FreedomWorks tea party group nearly falls apart in fight between old and new guard

Stephenson has a passion for libertarian politics stretching back to the 1960s, when he attended seminars featuring “Atlas Shrugged” author Ayn Rand and economist Murray Rothbard, according to those who know him at FreedomWorks. Like Armey, Stephenson was an early supporter of Citizens for a Sound Economy, the conservative lobbying group founded by oil billionaires Charles and David Koch in 1984 that split into FreedomWorks and Americans for Prosperity 20 years later. The Kochs, known for bankrolling a variety of conservative causes, kept control of AFP, while Stephenson and Armey stayed with FreedomWorks.

FreedomWorks has been on a remarkable run in recent election cycles, growing its annual budget from $7 million to $40 million in just a few years and helping lead the tea party movement against Obama’s agenda. The group was among several that rose up last week in opposition to a failed proposal from House Speaker John A. Boehner (R-Ohio) to raise federal taxes on millionaires.

More from PostPolitics

On scandals -- real and imagined

Joel Achenbach

THE FIX | At the moment, the three scandals consuming the Obama administration don't quite measure up to Watergate.

Holder’s claim on the ‘Fast and Furious’ criminal citation

Glenn Kessler

FACT CHECKER | Attorney General Eric Holder said a U.S. attorney made his own decision not to pursue a criminal prosecution of Holder. But he got that wrong.

Part 4: ‘Why don’t you just make yourself legal?’ | Immigration: Pathway to now

VIDEO | The future remains uncertain for 11 million people living illegally in the U.S. Though immigration reform seems closer than it has ever been before, can Washington and the Obama administration effectively repair 30 years of broken policies?

• Immigration: Pathway to now

Read more

The group played a crucial role in ushering a wave of tea party candidates into office in recent years, staging rallies, hawking books and videos, and organizing media appearances with conservative personalities such as Glenn Beck and Rush Limbaugh.

“I’ve enjoyed my association with FreedomWorks,” said Sen. Mike Lee (R-Utah), who defeated incumbent Bob Bennett with help from the group. “Matt Kibbe and Dick Armey endorsed me early in my candidacy for the U.S. Senate, and they were a big help to me.”

Despite such testimonials, FreedomWorks has struggled with accusations that it is an “astro­turfer” — a national organization of big-money donors that swept in to lay claim to an independent movement.

According to public records, FreedomWorks received more than $12 millionbefore the election from two corporations based in Knoxville, Tenn.: Specialty Investments Group and Kingston Pike Development. The firms were established within a day of each other by William S. Rose III, a local bankruptcy lawyer.

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.

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.”