Huffpost Politics

Specialty Group Inc., Mystery Firm, Formed Days Before $5 Million Campaign Gift

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SPECIALTY GROUP INC DONATION
AP

By JACK GILLUM, ASSOCIATED PRESS

WASHINGTON -- A shadowy Tennessee company donated more than $5 million to a prominent conservative super political action committee days after establishing itself.

So who's behind one of the largest batches of election contributions this year? There's a questionable trail.

Campaign finance reports filed late Thursday show that the political committee, FreedomWorks for America, received seven donations totaling $5.28 million from Knoxville-based Specialty Group Inc. The money, which accounted for about 90 percent of FreedomWorks for America's donations during the first 15 days of October, is helping pay for TV ads supporting conservative candidates for federal office.

An Associated Press review of Tennessee business records showed that Specialty Group filed its incorporation papers on Sept. 26, less than a week before it gave several contributions to FreedomWorks worth between $125,000 and $1.5 million apiece. The Specialty Group appears to have no website detailing its products or services. It is registered to a suburban Knoxville home.

Specialty Group's opaque contributions provide another example of the marked changes to the campaign finance system, in which corporations and individuals can spend unlimited sums of money to support candidate. Major donors, including those to a super PAC benefiting Republican presidential candidate Mitt Romney, have been caught routing significant donations through corporate entities, effectively cloaking their identities.

Unlike those contributions, the recent donations to FreedomWorks for America, along with more transparent contributions to hundreds of other candidates, are driving last-minute ad buys and get-out-the-vote efforts before the Nov. 6 election. FreedomWorks for America's reports show a dozen donations totaling $460 from donors named "Anonymous" and sharing the same address as FreedomWorks' Washington offices.

FreedomWorks spokesman Russ Walker declined to comment on its donors Friday, saying the group complies with the law when it to comes to how it raises and spends its money. The super PAC is affiliated with FreedomWorks, which is chaired by former House Majority Leader Dick Armey. FreedomWorks backs tea party causes and is an advocate for less government intervention and lower taxes.

The registered owner of Specialty Group, William S. Rose, did not respond to requests for comment. He did not answer a knock on the door Friday at his Knoxville home, which shares the same address registered to Specialty Group.

Perhaps bolstered with the influx of cash, FreedomWorks for America made a new $1.5 million ad buy in the Illinois House race between Democrat Tammy Duckworth and Republican incumbent Joe Walsh, the nonprofit group Sunlight Foundation reported.

The Senate campaign of Florida Rep. Connie Mack, among the biggest benefactors of FreedomWorks' super PAC ads this year, said it didn't know about the donation and doesn't control such independent groups, although it appreciated the group's support. Under federal law, super PACs can't legally coordinate with the candidates their support.

A handful of federal court decisions in recent years has upended the campaign finance system and has fueled an expansion of outside money, which critics lament as corruptive but supporters argue amounts to free speech. Super PACs have helped push a presidential fundraising race beyond $2 billion, not counting billions of dollars in additional spending by outside groups in House and Senate races.

Groups supporting President Barack Obama are also enjoying the cloak of anonymity for major contributors. Nonprofit organizations backing the president and his challenger alike are funding a separate, $100-million-plus barrage of issue ads. Those groups are organized under the tax code, not through the Federal Election Commission, and don't have to reveal their donors.

Federal rules still require timely disclosure for super PACs, which can expressly advocate the support for or defeat of a candidate. But determining who bankrolls expensive ad buys isn't always easy to figure out.

In summer 2011, a fledgling company dissolved shortly after making a $1 million contribution to a super PAC supporting Romney. Records showed the company, established and shuttered over a four-month period, was formed by Ed Conard, a Romney supporter who once worked with the former Massachusetts governor at the private equity firm Bain Capital.

Then, months later, a $400,000 gift from Seaspray Partners LLC turned out to be a fund connected with Boston-based Hellman Jordan Management. The AP pressed executives at the firm repeatedly before they revealed that a couple - some of Romney's fundraisers - received the $400,000 sum as part of an unspecified investment disbursement; the pair asked Hellman Jordan to give it directly to the super PAC instead of sending it to their personal checking account.

___

Associated Press writers Steve Megargee in Knoxville, Tenn., and Gary Fineout in Tallahassee, Fla., contributed reporting.

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