October 5th, 2010
01:59 PM ET
4 years ago

Rove-backed group faces allegations of tax abuse

(CNN) – A major conservative group backed by Karl Rove is being accused of U.S. tax law violations for operating as a non-profit institution and shielding its donor list from the public domain by two campaign finance watchdogs in a letter sent Tuesday.

Democracy 21 and the Campaign Legal Center are urging the Internal Revenue Service to investigate the political activities of Crossroads GPS, the organization, backed in part by Rove, that has structured itself as a tax-exempt "social welfare" 501(c)(4) organization. As part of its tax exempt status, the group is allowed to both raise unlimited amounts of money and keep the names and organizations of their contributors secret - an allowance that facilitates groups of this type to raise considerably more money then standard so-called 527 groups which have to report their donors.

The IRS stipulates 501(c)(4) groups may intervene in campaigns "as long as its primary purpose is the promotion of social welfare." But the line between the "promotion of social welfare" and attacking Democratic candidates is far from clear and one the IRS has yet to articulate.

But no matter where the line is drawn, Crossroads GPS has crossed it, the watchdog groups say in their complaint filed with the IRS.

"In our view, Crossroads GPS is a classic example of a 501(c)(4) organization that is impermissibly using its tax status to spend tens of millions of dollars in the 2010 congressional races while hiding the donors funding these expenditures from the American people," Democracy 21 President Fred Wertheimer said.

A spokesman for Crossroads GPS called the allegation "baseless."

This is a baseless complaint, filed by a partisan group that makes its living by filing baseless complaints, said spokesman Jonathan Collegio. "Crossroads GPS carefully follows all laws governing 501c-4 organizations. Liberal groups spent more than $400 million in undisclosed campaign money in 2008 alone, with zero protest from this group."

Rove and former RNC Chairman Ed Gillespie formed Crossroads GPS in June as an offshoot organization to their previously formed 527 group "American Crossroads." Thanks to the donor anonymity that Crossroads GPS was allowed to provide, the group has reportedly been able to raise millions of dollars at a faster clip the original parent organization did. Together, the two groups, which are run out of the same Washington, DC office - have set a goal of raising $50 million ahead of the midterm elections.

Fueled by those hefty coffers, Crossroads GPS has launched a string of adds across the country in key races targeting vulnerable Democratic candidates.

Most recently the organization went up with ads in California, Pennsylvania, and Kentucky calling on the Democratic Senate candidates running there to "defend citizens of those states from the massive Obamacare legislation – including its big government mandates, Medicare cuts and tax hikes," according to a statement on Crossroads GPS' website.

The group has also launched spots in Nevada targeting Harry Reid, saying the embattled Senate Majority leader "cut sweet deals across the country" to "push Obamacare."

"The group makes almost no effort at all to hide the fact that it was created principally to impact the 2010 elections, and to take money from those interested in contributing to their efforts but doing so anonymously," said J. Gerald Hebert, Executive Director of the Campaign Legal Center.

Both Democracy 21 and the Campaign Legal Center describe themselves as non-partisan organizations.


Filed under: 2010 • American Crossroads • Karl Rove
soundoff (31 Responses)
  1. stufthis

    Rove was the mastermind behind the Bush/republican culture of corruption. Hope the Turd Blossom discloses his foreign donors.

    October 5, 2010 02:04 pm at 2:04 pm |
  2. stufthis

    The stimulus has worked, TARP has almost paid for itself, the CBO says that health reform will decrease the deficit and insure many of the almost 50 million without insurance, taxes are the lowest they have been in 50 years, it was the republicans who controlled the presidency and both houses who voted for the Bush tax cuts for the wealthy to expire in 2011, it was the republicans who drove the debt with unfunded tax cuts, drug programs unnecessary wars, and a huge increase in the size of government. It was the republicans who refused to support bills to create jobs,to stop sending jobs overseas, to help the middle class. No wonder 95% of republican money comes from billionaires and foreign entities.

    October 5, 2010 02:11 pm at 2:11 pm |
  3. Nelson, Colorado Springs Co

    Karl Rove say it ain't so, say it ain't so we believe in you and you are a heel row. (SMILE)

    October 5, 2010 02:16 pm at 2:16 pm |
  4. Chris

    Karl Rove yet again tied to some shady, slimy shenaningans.

    October 5, 2010 02:20 pm at 2:20 pm |
  5. BH

    The crooks will to any length to run their agenda and whitewash the naive public – it all works out for them at the end. Rove would be the most significant catch of the century. After all he was squarely behind the brains of the last 8 years of crookdom. No doubt the coffers in the fund will turn out to be the wealthy and the corporations. All the more reason Obama should have prosecuted these thugs when the trail was fresh.

    October 5, 2010 02:23 pm at 2:23 pm |
  6. all of America

    Kinda like Tim Geitner, one of obama picks.Most of obamas administration are corrupt to some extent weather it be tax cheats like charlie rangel,or crooks like maxine waters.Im shure if they would investigate the obama's , you could find all kinds of corruptions!

    October 5, 2010 02:23 pm at 2:23 pm |
  7. rob

    It figures that if Carl Rove is involved it should be investigated by the IRS. Why dont these supposedly "Non Partisan" groups call for investigations of groups in which George Soros or Move-on is involved?

    October 5, 2010 02:24 pm at 2:24 pm |
  8. walleye46

    A recent article in the Denver Post states that the money being spent by UNKNOWN DONORS in order to the the GOP back in office is unprecidented. Millions are being spent and the money is coming from sources that would benefit if the GOP had their majority again. Large Corporations, Oil Industry execs and all the rest are pushing their agenda. The Supreme Court ruling allowing such donations earlier this year needs to be looked at again and needs to be overturned.

    October 5, 2010 02:30 pm at 2:30 pm |
  9. Orlando Patsy

    What is wrong with bashful billionaires from all over the world giving money anonymously? Democrats took on Wall Street, and now it is costing them donations.

    October 5, 2010 02:32 pm at 2:32 pm |
  10. The Real Nate

    This is a testament to how bad things have gotten. This process needs to be more open on all sides so the people can decide. So we MUST press for proper campaign reform!

    October 5, 2010 02:33 pm at 2:33 pm |
  11. John

    Figures....lying and cheating is the Rove path to politics, so this isn't a surprise. He follows the Bush philosophy that says honesty is a sign of weakness. So lie and cheat yourself into political office, it's the American way (today).

    October 5, 2010 02:34 pm at 2:34 pm |
  12. T'SAH from Virginia

    I've been blogging now since I found out about BIG CORPs and BIG CORPs posing as 'SMALL BUSINESSES' – that is the next thing that should be investigated and I bet that is the NUMBER ONE REASON why the RepubliCAN'Ts are so much in a hurry to PROTECT SMALL BUSINESSES when they know DOGGONE well most TRULY small business will fall on, below or around $250,000 a year!!!!

    "...has structured itself as a tax-exempt "social welfare" 501(c)(4) organization." What else is 'structured' to be something else when in reality it's not!!!????

    AMERICA – Wake Up and smell the CORRUPTION!!!!
    The RepubliCAN’T/Tea Party that is SCREAMING the LOUDEST now while they spew HATE and FEAR are now showing their TRUE FACE of hating GAYS, Muslims, African Americans, so-called non-Christians; showing their true face of so-called hating BIG GOVERNMENT while they hide under ‘little shields’ and think they will go unnoticed in order to make ‘illegal’ money; they are showing their true FACE by making like they are CHRISTIAN when in reality they are 'the Devil' in disguise; their true FACE is shown while they try to make us believe that they really CARE when all they care about is $$$$$$ ('DOLLA' BILLS YA'LL)!!!!!!!!!!!!!!

    Some of the Democrat Politicians continue to distance themselves from their BASE and from those they should truly be representing just to AGREE and ‘tag along’ with the FAR RIGHT!! Where is that going to get you???? Keep it up and you will LOSE – if not this race in 2010 – it will be the next one because the Democratic BASE will remember!!!
    DEMOCRATS – as each day ticks by it is beginning to be more obvious that we need to STATE the CASE and mean it – UNITE the BASE and be proud of it – get out and campaign and send emails to your family and friends, telling them to WAKE UP and we will WIN this RACE in November 2010!!!

    This is T’SAH from Virginia and I approve this message!!! (I apologize that this messge is LONG but Necessary!!)

    October 5, 2010 02:34 pm at 2:34 pm |
  13. Fed Up

    Well, now they are all eligible for the Senate, House, or any appointed position. Well done folks.

    October 5, 2010 02:42 pm at 2:42 pm |
  14. King

    The repugs are the new american mafia they think they can say and do anything without repocussion. they almost obliterate the country. then tried everything to sabatage the dems when they were trying to fix their mess.now the mess is fixed, and the country growing again theyre trying to make it look like dems caused the mess and only them can fix it. this unbeleivable when so many people beleive the crap they spread.

    October 5, 2010 02:48 pm at 2:48 pm |
  15. Joseph

    Between Rove's under handed money laundering & tax evasion, and The Chamber of Commerce foreign money laundering the middle class is being sold down the river. Voters need send these criminals and their bought henchmen back under the rocks they crawled out from under.

    October 5, 2010 02:50 pm at 2:50 pm |
  16. reesse

    I am making an allegation that CNN helps create allegations that have no merit.

    October 5, 2010 02:51 pm at 2:51 pm |
  17. Eric

    So when you can't run on the issues and you certainly can't run on your very, very unpopular legislative "accomplishments," you attack, smear and deflect.

    Democrats... why are you not running on Obamacare, Government Motors takeover, Stimulus, Porkulus, bailouts, "pass it to learn what's in it," etc??? Why must you change the subject?

    Come on, you guys had a very successful time in congress these past two years. Obama literally got about 95% of everything he asked for. So, again, why so glum? Why must you distract, deflect and hold up shiny objects instead of running on your record?

    October 5, 2010 02:53 pm at 2:53 pm |
  18. diridi

    I told you this idiot is nothing but nonsense to the nation. This idiot is just like Rush Limbaugh, Glen Beck...and that cheating thug...Barney Ma-doff...o.k. Now this SOB talks and brainless idiots in America listen....what a pity...first we need to educate the people...in this country....This nation is just like third world nation, with no brain....pity....just vote for any Democrat....o.k, you are benefited at least...

    October 5, 2010 02:55 pm at 2:55 pm |
  19. sssimon

    In the end it was tax evasion that brought down that other gangster Al Capone. We can only wish the same for Karl Rove.

    Yes I know – "my comment is awaiting approval" and will never actually show up. Thanks CNN.

    October 5, 2010 02:56 pm at 2:56 pm |
  20. Sniffit

    Funny, a crossroads is where you sell your soul to the devil.

    BTW, I should correct a mis-speak from earlier...I had 527s and 501(c)(4)s backwards when referring to which one had the ability to keep their donors secret.

    October 5, 2010 02:56 pm at 2:56 pm |
  21. Monster Zero

    No citizens, tax abuse is any household making $250K or more paying 50k of it to the Federal Government and then another 20% of it on State mandated taxes and hidden taxes called fees. Time to wake up boys and girls and vote these Socialist pigs back to their slop yard and out of our pockets!

    October 5, 2010 02:58 pm at 2:58 pm |
  22. gt

    gee i wonder what left wing nut jobs back these so call watch dogs ...george soros ?

    October 5, 2010 03:03 pm at 3:03 pm |
  23. Realist

    Karl Rove involved in shady and/or illegal campaigning. In other news, the sun rose in the east today.

    October 5, 2010 03:04 pm at 3:04 pm |
  24. Bill in California

    ONE can ALWAYS tell when an important election is nearing. The fur and other stuff starts flying around. EACH SIDE hoping something will stick with us dumber than dirt AMERICAN VOTERS. It doesn't take a rocket scientist to see that our system is broken. Taken over by OPPORTUNISTS and ARROGANT, POWER HUNGRY elitists. The lines are drawn, there is no gray. Either you love being a ward of the STATE or you want this great country restored to what made it the jewel of the world, INDIVIDUAL RIGHTS AND FREEDOMS. With a government working for US. NOT the other way around.

    October 5, 2010 03:07 pm at 3:07 pm |
  25. Greg, San Francisco, CA

    Wow, an unethical Republican? I'm shocked! *rolls eyes*

    October 5, 2010 03:10 pm at 3:10 pm |
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