. “What happened to ... campaign finance reform?”

“You mean getting the big money out of politics?” Musgrave asked.

Pollock shook his head in disgust. “Yeah, right.”

The campaign finance reforms that took effect for 2004 limit individuals to about $100,000 in total contributions to all candidates, parties and political action committees per election cycle. Parties and PACs remain extremely influential. PACs, for instance, are expected to funnel more than $1 billion to candidates this year by bundling contributions from trial lawyers, beer wholesalers, pharmaceutical makers and other groups.

But more than 70 individuals have maxed out their PAC and party contributions; if they want to pump more cash into the election, they must donate to 527s and 501(c)s. Many prefer that approach because they can control how the money is used.

The 501(c) groups do not have to disclose donors or itemize spending. The 527s must report donors and expenses, but the groups are often ephemeral, forming under a generic name for a few months and then dissolving. That makes it all but impossible to sort through IRS filings and pick out which organizations will get involved in which races. By law, these groups cannot coordinate their activity with candidates.

“The first warning you have is often when you see their ad on TV,” said Robert Duffy, a political scientist at Colorado State University who tracks the groups. “These 527s throw a whole lot of unpredictability into campaigns.”

In 2004, Democrats dominated 527 fundraising, led by financier George Soros and insurance magnate Peter B. Lewis, who each contributed more than $23 million. This year, Soros and others are focused instead on long-term party-building efforts, such as strengthening liberal think tanks and building a national voter database.

Two Republicans now top the donors’ list compiled by the Center for Responsive Politics, a nonprofit research firm based in Washington.

Homebuilder Bob Perry, who financed the Swift Boat ads, has pumped $5 million into TV ads attacking Democratic congressional incumbents in Georgia, Iowa and Oregon as tax-and-spend liberals. GOP backer A. Jerrold Perenchio, who owns the Spanish-language television network Univision, has spent $5 million on ads in Missouri and Ohio featuring images of terrorism and warnings about those who would “cut and run” in Iraq.

Here in Colorado, the 527 targeting Musgrave is funded by siblings Patricia Stryker and Jon L. Stryker, billionaire heirs to a medical-supply fortune, and by Tim Gill, a software developer.

They bankrolled a similar effort in 2004, with TV ads that portrayed Musgrave picking soldiers’ pockets as an announcer accused her of voting to cut veterans’ benefits.

Their TV campaign this year has been far less dramatic but still controversial, accusing Musgrave of cutting a program that protects clean drinking water. In fact, Musgrave did not vote on that issue, though she has cast other votes that environmentalists say would weaken water protection.

Thanks, but no thanks

Musgrave’s Democratic challenger, Angie Paccione, watched the water ad with a sinking heart. Like many candidates, she regards 527s as a mixed blessing. The independent group has undoubtedly given her campaign a boost; when the national Democratic Party canceled $630,000 worth of TV ads in the district, Patricia Stryker wrote a check for $720,000 to keep anti-Musgrave spots on the air.

But Paccione has no control over the message. Attacks such as the pickpocket dramatization could alienate voters. She considers ads like the one on water a waste of money.

“Clean drinking water?” Paccione said. “Holy smokes! There’s a litany of things you could do against Marilyn Musgrave. Clean drinking water is not one of them.”

Paccione’s own ads portray Musgrave as a conservative ideologue.

A lawsuit pending in federal court aims to rein in 527 activity. But political analysts say they don’t expect much to change, even if the case succeeds.

“Political money is like water. It will find an outlet,” said Jeffrey M. Berry, a political science professor at Tufts University. “If 527s are banned, will another vehicle pop up? Absolutely.”

stephanie.simon@latimes.com

(Begin text of infobox)

Midterm ‘soft money’

Unregulated political groups known as 527s have received nearly $300 million this election cycle from unions, corporations and wealthy individuals. These groups can influence how voters view candidates, specifically through advertising. Here are some 527 figures for the 2006 election cycle*:

Top individual contributors to 527 committees

Donor: Bob Perry

Business: Perry Homes

Location: Houston

Primary support: Rep.

Amount: $5,150,000

Donor: Jerry Perenchio

Business: Chartwell Partners

Location: Los Angeles

Primary support: Rep.

Amount: $5,000,000

Donor: George Soros