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American Issues Project

Obama Goes After Conservative Group — But Can't Find Business Filings

The Obama campaign has gone on the offensive against a multi-million dollar ad campaign by the American Issues Project, a conservative group tying the Democratic candidate to Bill Ayers, a one-time leader of the Weather Underground.

This new ad from the Obama campaign asks why John McCain is "talking about the '60s" — a direct message that he's ignoring current problems and a subtext that he's stuck in the past.

And because this is a campaign finance issue, there's also action on the legal front. Obama's lawyer Robert Bauer has done what lawyers do — dispatch letters, both to the Justice Department, demanding an investigation of the American Issues Project, and to stations running the ads. The letters were first reported by Politico .

In a small bit of irony, the letters from Bauer resemble an attack he mounted against the American Leadership Project, a 527 group that backed Hillary Clinton in the primaries and attacked Obama. It's ironic because ALP is now going after McCain on Obama's behalf.

Odder, perhaps, is this gap in Bauer's research, and what it shows about the inner workings of independent political operations.

In an Aug. 21 letter to station managers, Obama's attorney Bob Bauer writes, "There is no 'American Issues Project.' It is not incorporated anywhere...Its name is only a front to hide the true sponsors of this base and mendacious attack, and FCC regulations do not permit a shadowy front group to claim sponsorship of political advertising."

Apparently the Obama legal team did not look in the home state of Obama's running mate, Joe Biden. The American Issues Project does indeed exist, and Delaware, a popular spot for business incorporations, is where it's incorporated.

The story gets stranger from here. AIP was originally incorporated in May 2007 under the name Citizens for the Republic, according to Delaware filings.

The original directors of Citizens for the Republic were Paul Erickson, Richard Sharp, and Stephen Moore, founder of the Club for Growth and current member of the Wall Street Journal editorial board . Erickson (who served on the National Faith and Values Steering Committee for Mitt Romney's campaign in this year's GOP primaries) told us that CFTR — named after a group run by Ronald Reagan in the 1970s — was formed to push a conservative, free-market issues agenda, but never got off the ground.

Records show that CFTR changed its name to Avenger Inc. earlier this year, and then to American Issues Project just this month.

Erickson says Avenger Inc. was just a placeholder name, and that CFTR has nothing to do with American Issues Project. He said AIP has completely separate leadership and simply used the corporate "shell" of Citizens for the Republic after it disbanded. As to why AIP would take the corporate shell instead of forming a new one, Erickson said he could only guess that there were cost savings involved.

Odd that a group flush with some $3 million would have to cut corners like that. Perhaps another benefit was that Citizens for the Republic already had received 501(c)(4) nonprofit tax status from the Internal Revenue Service.

Inheriting 501(c)(4) status from the get-go would allow American Issues Project to claim a special exemption and do what few other political organizations can do: expressly advocate for the defeat of a candidate, namely Obama, without any contribution limits. At least that's what a Washington lawyer who specializes in nonprofits tells us.

The group would still eventually have to prove to the IRS that it stayed within the rules of its tax-exempt status. But it would start out golden.

Of course, the Obama campaign says that AIP is not playing by the rules of a 501(c)(4). Bauer's letter to John Keeney, deputy assistant attorney general at DOJ's criminal division, says that AIP is operating as a political action committee and ought to be constrained by the same contribution limits. Donors to PACs are limited to $5,000. One donor, Texas businessman Harold Simmons, put up $2.8 million for the ads.

UPDATE: Politico has AIP's response to the Justice Department. Interestingly, the group's lawyer, Cleta Mitchell, is the same one who registered Citizens for the Republic as a 501(c)(4) with the IRS.