Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (44 page)

T
he picture was far brighter in the key presidential battleground state of Wisconsin. There, the first-term governor, Scott Walker, had vaulted to national stardom by enacting unexpectedly bold anti-union policies. Walker exemplified the new generation of Republicans who had coasted to victory in 2010 on a wave of dark money, ready to implement policies their backers had painstakingly incubated in conservative nonprofits for decades.

For the Koch network, Walker’s improbable rise was a triumph. Koch Industries PAC was the second-largest contributor to Walker’s campaign. More important, the Kochs were an important source of funds to the Republican Governors Association, which Republicans used in Wisconsin and elsewhere in 2010 to work around strict state contribution limits. The Kochs’ PAC had also contributed to sixteen state legislative candidates in Wisconsin, who all won their races, helping conservatives take control of both houses of the legislature and setting the stage for Wisconsin’s dramatic turn to the right.

Walker had also benefited enormously from the philanthropy of two other archconservative brothers, the late Lynde and Harry Bradley, whose foundation had grown into an ideological behemoth in Milwaukee. Walker’s campaign manager, Michael Grebe, was the Bradley Foundation’s president. Think tanks had long supplied policy ideas to those in power.
Some, like the liberal Center for American Progress, were led by well-known partisans who moved in and out of government. It was rare, though, to wear both hats simultaneously. But Grebe’s dual role would have made his predecessor at the Bradley Foundation, Michael Joyce, proud. It was exactly the kind of hands-on political impact Joyce had sought when he set out to weaponize conservative philanthropy.

The Bradley Foundation’s close ties to Walker were evident on his social calendar. Among his first private engagements after the election was a celebratory dinner with the foundation’s board and senior staff at Bacchus, a stylish Milwaukee restaurant overlooking Lake Michigan. By then, Lynde and Harry Bradley’s foundation had assets of over $612 million and had provided the playbook for many of Walker’s policies.

Grebe denied his foundation had hatched the initiative that made Walker famous, his crackdown on the state employees’ unions. But he applauded the move and had personally sent out fund-raising letters asking supporters to help Walker fight “
the big government union bosses.” The Bradley Foundation, meanwhile, in 2009, gave huge grants to two conservative Wisconsin think tanks developing plans to break the power of the state’s public employee unions. As the
Milwaukee Journal Sentinel
noted in 2011, the Bradley Foundation was “
one of the most powerful philanthropic forces behind America’s conservative movement” and “the financial backer behind public policy experiments that started in the state and spread across the nation—including welfare reform, public vouchers for private schools and, this year, cutbacks in public employee benefits and collective bargaining.” As Grebe later acknowledged about Walker’s meteoric rise to
The New York Times
, “At the risk of being immodest, I probably lent some credibility to his campaign early on.”

As a college dropout with no exceptional charisma or charm, Walker might not ordinarily have been marked for high office, but Americans for Prosperity, which had a large chapter in Wisconsin, had provided him with a field operation and speaking platform at its Tea Party rallies when he was still just the Milwaukee county executive. The Kochs’ political organization had been fighting the state’s powerful public employee unions there since 2007. The fight was freighted with larger significance. In 1959, Wisconsin had become the first state to allow its public employees to form unions and engage in collective bargaining, which conservatives detested in part because the unions provided a big chunk of muscle to the Democratic Party. “
We go back a long way on this in Wisconsin, and in other states,” Tim Phillips, the head of Americans for Prosperity, acknowledged to
Politico
. In the past, Phillips had spoken enviously of the unions as the Left’s “army on the ground.”

Walker’s anti-union, antitax, and small-government message harmonized perfectly with the Kochs’ philosophy and also served their business interests. Koch Industries had two Georgia-Pacific paper mills in the state, as well as interests in lumber mills, coal, and pipelines employing some three thousand workers.

Soon, a handful of Wisconsin’s wealthiest magnates, who were part of the Koch donor network, started writing checks, too. John Menard Jr., for instance, the richest man in Wisconsin, was both a million-dollar donor at the Kochs’ June 2011 summit and a million-and-a-half-dollar donor to the Wisconsin Club for Growth, an outside dark-money group boosting Walker. Like many of Menard’s investments, the political contributions more than paid off.
Once in office, Walker chaired a state economic development corporation that bestowed $1.8 million in special tax credits on Menard’s business. Walker’s administration also eased up on enforcement actions against polluters.

Seventy years old at the time Walker was elected, Menard had made a fortune, estimated at about $6 billion in 2010, from a chain of home improvement stores bearing his name, but until Walker entered the statehouse, his relationship with the government had been contentious, to say the least.
According to a 2007 profile in
Milwaukee Magazine
, his company had more clashes with the state’s Department of Natural Resources than any other firm in Wisconsin. Ultimately, his company and Menard personally paid $1.7 million in fines for illegally disposing of hazardous waste. In one memorable instance, his company reportedly labeled arsenic-tainted mulch as “ideal for playgrounds.”

Menard’s hostility to organized labor was pronounced. He imposed an absolute ban on hiring anyone who had ever belonged to a union.
One employee described having to fire two promising management prospects because they had worked in high school as baggers for a unionized supermarket. Managers, meanwhile, were subject to 60 percent pay cuts if their stores became unionized. They also had to agree to pay fines of $100 per minute for infractions such as opening late and to submit any disputes to management-friendly arbitration rather than the courts. Menard also forbade employees to build their own houses, for fear they would pilfer supplies. When one employee got special permission to build a ramp-equipped home in order to accommodate a wheelchair-bound daughter (in exchange for a demotion and a large salary cut), he was fired. His offense was that his contractor was using building materials from a competitor.

Menard had a disputatious record on compensation and taxes as well. The IRS ordered him to pay $6 million in back taxes after he allegedly mischaracterized $20 million as salary, not dividends, deducting it as a business expense. In a separate case, the Wisconsin Supreme Court forced Menard to pay $1.6 million to a former legal counsel, a woman who was the sister of his girlfriend at the time, to compensate for gender discrimination and gross underpayment. The woman’s lawyer described Menard as “a man without parameters, no limits, no respect for the law, and obviously no self-discipline.”

That case was followed by another in which the wife of a former business associate whom Menard fired in 2011 accused him of retaliating against her husband because of her refusal to engage in a sexual threesome with the billionaire and his wife. A spokesman for Menard denied the allegation. Meanwhile, a second woman, the wife of a former Indianapolis Colts quarterback, claimed Menard fired her for rebuffing his sexual advances. The company spokesman denied this as well. All in all, Menard seemed an unlikely patron for Walker, who emphasized his Christian conservatism as the son of a Baptist preacher, but on economic policies there was a meeting of the minds. Moreover, Menard was famously press shy, and little of his involvement with Walker surfaced until years later.

Diane Hendricks, the richest woman in Wisconsin and another of the Kochs’ million-dollar donors, might also have stayed beneath the radar except for a documentary filmmaker who fortuitously caught her on camera. Fifteen days after Walker was inaugurated, in January 2011, Hendricks was captured in what she thought was a private chat, urging the governor to go after the unions. Looking glamorous but impatient, the sixty-something widow pressed Walker to turn Wisconsin into a “completely red” “right-to-work” state. Walker assured her that he had a plan. He had kept voters in the dark about it during his campaign, but he confided to Hendricks that his first step was to “deal with collective bargaining for all public employees’ unions.” This, he assured her, would “divide and conquer” the labor movement. Evidently, this was what Hendricks wanted to hear. She had amassed a fortune estimated at $3.6 billion from ABC Supply, the nation’s largest wholesale distributor of roofing, windows, and siding, which she and her late husband, Ken, founded in 1982. Despite her phenomenal success, Hendricks said she was worried that America was becoming “a socialist ideological nation.”
Soon after the governor reassured her that he shared her concern, Hendricks and her company began a series of record-setting contributions that would reportedly make her Walker’s biggest financial backer.

When Walker “dropped the bomb” on the unions, as he put it, he effectively stripped most state employees of the right to bargain collectively on their pay packages. He singled out the public employees, and particularly teachers, whose average salary was $51,264, as causes of the state’s deficit. Amid the doomsday talk about overindulged and under-contributing public workers who were bankrupting the state, one awkward fact went unmentioned.
Thanks to complicated accounting maneuvers, Diane Hendricks, according to state records, did not pay a dime in personal state income taxes in 2010.

Lines were drawn in Madison. In a desperate attempt to deprive Republicans of the quorum necessary to pass Walker’s anti-union bill, Democratic legislators fled the state. Angry activists stormed the legislature, thronged the streets, and lambasted Walker as the Kochs’ anti-union stooge.
Walker unwittingly lent credence to the caricature less than a month into his tenure by carrying on a long, cringe-worthy phone conversation with a prankster pretending to be David Koch, the contents of which were soon made public. In a phrase that said all too much, Walker enthusiastically signed off with the impostor by saying, “Thanks a million!”

As the furious backlash against Walker evolved into a prolonged and ultimately unsuccessful effort by his critics to recall him from office, the Kochs, who by then had become the face of the opposition, mounted a fierce counterattack. They used Americans for Prosperity and other vehicles to mobilize pro-Walker rallies and air thousands of “Stand with Walker” and “It’s Working!” television and radio ads. They also utilized Themis, a high-tech data bank they had developed, to help get out the vote.

After Walker triumphed in the recall fight, putting him in line for his ill-fated run for the White House in 2016, an independent counsel’s investigation into possible campaign-finance violations disgorged a trove of e-mails revealing just how many hugely wealthy, out-of-state hidden hands were involved in his campaign to stay in office. The e-mails revealed advisers to Walker scheming to get the Kochs and allied donors to help him by donating to what purported to be an independent group, the Wisconsin Club for Growth. One e-mail suggested, “Take Koch’s money.” Another insisted that the governor should “get on a plane to Vegas and sit down with Sheldon Adelson.” It went on, “Ask for $1m now.” A third advised Walker that Paul Singer, the hedge fund mogul, would be at the same resort as he and insisted, “Grab him.” Soon after, the Wisconsin Club for Growth received $250,000 from Singer.

At the helm of the Wisconsin Club for Growth, and thus at the center of the web, was an old ally of the Kochs’, Eric O’Keefe. He was the same Wisconsin investor who had volunteered in David Koch’s ill-fated Libertarian campaign for vice president, before going on to run the Sam Adams Alliance, which had played a seminal role in launching the Tea Party movement, and join the Cato Institute’s board. Over the years, O’Keefe’s various political gambits had also been greatly aided by the Bradley Foundation.
According to one tally, it contributed over $3 million to groups directed or founded by O’Keefe between 1998 and 2012. The Bradley Foundation, meanwhile, tightened its ties to several members of the Kochs’ circle. It soon added to its board both Diane Hendricks and Art Pope, the Kochs’ longtime North Carolina ally, who also was on the board of Americans for Prosperity. The club that O’Keefe and the others belonged to was ingrown and small, but its reach was growing.

Richard Fink made clear what the stakes were for both himself and his benefactors after the embarrassment of the trick phone call. “
We will not step back at all,” he proclaimed. “With the Left trying to intimidate the Koch brothers to back off of their support for freedom and signaling to others that this is what happens if you oppose the administration and its allies, we have no choice but to continue the fight.” Fink defiantly claimed, “This is a big part of our life’s work. We are not going to stop.”

B
uoyed by their success in Wisconsin, the Kochs began to focus in earnest on the presidential race. It had taken years, but by 2012 they were becoming a rival center of power to the Republican establishment. Political insiders who had once scoffed at them now marveled at the breadth of their political operation.

While amassing one of the most lucrative fortunes in the world, the Kochs had also created an ideological assembly line justifying it. Now they had added a powerful political machine to protect it. They had hired top-level operatives, financed their own voter data bank, commissioned state-of-the-art polling, and created a fund-raising operation that enlisted hundreds of other wealthy Americans to help pay for it. They had also forged a coalition of some seventeen allied conservative groups with niche constituencies who would mask their centralized source of funding and carry their message. To mobilize Latino voters, they formed a group called the Libre Initiative. To reach conservative women, they funded Concerned Women for America. For millennials, they formed Generation Opportunity. To cover up fingerprints on television attack ads, they hid behind the American Future Fund and other front groups. Their network’s money also flowed to gun groups, retirees, veterans, antilabor groups, antitax groups, evangelical Christian groups, and even $4.5 million for something called the Center for Shared Services, which coordinated administrative tasks such as office space rentals and paperwork for the others. Americans for Prosperity, meanwhile, organized chapters all across the country. The Kochs had established what was in effect their own private political party.