From the St. Louis Post Dispatch

Sources of donations in high court race can’t be traced
By Kevin McDermott and Paul Hampel
Of the Post-Dispatch
Supporters on both sides of this year's bitter Illinois Supreme Court
election funneled more than a half-million dollars in donations through two
newly formed nonprofit corporations that don't have to reveal where the
money came from, a Post-Dispatch analysis of state election and corporate
records has found.
It's an unusual maneuver that critics contend was designed to sidestep
campaign disclosure laws in the nation's most expensive battle for the
bench. Some are questioning the legality of the move.
Illinois has no campaign contribution limits, but the state does require
that any political donor of more than $150 be publicly identified. Yet the
source of about $540,000 spent on behalf of Gordon Maag, a Democrat, and
Lloyd Karmeier, a Republican, in the final days of their bruising Supreme
Court campaign remains a mystery.
That's because the money was routed through two entities that appear to be
typical political fund-raising committees - but which claim not to be.
Karmeier won the election Nov. 2 for the state's only open Supreme Court
seat, the 5th District, a race that had become ground zero in the war over
tort reform. The race shattered national records for campaign spending as
business interests and trial lawyers spent millions on Karmeier and Maag,
respectively. Most experts believe it was an attempt by two competing
interests to sway the high court's future stance on issues such as
liability limits and lawsuit caps.
The Post-Dispatch found that, on either side of the campaign, two opposing
nonprofit corporations - both chartered this year - made large donations to
political action committees that had the same names and addresses as the
nonprofit corporations.
Those PACs, in turn, spent money on behalf of one or the other candidate.
Then the PACs filed disclosure forms revealing only that the money came
from the identically named nonprofit corporations, but not revealing who
donated it in the first place.
The circular arrangement led to instances in which PAC donations hundreds
of times larger than the minimum legal reportable contribution couldn't be
traced to their source.
"My first reaction was, where the heck is this money coming from?" said
Cindi Canary, director of the Illinois Campaign for Political Reform. The
Chicago-based watchdog group is considering filing complaints with the
state Board of Elections regarding the contributions to both Supreme Court
candidates. " ... This is just a slap in the voters' face."
It's not unusual for a private company to establish a PAC through which the
company can donate money to candidates. But usually, those donors are
existing businesses "with an identifiable source of income," said David
Morrison of the Illinois Campaign for Political Reform. Nothing in the
donations from the two corporate entities in the Supreme Court race give
any clue as to where their money is coming from.
Records show both entities were incorporated in Illinois this year as
nonprofit corporations that don't have to disclose the names of their
political donors. In both cases, PACs with the same names and addresses as
the nonprofit corporations were established afterward, to receive money
from the nonprofit corporations and pass it on to the candidates.
"It seems like the only reason to do this is to obscure the source of the
contributions. I believe it's illegal," said political scientist Kent
Redfield of the University of Illinois at Springfield, a top authority on
Illinois' campaign finance system.
State law specifies that any entity that "solicits or receives funds for
political purposes or acts as a conduit for political funds" must register
as a PAC and reveal where its money came from.
The newspaper's analysis found that the two nonprofit corporations in
question are connected to two registered PACs that have been at the center
of Illinois' heated debate over tort reform this year.
The Justice For All PAC is heavily funded by Metro East lawyers who oppose
lawsuit caps and supported Maag. The Illinois Coalition for Jobs, Growth
and Prosperity PAC, also called the "Jobs Coalition PAC" in state records,
is a pro-business lobbying group that backed Karmeier.
According to records, a nonprofit corporation called the Justice For All
Foundation formed in June and donated $385,000 to the Justice For All PAC,
which was formed in October. The PAC, in turn, spent that and other money
in support of Maag. Both the PAC and the foundation are based at the same
East Alton address.
Anyone who donates money to the Justice For All PAC must be identified in
state records. But the Justice For All Foundation isn't under such
requirements, because it isn't registered as a PAC. Nothing in state
records shows where the foundation got the $385,000 that it gave to the
PAC.
A Madison County union official, George Machino, is listed as the treasurer
of the Justice For All Foundation. Machino is president of the Greater
Madison County Federation of Labor. He did not return numerous phone calls
over the past week to his home and office.
The mystery surrounding the unidentified donations has fueled speculation
that they came from law firms outside the region trying to influence the
election.
Part of the reason for that speculation is that Madison County trial
lawyers have not been shy about attaching their names to hundreds of
thousands of dollars in contributions to Maag. The SimmonsCooper personal
injury firm in East Alton alone, or its partners, donated more than $1
million to Maag or to PACs that supported Maag, according to records.
"We never tried to hide the donations we made to Judge Maag," said Jeff
Cooper, managing partner of the SimmonsCooper firm. He said he did not
believe that his firm accounted for the unidentified donations.
On the other side of the race, the Jobs Coalition PAC - funded mostly from
business interests that supported Karmeier - got about $445,000 of that
money from a separate Jobs Coalition nonprofit corporation with the same
Oak Brook, Ill., address. Ultimately, about a third of that money made its
way to Karmeier's campaign.
The corporation, formed in January, also donated money to other funds,
including $8,000 directly to Karmeier's campaign.
The money trail in records was often a twisting one, making it that much
harder to trace. For example, a lump sum $150,000 donation was given by the
Jobs Coalition nonprofit corporation to the Jobs Coalition PAC on Sept. 27.
The next day, the Jobs Coalition PAC donated $150,000 to JUSTPAC, another
pro-business organization. Two weeks later, JUSTPAC donated $150,000 in one
lump sum directly to Karmeier's campaign.
While Illinois law doesn't limit political contributions, it does
specifically prohibit any one person or entity from making donations in the
name of another.
Doug Whitley, a Jobs Coalition official, said his group was created in
reaction to what he called the "anti-business stance" of Gov. Rod
Blagojevich. "Our mission was to hold the governor responsible, track
voting records and put money into candidates' races."
Whitley said his group counted 24 contributors, "all from the business side
of the ledger, all corporations, no individuals."
He defended the corporation's status as a nonpolitical entity that, as
such, was not required to submit the identities of its contributors before
the election.
"If we had gone out to raise money specifically for the PAC, to put money
into a specific campaign, then I think we could say, yes, this or that
company gave money to the coalition's PAC for the purpose of political
action," Whitley said.
"But if some of our contributors gave money without the intention that it
go to (Karmeier), then I don't think it would be fair to name that
corporation as one of his contributors."
Karmeier said Friday that he was unaware of any details regarding the Jobs
Coalition. "I don't know anything about them, frankly," he said.
Maag didn't return a call seeking comment Friday.
For years, Illinois leaders have resisted calls for campaign contribution
limits, saying it was enough that the state has one of the most stringent
disclosure laws in the nation.
"In Illinois, we don't have limits on how much contractors, regulated
industries, trial lawyers or anyone else wants to give. All we have is
disclosure," said Canary, of the Chicago-based watchdog group.
"Every time I go to the capital and advocate for more regulations, I'm
told, 'Sunshine is the best policy!' If that's the case, then from a reform
group's perspective, we can't allow our disclosure law to be chipped away
like this."