[Congressional Record Volume 145, Number 120 (Wednesday, September 15, 1999)]
[Extensions of Remarks]
[Pages E1892-E1893]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BIPARTISAN CAMPAIGN FINANCE REFORM ACT OF 1999

                                 ______
                                 

                               speech of

                           HON. DENNIS MOORE

                               of kansas

                    in the house of representatives

                      Tuesday, September 14, 1999

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 417) to 
     amend the Federal Election Campaign Act of 1971 to reform the 
     financing of campaigns for elections for Federal office, and 
     for other purposes:

  Mr. MOORE. Mr. Chairman, during the 1996 election cycle a Virginia-
based organization called Triad Management spent hundreds of thousands 
of dollars in my home state of Kansas, as well as in Oklahoma and 
Louisiana, among other states. The money was spent on sham issue ads of 
dubious accuracy. I am including in the Record with my statement a copy 
of a New York Times article that recounts Triad's activities in this 
regard.
  Rigorous debate is part of democracy in America, and free speech is a 
right and freedom that all of us cherish. When you and I stand up to 
exercise that right, not only to conduct the business of the people but 
also to run in partisan elections, we show our face. But there are 
those who enter the public debate anonymously, however, backed by 
funds, the source of which is unknown.
  Mr. Chairman, this type of activity has two effects on American 
voters. The first is to cause outrage--and rightly so. After all, how 
can one expect justice and fair play from a system that has the 
appearance of being up for sale?
  The second is apathy. Sadly, we know this to be true based upon 
recent voter turnout statistics. Average voters feel like they can't 
make a difference in our system of big bucks and anonymous 
contributions, and their response is to refuse to participate.
  Mr. Chairman, you and I have both seen this outrage and apathy. Isn't 
it time we do something about it?
  Triad is one of the many examples of this abuse of the system; abuses 
enactment of Shays-Meehan will end. By passing this bill, no one is 
telling the anonymous donors to Triad that they can't be a part of the 
public debate. Instead, it simply requires them to reveal themselves to 
the public and show their face, just like everyone else has to do.
  Mr. Chairman, passing H.R. 417 is the one step Congress can take that 
will most contribute to restoring the public's loss of confidence in 
our political process. People have an absolute right to know who is 
trying to influence their vote and the vote of their elected 
representatives.
  I urge my colleagues to pass H.R. 417 immediately so we can shine the 
light of day on this problem.

                       [From the New York Times]

                 A Back Door for the Conservative Donor


      Consultant Used PAC's and Nonprofits to Offer Maximum Impact

                           (By Leslie Wayne)

       Washington, May 21--When Floyd Coates, an Indiana 
     businessman and one-time candidate for Congress, decided to 
     make some big campaign donations in the last election, he 
     wanted to be sure that the $100,000 or so he planned to give 
     would end up supporting his brand of conservative, free-
     market, pro-military, anti-abortion candidates.
       ``I wanted to do all I could,'' Mr. Coates said. ``But I 
     didn't want my money to go to the 5 to 10 percent of the 
     Republican candidates who were too liberal, or to the 5 to 10 
     percent who didn't have a chance.''
       So, for guidance, Mr. Coates turned to Triad Management 
     Services, a Washington political consulting concern headed by 
     a former fund-raiser for Oliver L. North. Tapping into a 
     network of conservative donors across the country, Triad 
     funneled their money through nonprofit groups and political 
     action committees to support conservative candidates in 
     important races. By finding donors and advising them where to 
     put their money, Triad pumped more than $5 million into last-
     minute negative television, advertisements that benefited 
     Republican candidates and, in some cases, swayed elections.
       A Democratic candidate for Congress in Kansas was described 
     in an advertisement produced by Triad with money from 
     conservative donors as supporting ``special preferences for 
     gays and lesbians.'' She lost. A Democratic Congressional 
     candidate in Montana lost his slim lead, and the election, 
     after a Triad advertisement portrayed him as a wife-beater.
       In the hotly contested race for Bob Dole's Senate seat in 
     Kansas, the Democratic challenger, who had been running neck-
     and-neck, lost after a last-minute $200,000 advertising blitz 
     from Triad characterized her as a ``liberal'' from 
     Massachusetts, the state she left 20 years ago.
       Few people, least of all the Congressional candidates under 
     attack, knew where the money for these advertisements came 
     from: a little-known group taking advantage of loopholes in 
     campaign finance laws on behalf of Republican candidates.
       ``Triad played the role of an orchestra leader,'' said Bill 
     Hogan of the Center for Public Integrity, a nonprofit 
     research group. ``They had an ocean of money, and where it 
     comes from and where it goes doesn't have to be disclosed. 
     These organizations skirt the very fine print of the Federal 
     regulations. It's secret money, and the level of it is worse 
     today than during Watergate.''
       Working outside the confines of the Republican Party, 
     Triad, a profit-making consulting group, came up with ways 
     for conservative donors--including corporations, which are 
     prohibited from giving directly to Congressional candidates--
     to get money to tight races where conservative Republicans 
     stood a chance of victory. The money was often channeled into 
     television advertisements through nonprofit organizations--
     including one headed by Lyn Nofziger, a former aide to 
     President Ronald Reagan who was convicted of three felony 
     ethics violations--in ways that make it impossible to trace 
     the sources or the amounts of the donations.
       In a year in which one new loophole after another in 
     campaign finance law was being exploited, Triad carved out a 
     unique role as a middleman and showed how nonprofits could be 
     used to steer money into Congressional races. Triad did not 
     collect campaign dollars itself. Rather, it advised 
     individual donors on which candidates and political action 
     committees to support. And it found donors, whose names were 
     never disclosed, to contribute to nonprofit groups that used 
     Triad to design attack advertisements.
       In exchange for this, Triad collected a fee from the 
     individual donors and took a portion of the money raised for 
     the television advertisements. While there are many 
     Washington consulting firms that advise candidates and 
     parties, Triad is the rare one that advises donors.
       For a fee, Triad would advise donors like Mr. Coates on 
     which Congressional candidates and conservative political 
     action committees to support. In doing so, Triad enabled 
     conservative donors to maximize the impact of their dollars 
     by coming up with back-door, but legal, ways for them to get 
     money to Republican candidates in amounts above the $2,000 
     Federal contribution limits.
       This happened when Triad donors gave to candidates and to 
     political action committees that would, in all likelihood, 
     make donations to the same candidates. Using Mr. Coates as an 
     example, he and his wife, Anne, gave $5,000 to the Eagle 
     Forum, a PAC headed by the anti-abortion leader Phyllis 
     Schlafly, which gave money to candidates to whom the Coateses 
     had already given.
       For instance, the Coateses had already contributed $2,000 
     to Randy Tate, a Republican Congressional candidate in 
     Washington. Eagle Forum's political committee gave him an 
     additional $7,000. The Coateses gave $2,000 to Sam Brownback, 
     a Republican running for Mr. Dole's vacant seat in Kansas. 
     Eagle Forum gave $7,000. The Coateses gave $3,800 to Jean 
     Leising, a Republican Congressional candidate in Indiana, and 
     the Eagle Forum contributed $5,000.
       Similarly, the Coateses gave $5,000 to something called the 
     American Free Enterprise PAC, which in turn, gave $7,000 to 
     Mr. Tate and $4,500 to Mr. Brownback. In all, the Coateses 
     donated to 14 conservative political action committees and 21 
     Congressional candidates; 17 of those candidates received 
     money from the PAC's that had received money from Mr. and 
     Mrs. Coates.
       ``I turned to Triad for research, and I liked their 
     recommendations,'' Mr. Coates said. ``I mailed checks to 
     PAC's and candidates that shared my pro-life Christian 
     values. But what the PAC's did with that money, I had no 
     idea. They got no direction from me.''
       The role of Triad is under scrutiny by the Senate 
     Governmental Affairs Committee, headed by Senator Fred 
     Thompson, Republican of Tennessee. Under prodding from the 
     Democratic minority, the committee recently subpoenaed Triad 
     and two nonprofit organizations hired by Triad to find donors 
     and produce last-minute multimillion-dollar advertising 
     blitzes attacking Democrats.
       One nonprofit is Citizens for Reform, headed by Peter 
     Flaherty, a one-time campaign manager for President Reagan. 
     Citizens for Reform raised and spent $2 million from August 
     to October 1996 on races in 10 states, with the most going to 
     Kansas and California. Mr. Flaherty said in an interview that 
     Triad had raised all the money for his group, which was 
     founded last spring, and had spent it for him.
       ``We played a major role in the 1996 election, and we are 
     quite happy with our results,'' Mr. Flaherty said. ``Triad 
     produced our television ads, drafted scripts and bought

[[Page E1893]]

     television time. They basically managed it and lined up 
     vendors for a television campaign and for our direct mail and 
     phone banks.''
       Citizens for Reform, as a nonprofit organization, is not 
     required to disclose its donations. Because it engages in 
     some lobbying, however, donations to it are not tax-
     deductible.
       In fact, it is the promise of anonymity--as well as a sky-
     is-the-limit rule on donations--that makes these nonprofit 
     groups popular among big donors. Unlike contributions to 
     individual Federal office-seekers and PAC's, there are no 
     limits on how much can be donated to a nonprofit. And 
     corporations, which are barred from donating to Federal 
     candidates, can give to nonprofits.
       ``Privacy is important to our donors,'' said Mr. Flaherty, 
     who added that his nonprofit did not take foreign money. 
     ``Nondisclosure is something we definitely point out.''
       The lack of disclosure, however, troubles some. ``This is 
     completely invisible money,'' said Kenneth Gross, former 
     enforcement chief for the Federal Election Commission. ``At 
     least soft money is disclosed. This money isn't. It's one 
     thing to have money that is under the radar screen. Money 
     from nonprofits isn't even close to the radar screen.''
       The second nonprofit Triad advised was Citizens for the 
     Republic Education Fund, where Mr. Nofziger is a director. 
     This group spent $2 million at the end of the 1996 election 
     on advertisements produced and designed by Triad with money 
     Triad had found for the nonprofit group. These spots focused 
     on United States Senate races in Arkansas, especially against 
     Winston Bryant, a Democrat who lost.
       Mr. Nofziger declined to comment beyond saying, ``As long 
     as they are fiddling around with Senate hearings, it's best 
     for me not to talk.''
       Triad's founder and president is Carolyn Malenick, a former 
     fundraiser for Mr. North. She also heads Citizens for the 
     Republic Education Fund. Ms. Malenick's commitment to the 
     conservative cause is well known, as is her fund-raising 
     prowess.
       ``Carolyn is a terrific fund-raiser,'' Mr. Flaherty said. 
     ``She has a Midas touch. She has a bigger vision than others. 
     People were never asked to contribute at this level before.''
       Triad collects a management fee based on donations to the 
     two non-profits--in essence, a cut of all the money they 
     raise. In addition, Ms. Malenick charges some donors a fee 
     for her advice, on a sliding scale.
       ``My clients are typically socially conservative 
     businessmen and women,'' Ms. Malenick said in an interview. 
     ``I provide them with due diligence, or research, in the 
     political environment. If you want to buy stocks, you go to a 
     stockbroker and get research and advice. That's what I do in 
     the political arena, which is heavily regulated.
       ``We don't dictate or tell my clients what to do. We say, 
     `Here are the campaign giving limits and here are the laws.' 
     We say, `Here are the candidates who are viable and who feel 
     the way you do.' ''
       Mark Braden, former general counsel of the Republican 
     National Committee and Ms. Malenick's lawyer, compared her to 
     a corporate consultant. ``Carolyn has taken a Fortune 500 
     activity, consulting, and moved it to a group of socially 
     conservative rich folks,'' Mr. Braden said. ``And it's worked 
     well.''
       One group Ms. Malenick said she did not work with closely 
     is the Republican Party, although Republicans like Senator 
     Don Nickles of Oklahoma have appeared in her literature. 
     ``I'm not an agent of the Republican Party,'' Ms. Malenick 
     said. ``I don't work for them. We choose where to get 
     involved, and there is no need to tell them.''
       Rich Galen, a spokesman for the National Republican 
     Congressional Committee, confirmed that view but acknowledged 
     social ties between Triad's principals and the party. ``Lots 
     of people in this town get seen in the same places,'' Mr. 
     Galen said. ``So I don't want you to think some of these 
     people don't show up in the same place and have a drink. But 
     we do not do any coordination with them. That would be 
     improper.''
       As well as illegal. One of the questions Senate Democrats 
     want answered involves the extent of coordination, if any, 
     between Triad, the nonprofits and the Republican Party. If 
     coordination is shown, then Triad's nonprofit organizations 
     could face the same disclosure and spending limits as other 
     political committees.
       Those on the receiving end of Triad's advertisements said 
     they had been stunned by the onslaught. Jill Docking, a 
     Democrat, was in a dead heat with Mr. Brownback for the 
     Kansas seat vacated by Mr. Dole. She saw her chances vanish 
     after an advertising blitz.
       ``We couldn't figure out where the ads were coming from,'' 
     said Ms. Docking, a Wichita stockbroker. ``Even more 
     frustrating was the massive deluge. The ads came at me in 
     every direction in the last weeks. There were five or six of 
     these ads to every one of mine. Our television looked pretty 
     pitiful. It clearly swayed the election.''
       Those who benefited from Triad's activities, like Senator 
     Brownback, said they did not have a hand in the 
     advertisements.
       Still, the spots did not hurt. Said David Kensinger, Mr. 
     Brownback's deputy campaign manager, ``Never look a gift 
     horse in the mouth.''

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