As a donor and sponsor of Troopathons going all the way back to my days at Captain’s Quarters, this exposé from ProPublica and The Daily Beast disappoints profoundly. We helped raise money to take care of the troops on the front lines, and we were hardly alone; lots of people joined in, including celebrities from the political and entertainment worlds in order to send care packages through Move America Forward to men and women in Afghanistan and Iraq. If the investigation by ProPublica is correct, though, a significant amount of the money raised went into the pockets of organizers rather than into those care packages:
Charities like Move America Forward, which accept tax-deductible donations, are not allowed to engage in partisan politics like other nonprofits, such as trade associations and social-welfare groups. Charities are also not allowed to pay excessive fees or wages to staffers or consultants, according to federal tax rules.
But an examination of Move America Forward’s tax returns shows that it is deeply intertwined with Russo’s political enterprises and businesses, paying millions of dollars to him and his consulting firm.
According to its five most recent tax returns, Move America Forward paid out more than $2.3 million to Russo or Russo, Marsh and Associates for services including “program management and advertising.” That’s about 30 percent of the charity’s overall expenditures over that time.
“It was just so shady,” said Kelly S. Eustis, a former consultant for the Tea Party Express, also known as Our Country Deserves Better. “With PACs, I know it’s dirty money–it’s politics. But this is a charity that’s supposed to be helping the troops.”
Russo is Sal Russo, the man behind Tea Party Express. TPE was one of the organizations accused by the Washington Post and the Sunlight Foundation in April of raising money mostly for itself. The report showed that TPE took in almost $3 million while spending just a little over $200,000 in ads, bus tours, and direct donations to candidates. Russo explained that most of the rest went to staffing for those tours and rallies:
Russo said that figure was misleading because most of the payments to his firm were reimbursements for the cost of staffing the elaborate bus tours and rallies that the group holds around the country.
“Everything goes on our credit card,” he said. “Sometimes there’s up to 45 people that we’ve got to feed and house.”
It may be more difficult to explain this:
In its 2004 application for tax-exempt status, filed under penalty of perjury, Move America Forward told the IRS that it would not directly or indirectly share facilities, equipment, mailing lists or other assets with any political organization.
Yet Move America Forward shares its Sacramento office suite with at least two of thethree PACs set up by Russo, Marsh, as well as The Campaign Store, DonationSafe and Frontline Strategies, a political consultant firm where Callahan is a partner.
According to the charity’s 2012 tax return, Move America Forward paid about $82,000 in rent that year. The PACs reported paying no rent for the same period, according to filings with the FEC. The office’s property manager confirmed to ProPublica that the rent for the office is now about $83,000 a year, plus fees for use of the common area, indicating that in 2012, the charity likely covered the rent for all of the suite’s occupants.
“That office rental arrangement is clearly inappropriate,” said Bruce Hopkins, a nonprofit lawyer in Kansas City, adding that the charity was subsidizing the PACs. “I can tell you right now, the IRS would be all over that.”
In his email in March 2013, Callahan said Frontline Strategies paid Russo, Marsh and Associates to sublease office space. Neither Russo nor Gonzalez responded to questions about the rent agreement.
The money flows back to Russo’s inner circle in other ways, too, according to reporter Kim Barker:
In May, one button on the charity’s website sent donors to the website of a company that processes credit-card donations called DonationSafe, founded by Callahan. Move Forward America doesn’t reveal how much it pays DonationSafe to process donations, but the company has received substantial fees for similar work for Russo-affiliated PACs. The Conservative Campaign Committee, then known as the Campaign to Defeat Barack Obama, paid DonationSafe almost $267,000 for credit card processing in the 2012 election cycle, when the PAC brought in $3.9 million.
Callahan, who has also worked for Russo, Marsh, and consulted for the Tea Party Express, did not reply to ProPublica questions about processing work related to Move America Forward.
Another donation button on Move America Forward’s website allows donors to send money for individual care packages or packages for an entire battalion. When a ProPublica reporter donated $24.99 to send a single package in May, her credit card bill showed the money went to a limited liability company called The Campaign Store. So did another donation made to the Troopathon event.
Russo is the president of The Campaign Store, which described its business as “retail political products” in a 2007 filing with the California Secretary of State.
There are also questions raised about the pitches MAF used to get donations for their care packages. Barker details several examples where MAF appropriated the photos, stories, and even donations of others to claim them as their own assistance. One pitch promised to send care packages to Afghanistan for a battalion that was actually far from the front lines in Okinawa.
If true, this saddens, angers, and sickens me — and I’m sure I’m not alone. How true is it? I’ve asked MAF for a response, and as of this writing, I have not received a reply. I would love to believe that it’s not true and that all of those resources went to where they were intended; I’m sure some of them did, so that’s at least some comfort while we wait for a full accounting from MAF and TPE.
Hopefully, that will come soon. After having asked CapQ and Hot Air readers for their support and participation in Troopathons over the years, I felt strongly that I needed to alert you to these developments quickly regardless. If these allegations turn out to be true, I apologize for being misled.
Update: Leon Wolf has more thoughts on our sister site RedState:
The basic thrust of Barker’s article is that Move America Forward, a charitable organization that purports to collect care packages to troops and which regularly hosts a Troopathon fundraising drive that is headlined by prominent conservatives, is being run improperly in a number of particulars. The overall insinuation and tone of the article is that Move America Forward does either little or no actual charity work and is in fact merely an improper conduit to make TEA Party consultants and/or their PACs rich. The folks who have a vested interest in discrediting the TEA Party have taken these insinuations and innuendo and are presenting them as what the article actually proves. …
First of all, I don’t know whether the statement at issue was true when Move America Forward actually filed their original application or not, and the ProPublica article does not say. Second, this arrangement, as well as the arrangement in which the Tea Party Express was apparently given free access to Move America Forward’s email list, are definitely improper under IRS regulations, if we again assume ProPublica is being truthful and accurate. There is nothing wrong or improper about the actual sharing of office space, material, staff, or mailing lists per se, but the organizations definitely should have had in place a cost sharing agreement whereby the PACs reimbursed the charity for the use of the office space and equipment. While improper (if true), these facts are most suggestive of negligence rather than active fraud, and they are definitely a long way from proving that the charity was “lining the pockets of TEA Party cronies.”
There is nothing in the lengthy article at all to support the most damaging innuendo of all; that Move America Forward is actually a shell that bilks people of their donation money that is supposed to go to troops and instead uses it to line the pockets of scam artists. In fact, buried among several paragraphs where ProPublica again treats their own ignorance and inability to uncover facts as proof of wrongdoing, ProPublica is forced to acknowledge that the one fact they were actually able to uncover is that some troops did in fact receive care packages from Move America Forward[.]
Some of the ProPublica focus on the use of photographs is rather minor in character, true. But the issues of having TPE founders and their vendor operations profiting from the transactions for the care packages is disturbing, if true, even if it doesn’t necessarily violate any laws. That’s certainly not what donors and sponsors thought was happening in the Troopathons, and both MAF and TPE owe those donors and sponsors a more detailed explanation than just dismissing the allegations because ProPublica made them.
Update, 6:41 PM: MAF has responded to this post and the ProPublica article in a new post.