I just finished nearly two hours closely watching a documentary on dark money in politics. The core of the story was IRS 501(c)(4).
The IRS 501(c)(4) rules and regulations include the following key points:
Purpose: Organizations must be operated exclusively for the promotion of social welfare.
Non-Profit Requirement: They must not be organized for profit and must operate primarily to further the common good and general welfare of the people.
Membership Limitations: Local associations must limit their membership to employees of a designated person or persons in a particular locality.
Earnings: No part of the net earnings may inure to the benefit of any private shareholder or individual.
Exemption Requirements: Organizations must meet specific requirements outlined in the Internal Revenue Code section 501(c)(4) to qualify for tax exemption.
This seems rather clear to a person like me. I have limited knowledge about the corporate world and its structure. However, I do understand the goal of “social welfare” and “common good.” I also see that the guidelines include limited membership and restrictions on financial benefit.
These regulations were specifically applicable in the Ohio political bribery scheme of just a few years ago.
Information from the United States Attorney’s Office, Southern District of Ohio, stated in 2024:
Imprisoned ex-Ohio House Speaker Larry Householder was indicted on 10 new felony counts, including one that would ban him from ever holding public office in the state again.
The fresh indictments brought by the state extend action in what was already the largest corruption case in state history.
The 64-year-old Householder was convicted of racketeering for his role orchestrating a $60 million bribery scheme funded by Akron-based FirstEnergy Corp. in exchange for passage of a $1 billion bailout of two nuclear plants owned by one of its subsidiaries. He was sentenced to 20 years, which he’s serving at Elkton Federal Correctional Institution near Youngstown, and has appealed.
The Ohio Speaker of the House was arrested this morning and charged in a federal racketeering conspiracy involving approximately $60 million paid to a 501(c)(4) entity to pass and uphold a billion-dollar nuclear plant bailout.
A Cuyahoga County grand jury indicted Householder on the additional charges, which include alleged misuse of campaign funds, ethics violations and a theft in office charge that would block him from working for the government.
It is alleged that Larry Householder, 61, of Glenford, Ohio, and the enterprise conspired to violate the racketeering statute through honest services wire fraud, receipt of millions of dollars in bribes and money laundering.
Four other individuals were also arrested and charged. They include:
Mathew Borges, 48, of Bexley, a lobbyist who previously served as chair of the Ohio Republican Party;
Jeffrey Longstreth, 44, of Columbus, Householder’s longtime campaign and political strategist;
Neil Clark, 67, of Columbus, a lobbyist who owns and operates Grant Street Consultants and previously served as budget director for the Ohio Republican Caucus; and
Juan Cespedes, 40, of Columbus, a multi-client lobbyist.
Generation Now, a corporate entity registered as a 501(c)(4) social welfare organization, was also charged.
According to the 80-page criminal complaint unsealed today, from March 2017 to March 2020, the enterprise received millions of dollars in exchange for Householder’s and the enterprise’s help in passing House Bill 6, a billion-dollar bailout that saved two failing, Ohio nuclear power plants from closing.
The defendants then also allegedly worked to corruptly ensure that HB 6 went into effect by defeating a ballot initiative to overturn the legislation. The Enterprise received approximately $60 million into Generation Now from an energy company and its affiliates during the relevant period.
As alleged, in February 2017, Longstreth incorporated Generation Now as a 501(c)(4) social welfare entity purporting to promote energy independence and economic development; however, the entity was secretly controlled by Householder. As Clark stated in a recorded conversation, “Generation Now is the Speaker’s (c)(4).” Pursuant to federal law, the names and addresses of contributors to 501(c)(4)s are not made available for public inspection.
In March 2017, Householder began receiving quarterly $250,000 payments from the related-energy companies into the bank account of Generation Now. The defendants allegedly spent millions of the company’s dollars to support Householder’s political bid to become Speaker, to support House candidates they believed would back Householder, and for their own personal benefit. When asked how much money was in Generation Now, Clark said, “it’s unlimited.”
The affidavit filed in support of the criminal complaint also alleges:
In 2018, the enterprise spent energy company-to-Generation Now money on approximately 21 different state candidates – 15 (including Householder) in the primary, and six additional candidates in the general election. The Enterprise spent more than one million in fall 2018 alone to flood the airways with negative ads against enterprise opponents. Most of these candidates won the 2018 general election. All who won voted for Householder as Speaker.
Money passed from the energy company through Generation Now was used to pay for Householder campaign staff, which would otherwise have been paid by Householder’s candidate committee, Friends of Larry Householder.
Householder received more than $400,000 in personal benefits as a result of the payments into Generation Now, including funds to settle a personal lawsuit, to pay for costs associated with his residence in Florida, and to pay off thousands of dollars of credit card debt.
The enterprise paid $15,000 to an individual to provide insider information about the ballot initiative and offered to pay signature collectors for the ballot initiative $2,500 cash and plane fare to stop gathering signatures.
The racketeering conspiracy as charged in this case is punishable by up to 20 years in prison.
“All forms of public corruption are unacceptable,” stated FBI Cincinnati Special Agent in Charge Chris Hoffman. “When the corruption is alleged to reach some of the highest levels of our state government, the citizens of Ohio should be shocked and appalled.”
Michael Hartmann wrote for the Capital Research Center:
They typically call (c)(4)s “political nonprofits” and often note that (c)(4)s can give money to “super PACs”—a new type of group that arose in the wake of Citizens United that can raise and spend unlimited sums on politics, provided they do not coordinate with or donate to a specific political candidate. Although super PACs are required to publicly disclose their donors, they can themselves raise money from (c)(4)s, whose original donors need not be disclosed, thereby making the money “dark.” Any original individual donor, of course, may just not want public disclosure of his or her name, home address, occupation, and employer to a political opponent, nosy neighbor, friend, dentist, or the like.
The documentary about Ohio’s corruption ended with a brief photo of Donald Trump and a question or two about our current situation. Seems the U.S. government has gone past the point of no return. This type of activity is now taking place in the open.
Sad times, difficult times are upon us.