Political groups in Nevada continue stubborn fight against disclosing donors

By Andrew Doughman

Published Tuesday, Jan. 14, 2014 | 2 a.m.

Updated Tuesday, Jan. 14, 2014 | 8:22 a.m.

Nevada’s politicians are assembling stockpiles of money, the ammunition for this year’s election campaign season.

They will report millions of dollars in campaign contributions this week on annual disclosure forms, but that's just the money elected officials are required to report.

As in the 2012 election, groups unaffiliated with any candidate will likely spend millions of dollars to bankroll advertisements aimed at Nevada voters, and it’s unclear what, if anything, these groups need to tell you about who’s paying for the ads.

Judges in several Nevada court cases are considering whether groups sending political messages must disclose their donors in Nevada.

For instance, you get a mailer at home from an organization telling you negative things about a candidate who will be on your ballot; do you have a right to know who’s sending you this mailer?

To get an answer, the courts are weighing fundamental questions about free speech and the role of government in regulating transparency in elections.

“What’s at stake with these cases is actually an extremely important debate about free speech, organizational constitutional rights and so forth,” said Daniel Stewart, a lawyer at Koch & Scow who does work for the Republican Party.

Secretary of State Ross Miller has argued in all three cases that voters deserve to know who’s financing the election season messages they receive.

“It all comes down to basic transparency,” he said. “All we’re asking is that these groups that are engaging in substantial political speech and trying to influence our elections disclose who is paying for this speech. We’re not trying to limit anybody’s speech, but we’re simply trying to say if you’re trying to influence the outcome of the election, voters should know who’s trying to influence that outcome.”

To that end, Miller, a Democrat, brought lawsuits against three groups — Americans for Prosperity, Alliance for America’s Future and Citizen Outreach — that he said attempted to influence an election without disclosing donors.

• In July 2012, conservative group Citizen Outreach was fined for failing to file expense reports showing how the organization paid for mailers criticizing former Assemblyman John Oceguera, D-Las Vegas, during his 2010 re-election campaign. Citizen Outreach has appealed the decision.

• In November 2012, the Nevada branch of national conservative group Americans for Prosperity won a lawsuit about whether the group had to disclose donor contribution reports for a negative mailer it published about state Sen. Kelvin Atkinson, D-North Las Vegas. Miller is not appealing that decision.

• Also in November, a judge fined Virginia-based Alliance for America’s Future for running an advertisement in favor of Gov. Brian Sandoval in the 2010 election. The group did not register as a political action committee in Nevada, and the courts have said the group will now have to disclose who paid for the advertisement. The alliance has appealed the decision to the state Supreme Court.

The varying decisions represent an area of state law in flux, and the consequences of the courts’ decisions apply directly to you, the voter, in terms of how much you’re allowed to know about these groups and in terms of what disclosures the state may require of you if you start circulating political fliers — even among a church or social group.

The courts first are weighing what constitutes political speech.

Under a law Miller supported during the 2011 legislative session, political speech means you’ve got to “expressly advocate” for the victory or defeat of a candidate or ballot measure.

“It all hinges on express advocacy,” said Matt Griffin, partner at the Capitol Company, a lobbying firm, who also was secretary of elections for Miller until 2010. “When you cross that threshold, you have to disclose.”

That’s the first point where the legal conflict arises. Are these groups advocating for one candidate to win or lose, or are they performing a civic duty in helping voters become better educated about candidates?

“What you’re seeing in these cases is the difficult attempt to try to draw the line between those two types of activities,” Stewart said.

Many groups exploit that confusion by moving money into political advertising by funneling cash through what the federal Internal Revenue Service calls a 501(c)(4) “social welfare” organization. So long as these groups aren’t primarily political, they can spend money on political advertisements without disclosing their donors as candidates have to do.

Such a situation is a selling point for these groups.

“Our donations are confidential,” wrote Erin Neff, former executive director of ProgressNow Nevada Action, in an April 27, 2012, fundraising email appealing to Nevadans to donate to a campaign for state Sen. Pat Spearman, D-Las Vegas. “As a 501(c)(4), ProgressNow Nevada Action does not publicly report its donors.”

The nonprofit organization’s 2012 annual financial disclosure form shows about $355,000 in “contributions, gifts, grants” but offers no further detail, making good on Neff’s promise that donors wouldn’t be disclosed.

Although Neff worked for an organization supporting liberal candidates, this is not a partisan issue.

Chuck Muth with the conservative Citizen Outreach group is still in court fighting against disclosure. He said he opposes disclosing donors because it could lead to retaliation against donors who are giving money to what might be an unpopular political cause.

That would unnecessarily restrict free speech, he said.

“I don’t know of anybody who cares, other than the media, who the donors are,” he said.

The courts care.

State laws about disclosure have changed numerous times during the past decade. In 2004, the state Supreme Court knocked down a law requiring the names and addresses of financial sponsors of political mailers to appear on the mailer.

Since then, state legislators have adopted a law that says donors must be disclosed when a mailer or other “communication, taken as a whole, is susceptible to no other reasonable interpretation other than as an appeal to vote for or against a clearly identified candidate.”

With the federal Supreme Court weighing a decision about individual campaign contribution caps, election lawyers say financial transparency is the next battle in how American elections will be conducted.

“If you’re willing to be involved in politics, then go ahead and be involved,” said Bradley Schrager, attorney with Wolf, Rifkin, Shapiro, Schulman & Rabkin, who often represents the Nevada State Democratic Party in court. “I don’t see why anyone needs the cover of darkness when it comes to the American political sphere. People have accepted money in politics. What they don’t accept is secrecy.”

In Nevada, it may be the state Supreme Court that answers these questions of free speech, transparency and money in politics.

It also could be an election issue.

Miller is running for attorney general, and Democratic Treasurer Kate Marshall and Republican state Sen. Barbara Cegavske both want to be the next Nevada secretary of state.

Marshall said transparency in campaign finance is “one of my priorities to deal with when I get into office.”

“People ought to be able to follow the money, and they ought to be able to know who is spending money to advocate various positions,” she said.

When asked about state law governing campaign finance disclosures, Cegavske said in an email: “I firmly believe in the First Amendment.”

“As Nevada's secretary of state, I will swear to uphold and defend the Constitution of the United States and the state of Nevada and will closely examine all issues with this oath in mind,” she said.

Regardless of who gets elected, you can expect to see plenty of anonymously funded political advertisements in Nevada this year.