Joplin Globe: Some lobbyist groups operating in Jefferson City shield donors

by Crystal Thomas

March 5th, 2016

JEFFERSON CITY, Mo. — Jeremy Cady’s face is a familiar one around the Missouri capitol.

A lobbyist for the Missouri Alliance for Freedom, he is frequently seen testifying either in favor of or against legislation and meeting with lawmakers and their staffs.

As president of the group, Ryan Johnson, too, is familiar, and not just in Jefferson City. He travels the state on behalf of the Alliance, most recently speaking to Southwest Missouri Republicans gathered Saturday night in Joplin for the annual Jasper-Newton County Lincoln Days event.

Cady and Johnson also are part of another group making its presence known at the Capitol — “the dark money contingent,” according to one lawmaker.

Despite their ubiquitous presence in the capitol and elsewhere, no one knows who is funding them.

Hearing rooms

Cady turned up in House Hearing Room 5 one day last week, testifying in favor of some bills that would expand gun rights in the state, including one that would allow a person to use deadly force in self-defense without the obligation to back down when threatened — known as “stand-your-ground” legislation.

He also turned up in Senate Hearing Room 1 recently, advocating in favor of a bill that would allow religious organizations and some businesses that provide wedding services to opt out without any legal repercussions if it is a same-sex wedding.

When not testifying, he can be seen popping out of a state senator’s office, or sitting in a chair, laughing with legislative staffers.

The Missouri Alliance for Freedom was the sole voice in opposition on Jan. 13 to a bill that would raise the gas tax in Missouri as a way to pay for state highway work, a proposal endorsed by Missouri Gov. Jay Nixon during his State of the State address. The Alliance alleges on its website that the Missouri Department of Transportation is “ripe for reform,” and the lawmakers need to “rein in” the agency, beginning with a comprehensive audit.

It’s representatives testified against a prescription drug database, arguing that it would violate patient privacy. U.S. Sen. Claire McCaskill, D-Mo., held a hearing about the program at the beginning of the legislative session, chastising Missouri for being the only state without one.

Last fall, the Alliance also supported efforts to override the governor’s veto of right-to-work legislation, an override that was ultimately unsuccessful.

But testifying isn’t the only way the group has made its presence known.

Last month, the Missouri Alliance for Freedom helped sponsor a GOP gubernatorial debate, its name flashing up on TV screens on either side of the stage.

And while Cady focuses on being the voice in committee hearings and in legislators’ ears, Johnson said he spends a significant portion of his time traveling around the state meeting with grass-roots groups about conservative values.

Some lawmakers also prominently display the Alliance’s “Champion of Freedom Award,” which is given to lawmakers who score 90 percent or better on the group’s scorecard, which ranks House and Senate members on select bills based on how they voted and whether that vote was in line with the group’s values.

Kitchen conversation

Johnson said the Alliance began with a kitchen conversation in 2013 with his friend, John Elliot, who is currently the group’s vice president.

“The genesis of Missouri Alliance for Freedom was really born out of a sense of frustration with the status quo on the Republican side, as well as the Democratic side,” Johnson said.

Johnson said influencing the state legislature was the best way to make a difference. He said he wanted to push their three main principles: limited government, individual liberty and free market policies.

“We don’t want to set ourselves up as the final arbiter of all things conservative,” Johnson said. “But we want to be fair and firm in terms of trying to direct or help steer — influence if you will — the debate in Jefferson City from a traditionally conservative perspective with what I would call a little bit of a libertarian streak.”

He also said he doesn’t see his group as having the same level of funding or influence as other special-interest groups, such as Missouri Right to Life, the Missouri Club for Growth or unions. However, he acknowledged the Alliance’s “work ethic” and style, which he called “disruptive innovation,” have helped get them noticed.

The Alliance was set up as a 501(c)(4) nonprofit corporation. It and similar groups, even those with a political agenda, are often referred to as “social welfare” groups, taking their name from a section of the IRS tax code — “501(c)” — that regulates nonprofit groups, and — (4) — a subsection dealing with social welfare groups.

As a 501(c)(4) group, the Alliance does not have to disclose its donors, whether that’s $5 coming from thousands of different donors around the state, or from a single donor cutting one check, in effect hiring Cady and Johnson as his or her own personal lobbyists.

And that’s the rub for one lawmaker.

“Is this a widespread or populist perspective, or one person who generally has something to gain from pushing a candidate or issue?” state Sen. Jill Schupp, D-St. Louis, said last week when questioned about the Alliance and similar groups. “Does this receive broad support or deep-pocket support?”

Schupp is the one who said she sees the Missouri Alliance for Freedom as part of the “dark money contingent” operating in Jefferson City, and she also said she wished she knew who funded it and how many donors it has. As a sponsor of bill that would make 501(c)(4) groups disclose their donors, she said transparency is critical.

State Sen. Ron Richard, R-Joplin, senate president pro tem, also said last week that he also has no idea who is bankrolling the group, and that he’d also like to know.

Although state Sen. Ed Emery, R-Lamar, displays the Champion of Freedom Award in his office, he, too, said he does not know who supports the group, but added that he wouldn’t care, as along the Alliance’s values align with his.

The Alliance’s source of funding also has generated a lot of speculation and talk in the halls of the Capitol.

State Rep. Jeremy Lafaver, D-Kansas City, after the gun hearing last week, wondered if Phyllis Schlafly, of St. Louis, and her Eagle Forum could be behind it, but he said he wasn’t confident in his guess.

One pro-union lobbyist last week speculated that it might be the Koch brothers, David and Charles, of Wichita, Kansas, who are the subject of a current best-seller, “Dark Money,” about groups operating in a similar way at the federal level.

Other talk has raised the possibility of St. Louis megadonor, Rex Sinquefield, but he has been linked to another 501(c)(4) group known as Pelopidas.

State Rep. Bill White, R-Joplin, with whom Johnson shares a house in Jefferson City, also offered a guess.

“Herzog, right?” White asked last week, referring to Stan Herzog, whose contributions to state lawmakers over the years are approaching $2.7 million, according to a database of donations maintained by the National Institute on Money in State Politics. Herzog also is a seven-figure donor at the federal level, including a $1 million donation in 2012 to a political action committee that supported Mitt Romney’s presidential bid.

According to the Alliance’s tax filings, its operating budget is approximately $270,000. It does not make donations to political campaigns, Johnson said, and while according to the group’s website, endorsements for office may or may not be made, contributions to the Missouri Alliance for Freedom are not tax deductible.

Johnson last week said he wouldn’t disclose the group’s donors, either the number of them, or the dollars.

“Our donors are Missourians with conservative values,” was all he would say.

Links to Herzog

Although no one is confirming it, there are several links between the Alliance and Herzog, chairman and CEO of Herzog Contracting Corp., based in St. Joseph.

Herzog regularly shows up on lists of the state’s top political donors, such as the one compiled last fall by the Kansas City Star, or earlier by the St. Louis Beacon, an online news source.

Among other things, Herzog has given $75,000 to the Courageous Conservatives PAC, a Texas-based political action committee supporting Ted Cruz.

Both the Courageous Conservatives PAC and the Missouri Alliance for Freedom have the same treasurer — James C. Thomas III, a Kansas City attorney, according to the Federal Election Commission and the Missouri Secretary of State’s Office.

Thomas last week said he is the registered agent for several organizations, some political, some not, but said he wouldn’t divulge anything about his clients, citing lawyer-client confidentiality.

“Anybody that calls me is a conservative,” Thomas said. “I don’t get many Democrats calling me.”

“They have no connection to each other … other than they have the same lawyer,” Thomas said of the groups for which he is the registered agent.

Johnson, Cady and Elliott also are key Cruz supporters in Missouri, each listed as one of Cruz’s 32 “conservative influencers” last fall, part of the presidential candidate’s political leadership team in the state.

Herzog and the Alliance also have ties through a pair of political brothers. Todd Graves, former U.S. district attorney for the Western District of Missouri, is on the board of directors of Herzog’s company, while his brother, U.S. Rep. Sam Graves, a Republican, was Johnson’s boss in 2005.

Attempts to reach Herzog last week were unsuccessful, and when asked about the links, Johnson wouldn’t confirm anything.

Johnson did say the Alliance’s donors have a hands-off approach, though he does talk to them about politics.

“We are not going to accept a donation for somebody if a precursor for that donation is that we have to change our priorities or that there is expectation that we somehow go against our principles,” Johnson said last week.

Asked why the need for anonymity, Johnson said he fears retribution for his donors, such as when some IRS staff members targeted for additional scrutiny groups with the words “tea party” in them in 2013.

This argument was echoed on the Senate floor last week by Emery, when debate about campaign finance reform was introduced. The full Senate was able to weigh in on the question of anonymity for 501(c)(4)s when Schupp offered an amendment to a House-sponsored ethics bill. Her amendment would have required donors to be disclosed.

St. Joseph’s Rob Schaaf and Warrensburg’s David Pearce, both Republicans, and Kansas City’s Jason Holsman and St. Louis County’s Scott Sifton, both Democrats, argued for Schupp’s amendment, while many other senators, including Emery, argued against it.

Sen. Kurt Schaefer, R-Columbia, also offered an amendment that would require disclosing the names of donors to nonprofits that are run by staff or the spouse of a candidate or elected official. He said Schupp’s amendment, covering all nonprofit donors, was too broad.

Holsman said that if in court, a defendant is able to know who his accuser is, and he compared this with knowing who was funding groups, including those that can run political attack ads, saying the credibility of the accuser affects the legitimacy of his argument. Holsman also wondered whose interests are being served by allowing donors to remain anonymous.

Emery said Shupp’s amendment was an attack on liberty and would curtail donations that are otherwise freely given to private groups, who are public about their values.

Pearce replied by asking other senators what donors had to hide by keeping their names disclosed.

In the end, Shupp’s amendment was narrowly defeated with a vote of 15-15; Schaefer’s amendment passed.

Johnson said Schupp’s amendment was “not about transparency but shutting us down.”

And since the Missouri Alliance for Freedom does not donate to campaigns or participate in electioneering, Johnson said he didn’t think the public has a right to know about a private individual’s donation to a group run by private individuals.

Schupp disagreed with Johnson, and said influencing legislation and votes absolutely means influencing elections.

“Big dollars can equate to influence because it means they have access to legislators by being able to be in Jefferson City every day,” Schupp said.

Johnson said he gets questions about the anonymity of donors when he speaks at grass-roots events.

“I told them, if you are skeptical, I completely understand that,” Johnson said. “Watch how we behave for a couple of years, watch what we say and watch what we do for a couple of years, and then make up your mind about us.”

‘Full and fair warning’

When Johnson attends a grass-roots event with conservatives, he said he distributes hard copies of scorecards. Though several advocacy groups have scorecards, the Missouri Alliance for Freedom’s differs because of its breadth in subject.

Johnson said last year’s scorecard was narrowed down to 29 votes for the House and 24 votes for the Senate, with certain votes given additional weight when determining the final score. Johnson said the Alliance also sends out email alerts when a bill comes up, telling lawmakers ahead of time how the bill will factor into the scorecard.

Before legislators voted on the prescription drug monitoring program, Johnson said his group sent out an alert, urging House members to vote against the bill.

White, who voted for the prescription drug database, said he found the alerts to be annoying and “bullying.” Though he received a 92 percent on the group’s scorecard last year, he said he would never vote in order to receive a good score.

“It’s an attempt to pressure inappropriately,” White said.

“We are not playing gotcha or surprise with anybody,” Johnson said. “We give a full and fair warning that we are following this, what our position is, that we might grade on it.”

Johnson said he also mails copies of scorecards along with a cover letter to “legislators, their staff, their neighbors and the donors to the legislature, as well as other interested parties.” He said he believes the scorecard is influential and a helpful guide for voters, who will be able to see if their representatives are as conservative as they say.

“We actually get lobbied ourselves, now, by legislators and staff that say, ‘Grade this’ or ‘Don’t grade this’ or ‘This would be a better one,'” Johnson said.

Legislator-lobbyist

When Johnson is in Jefferson City he stays in the basement of a three-bedroom condominium owned by White, who also rents part of the place to state Rep. Charlie Davis, R-Webb City. Legislators informally leasing to lobbyists is a common practice, especially given the temporary nature of their stays in Jefferson City.

White said he didn’t know Johnson was a lobbyist when he began renting to him in January 2015 and accepted the first person who needed a room on the recommendation of Cady, whom White had known long before Cady was a lobbyist.

White said he called the Missouri Ethics Commission immediately after finding out about Johnson’s profession. White said the commission told him it was a lobbyist’s responsibility to disclose any business relationship with a lawmaker.

“I don’t want you to think he’s funneling me thousands of dollars or anything,” White said.

Johnson’s rent is $350, which is below market value, White later added. According to his monthly filing reports, Johnson has not reported this relationship.

Johnson said because the Missouri Alliance for Freedom pays his rent, he does not have to disclose the relationship. However, he said he realized the lack of disclosure was a technicality and would amend the reports just in case.

Globe staff writer Susan Redden contributed to this report.

Follow the money

To track political donations at the state level, go to the website of the National Institute on Money in State Politics, at www.followthemoney.org/.

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