Saturday, October 25, 2014

The Scott Walker campaign finance investigation, explained

Spencer Platt, Getty Images News

For nearly two years, Wisconsin Governor Scott Walker and several of his associates have 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, trickling out only gradually in various releases of documents. Meanwhile, state and federal courts have issued rulings that have slowed the investigation to a halt.

On Wednesday, September 24, though, a federal court issued a ruling removing one roadblock for the prosecutors — and making clear that this matter hasn't yet been resolved. Yet prosecutors still face another key obstacle — they're fighting for court permission to use the evidence they think they need to build a case, and so far, one state judge has refused their request. Here's what you need to know about the John Doe investigation.

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 argued in one document that Walker, too, was involved in this "criminal scheme." Much of their basis for this claim was revealed in a court filing accidentally made public in August, revealing more emails prosecutors had obtained. In April 2011, Walker consultant Kate Doner wrote to Johnson, "As the Governor discussed... he wants all the issue advocacy efforts run thru one group to ensure correct messaging." She added, "The Governor is encouraging all to invest in the Wisconsin Club for Growth." A June 2011 email to Walker from an aide advises him to tell donors to donate to "your 501c4." Another email, from Doner to Walker and Johnson, suggests raising money from the Koch brothers and Sheldon Adelson. An email from an associate to Walker, prepping him from a donor meeting, says "This meeting is for WiCFG Funds," and adds, "THE ASK: contribute $100k to WiCFG." It seems clear that Walker was involved in the group's fundraising. "State prosecutors detail instance after instance of Walker meeting with high dollar donors and a check being received shortly afterwards by WCFG," Mary Bottari writes.

It's important to note that a lawyer for the special prosecutor has clarified that Walker "was not a target" of the investigation, and that he has not been subpoenaed. The "criminal scheme" comment that mentioned his name, the lawyer said, was just an argument "in support of further investigation" to determine "if criminal charges against any person or entity are warranted." That doesn't mean Walker's in the clear — but it means that prosecutors probably weren't close to charging him with anything.

However, the current issue holding up the investigation isn't even about whether charges should be filed against anyone. Instead, there's a dispute about whether all this presented probable cause to justify subpoenaing Johnson, Jordhal, and the groups for documents. At first, the judge assigned to the case agreed with prosecutors that it did — 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 perhaps 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 then halted the investigation for several months.

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.

But a federal appeals court panel stayed the order to destroy documents, and decided to hear prosecutors' appeal of Randa's ruling. On September 24, they voted unanimously to reverse it. "Principles of equity, comity and federalism counsel against a federal role here," wrote Judge Frank Easterbrook, a Reagan appointee. So, unless there's an appeal by Walker's team, the action will move back to state courts.

What happens next?

The federal roadblock to the investigation has been removed, but the state one remains. Now, the question of whether prosecutors had probable cause to launch raids against and subpoena documents from the consultants and nonprofit groups will be revisited by a Wisconsin appeals court. But this latest news makes it clear that the legal wrangling isn't yet over.

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