The Washington Post’s story of former House Majority Leader Dick Armey’s attempted coup of the tea party group FreedomWorks had the political press buzzing on Wednesday. But in the background, behind the dramatic account of a high-stakes D.C. power struggle, Amy Gardner’s story also supplied some answers to one of the abiding money mysteries of 2012 election.
In early November, several news outlets ran stories about a Knoxville, Tenn. man named William S. Rose III. Over six weeks that began in late September, using two newly formed companies with no other apparent purpose, Rose gave more than $12 million to FreedomWorks. The donations made Rose’s companies among the biggest corporate donors of the election cycle. In response to the press interest over his motivations, Rose released a six-page statement, denying that he or his companies were “shadowy” but insisting that the business of one of the companies, Specialty Group, was a “family secret” that would be kept secret “as allowed by applicable law — for at least another 50 years.”
The Post’s story this week reported that the money given by Rose’s companies actually came from Richard Stephenson, a “reclusive Illinois millionaire” and the founder and chairman of the board of the for-profit Cancer Treatment Centers of America. From the Post:
Rose, who could not be reached for comment, has said publicly he would not answer questions about the donations. But according to three current and former FreedomWorks employees with knowledge of the donations, the money originated with Stephenson and his family, who arranged for the contributions from the Tennessee firms to the super PAC.
[Adam] Brandon, FreedomWorks’ executive vice president, told colleagues starting in August that Stephenson would be giving between $10 million and $12 million, these sources said. Brandon also met repeatedly with members of Stephenson’s family who were involved in arranging the donations, the sources said.
Stephenson attended a FreedomWorks retreat in Jackson Hole, Wyo., in August at which a budget was being prepared in anticipation of a large influx of money, according to several employees who attended the retreat. At the retreat, Stephenson dictated some of the terms of how the money would be spent, the employees said.
“There is no doubt that Dick Stephenson arranged for that money to come to the super PAC,” said one person who attended the retreat. “I can assure you that everyone around the office knew about it.”
What’s not yet clear: why Stephenson, a member of FreedomWorks’ board, used Rose to mask his donations. Rose’s affiliation with FreedomWorks goes way back. According to the Post, Stephenson was an early supporter of Citizens for a Sound Economy, the conservative lobbying group founded in 1984 by the Koch brothers, which in 2004 split into FreedomWorks and Americans for Prosperity. To resolve the recent Armey struggle with FreedomWorks, Stephenson agreed to pay $400,000 per year over 20 years in exchange for Armey leaving the group.
Just last week, two watchdog groups, Democracy 21 and the Campaign Legal Center, filed complaints with the Federal Election Commission and the Department of Justice over the $12 million that came from Rose’s companies.
“The circumstances surrounding more than $12 million in contributions made to Freedom Works for America raise serious questions about whether this was an illegal scheme to launder money into the 2012 elections and hide from the public the true identity of the sources of the money,” Democracy 21 President Fred Wertheimer said in a statement.
Eric Lach is a reporter for TPM. From 2010 to 2011, he was a news writer in charge of the website’s front page. He has previously written for The Daily, NewYorker.com, GlobalPost and other publications. He can be reached at ericl(at)talkingpointsmemo.com