Gehrke: With courts ruling against ‘dark money,’ it’s time for Utah to try again to shine the light on campaign funds

Francisco Kjolseth | The Salt Lake Tribune The Salt Lake Tribune staff portraits. Robert Gehrke.

Sean Reyes got a lesson in dark money during his 2012 bid to be attorney general.

Late in the Republican primary, Reyes was on the receiving end of a nasty ad on television and radio, hammering him for a road rage incident he was involved in when he was a young man.

The ad came from a shadowy Nevada-based group, Now or Never PAC. The campaign manager for John Swallow, who was Reyes’ opponent at the time, swore up and down that Swallow’s campaign had nothing to do with it.

Swallow, we would come to find out, was not the most ethical of Utah politicians.

In fact, Swallow and his campaign consultant had laundered money from the payday lending industry — $425,000, in all — through a “daisy chain” of practically untraceable nonprofits, investigators hired by the House of Representatives later uncovered. And some of that money made it to Now or Never PAC.

This chart, produced as part of the House Investigative Committee's inquiry into former Attorney General John Swallow, illustrates the chain of non-profit entities that channeled money from the payday lending industry into attacks on Swallow's opponent, Sean Reyes, and Rep. Brad Daw, who had sponsored legislation to regulate the industry.

The payday lender money was also used to send a series of vicious mailers attacking state Rep. Brad Daw, R-Orem, who had proposed regulating the payday lending industry.

It is a well-worn political ploy: A group with a pleasant sounding name — Americans for Cuddly Puppies and Smiles — shows up with an ad alleging a candidate eats the faces off babies and voters never know who is really behind the scurrilous attack.

In the aftermath of the Daw attacks, Rep. Greg Hughes, then the House majority whip, pushed through legislation that would require nonprofits that engage in election activity to disclose their donors, so voters would at least know who was bankrolling them.

It didn’t last long.

Groups across the political spectrum — from Alliance for a Better Utah on the left to the National Rifle Association on the right — hated it.

Not long after it took effect, it was challenged in court by the Libertas Institute and the Utah Taxpayers Association — backed by the Institute for Free Speech, a corporate-backed Washington think tank — arguing that it violated groups’ free speech rights and the Supreme Court’s Citizens United ruling.

Then something curious happened: Reyes — who was on the receiving end of the state’s dirtiest dark money attack — caved.

The attorney general’s office agreed in 2016 that the law was unconstitutional and promised it would not be enforced. The next session, the Legislature repealed it.

“We understood it could potentially be challenged, but we thought we had a really strong bill,” Hughes told me Thursday. “The legislative branch and its attorneys were never given an opportunity to defend that. … I was very disappointed.”

(Last session, the Legislature passed a law that would allow lawmakers to hire their own counsel to defend a law if they think the attorney general’s office is mishandling it. The disclosure case was the only one that supporters could point to for why the bill was needed.)

This week, something interesting happened.

On Tuesday, the U.S. Supreme Court refused to hear a challenge to a lower court ruling that forces nonprofits that engage in political activity to disclose the identity of any donor that contributes more than $200.

The case stemmed from the group Citizens for Responsibility and Ethics in Washington (CREW) suing a dark money group, Crossroads GPS, co-founded in 2010 by Olympus High graduate Karl “Turdblossom” Rove. In the suit, they argued that the law requires disclosure.

The district court agreed, so did the appeals court, and Chief Justice John Roberts refused to intervene.

“This is a great day for transparency and democracy,” said CREW Executive Director Noah Bookbinder. “We’re about to know a lot more about who is funding our elections.”

Meantime, on the other side of the country, the 9th Circuit Court of Appeals upheld a California law that requires dark-money nonprofits to disclose donors in a nonpublic report to the state, which is intended to let officials sniff out fraud.

That law had been challenged by Americans for Prosperity Foundation, a 501(c)3 tied to David and Charles Koch — billionaire moguls and prolific funders of causes attacking business regulation and transparency.

If Americans for Prosperity sounds familiar, it also could be because there is a branch of the group in Utah that led the campaign against the ballot initiative to raise taxes to fund the Utah Transit Authority and now is working to kill a ballot initiative to expand Medicaid in the state.

And they get to do all of it without ever disclosing their donors.

Armed with these new court rulings, however, it’s time for the Utah Legislature to take another shot at cracking down on dark money groups in the state. It’s a fundamental issue of fairness. Why should candidates have to disclose donors while these groups scurry around in the dark?

“I think that bill is as relevant today as the day we ran it,” Hughes said.

And it is. Because when Americans for Cuddly Puppies and Smiles wants to buy our elections, voters deserve to know who is footing the bill.

Editor’s Note: On Sept. 27, KUED is hosting a free screening of the Sundance award-winning documentary “Dark Money” at 7 p.m. at the downtown library. After the film, Gehrke will be moderating a panel discussion on the topic. For more information, visit kued.org/events.