May 22, 2014 at 1:00 am

Laura Berman

'Dark money' forces seek to sway Detroit bankruptcy

The DIA's 'Watson and the Shark' by John Singleton Copley (DIA)

Detroit may be the nation’s largest bankrupt city. But to Americans for Prosperity Michigan — a well-funded arm of the billionaire Koch brothers’ political operation — the city is fat with “$3 billion worth of assets” that could be liquidated, if you count the storied masterpieces at the Detroit Institute of Arts.

Before the state chips in its dollars, American for Prosperity wants those Renoirs and Rembrandts sold. “I’m more concerned about pensioners trying to put food on the table than about somebody trying to keep artwork on the wall,” said Scott Hagerstrom, the group’s executive director in Michigan.

Hagerstrom’s group disdains government spending but happily benefits from tax-exempt status granted to “social welfare organizations,” an IRS designation, also called 501C4s. And ever since the 2010 Citizens United decision of the U.S. Supreme Court, these social welfare nonprofits have staked out the freedom to buy TV ads, spend money on “political education” and exercise their constitutional rights to political speech — without being required to identify their funding sources, or to report spending except in specific time periods close to elections. The impact, says Russ Choma, a specialist in campaign finance for OpenSecrets.org in Washington, D.C., was “transformational.”

In 2014, the Michigan AFP group has spent $1.75 million in the Detroit TV market, according to the Michigan Campaign Finance Network, which tracks such spending. Almost all of that has gone to pay for ads denouncing Obamacare and U.S. Senate-hopeful Gary Peters, months before the election gets earnest.

How much will they spend on phone calls and direct mail operations? There’s no way to know, which is why critics label the funding “dark money.” That’s led the Peters campaign to denounce “the out-of-state billionaires,” who have residences in Palm Beach, among other places, but not in Michigan.

The nonprofits, experts on political influence say, effectively cloak corporate and individual donations. And while corporations can make political donations outright to campaigns, they only rarely do so.

“The Citizens United decision gave (the nonprofits) a new purpose,” says Richard Robinson, executive director of the Michigan Campaign Finance Network. “It enabled them to implicitly tell you how to vote, and even explicitly tell you.”

That goes for both parties, and interest groups across the spectrum, of course. And groups like Planned Parenthood, the Sierra Club or Right to Life of Michigan have always had the same designation. The state’s labor unions pay for issue ads to slow down Terri Lynn Land, but spending by the Service Employes International Union and AFSCME ($168,000 each) is paltry by comparison to the Koch-backed group.

I’ve never seen any evidence of Americans for Prosperity’s social welfare work other than educating you about politicians in election years,” says Robinson, dryly, of what he calls “the biggest player in the state.”

And there is evidence that even when we have no idea who’s paying for an “issue ad,” at least some of us are smart enough to get a sense of who or what they are. A day after Americans for Prosperity Michigan unleashed its massive campaign to stop the Legislature from helping Detroit, a legislative committee pushed the financial aid package forward anyway. For now, at least, the Renoirs are staying on the wall.

LBerman@detroitnews.com