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Much of the money that flowed through the network in the last election cycle originated with two nonprofit groups that served as de facto banks, feeding money to groups downstream, according to an analysis by Center for Responsive Politics researcher Robert Maguire, who investigates politically active nonprofits.
The biggest was the Freedom Partners Chamber of Commerce, an Arlington County-based group set up in November 2011 that now functions as the major funding arm of the network, according to people familiar with the operation. The organization, whose board includes current and former Koch Industries officials, brought in nearly $256 million in its first year, “significantly more revenue than was expected,” according to its tax filing.
Nearly $150 million was in the form of dues paid by more than 200 members of the organization, which is structured as a business league. An additional $105.8 million came from something called “SA Fund.”
James Davis, a spokesman for Freedom Partners, said the organization funds groups “based on whether or not they advance the common business interests of our members in promoting economic opportunity and free-market principles.”
Freedom Partners and TC4 Trust moved a large share of their funds through an intermediary group, the Phoenix-based Center to Protect Patient Rights, which served as a major cash turnstile for groups on the right during the past two election cycles. It is run by political operative Sean Noble, who served as a Koch consultant in 2012.
Rather than finance CPPR directly, Freedom Partners and TC4 Trust transferred $129 million to limited-liability companies with changing names that are registered in Delaware, a state that requires corporations to disclose little about their operations: Eleventh Edition (which was renamed Corner Table and then Cactus Wren) and American Commitment (which was SDN, then became Meridian Edition).
Their relationship to CPPR was unknown until May, when the Arizona group acknowledged in amended tax filings that the LLCs were its affiliates.
Such LLCs are known as “disregarded entities,” which means that, for IRS purposes, they do not exist. Their revenue is reported on the balance sheets of their parent organizations.
Tax experts said disregarded entities are typically used by nonprofits to, for example, hold a piece of real estate to shield an organization from liability.
But they also can be used to make it harder to trace the movement of funds between groups. In its final tax return, TC4 reported doling out nearly $28 million to 10 organizations with names such as POFN LLC, PRDIST LLC and TRGN LLC. Those are the affiliates of the groups Public Notice, Americans for Prosperity and Generation Opportunity, in that order.
The Post and the Center for Responsive Politics identified the groups that make up the Koch-backed network through an analysis of tax filings, which revealed their shared DNA. Most have affiliated LLCs and received a substantial share of their revenue from the feeder funds.
