For at least forty years, Charles and David Koch, majority owners of a sprawling fossil fuels multi-national company called Koch Industries, have been blurring the lines between tax-exempt organizations and their own corporate political interests. We can now report that the blurred lines have disappeared. Koch Industries is unabashedly advertising for IT professionals at Indeed, LinkedIn, and at its own website to staff a massive voter data operation, i360, for the upcoming election. For the last five years i360 has been widely reported to be part of the tax-exempt group called Freedom Partners. That is now being called into question by these ads and documents we have tracked down at government archives. More about that in a moment, but first some necessary background.
There’s a rubric in law enforcement that if you want to find the perpetrator of a crime, you ask yourself this – who benefits. Cambridge Analytica, the voter database that harvested millions of Facebook users’ profiles without their permission and helped the Donald Trump campaign to victory in the 2016 presidential election is now bankrupt and under Federal investigation. Its financial backer, hedge fund billionaire Robert Mercer, has benefitted little in terms of packing the Trump administration with his own minions.
The group that has reaped monumental benefits, while preposterously telling Politico in 2016 that it had “decided to sit out the presidential race,” is Freedom Partners. According to SourceWatch, as of April, 12 people who previously worked at Freedom Partners are now working in the Trump administration. Among that group is Marc Short, Director of Legislative Affairs for Trump, who curiously stepped down from that post this past Friday.
Short was previously the President of Freedom Partners. The public tax filing in 2015 for the Freedom Partners Institute, a separate group, shows that Short made $1,100,328 in compensation from the related parts of Freedom Partners. That was chump change for what was accomplished for Koch Industries. According to the marching orders laid down for the Trump administration in a formal memo from Freedom Partners, Short and Trump delivered a bonanza – from the withdrawal from the Paris Climate Accord to the massive tax cut for corporations and the one percenters to the gutting of federal regulations and turning the EPA into a clown-like organization.
Also having ties to Freedom Partners is the perpetual defender-in-chief of the Trump administration on television, Kellyanne Conway. She formerly consulted for Freedom Partners, according to the public watchdog, Public Citizen. Then there was that strange hiring by Trump of an even dozen of Jones Day lawyers on the very day of his inauguration on January 20, 2017. According to Public Citizen, two of the main hires from Jones Day, White House Counsel Don McGahn and Ann Donaldson, Chief of Staff to McGahn, both previously represented Freedom Partners.
Freedom Partners is organized as a 501(c)(6) tax exempt organization that does not have to reveal its dark money donors to the public. Its Vice President, Nathan Nascimento, is a registered Federal lobbyist for issues near and dear to the heart of Charles Koch. It also has an affiliated Super Pac, Freedom Partners Action Fund, which does have to reveal its donors. Charles Koch and his trust have given $14 million to the Super Pac since 2014 according to the Center for Responsive Politics. The Super Pac runs attack ads on television against Democrats in election years. Time Magazine’s Philip Elliott reported in January 2017 that “In seven of the eight up-for-grabs U.S. Senate races last year, the Koch-backed candidate won. In all, Koch-backed candidates at all levels of races prevailed 96% of the time—a record any outside group would covet.”
Freedom Partners’ dark money donors have always been anonymous to the public, and now, thanks to a rule change announced just last week by Trump’s Treasury Department, even the IRS will no longer require the names and addresses of the donors of 501(c)(6) organizations. (That same rule change will also apply to 501(c)(4) nonprofits.)
Thanks to some high-priced lawyering, it’s been hard since its inception in 2011 to tell where Freedom Partners begins and Koch Industries ends. According to records at the Federal Election Commission, in just the 2013 tax year Freedom Partners paid the law firm Pillsbury Winthrop Shaw Pittman LLP $590,274 and another law firm, Weinberg Jacobs & Tolani LLP, $326,255 for “legal services”.
All but one of Freedom Partners’ 9-member Board of Directors is a current or former Koch company employee. The Board Chair is the same Mark Holden that is the General Counsel of Koch Industries. The 2016 tax return for Freedom Partners lists Robert Heaton as CFO and BDK LLP as the tax form preparer. Those two names also appear on the 2016 tax filing for the Charles Koch Foundation. Records at the U.S. Patent and Trademark Office show that a trademark attorney at Koch Industries, Warren L. Zeserman, obtained the trademark for i360 on May 3, 2016. The Secretary of State for California shows Demeter Analytic Services (reported to be the holding company for i360) located at the same address as Koch Industries’ headquarters in Wichita, Kansas.
Koch Industries previously took an ultra-aggressive stance against journalists covering their political activities and nonprofit front groups. They established a website called Koch Facts to disparage articles by those reporters. That website has been taken down but the Internet Archives’ Wayback Machine provides many glimpses of the website content over the years. On September 12, 2013 we found this statement about Freedom Partners at Koch Facts: “It operates independently of Koch Industries, and educates the public about a broad range of issues.”
How is all of this passing muster under tax-exempt laws? Since Trump took office, Washington has been defining down the concept of conflicts of interests to the point that it is almost meaningless in our lexicon today.
Since its formation in 2011, Freedom Partners (formerly known as Freedom Partners Chamber of Commerce) has funneled $486 million into Koch-related nonprofits or activities. For example, on the 2016 Federal tax filing it is required to make public (called a 990), Freedom Partners lists $952,779 it paid to the swanky Renaissance Esmeralda Resort and Spa in Indian Wells, California. That’s where Charles Koch held his semi-annual political network summit in 2016. Freedom Partners paid another $1,241,571 to The Broadmoor, a 5-start hotel and resort in Colorado Springs where the August 2016 retreat was held.
The help-wanted ads Koch Industries is now running show both its logo and that of i360. The ads include positions for Data Scientists with Ph.D.s, Database Engineer, Android Developer, Political Analyst and others. The career section of the i360 website lists the same jobs. When you click on “Apply Now” at i360, it links to an application at Koch Industries that says this: “Koch Industries collects the information you provide for the sole purpose of considering your employment at Koch Industries.”
The ad for the Senior Data Scientist defines part of the job as this: “Develop and apply models that predict individuals’ propensity to engage in a behavior or hold a particular viewpoint.” An ad for Automation Engineer makes it clear the job applicant will be deployed in this year’s election, writing: “…your work will be at the center of driving voter engagement in the upcoming campaign cycle and beyond.”
We emailed the Republican National Committee (RNC) to see if it knew that i360 was in fact independent of Koch Industries in 2014 and 2016 when multiple media reports said it had a co-sharing arrangement with i360 for voter database information. We received no reply. We emailed the media contact for Koch Industries, as well as Charles Koch and Mark Holden directly, asking them to clarify the ownership of i360. We received no response during all of last week.
Rank and file Republicans might find it alarming that the RNC was allowing the sharing of confidential voter data with a self-interested fossil fuels multi-national conglomerate out to gut environmental regulations and balloon the national debt through an ill-timed and ill-advised tax cut for the one percent. A precursor to that potential furor was sounded in 2015 when Katie Walsh, then Chief of Staff at the RNC told Yahoo News this: “I think it’s very dangerous and wrong to allow a group of very strong, well-financed individuals who have no accountability to anyone to have control over who gets access to the data when, why and how.”
The i360 website says that its database now has information on 199 million voters from all 50 states; information on 290 million consumers with 700+ data points; information on precinct election returns as well as data from the Census, NOAA, the Bureau of Labor Statistics and geo-spatial data; individual sentiment information on candidates and issues from its social media operations; and information from its grassroots groups (read Americans for Prosperity) and paid door-to-door knockers who are using a sophisticated hand-held device to update the database in real time in the pivotal weeks before an election.
But i360 is far more than just a voter database. It has social media targeting operations and really scary data collection that reaches into people’s homes. Consider this from their website:
Through an exclusive partnership with D2 Media Sales, the strategic relationship between DirectTV and Dish, i360 is able to identify households that meet your target criteria and serve ads uniquely to those households – no matter which stations or programs they are watching. With dozens of i360 custom segments pre-matched to more than 20 million DIRECTV and DISH homes, campaigns can now reach the largest addressable TV advertising platform in the nation. One-to-one television targeting combines the emotional impact of TV advertising with the precision and accuracy of direct mail marketing – resulting in the most cost-effective and high impact buying solution.
The website of D2 Media Sales further expands on this idea:
The set top box receivers in DIRECTV and DISH subscriber homes are like mini-computers. Demographic and voter file attributes specific to that subscriber are loaded on the box. Once an advertiser selects a target audience, we are then able to deliver a specific television commercial to that household during a commercial break when they are watching TV. The reporting that we are able to provide on the back end is more complete than anything ever seen in TV post campaign reporting.
Aside from its billionaires’ unlimited pockets, Koch Industries has another leg up on creating an unparalleled voter database. It owns a huge paper products manufacturer with brands like Brawny paper towels, Dixie paper cups, and Angel Soft toilet paper. What is to prevent it from seeking personal data every time it runs an online ad for these products.
If you think it’s impossible that a giant corporation would risk its reputation or wrath of the IRS attempting to control a tax-exempt organization, you might want to consider what Charles Koch did at the Cato Institute. As a result of a lawsuit filed in 2012, it emerged that Charles Koch had been a secret owner in the nonprofit Cato for 35 years, along with a handful of other men.
Koch Industries is one of the largest private corporations in the world with vast interests in fossil fuels, pipelines, chemicals, paper products, commodities trading and, most recently, a Wall Street-esque investment group, Koch Equity Development, that in November invested $650 million alongside Meredith Corporation to help it acquire Time Inc., publisher of iconic magazines like Time, Fortune and Sports Illustrated.
Charles Koch is the Chairman and CEO of Koch Industries. Together with his brother David, they are majority owners of the company they inherited from their father which has grown to estimated annual revenues of $100 billion. Each brother’s net worth is listed by Forbes as $51 billion. Their vast wealthhas been used for decades to fund a dizzying maze of interconnected nonprofit groups pushing an anti-regulatory agenda in Washington, leading to the sobriquet, the Kochtopus.
On June 5, the Wall Street Journal reported that David Koch was “retiring from his family-owned company and all political organizations.” At the time, a letter to company employees from Charles Koch assigned the surprise announcement to David’s deteriorating health. However, based on this voter database news, one has to wonder if David, and/or his wife, Julia, is balking at the radical new political direction. In recent years, David and Julia, who make their home in New York, have become part of the philanthropic aristocracy in Manhattan, giving hundreds of millions of dollars to hospitals, museums and a cool $100 million to the New York State Theater at Lincoln Center, now renamed the David H. Koch Theater.
Koch Industries has in recent years attempted to distance itself from its Kochtopus reputation, spending millions on a public relations and advertising campaign that included TV ads during the Olympics and Super Bowl. This concentrated effort at rebranding under the banner of “integrity” and “entrepreneurship” raises all the more questions as to why Koch Industries would choose now to appear to openly acknowledge its control of i360. One possible answer is that its rebranding feedback reassures it that it has won the propaganda war. Another, less comforting thought, is that since Charles Koch is now in his 80s, he’s decided to go for broke in taking over the Republican Party.
Another equally disquieting thought is that the Koch tracks in this 40-year attempt at a government takeover have been successfully erased. In October 2016, Ken Vogel, then with Politico and now with the New York Times, wrote that the Koch network was concerned that if Democrats retook the Senate, it “could find itself facing congressional investigations.” Vogel further reports that “about 200 staffers from the Koch brothers’ conservative advocacy network” were summoned to an auditorium and told “about the importance of destroying old physical and electronic files.”
Vogel says this meeting in mid-September of 2016 was preceded by an earlier one in the same month when “shredding bins were brought to the offices of various network groups, and employees were encouraged to identify sensitive files for destruction.”
While the U.S. intelligence community, the Justice Department and its FBI have their sights focused on potential Russian meddling in this year’s election, they may have completely overlooked the dangerous tentacles of a home-grown meddler.