Saturday, August 30, 2014

The Scott Walker campaign finance investigation, explained

Spencer Platt, Getty Images News

For nearly two years, Wisconsin Governor Scott Walker has been dogged by an investigation into activities surrounding the contested recall elections of 2011 and 2012. Yet many details of the investigation have been kept secret. On Thursday, however, a federal appeals court released 268 pages of documents that help shed some light on what's been going on.

If you got the impression from some early coverage that prosecutors were newly closing in on Walker — that's wrong. Instead, prosecutors are fighting for court permission to use the evidence they think they need to build a case. And so far, two judges have refused their requests.

What's the investigation about?

After Walker pushed through a law limiting the collective bargaining rights of public employees in 2011, several Republican state senators, and eventually Walker himself, were challenged in recall elections. Conservative outside groups spent millions on ads praising them and attacking their opponents.

State law requires that any such nonprofits spending on election ads do so independently, without any coordination with Walker or his aides. Prosecutors are arguing that they didn't do so — that, instead, Walker and two of his campaign consultants participated in a "criminal scheme" to "utilize and direct" the nonprofits' behavior. The investigation is being conducted under Wisconsin's unique John Doe law, which allows for many of the proceedings to be kept secret. The district attorney of Milwaukee, a Democrat, initiated the probe, but several other county prosecutors joined in, and a special prosecutor has since been appointed.

Importantly, no charges have been filed against anyone, and none appear imminent. Most of the legal wrangling so far has focused instead on whether prosecutors had probable cause to raid and subpoena documents from the consultants and nonprofit groups they believe to be involved.

Why do the prosecutors think a crime was committed?

As the recall campaigns began, Walker's top political adviser, RJ Johnson, was in close contact with conservative outside groups — especially one called the Wisconsin Club for Growth. It's undisputed that Johnson advised the Club to steer millions of dollars to other conservative nonprofits — some with close ties to him or his business partner, Deborah Jordahl. He also helped craft the Club's communications and advertising strategy, as it ran its own ads attacking or praising candidates in the state senate and state Supreme Court elections.

In court documents, prosecutors claim that Johnson in fact directed the activities of the Club, and used it as a "hub" for coordinating outside spending on the recall. As evidence, they say that Johnson has stated "We own CFG," and that Jordahl was a signatory to the group's bank account. Since Johnson was being paid by Walker's campaign at the time, prosecutors argue that this is illegal coordination between a paid campaign "agent" and an avowedly-independent outside group. And they say that the ads Johnson helped coordinate were, effectively, contributions to political campaigns.

The prosecutors claim that Walker, too, was involved — as one piece of evidence, they cite a May 4, 2011 email from Walker to Karl Rove, which states, "Bottom-line: R.J. helps keep in place a team that is wildly successful in Wisconsin. We are running 9 recall elections and it will be like running 9 Congressional markets in every market in the state (and Twin Cities)." But as the Washington Post notes, "the super PAC [Rove] co-founded, American Crossroads, was not involved in the Wisconsin recall races."

Now, no one is claiming that this is enough evidence to convict anyone of a crime — or even to file charges. Prosecutors are arguing that all this is probable cause to justify subpoenaing Johnson, Jordhal, and the groups for documents. And at first, the judge assigned to the case agreed — in October 2013, the consultants' homes were raided, and subpoenas went out to the Club and other groups, asking for financial records, emails, and other documents.

Why wouldn't all this be probable cause for a subpoena?

There's one big problem for the prosecutors' case. Watch the ad below — do you think it's a campaign ad?

Most ordinary people would say — of course that's a campaign ad, designed to trash Sandy Pasch's reputation right before her election. But, actually, the ad never mentions anything about an election. In its final line, the ad urges viewers to call Sandy Pasch — not to vote against her. The Wisconsin Club for Growth, and the groups that it funded, only paid for these kinds of ads.  And under federal campaign finance law, that would mean this is an "issue ad" — and not an illegally-coordinated campaign ad.

Since the Club and the groups it funded only paid for these kinds of ads, there's an argument that nothing illegal happened at all — and, therefore, that the prosecutors didn't have probable cause to suspect a crime. That instead, they were just going on a fishing expedition. So, after the raids, several targeted groups filed a motion asking for the subpoenas to be "quashed." In response, the prosecutors argued that Wisconsin law is more restrictive of issue ads than federal law is.

About a month after the subpoenas went out, the judge who had approved them, Barbara Kluka, recused herself from the case for unknown reasons, so judge Gregory Peterson replaced her. And in January 2014, Peterson ruled that the subpoenas should never have gone out, writing that prosecutors failed "to show probable cause that a crime was committed." He wrote that since the outside groups only funded issue ads, the coordination the prosecutors purported to show was in fact perfectly legal.

Initially, Peterson ordered the return of all documents seized. This could have significantly reduced, or even wiped out, the prosecution's chances at making a case. But two weeks later he stayed that order, so the evidence would be preserved in case a state appeals court ruled differently. The prosecutors' argument that they had probable cause, Peterson wrote, "is not frivolous. In fact, it is an arguable interpretation of the statutes. I simply happen to disagree. An appellate court may indeed agree with the state." The prosecutors soon appealed the ruling, but the state appellate court has not yet ruled on the matter — because a federal judge recently halted the investigation.

Why did a federal judge halt the investigation?

In February 2014, the Wisconsin Club for Growth and its director Eric O'Keefe filed a federal lawsuit. They alleged that the prosecutors' unjustified investigation and subpoenas had violated their First Amendment rights to free speech — chilling their group's fundraising and crippling its ability to advocate in this year's elections.

In May, federal district court judge Rudolph Randa agreed. "The plaintiffs have been shut out of the political process, merely by association with conservative politicians," Randa wrote, in a fiery opinion. "This cannot square with the First Amendment and what it was meant to protect." He agreed with Judge Peterson's ruling that the subpoenas were unjustified, because the groups only aired perfectly legal issue ads. Furthermore, Randa wrote, "The theory of 'coordination' forming the basis of the investigation... is not supported under Wisconsin law, and, if it were, would violate the United States Constitution."

So Randa ordered that the state investigation be halted. He even ruled that all documents collected from the subpoenas and raids must be returned or destroyed, though a federal appeals court panel stayed that latter ruling.

What happens next?

All action in Wisconsin courts has been halted for the time being as the federal courts sort things out. Prosecutors appealed Randa's decision, so a federal appellate panel is now considering the matter. (The new 268 pages of released documents have been unsealed by a federal appeals judge, because the prosecutors asked for their release, and neither O'Keefe nor the Club objected.) Regardless of how the panel rules, an appeal to the US Supreme Court is possible.

If the federal courts eventually allow the prosecutors' investigation to continue, things will pick up where they left off — the prosecutors will pursue their appeal of Judge Peterson's ruling on the subpoenas to a state appeals court (and then, potentially, to the Wisconsin Supreme Court).

Overall, the documents released Thursday provide new information on the case prosecutors sought to make, and what evidence they initially had. But they don't indicate any new substantive development in the investigation. Until prosecutors get permission from both federal and state courts to use the documents they subpoenaed, charges seem unlikely to be filed.

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