Analysis: Fight over GOP group's ads inject political and legal intrigue into governor's race

10/18/2011 08:24 AM

The Kentucky Democratic Party succeeded in not only halting, at least temporarily, the ads by an outside Republican group but also moving Kentucky to the forefront of a wider campaign finance debate.

It represents the first time an outside group’s ads have been taken off the air because of campaign finance disclosure questions since the U.S. Supreme Court’s Citizens United ruling in January 2010. That ruling paved the way for corporations to invest limitless amounts of money into independent campaign groups, such as American Crossroads or, in this case, Restoring America.

Franklin Circuit Judge Thomas Wingate granted the Democrats’ request for a restraining order on Monday because he ruled that Restoring America should have disclosed the names of the people that gave it money.

In its filing with the Kentucky Registry of Election Finance, Restoring America listed a single $1.365 million contribution from a non-profit corporation of the same name.

The Democratic Party argued that such a move was against Kentucky’s campaign finance laws. Wingate agreed.

Wingate’s decision to grant a restraining order Monday against Restoring America likely has triggered a major legal fight to come. Someone – whether it’s Wingate or potentially a federal judge – could be asked to try to rectify Kentucky’s rules for campaign committees to disclose its donors with the precedent from the Citizens United case.

In the meantime, the political and legal implications are many.

Campaign finance implications

After Citizens United came down, Kentucky’s Registry of Election Finance issued two advisory opinions in 2010 to help organizations make sense of how to adhere to the rules in Kentucky.

Unlike many states, Kentucky was well-positioned because state law already allowed for a strange animal called “unauthorized campaign committees.”

Those were committees independent of the candidates. They couldn’t coordinate with candidates’ election committees.

And while the Citizens United decision may have paved the way for unlimited contributions by corporations to such groups, Kentucky’s Registry ruled that such donors at least had to be disclosed to the public.

In fact, the registry sent a letter to Restoring America on Oct. 11 asking for four clarifications. Among the follow-ups was how Restoring America’s campaign committee distinguishes itself from Restoring America, Inc. – the non-profit corporation set up a week before the campaign committee formed in late September.

“If Restoring America, Inc., was capitalized with funds solicited … with the understanding that these funds would be … ‘passed through’ Restoring America” then those donors should be reported, the letter says.

*Political implications *

First the obvious: the restraining order takes the Republicans’ biggest player in the fall elections off the board unless lawyers from Restoring America convince Wingate to reverse his decision.

Republican candidate for governor David Williams has struggled to raise money on his own. After airing an ad in July and again in September, Williams hasn’t been able to buy more ad time.

Restoring America was the loudest voice on the air countering the advertising blitz of Gov. Steve Beshear’s campaign.

But the Democratic Party didn’t stop there. Its request to the court for the restraining order also asks the judge to order Restoring America “to disclose all of the contributors … to the Registry within in the next five days.”

And the court filing goes on to imply that Williams’ father-in-law, Russell Springs businessman Terry Stephens, “may be funding the 527 and, thus, the unauthorized campaign committee.”

“If that is the case, then further illegal conduct – coordination between a campaign committee and an unauthorized campaign committee – has occurred and continues to occur,” according to the petition for the restraining order. “Any discussion of advertising strategy between Senator Williams and his father-in-law or any other contributor to the 527 is in violation of (Kentucky law) and constitutes a felony on behalf of the candidate, committee chairperson and contributors.”

Stephens, president of Stephens Pipe & Steel, gave $1 million to the Republican Governors Association this summer, according to the RGA’s IRS filings.

Legal implications*

The Kentucky Democratic Party asked for the emergency injunction first thing Monday morning.

Wingate granted it. But Restoring America wasn’t notified of the restraining order.

Furthermore, Restoring America’s legal options, at least immediately, are limited.

Under Kentucky law, a temporary restraining order can’t be appealed to a higher court unless it can be shown that the judge who granted it was way out of bounds. Usually the swiftest way to challenge one is to pursuade the judge who issued it to reverse the decision in a follow-up hearing. So if Restoring America were to challenge the restraining order, its lawyers most likely would have to argue in front of Wingate at a hearing perhaps as soon as this week.

The Kentucky Democrats’ allegations of illegal coordination also add another dimension to the legal wrangling.

That could lead to a side debate over whether coordination between an outside independent group and a candidate can occur in on the “front end” – with fundraising – or just on the “back end” with discussions of strategy and ad messages.

Regardless, the political, legal and potentially precedent-setting effects of this case have injected a new life into this governors race that many political observers had been yawning over.


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