Outside groups pour money into Kentucky Senate race

anonymous donors spending millions on attack ads

habdullah@mcclatchydc.comOctober 31, 2010 

WASHINGTON — Millions of dollars in donations from wealthy, conservative and, in some cases, anonymous out-of-state donors have financed some of the most blistering campaign ads this season against Democratic U.S. Senate candidate and state Attorney General Jack Conway.

In all, outside groups have spent more than $4 million attacking Conway — nearly as much as the candidate has spent on his own race, according to federal campaign finance records.

Outside groups have spent more than $2 million against Republican Senate candidate Rand Paul. However, the Bowling Green ophthalmologist has been able to hold his own by spending roughly $6 million on his campaign.

In all, outside groups have spent a total of more than $8.5 million in the Kentucky Senate race, with the remaining $2.5 million being spent on advertising in support of either candidate (the balance of that in favor of Paul), according to the non-profit Sunlight Foundation.

"It's absolutely a money arms race," said Tara Malloy, associate counsel with the non-profit Campaign Legal Center, which tracks campaign financing. The 2010 election, she said, "is not unique; it's just that different weapons are being deployed."

Election law and campaign finance watchdogs say the financial floodgates were unleashed after a string of legal victories for conservatives — including January's Supreme Court decision allowing unlimited corporate and union dollars to bankroll independent election ads. Those legal wins, coupled with the Federal Election Commission's narrow interpretation of the rulings, enabled corporations and wealthy individuals to channel tens of millions of dollars into this year's midterm elections.

According to federal election records, billionaire public-storage tycoon B. Wayne Hughes, owner of Spendthrift Farm in Lexington, has given more than $2.3 million to American Crossroads, a conservative political action committee created by Karl Rove, the chief architect of George W. Bush's two presidential victories, and former Republican National Committee chairman Ed Gillespie. Mike Duncan, an Inez banker, prolific GOP fund-raiser and former chairman of the Republican National Committee, is chairman of American Crossroads.

The group has identified large donors, some writing seven-figure checks, to finance the nearly $16 million that it has spent to support Republican congressional candidates since Sept. 15, mainly in 10 key Senate races, including the closely watched Kentucky contest.

More than $1 million of that money was channeled into oppositional advertising against Conway, a McClatchy analysis found.

This week, the group sent out a mailer showing a sickly looking methamphetamine addict with hollow eyes as a symbol of what the group sees as Conway's "hollow promises" to curb the flow of narcotics into the region.

"Over the last two years, Democrats have added more than $3 trillion to the deficit, and we're very focused on putting the brakes on those policies by electing Republican senators," said Jonathan Collegio, a spokesman for the group. "We're trying to hold Republican open seats and Kentucky is critical there."

Last week, ABC News reported that the banker for American Crossroads is Lexington's Forcht Bank, owned by Kentucky businessman Terry Forcht. Forcht also owns a group of nursing homes, including Hazard Nursing Home, which Conway's office is prosecuting for allegedly failing to report the suspected sexual abuse of an an elderly resident in 2009.

Crossroads Grassroots Policy Strategies, a tax-exempt sister group that operates from the same offices as American Crossroads, legally isn't required to disclose the identities of any of the donors who have bankrolled $11 million in expenditures for GOP candidates, including seven of the closest Senate contests.

In September, Crossroads GPS aired a $520,000 ad attacking Conway for his "wrong way" in supporting "ObamaCare". Nationally, the group has spent more than $14 million against Democrats this cycle, according to the Center for Responsive Politics, a non-partisan organization that tracks money in politics.

The group has kept its donors' names secret under a rule that exempts those who didn't designate their money for specific ads. Sen. Max Baucus, D-Mont., the chairman of the Senate Finance Committee, has asked the Internal Revenue Service to investigate the legitimacy of such groups' tax status.

"Karl Rove, backed by his secret donors, is pouring money into Kentucky to attack Jack Conway," said Alec Gerlach, a Democratic National Committee spokesman. "But Crossroads has time and again refused to disclose the full range of their donors, leaving open the question of whether foreign interests are influencing Kentucky's election."

Gerlach called on Paul to demand that Crossroads disclose its donors or immediately remove any remaining ads.

Conway, after a rally Thursday at state Democratic Party headquarters in Frankfort, called the heavy spending by outside groups "absolutely tragic." He said the effect of the U.S. Supreme Court ruling that allows unlimited spending by businesses, unions and other groups "is playing out in this case."

He noted that the courts ruled in 1976 that money in campaign contributions basically equals free speech. "Now corporations have the same speech rights as individuals. It gets democracy further and further away from the people."

A law is needed, Conway said, "that says a corporation can't spend on direct advocacy unless the shareholders vote to spend the money.

"There are a lot of things we can do. But we really have to take a look at that decision because it is having huge ramifications here in Kentucky."

The Paul campaign says Democrats are grasping at straws.

"In election after election, international union bosses and Democrat-backed groups lead the way in special outside groups, and it is no different this year," said Jesse Benton, Paul's campaign manager. "Perhaps the selective outrage from Obama and the Washington liberals is the result of being so out of step with voters that they are frantically searching for someone to blame for what is about to be an overwhelming rejection of their big-government agenda."

American Crossroads and Crossroads GPS share some staffers — including the organizations' head, Steven Law — but they have separate boards and legal structures and are not the same entity, said Collegio, who is spokesman for both groups.

"I believe the folks who bring up disclosure should have been bringing up disclosure two, four or six years ago when Democrats dominated non-disclosure tactics," Collegio said.

Herald-Leader staff writers Bill Estep and Jack Brammer contributed to this report.

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