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Deal’s pals’ PAC collected $327K+ with no disclosure
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By JIM WALLS
July 19, 2013 — A political committee run by close associates of Gov. Nathan Deal has pocketed at least $327,500 since 2012 without reporting it, apparently skirting disclosure rules and the federal tax code.
Major benefactors of the committee, Real PAC, include health-care interests seeking tens of millions — even billions — of dollars in business with state government. One donor, WellCare of Georgia, gave Real PAC $50,000 on the same day that state Medicaid officials said they planned to extend WellCare’s $1 billion-a-year contract for two years.
Real PAC’s other big undisclosed donors, identified by searching other PAC’s expenditures, include:
- United Health Group Inc. ($50,000), one of two insurers covering employees and retirees in the State Health Benefit Plan;
- BlueCross BlueShield of Georgia ($50,000), considered by some to be the front-runner to become the sole insurer for that benefit plan, replacing United Health and Cigna; and
- Georgia’s nursing home lobby ($70,000), which this year won a $10 million hike in a so-called “bed tax” that will bring an additional $20 million in federal funds to Georgia nursing homes. Lawmakers at the time had the jitters over possible political backlash if they renewed a much larger bed tax for hospitals. The Georgia Health Care Association, the nursing homes’ trade group, wrote a $50,000 check to Real PAC in December; its president spent $73 on dinner that same day for Deal, whose staff was preparing budget recommendations that would include the bed tax.
Real PAC has not disclosed those gifts or any others since December 2011, when it last filed a campaign finance report with the state ethics commission. The PAC registered with the IRS in 2011 but since then has filed no reports of donations and spending with that agency.
Rick Thompson, the PAC’s treasurer and a former executive secretary of the ethics commission, said it never had to file in Georgia because it made no contributions to political candidates.
Nationally recognized experts on federal campaign finance law, though, say groups organized like Real PAC cannot avoid disclosures altogether.
“You’ve got to disclose to somebody,” said Professor Ellen P. Aprill of Loyola Law School in Los Angeles.
Deal’s business partner, Ken Cronan, and Gainesville businessman Jim Walters, a lifelong friend of the governor’s, are the PAC’s secretary and chairman. Its name is a reference to Deal’s 2010 campaign slogan: “Deal. Real.” And its registered agent, Russell P. Love, is an attorney at McKenna Long & Aldridge, as is Deal’s high-profile attorney, Randy Evans.
But Real PAC, despite its name and its officers’ close ties to Deal, has operated independently of the Governor’s Office, Thompson said.
“This is an issue-advocacy organization,” he said. “It doesn’t coordinate with candidates or anything like that.”
Real PAC also does not appear to have filed annual tax returns with the IRS, as required by the federal tax code. None are listed on the IRS’ website, and PAC officials have not provided copies of such filings since Atlanta Unfiltered began asking for them in mid-June.
Walters, Real PAC’s chairman, said this week he knows nothing about the organization’s tax or campaign finance filings. “You’ll have to talk to the accountants about that,” he said.
Cronan and Love did not return telephone calls seeking comment. Nor did Brian Robinson, the governor’s chief spokesman.
While Real PAC did disclose $157,000 in donations in 2011, Thompson said it didn’t have to do so. “I think it was just being transparent … about who the organization was about,” he said.
Georgia law does not require PACs to file disclosures unless they donate more than $25,000 to political candidates in a calendar year.
Real PAC, though, claims status as a “qualified” state political organization that’s exempt from filing disclosures with the IRS. Experts say this type of “527” organization, named after a section of the federal tax code, still must file regular reports on its financial activity with a state or local agency.
“Some organizations disclose to the Federal Election Commission, some disclose to the state, and if you’re not disclosing to either, you have to disclose to the IRS,” said Aprill of Loyola Law School.
The exception was intended to keep state and local PACs from having to file twice, Notre Dame law professor Lloyd Mayer said.
“Congress knew that state [disclosure] laws varied a lot,” Mayer said, “so they said … you’re only going to get this exception if you have to report and you in fact do report information on your financial activity.”
The IRS could require violators to pay taxes on undisclosed income, said Donald Tobin, law professor at The Ohio State University.
Public records provide little insight into Real PAC’s activities. It’s collected at least $484,000 in donations but disclosed no spending. Campaign finance records show only one political entity, the Georgia Republican Party, has reported receiving a donation from the PAC — $20,000 in 2012.
Real PAC is winding down and will file paperwork within a few weeks dissolving the organization, Thompson said. “It was established and started to put a political message out there,” a task that is has completed, he said.
As treasurer, Thompson said he could not speak to what that message was.
The PAC’s website presents a photo of a smiling Nathan Deal and his wife, apparently at an election night victory celebration, and a form for users to submit their contact information. (Update: A couple weeks after I submitted mine, I got an email inviting me to “Grab Some BBQ!” with the governor.)
The only political message on the site: “With your help we can create a job friendly environment, better our children’s education, and protect our conservative values.”
Here’s a list of all known donations to Real PAC since it filed its last disclosure in January 2012:
- Aetna, $5,000
- Anheuser-Busch Companies, $50,000
- *AT&T Georgia, $50,000
- BlueCross BlueShield of Georgia, $25,000
- Comcast, $2,500
- Georgia Apartment Association, $5,000
- Georgia Cable Association, $2,500
- Georgia Health Care Association, $50,000
- Georgia Hospital Association, $2,500
- Humana Inc., $2,500
- Joe Tanner & Associates, lobbying firm, $2,500
- McGuire Woods, $5,000
- Pfizer Inc., $5,000
- United Health Group, $50,000
- United Health Services of Georgia, nursing-home chain, $20,000
- WellCare of Georgia, $50,000
*AT&T’s total include an August 2012 donation of $25,000 that the company first reported a few weeks after this article was published.