Anti-Obama Backer Broke Campaign Finance Law
Billionaire Backer Of Anti-Obama Ad Previously Broke Campaign Finance Laws
By Jason Leopold
The Public Record
Harold Simmons, the billionaire Dallas investor has grown accustomed to using his vast wealth to influence the outcome of elections.
For decades, Simmons has poured millions of dollars into the campaign coffers of mostly Republican lawmakers to get legislation introduced that would greatly benefit on his financial holdings.
Simmons has had a close relationship with President George W. Bush and the Bush family for more than a decade. He contributed at least $90,000 to Bush’s Texas gubernatorial campaign, was one of the largest donors to Bush’s presidential campaign in 2000, and donated $100,000 to Bush’s 2004 inauguration.
In 1998, Bush backed a highly controversial plan to construct a radioactive waste dump near the New Mexico border that Simmons’s company, Waste Control Specialists, would operate.
"I basically told George that I was involved in the company as a major investor," Simmons said in an interview with the Dallas Morning News in early 1998. "And wanted him to be aware of it in case the issue ever came up."
The Austin Chronicle reported last December that “Simmons seemingly greased every palm in the statehouse to smooth his radioactive plans, with his company, Waste Control Specialists, giving more than $2 million in political cash since 2001 while spending $2.8 million on 63 lobby contracts, according to Texans for Public Justice.”
Simmons was one of the main financial backers of the Swift Boat Veterans For Truth, the organization that ran a series of damaging television advertisements against John Kerry, the 2004 Democratic presidential nominee, attacking the senator’s service record during the Vietnam War.
In the 1980s, Simmons, who has been referred to as a “corporate raider,” waged a two-year battle to win control of military contractor Lockheed Martin before the company merged with Martin Marietta Corp. Simmons has built his fortune by orchestrating hostile takeovers. He controls an empire of sugar, manufacturing, metal, chemical, oil, real estate, insurance and other companies.
Now Simmons has reemerged as the main financial backer of American Issues Project, the latest in a long list of political groups Simmons has financed with the intended goal of influencing public perception of Democratic candidates and derailing their political aspirations. The groups have operated under tax-exempt status under section 501(c)4 of the United States tax code giving them free rein to raise unlimited amounts of cash to run negative campaign ads.
Critics believe these swift-boat type groups have abused the tax-exempt code and should be categorized as a political committee under federal election and campaign finance laws, which would limit donations to $42,000 and require the organizations to disclose the identity of their donors.
Up until last week, Democrats have not issued a forceful challenge to the way the swift-boat groups have operated. In the past, Democratic candidates have decided to ignore the attack ads funded by individuals like Simmons so as not to draw more attention to the negative claims contained in the ads—even though many of the allegations are untrue—or provide the groups with additional publicity.
But when the American Issues Project rolled out a stinging television advertisement against Sen. Barack Obama, tying the Democratic presidential nominee to domestic and foreign terrorists, the Obama campaign responded swiftly, urging the Department of Justice to launch a criminal inquiry into the American Issues Project, as well as the organization’s officers and donors, alleging violations of the Federal Election Campaign Act. Ed Failor Jr., a former aide to Sen. John McCain’s presidential campaign heads the organization.
Papers filed with the Federal Election Commission show that Simmons, who has raised between $50,000 and $100,000 for the McCain campaign, donated $2.9 million to the group on Aug. 12, all of which is being used to finance the attack ads against Obama.
Robert Bauer, general counsel for the Obama for America campaign, said in an Aug. 21 letter to John Keeney, the deputy attorney general of the DOJ’s criminal division, that the organization Simmons has funded is attempting to “evade the structures of election law” by advocating the “defeat of the Presidential candidacy of Barack Obama,” which would require the group to operate under the rules of a political action committee.
On Tuesday, Bauer stepped up his call for a DOJ probe, sending a second letter to the Justice Department demanding the agency specifically investigate and prosecute Simmons.
"We reiterate our request that the Department of Justice fulfill its commitment to take prompt action to investigate and to prosecute the American issues Project, and we further request that the Department of Justice investigate and prosecute Howard (sic) Simmons for a knowing and willful violation of the individual aggregate contribution limits," Bauer wrote.
A Justice Department spokesman said the agency was “reviewing” the letter and had no further comment.
In an Aug. 25 letter to the Dallas Morning News, Simmons said his "political contributions are dwarfed by my charitable contributions of $400 million."
In early 1998, Simmons settled a lawsuit filed against him by his two daughters paying them $100 million to drop their claims that he mismanaged the family trust.
"Those girls are no longer part of the family," Simmons said after the settlement deal was announced. "They're divorced from us."
Moreover, his daughters had alleged that Simmons violated campaign finance laws by donating at least $130,000 to Republican candidates through his family trust and in his daughters’ names between 1991 and 1995.
The Justice Department investigated Simmons to determine whether he violated federal election, tax or other laws. The Federal Election Commission leveled hefty fines against Simmons and longtime friend, former Sen. Phil Gramm, an aide to McCain’s presidential campaign, in 1993 for campaign finance law violations. Simmons paid a $19,800 fine to the FEC for exceeding campaign finance limits.
In a deposition, Simmons admitted he made about $200,000 in contributions in the names of his family members in excess of campaign finance legal limits.
If the DOJ launches a probe into the American Issues Project—and Simmons—it could lead to a radical change in the way these freewheeling, unregulated, Republican connected organizations have operated over the past five years.
Last year, Simmons, along with Dallas oilman T. Boone Pickens, and Houston homebuilder Bob Perry, bankrolled an effort to derail Sen. Hillary Clinton’s presidential hopes by launching the organization Stop Her Now. That group’s mission was identical to American Issues Project that the Obama campaign asked the DOJ to investigate.
Simmons has been an adversary of the Clinton’s since Bill Clinton’s second term as president. In 1997, Clinton became the first president in history to issue a line-item veto in a federal budget bill, removing a provision that would have granted Simmons a $104 million tax break on the sale of his sugar plant, the Amalgamated Sugar Company, to beet farmers in Oregon.
“A provision in the tax bill, included at the behest of several members of Congress, including freshman Rep. Kenny Hulshof, R-Mo., would have granted Simmons something both he and 2,000 beet farmers in Oregon desired: a graceful exit out of a joint venture deal that they had struck for the sole purpose of reducing, or eliminating altogether, a bill for $80 million in capital gains taxes Simmons was facing,” the St Louis Post Dispatch reported in an Aug. 12, 1997 article.
“To avoid capital gains, Simmons came up with a cumbersome arrangement: form a joint venture with the Snake River Sugar Cooperative, a group of 2,000 Oregon beet farmers formed for this purpose, and have the joint venture own the refinery and share the profits. Under the tax laws, this arrangement was not technically a sale, and Simmons owed no capital gains taxes, even though the cooperative paid him $260 million in the deal.”
Simmons fired off a letter to Clinton prior to the line-item veto.
He said that because the sale of the sugar beet refinery was closed in January 2007, the measure backed by Hulshof's measure would not benefit him financially. Simmons claimed that the sale was structured in such a way that he or his company, would not have paid capital gains taxes for 30 years regardless.
"The new legislation would not provide me . . . any additional deferral above what I have already received," Simmons wrote President Clinton. "Reports of an additional tax benefit to me are based on inaccurate information and are incorrect."
No less than a dozen members of Congress, including Sen. Phil Gramm, (R-Texas), an aide to the McCain campaign, supported the provision. Simmons had contributed tens of thousands of dollars to the lawmakers’ campaign coffers.
McCain, who was a supporter of president’s right to use line-item veto, changed his stance when Clinton said he would invoke it and remove the obscure provision that would benefit Simmons.
"I strongly urge you not to use this important tool at this time," McCain said.
But Clinton’s treasury secretary, Robert E. Rubin, said Simmons was not being forthcoming and pegged the billionaire’s tax break at more than $100 million if the budget bill was passed with the provision intact.
"This is a vendetta against Harold Simmons, and that's sad," said Allan Lipman, president of Snake River, after Clinton vetoed the provision. "They tried to shoot Harold Simmons and instead they shot our 2,000 growers."
Two years later, Sen. Larry Craig (R-Idaho), who was one of the original backers of the budget provision that would have given Simmons a massive tax break, resurrected the issue on Simmons behalf. Craig is the senator who pleaded guilty to soliciting sex from an undercover male police officer in an airport bathroom last year.
The anti-Obama ad that Simmons funded was rejected by CNN and Fox News, although some local Fox affiliates have been airing the spot. Sinclair Broadcasting, however, which drew fire in 2004 for an anti-Kerry documentary it aired prior to the election, has been running the Obama ad. Simmons was also a financial backer of the Kerry documentary.
Obama supporters inundated Sinclair with more than 93,000 emails criticizing the company for airing the spot.
“Other stations that follow Sinclair’s lead should expect a similar response from people who don’t want the political discourse cheapened with these false, negative attacks,” the Obama campaign said in a prepared statement.
Jason Leopold launched a new online investigative news magazine, The Public Record.