Did Karl Rove earn any money from American Crossroads?

at 06:02 AM ET, 12/12/2012

Chris Matthews: “Who got all this money? Nobody got it — not even him {Karl Rove]. It was just wasted.”

Rick Tyler: “So he said. Do you really believe Karl Rove got no money?”

Matthews: “Well, he said he volunteered.”

Tyler: “Well, fine. Show us your K-1s and your tax returns and we’ll see if you got any money. I don’t believe it.”

exchange on MSNBC’s “Hardball,” Nov. 30, 2012

It is an axiom of Washington that when politicians spend money, lots of people are getting a piece of the action. So when the Super PAC American Crossroads spent some $300 million in 2012 on behalf of Republican candidates, with rather mixed results, some speculated that nevertheless Republican strategist Karl Rove, who co-founded the group, certainly earned a pretty penny.

Rove has denied he earned anything from his work with Crossroads, saying he was simply a volunteer. But that has not stopped the chatter.

After the election, US News ran an article titled “Why We May Never Know How Much Money Karl Rove Made Running Crossroads.” (The magazine later issued a long mea culpa, acknowledging “there is no credible basis to believe that Karl Rove earned any compensation, either directly or indirectly, from these outside groups.”)

Rick Tyler, a GOP consultant who is close to former House Speaker Newt Gingrich, also publicly expressed his deep skepticism on MSNBC’s “Hardball.” Tyler has also been a senior adviser to failed Senate candidate Todd Akin of Missouri, and during the campaign he publicly scolded Crossroads for not backing his candidate. “They would rather win television commissions than win the Senate,” he claimed.

But others have also assumed Rove ended up with a chunk of the millions of dollars raised by Crossroads. Bill Moyers in July said protesters “marched at the DC offices of American Crossroads and Crossroads GPS, which is the right wing money mills run by the mastermind of much of this massive fundraising, Karl Rove. He’s making a bundle himself, buying and selling free speech.”

Meanwhile, New York magazine columnist Frank Rich, on MSNBC’s Rachel Maddow Show, declared this week: “I'm sure he [Rove] gets a lovely salary from American Crossroads, too.”

In an exchange of e-mails, Tyler initially defended his comments, noting he was responding to Rove’s assertion of being merely a volunteer.

“I've not made a claim. He has. I simply don't believe his claim,” Tyler wrote. “I have no way of knowing if his assertion is true. Only Rove knows and given the responsibility he had with resources under his stewardship and that he was presented as an honest broker both on Fox News and The Wall Street Journal, he should provide some assurances that his assertion is true. We know that media buying precipitates commissions (kickbacks). Who got that money or where was it spent and why was it not disclosed?”

Rove is certainly a controversial figure, but we’re interested in the facts. Let’s look deeper at what the records show.

The Facts

American Crossroads was created after the 2008 elections, in an effort to create a conservative counterpoint to the alliance of labor and liberal interest groups that work on behalf of Democrats. As a tax-exempt organization subject to Section 527 of the tax code, the Super PAC is required to disclose its funding and its salaries, but a spin-off 501 (c)(4) nonprofit group known as Crossroads Grassroots Policy Strategies (Crossroads GPS) does not have to disclose donor information.

In an interview with our colleague Karen Tumulty, Rove explained why he decided not to take any salary — or even submit travel expenses.

As they talked to potential donors, Rove said, they realized “there was just a generalized sense that too much of this kind of activity was basically of, by and for the consultants. Donors said, ‘Consultants set these things up, pay a commission to fundraisers, hire themselves to do the work and pay themselves too much.’ ”
“Major donors said, ‘We write checks to these groups, but we’re not enthusiastic, given how they are going about their business,’ ” Rove said.
 He [Rove] noted it [American Crossroads] has a relatively small staff of 19 and said it pays its ad makers only 3 percent of the amount spent, the bottom in an industry where 10 and 15 percent fees used to be common. Ninety-five cents out of every dollar that Crossroads spends “goes onto the target,” he said.

None of Crossroads’s public filings — the numerous forms filed with the Federal Election Commission for American Crossroads or the 990 forms filed by Crossroads GPS in 2010 and 2011 with the Internal Revenue Service — show any evidence of Rove receiving any disbursements.

We consulted with campaign finance experts to see if there was anything we were missing — some way that Rove could disguise payments, such as through vendors.

Several experts noted that Rove could be a part-owner of one of the media or fundraising companies that were paid by Crossroads — what Tyler had called “kickbacks.” For instance, one company loosely linked to Rove’s old Texas firm received money from Crossroads, but we can find no financial connection between Rove and that firm today.

After our queries, we received a statement from American Crossroads that exceeded any previous comments on this matter.

“Mr. Rove receives no financial benefit either directly or indirectly from American Crossroads, Crossroads GPS or any of its vendors or subvendors,” said spokesman Jonathan Collegio. “He also pays his travel expenses out of his own pocket.”

Campaign finance experts agreed the sweeping statement covered all of the bases, leaving little wiggle room, and was fairly compelling without actually examining Rove’s personal financial records.

Given that Rove’s selling point for American Crossroads is precisely that it does not waste money on consultant commissions, he is certainly putting his credibility on the line if this statement ever turned out to be misleading.

After we sent Tyler the statement, he responded: “Well then, I withdraw my assertion and concede that he is paid exactly what he is worth.”

Meow!

The Pinocchio Test

We originally viewed Tyler’s statement as being in the same category as Harry Reid’s infamous claim that Mitt Romney never paid taxes — a claim based on no evidence, random phone calls and Reid’s own gut. Reid earned Four Pinocchios — and never took back that claim.

Tyler argued that he was not making a claim, but that Rove was. In any case, he has now withdrawn it.

The rumors and innuendos persist, perhaps because it seems inconceivable that anyone in Washington would do something for free. Rove has been placed in the position of having to prove a negative, when in fact the people making this charge have the responsibility to provide the evidence. Otherwise, it is simply McCarthyism.

So we are making a prospective ruling — to anyone who makes this claim in the future.

 Four Pinocchios





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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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