NC Dems say ‘social welfare’ group illegally aids House GOP

On Friday, the North Carolina Democratic Party filed a complaint with the state elections and ethics board, contending the coalition is working in concert with House Speaker Tim Moore, shown in this file photo, and other House Republicans in violation of state election laws.
On Friday, the North Carolina Democratic Party filed a complaint with the state elections and ethics board, contending the coalition is working in concert with House Speaker Tim Moore, shown in this file photo, and other House Republicans in violation of state election laws. News & Observer

Two years ago, the Carolina Leadership Coalition launched with the stated mission of promoting social welfare by advocating for economic development, innovative education strategies, lower taxation and limited government.

But the group’s website and social media accounts show it wants to keep Republicans in control of the state House, where they have a super majority, with lengthy critiques of House Democratic candidates that include brushes with the law, legal disputes and their criticisms of the NRA.

Two officials with the coalition also have key roles with Citizens for North Carolina, a political action committee supporting House Republicans. Within a month of the 2016 general election, the coalition gave two donations totaling $175,000 to the PAC. Two other coalition officials are identified as political allies of House Speaker Tim Moore from his home county. The coalition, PAC, and House Republicans also use the same businesses to raise money and produce campaign ads.

On Friday, the North Carolina Democratic Party filed a complaint with the state elections and ethics board, contending the coalition is working in concert with Moore and other House Republicans in violation of state election laws. Democrat officials wants the board to investigate the coalition, which they view as a political committee that should have been registered with the elections board.

“House Republicans, including Speaker Moore, are potentially illegally intertwined with an outside group, relying on them to help direct their polling, advertising, opposition research, and even which constitutional amendments they put on the November ballot,” said Kimberly Reynolds, the NCDP’s executive director, in an emailed statement. “Protecting the sanctity of our elections is paramount. This brazen coordination warrants an immediate and full investigation. Any violations must be rooted out and punished to curb future efforts to undermine our elections.”

The coalition’s president, John T. Coley IV, a Holly Springs businessman, could not be reached Friday evening through a phone message left for him at work, nor through his business or personal email addresses. He is chairman of the N.C. Wildlife Resources Commission and was reappointed to the commission by Moore last year.

John Coley.jpg
John T. Coley IV Melissa McGaw/NCWRC

A consultant for the coalition, Michael Luethy, responded on behalf of the organization in an emailed statement. He said the complaint is “defamatory” and based on “false assumptions, misguided guesswork, and incomplete research.”

“It attacks CLC for educating the public about the public records and positions of General Assembly members and candidates and is nothing more than a political stunt designed to chill the voice of a pro-business organization dedicated to limited government,” said Luethy, a former policy aide to Moore’s predecessor, Thom Tillis, who is now a U.S. senator.

Luethy included an opinion from the elections and ethics board’s executive director, Kim Westbrook Strach, stating in an unrelated matter from 2015 that organizations engaged in “issue advocacy communications” can coordinate with a candidate so long as the communications are not “electioneering” or contain “express advocacy.” The opinion also said payments for those communications can not be deemed “coordinated expenditures” or “contributions.”

It’s unclear how much of the coalition-produced material has been used by House Republican candidates or party officials. If the allegations are correct, the coalition could be forced to disclose the donors whose contributions total more than $2 million over the past two years, as well as how much each donor gave. Filings with the North Carolina Secretary of State show once fund-raising expenses were subtracted, the coalition netted $1.95 million. The group could also have to provide more details on its spending.

Some corporations report their giving to such groups voluntarily. Reynolds American, the cigarette manufacturer headquartered in Winston-Salem, has reported donating a total of $171,000 in 2016 and 2017 to the coalition. Telecommunications company CenturyLink of Monroe, LA, listed a $5,000 donation last year.

The coalition has sought nonprofit status as a 501(c)(4), which is the federal tax code designation for social welfare organizations, though correspondence with the NC secretary of state indicates that status is pending with federal government. Such groups can lobby lawmakers, but only on matters related to their exempt purpose. They can engage in political activities, so long as that’s not their primary purpose.

The coalition and similar groups are an outgrowth of the U.S. Supreme Court’s 2010 decision on Citizens United that allowed corporations and individuals to give unlimited amounts of money to support political causes without having to reveal themselves. This “dark money” spending is now in the hundreds of millions of dollars for federal elections, according to the Center for Responsive Politics.

In North Carolina, lobbyists can make donations to these groups, even as state law prohibits them from giving to candidates and political parties. That was a reform passed in 2006 as a result of scandals involving former House Speaker Jim Black, a Democrat.

The laws require such groups to not work with candidates or political parties, and to avoid running ads that tell people to vote for or against a specific candidate. Coordination complaints from Democrats and Republicans regarding these groups have become common during election season.

The NCDP’s complaint focuses on the connections between the coalition, the Citizens for North Carolina PAC, the House Republican Caucus and Speaker Moore.

Records related to the coalition from public sources show:

  • One of the founders of the coalition, D. Victor Edwards, who is listed as the secretary/treasurer, is also the assistant treasurer for the citizens PAC. The coalition’s federal tax return lists Murchison “Bo” Biggs, as a director and secretary; he is also the treasurer for the citizen’s PAC. Biggs, a Lumberton businessman, helped found the conservative Carolina Coalition super PAC in 2015. The prior year, then-Speaker Tillis appointed him to the Golden LEAF Foundation.

  • Two other founders, Johnny Hutchins and Ronnie Hawkins, are from Moore’s hometown of Kings Mountain. Hutchins is a current Cleveland County commissioner, while Hawkins, who died in 2016, served on the commission for 16 years. Both are Republicans who have contributed to Moore’s election campaigns. Hutchins also voted in favor of hiring Moore as the county attorney, though Hawkins was absent from that vote.

  • The coalition’s office in Raleigh is the home of Collin McMichael, the treasurer of the N.C. House Republican Campaign Committee, which lists as members Moore, House Majority Leader John Bell and Rep. John Szoka. McMichael runs a campaign compliance business, CM&Co, and his business email is listed as a contact for the coalition.

  • The coalition and the PAC have used the same business, Impact Strategies, for campaign ads, and the same fundraiser, Shook Consulting. The fundraising firm, led by Madison Shook of Raleigh, has also done work for the House Republican Caucus and Moore’s campaign committee. The other fundraiser for the coalition, The Macon Group of Greenville, lists as president Jonathan Brooks, a lobbyist with the Ward & Smith law firm in Raleigh.

  • In May, the coalition produced a poll that gauged support for several proposed constitutional amendments. One in particular, to create a voter ID, the poll’s author found, would drive up turnout among Republicans with low interest in the election, with “minimal” push-back from opponents. A month later, state lawmakers in the GOP controlled legislature put that proposed amendment and five others suggested by the poll’s author on the ballot for November.

The group’s website hosts opposition research reports on five House Democratic candidates, two of them around 300 pages each. One for Rep. Bobbie Richardson, a Franklin County Democrat, reports her opposition to the death penalty and support for allowing those with a deferred immigration status to apply for drivers’ licenses.

The website also includes a video advertisement attacking Gov. Roy Cooper, Attorney General Josh Stein and House minority leader Darren Jackson. While the website has a mission statement, there is no information regarding who manages it.

A number of position statements and talking points, as well as handicapping of competitive House races, are also on the site. It includes a solicitation for financial contributions or questions through an online portal or a post office box.

The coalition has also put out campaign mailers and Facebook ads against several Democratic candidates. In one, it makes an apparent reference to Kinston Democratic Rep. George Graham’s arrest for driving while intoxicated in 2016: “RECKLESS BEHIND THE WHEEL. RECKLESS WITH YOUR TAX DOLLARS.” The coalition also put out a mailer supporting incumbent Rep. Chris Malone, a Republican from Wake Forest who is in a close re-election campaign.

The coalition has drawn some notice. The Daily Haymaker, a conservative news outlet, among others raised questions about the coalition in August after its campaign ads began showing up in mailboxes.

But the coalition hasn’t hidden in the shadows.

Last year, for example, it sent out a news release of a poll that sought to measure public reaction to the replacement legislation for the controversial HB 2 “bathroom bill” that took away municipalities’ power to pass ordinances to protect equal access for gays, lesbians, bisexuals and transgender people.

Democratic officials are asking the elections board to force the return of any donations the coalition had improperly spent on elections. They also want the board to request a state judge to freeze the coalition’s operations while it’s being investigated, and call upon the Wake County district attorney to conduct a probe.

Dan Kane: 919-829-4861, @dankanenando
Craig Jarvis: 919-829-4576, @CraigJ_NandO