Mystery donor money quietly funded Michigan Senate leader Arlan Meekhof's nonprofit
Lansing — As then-Michigan Senate Majority Leader Arlan Meekhof was deciding which bills would advance and possibly become law in 2018, an organization led by his allies raked in hundreds of thousands of dollars from secret donors.
The American Jobs Council then spent nearly $1 million in 2018, including a $500,000 contribution to another nonprofit tied to Meekhof and $19,448 to reimburse "charity auction purchases" and "other expenses" that involved Meekhof, according to a tax filing obtained by The Detroit News.
While Meekhof and his associates said their actions complied with the law, one tax expert labeled the reimbursements "odd." Another said he would expect a nonprofit to be more forthcoming about efforts that are supposed to benefit "social welfare."
The situation with the Meekhof-related nonprofits could have led to "improper influence," said two other legal experts who study money in politics.
The American Jobs Council is part of a larger national trend of officeholders' supporters using nonprofit accounts to raise money from undisclosed sources and then help causes tied to the elected officials. The trend has gained steam since the U.S. Supreme Court's 2010 Citizens United decision, which limited governments' ability to bar corporate and union spending in politics.
“You have one of the most powerful people in government raising funds from secret donors who may or may not have business before government,” said Brendan Fischer, director of the federal reform program at the Campaign Legal Center in Washington, D.C., about Meekhof's situation.
Meekhof, a Grand Haven Republican who left office because of term limits at the end of 2018, and others involved in the groups have denied wrongdoing and said a reporter was trying to make legal activities appear nefarious. In a phone interview, Meekhof said the donors who give to the nonprofits are focused on advocating on issues and don't want to "get called out by folks like yourself."
The 60-year-old former lawmaker served two terms in the Michigan House before he was elected to the Senate for eight years, spending 2015 through 2018 as the upper chamber's leader. He now runs a consulting business.
In the Senate, Meekhof was an ally of business groups — he voted with the Michigan Chamber of Commerce on 93% of its top issues in 2017 and 2018. He often clashed with labor unions and opposed transparency measures, like opening the records of the Legislature to public inspection.
Meekhof led the Senate during the 2018 lame duck session — the period between the November election and the end of the term — when Republican lawmakers sent nearly 400 bills to then-GOP Gov. Rick Snyder before Gretchen Whitmer, a Democrat, took office. During the period Meekhof introduced five bills himself, with three of them focusing on marijuana. One failed bill aimed to alter the voter-approved constitutional amendment to legalize recreational marijuana.
The Detroit News examined the American Jobs Council after reporting on the West Michigan Community Preservation Fund, a Meekhof-connected nonprofit organization that disclosed receiving $500,000 from a mystery source in 2018. While Meekhof wouldn't say where the $500,000 came from, The News later learned the $500,000 was a contribution from the American Jobs Council, which formed in 2016.
The former Senate leader is one of many politicians in Michigan and outside the state with allies who run so-called "social welfare" nonprofit groups that raise money from mystery sources.
These types of organizations, which often promote elected officials or their policies, had "recently flourished," according to a 2018 report from the Brennan Center for Justice, a law and policy institute at New York University. The report also identified them as a problem that likely will spread.
Council dissolves after inquiry
The American Jobs Council's fundraising total of $738,074 in 2018 was "significant," said Chisun Lee, who helped produce the report and is senior counsel in the Brennan Center's Democracy Program.
The nonprofit reported having three directors, according to its tax filing with the Internal Revenue Service for 2018. They were Steve Linder, a consultant who's worked with Senate Republicans; Robert DeVries, a lobbyist who previously served as Meekhof's chief of staff; and Meredith Beidler, Meekhof's daughter.
The nonprofit on Feb. 21 released its 2018 tax filing, which showed the $500,000 expenditure. That same day, the group released a letter announcing it was dissolving and giving its remaining dollars to the West Michigan Community Preservation Fund, which Meekhof manages.
"AJC is proud of its record and the difference it has made in securing policies that have contributed significantly to Michigan’s economic recovery and to helping workers and families keep more of their own hard-earned money during this period of growth," the letter announcing the dissolution said. "We want to thank the council’s supporters who contributed to our mission and members of the state Legislature who heard our message and stood firm on conservative values with their votes and policies."
The group's 2018 financial supporters included 11 donors who contributed at least $20,000 each. The group had to disclose under federal tax law how much it received from individual large donors but not who they were.
One donor gave $150,000, according to the tax filing. Another gave $125,000. There were contributions of $82,800, $75,000 and $60,000. And three gave $50,000 each.
The tax filing from American Jobs Council appears to show that "a handful of unidentified donors" were actually behind the $500,000 that ended up with the Meekhof-tied West Michigan Community Preservation Fund in 2018, said Michael Beckel, research director for Issue One, a national political reform group.
"This type of daisy chain situation adds an additional layer of opacity to these transactions," Beckel added. "The public is still in the dark about which wealthy donors and special interests were contributing to the West Michigan Community Preservation Fund."
'Everything done very meticulously'
Linder, the president of American Jobs Council, declined to say whether Meekhof had been involved in raising money for the group. He also said he wouldn't release the names of the donors.
"Everything was done with legal counsel," Linder added. "And everything was done very meticulously."
The American Jobs Council's mission is to "promote the common good" and "provide Americans with an understanding of how current policy initiatives will affect their well being," according to its tax filing.
Beidler, Meekhof's daughter who previously worked as a Michigan assistant attorney general, didn't respond to a request for comment. DeVries, who now lobbies for the multi-client firm Governmental Consultant Services Inc., said, "I am no longer on the board of the American Jobs Council."
Of $992,924 the group reported spending in 2018, it gave $500,000 to West Michigan Community Preservation Fund and $250,000 to the Michigan Republican Party. Those contributions represented more than 75% of its activities.
American Jobs Council has the appearance of acting as a "pass through" to fund the Michigan GOP and West Michigan Community Preservation Fund, said Fischer of the Campaign Legal Center.
"If the money being raised was being put toward the benefit of the Senate leader or his party, then there are significant concerns about improper influence," Fischer added.
American Jobs Council also spent $19,448 on reimbursements for "charity auction purchases" and "other expenses" that it described as officeholder reimbursements benefiting Meekhof, according to its tax filings. No other details of the reimbursements were provided in the filing.
The items were purchases made on behalf of the fund, Meekhof said. The items, which he didn't provide specifics about, were taxed or put back up for auction, he said.
The $19,448 described as "reimbursement" seemed "odd" to Ellen Aprill, a professor at the Loyola Law School in Los Angeles who has practiced nonprofit law for more than 30 years. But Aprill said it would take more information to prove whether something was legally wrong or not.
Philip Hackney, a law professor at the University of Pittsburgh who once worked in the Office of the Chief Counsel at the Internal Revenue Service, noted that nonprofits like the American Jobs Council are supposed to be focused on promoting "social welfare." They aren't supposed to engage in so-called "excess benefit transactions" that provide unwarranted benefits to a specific individual, he said.
According to the American Jobs Council's 2018 tax filing, the group denied making "excess benefit transactions" in 2018 when asked by the IRS form, Hackney said.
But the group's reluctance to answer specific questions about the purchases raised questions, he said. "You would expect a nonprofit to be more forthcoming," Hackney said.