Legislators decry 'dark money' influence in primary
A Michigan legislator who ran for state Senate says dark money from "monopoly utilities" is in part to blame for his loss in the Republican primary earlier this month.
He's not the only one crying foul. A fellow Republican legislator and a Lansing area economist have filed complaints about the dark money, alleging violations of state and federal law by two organizations that spent significantly on Michigan races.
The accusations provide compelling examples for those who believe Michigan's lax campaign finance laws allow shadowy interests to influence political elections.
Republican state Rep. Gary Glenn lost his primary race in the 31st state Senate district Aug. 7 to fellow state Rep. Kevin Daley, who took 58.6 percent of the vote. The 31st district includes Tuscola, Bay and Lapeer counties.
A prominent conservative who has long advocated for school choice, traditional marriage and right-to-work provisions, Glenn chairs the House Energy Policy committee and has taken a hard line on what he calls Michigan's “monopoly utilities,” including DTE Energy Co. and Consumers Energy Co.
At a committee hearing in May, the Williams Township Republican described a meeting in which he said a Consumers lobbyist threatened to sabotage legislation that would allow the state to approve long-term electricity rates for industrial customers. Glenn compared the bill to a hostage — and likened the Michigan utility company to terrorists he'd like to shoot.
After his defeat in the primary, Glenn charged that “utility bosses” used rate-payer dollars on “dark money” front-groups that influenced the election of legislators who he said would decide “whether utilities get to keep their 90 percent guarantee of market share and 10 percent guaranteed annual profit.”
Despite that animosity, Glenn urges supporters to vote for Daley in November's general election.
“Kevin may have benefited from utility bosses' successful character-assassination campaign, but he was not the cause of it,” Glenn wrote.
Glenn estimated that nonprofits Faithful Conservatives for Michigan, Citizens for Energizing Michigan's Economy, and Alliance for Michigan Powerspent more than $1 million against him in his race alone. While it’s difficult to verify his estimate, reports indicate Faithful Conservatives for Michigan spent at least $263,000 on TV ads in the 31st District during the primary season, according to Craig Mauger, executive director for the Michigan Campaign Finance Network. The total does not include what the 501(c)(4) spent on radio ads and mailers, figures that aren't as readily available as TV spending.
“In a race for the state Legislature, that’s a lot of money,” Mauger said. “It is extremely rare for a group to spend more than $50,000 on broadcast TV ads in a primary race.”
The negative ads run on television by Faithful Conservatives for Michigan included one calling Glenn the “snake of Michigan politics.” It said Glenn voted to keep an $80 million tax loophole for insurance companies. The ad urged viewers to call their legislators and "tell them the days of corruption are over."
"The overall characterization of me being the face of corruption in Lansing is something I think friend and foe alike in Lansing would say is ludicrous," Glenn said. "But they can say whatever they want to say without disclosing the source of their funding.”
A former Idaho lobbyist who helped defend the state's right-to-work law, Glenn advocated for a school choice tax credit in Michigan in the late '90s and later, as head of the American Family Association of Michigan, defended traditional marriage in several high-profile gay rights fights. Glenn was one of three Tea Party conservatives elected to the state House in 2015, alongside disgraced lawmakers Todd Courser and Cindy Gamrat.
In the House, Glenn has battled the common core curriculum, taxes on pension income, the prevailing wage, and what he’s called “monopoly utilities” such as DTE Energy and Consumers Energy.
In particular, Glenn has defended the state’s 10 percent electric choice market, advocated for loosened rules for homeowners and businesses seeking to invest in renewable energy, and argued the state should be able to approve long-term electricity rates for industries, a provision sought by Dow Chemical for its Hemlock Semiconductor operation.
Contributions to Glenn's campaign for state Senate included $5,000 from the Hemlock Semiconductor PAC, $5,000 from the Dow Chemical Company Employees PAC, and $10,000 from the Exelon PAC.
Glenn’s wife, Annette, won the Aug. 7 primary for Glenn’s current House seat.
Faithful Conservatives for Michigan was incorporated as a domestic nonprofit corporation in January, according to state records. As a nonprofit, the group isn't required by the state campaign finance act to disclose donors as long as its ads do not direct viewers to vote for or against a certain candidate.
The resident agent for the group is attorney Eric Doster, who holds the same role for another nonprofit called Citizens for Energizing Michigan’s Economy.
Doster, a former long-time lawyer for the Michigan Republican Party specializing in campaign finance and election law, declined comment when asked who hired him to form the nonprofits. He would not comment on potential connections between the groups but said they were organized for "social welfare activity."
Citizens for Energizing Michigan’s Economy benefited from roughly $20 million in contributions from Consumers Energy in 2017, according to reports the utility submitted to the Michigan Public Service Commission.
Consumers Energy did not contribute to Faithful Conservatives for Michigan, said Consumers spokeswoman Katelyn Carey, but the utility and its political action committee, Employees for Better Government, supported Daley in the state Senate race, making a direct contribution of $2,500 to his campaign. Carey said the company believes Daley “will best serve the interests of CMS Energy and Consumers Energy customers.”
Citizens for Energizing Michigan's Economy is an independent organization and not part of Consumers Energy, Carey said, noting the utility’s contributions to the group came from “non-customer, shareholder dollars.”
“We support the group as we support the mission to educate elected officials and the general public on issues facing Michigan, including pragmatic energy policies that are focused on safe, reliable and affordable energy for Michigan,” Carey said in an email.
The DTE Energy Political Action Committee also made a direct contribution of $3,500 to Daley’s campaign, DTE Energy spokesman Pete Ternes said. He said the company did not contribute to any entities that ran negative ads in the race, including Citizens for Energizing Michigan's Economy or Faithful Conservatives for Michigan
Statewide, negative ads funded by nonprofits could have a chilling effect on legislators unsure of the source of the funding, Glenn said: "It still leaves each legislator to ponder whether they want that much money spent against them."
Citizens for Energizing Michigan’s Economy also purchased advertising pertaining to Republican primary races in the 24th and 26th state Senate districts and the 63rd, 65th and 93rd state House districts, Mauger said.
While Doster is a link between Faithful Conservatives for Michigan and Citizens for Energizing Michigan’s Economy, he is hardly a conclusive one. The former general counsel for the Michigan Republican Party is known to offer similar services to several other nonprofits, Mauger said.
The groups also were linked through a radio buy this spring, when an agent purchased radio time for Citizens for Energizing Michigan’s Economy in mid-Michigan, but later withdrew the request and swapped it out for one on behalf of Faithful Conservatives for Michigan, according to a July complaint to the secretary of state.
The July 23 campaign finance complaint, filed by state Rep. John Reilly, R-Oakland Twp., against Faithful Conservatives, alleges the group’s ads were personal attacks on Glenn with the purpose of altering the outcome of the race.
“Faithful Conservatives for Michigan should be sanctioned for any and all violations of Michigan campaign finance law in association with these electioneering communications posing in bad faith as a ‘faithful conservative’ issue advocacy group for the purpose of ‘social welfare,’” Reilly wrote.
The Secretary of State dismissed the complaint July 27 because the ads did not contain express advocacy through directives such as “vote for,” “vote against,” “defeat,” “support,” or “oppose."
Economist Patrick Anderson, principal and CEO of the Anderson Economic Group, filed a complaint against Citizens for Energizing Michigan's Economy with the Internal Revenue Service on July 31. The group backed Republican Graham Filler in the 93rd House district where Anderson’s wife, Madhu Anderson, also was on the Republican ticket. Filler won the primary Aug. 7.
“My outrage over this is not that everybody doesn’t want to vote the same way I do," Anderson told The Detroit News. "It’s that these people are blatantly violating both federal and state laws."
Also listed in Anderson’s complaint as potentially related entities was the Alliance for Michigan Power, Michigan Energy First and Faith Conservatives for Michigan — all nonprofits whose resident agent is Doster and who share the same address as Doster's law office in Okemos.
In his complaint, Anderson estimates the groups spent more than $150,000 advocating for Filler in the 93rd state House district primary, and more than $1 million criticizing Glenn in 34th state Senate district.
He estimates the groups spent more than $500,000 in the 24th state Senate district primary — more than $300,000 for Republican candidate Brett Roberts and $200,000 against Republican candidate Tom Barrett. Despite their opposition, Barrett won.
“It’s been known that nonprofit groups can push the envelope and get involved in campaigns as long as they were quite careful,” Anderson said. “But what (Citizens for Energizing Michigan’s Economy) did went way beyond the gray area.
“That’s a dangerous precedent if it's allowed to stand."