Koch Operative May Have Deceived Officials to Take $2.7 Million in Taxpayer Money for Governor’s Race

Our guest blogger is Steve Lebowitz, a researcher and blogger based in Maryland. With additional reporting from Lee Fang.

In 2008, Steve Lonegan, the New Jersey state director for David Koch’s Americans for Prosperity group, announced a campaign to run for governor. Running as a Republican, Lonegan lost to Chris Christie (R-NJ) in the Republican primary, and Christie went on to win the general election later in 2009. But recent tax disclosures examined by ThinkProgress reveal that Lonegan, who used$2.7 million in taxpayer matching funds for his gubernatorial campaign, may have deceived public officials in order to collect the public money used for his campaign.

According to New Jersey state clean election law, recipients of public campaign funds cannot be “involved in any way in the management of” a political advocacy 501(c)(4) organization “unless the organization agrees to disclose the name of each of its contributors and the amount of each contribution and expenditure.” Americans for Prosperity has never disclosed its donors. Lonegan, who has served as the New Jersey Americans for Prosperity executive director for years, said the disclosure law didn’t apply to him because he was paid by Americans for Prosperity’s educational 501(c)(3) foundation rather than its 501(c)(4) lobbying and advocacy branch. He told reporters that he was only paid by Americans for Prosperity’s educational foundation, not its lobbying branch. However, new information shows that Lonegan was in fact paid by Americans for Prosperity’s 501(c)(4) lobbying and advocacy branch and that he had significant managerial duties at Americans for Prosperity’s New Jersey Political Committee:

To avoid potential campaign conflicts, candidates who apply for matching money are required to tell the commission if they’ve previously managed issue-advocacy groups and list their donors and expenditures if they’ve recently run such a group. Lonegan said he is not subject to those reporting requirements because he was paid by the educational foundation of the anti-tax lobbying group, not its lobbying branch.

When Lonegan filed his request for public funds, he signed a certificate saying he was not “involved in any way in the management of an issue advocacy organization” for the period of 2005 to 2009.

When he applied for the taxpayer campaign funds, Lonegan reasoned that his Democratic opponent, then-Gov. Jon Corzine, was so wealthy that the campaign would be unfair. Ultimately, Lonegan collected $2.7 million in taxpayer money for his campaign. But recent tax disclosures reveal that Lonegan was in fact paid by Americans for Prosperity’s 501(c)(4) advocacy and lobbying arm, and that he deceived reporters, and possibly even New Jersey public officials when applying for the matching funds:

– The 2008 disclosures for Americans for Prosperty’s 501(c)(4) lobbying and advocacy branch reveal that the group paid Lonegan $24,500 in 2008 and listed him as a highly compensated employee (see page 7) — the same period in which Lonegan began his gubernatorial campaign. This funding was in addition to the $108,000 Lonegan received from Americans for Prosperity’s 501(c)(3) education wing that year.

– Additionally, Lonegan was involved in other significant and managerial advocacy efforts on behalf of Americans for Prosperity. In 2007, Lonegancreated the “Americans for Prosperity New Jersey Political Committee” to oppose ballot questions that year, listing himself as chairman and treasurer. He reportedraising $455,000 for his “Americans for Prosperity New Jersey Political Committee” advocacy group.

We asked Phil Kerpen, Americans for Prosperity’s vice president, if Lonegan has a management role at the organization. Kerpen confirmed, saying yes, Lonegan is “autonomous,” but that the national organization “advises” him. Today, ThinkProgress contacted Lonegan about taking taxpayer funds for his election. Asked if he was paid by the Americans for Prosperity 501(c)(4) lobbying and advocacy wing, Lonegan said, “I don’t remember, I don’t know.” When told about the recent tax returns showing that he was indeed paid by the lobbying wing, in contrast to what he told reporters at the time in 2009, Lonegan said, “that’s old history.”

If he gave the New Jersey election law enforcement commission his compensation information from Americans for Prosperity’s educational foundation but not its lobbying and advocacy branch, and if he concealed his dual Americans for Prosperity salary from the commission, Lonegan and Americans for Prosperity could have some explaining to do. If the election commission decides to investigate the issue, it could hand down fines or other penalties to Lonegan.