How law firms are advising on 501(c)(4)s

From: POLITICO Influence - Wednesday Mar 22,2023 11:08 pm

Mar 22, 2023

With Josh Sisco and Daniel Lippman

HOW LAW FIRMS ARE ADVISING ON 501(C)(4) GROUPS: The convictions earlier this month of former Ohio House Speaker Larry Householder and a former state GOP official for their role in a $60 million bribery scheme using a 501(c)(4) nonprofit to launder corporate cash placed a new spotlight on dark money groups, which can raise unlimited amounts of money without having to disclose their donors.

— Now, law firms that advise clients on political and campaign finance law are seeking to make sure none of their clients are caught in the potential crossfire. The verdicts “left many businesses wondering what this conviction means for donations to these vehicles going forward,” Barnes & Thornburg’s Michelle Nicholson and David DeVillers wrote in a blog post last week. DeVillers is especially well-versed in the Ohio case, having brought the original indictment while serving as U.S. Attorney for the Southern District of Ohio.

— The trial illustrated that staying on the right side of the law “isn’t as simple as a bright line in the sand and depends on context and circumstances,” Nicholson and DeVillers argue, pointing to ambiguity in the statutes governing 501(c)(4)s that require a solid understanding of the nuances at play.

— Members of the political law practice at Skadden, Arps, Slate, Meagher & Flom echoed that point in an alert to clients this week. Skadden's memo doesn't mention the Householder case — though the firm cites “several high-profile instances of their misuse” that have invited increased scrutiny of 501(c)(4) groups.

— Still, "at this point it is clear that 501(c)(4) organizations are here to stay as part of the political and public policy advocacy landscape, and can be a useful tool,” the firm wrote, pointing to the general lack of donor disclosure requirements as part of “what makes them so appealing.”

— But the firm outlined “potential legal hazards” to be aware of, including the possible loss of tax-exempt status or fraud violations in addition to avoiding an “illegal dark money issue" and running into campaign finance violations. “Whether one is considering establishing or merely donating to a 501(c)(4) organization” the firm wrote, “it is important to do so with care.”

ZELDIN HANGS A SHINGLE: Following his better-than-expected showing against Kathy Hochul in last fall’s New York gubernatorial contest, former congressman and GOP nominee Lee Zeldin will deploy that expertise on the consulting side. Zeldin Strategies will advise individual and corporate clients on strategy, public relations, acquisitions and crisis management, and while he indicated to the New York Post the firm will handle government relations, it was not immediately clear if Zeldin plans on registering to lobby.

Happy Wednesday and welcome to PI. Tips: coprysko@politico.com. Twitter: @caitlinoprysko.

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MALIGNED TECH COMPANY SEE, MALIGNED TECH COMPANY DO: “As TikTok CEO Shou Zi Chew faces an impending congressional grilling and the company encounters a perilous suite of problems — capped by pressure from the Biden administration for its Chinese owners to divest their stakes — it is mounting a campaign to wrest itself from its role as Washington’s boogeyman.”

— To do so, the video platform “is leaning on the aggressive playbook of its American peers in an attempt to ingratiate itself with Capitol Hill,” The Washington Post’s Cat Zakrzewski and Cristiano Lima report.

— In addition to the company’s record lobbying spending, it’s “launched an ad campaign touting its contributions to American businesses and hired a cadre of experienced Washington operators to help push its message to lawmakers” that include familiar faces like former Rep. Joe Crowley, who the Post reports “has sat in on several private meetings with lawmakers, according to two congressional aides, who spoke on the condition of anonymity to discuss the private discussions.”

— “Chew drafted himself into a vigorous charm offensive, making an unusual number of personal appearances with lawmakers, while the company rolls out policy changes intended to assuage concerns about data privacy, misinformation and harms to children.” TikTok’s rivals from Silicon Valley, meanwhile, are relishing the shift in the spotlight away from their own practices, and their allies around Washington are mobilizing to capitalize on the moment.

CASE IN POINT: TikTok isn’t just swiping tactics from the playbook employed by other tech companies that have faced the gauntlet in Washington — the company has also scooped up other tech giants’ personnel.

— Alex Haurek, who previously did policy communications for Amazon, joined the comms team at TikTok this week as the company's head of strategic response, per Josh. Haurek is at least TikTok's third hire from Amazon's comms team since early 2022. Early last year the embattled Chinese social media app nabbed Brooke Oberwetter, and in December it hired Jodi Seth, Amazon's former head of policy comms, who spent a year at Lyft in between.

ALCOHOL WHOLESALERS THROW BACKING BEHIND LEGAL WEED: “The Wine and Spirits Wholesalers of America, one of the largest alcoholic beverage trade groups in Washington, is coming out in support of federal cannabis decriminalization and regulation,” POLITICO’s Natalie Fertig reports.

— “‘Cannabis legalization at the state level is here to stay, evidenced by nearly a decade of newly legalized state markets and no meaningful effort to undo them,’ WSWA stated in a policy paper released this morning and shared exclusively with POLITICO.” The trade group had previously backed legislation that would make it easier for cannabis companies to access banking services, but hadn’t taken a formal position on federal cannabis legalization.

— The wine and spirits wholesalers join “a slowly growing group of non-cannabis trade organizations or companies publicly backing cannabis decriminalization. Tobacco company Altria, home security firm The Brink's Company, and alcohol/beverage companies Constellation Brands and Molson Coors are all part of the” Greg Walden and Tom Daschle-backed Coalition for Cannabis Policy, Education, and Regulation, which supports decriminalization at the federal level.

— “But the number of non-cannabis groups actively lobbying for federal decriminalization is still rather low — and a group the size of WSWA could have an impact if it engages on an issue.” The trade group plans to deploy not only its lobbying firepower, but “knowledge of how the Alcohol and Tobacco Tax and Trade Bureau regulates an industry producing and selling an intoxicating product.”

CAN AFP BOUNCE BACK?: Semafor’s Dave Weigel reports that “in interviews with former staffers and allies within the Koch network,” many saw Americans for Prosperity’s recent pledge to drop tens of millions of dollars in the GOP presidential primaries to “turn the page” on former President Donald Trump “as more of a last gasp than a rebirth.”

— “In their eyes, a machine that once rivaled the RNC in influence during its tea party heyday has been relegated to the sidelines as the GOP continues to shift away from its positions on immigration, free markets, and criminal justice reform. One of the iconic ‘Koch Brothers,’ David, died in 2019, and some question whether AFP will survive at all after its remaining family founder, Charles Koch, retires or passes on.”

— Though the Kochs notched several important wins during Trump’s presidency in spite of sparring personally with Trump, their network “clearly see[s] their chance of a conservative revival as stronger with Trump decisively gone.”

— “And the network’s best case against him, which ran throughout AFP President Emily Seidel’s February memo, may be electability rather than ideology. Seidel referred not-so-mysteriously to a GOP nominee who ‘represents a new chapter’ and ‘can win,’ after AFP Action spent $33.4 million on 2022 candidates who lost, including Trump-backed candidates like Mehmet Oz in Pennsylvania and Herschel Walker in Georgia.”

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Jobs Report

SPOTTED at a fundraiser at Morton's last night in honor of Sen. Alex Padilla’s (D-Calif.) 50th birthday, per a PI tipster: DSCC Chair Gary Peters (D-Mich.), Sen. Bob Menendez (D-N.J.), Madison Group’s Marcus Mason, Capitol Counsel’s Lyndon Boozer, Watts Group’s Daron Watts, International Association of Sheet Metal, Air, Rail and Transportation Workers’ Steve Dodd, theGROUP D.C.’s Eriade Williams, Ibarra Strategy Group’s Mickey Ibarra, Walt Disney Company’s Susan Fox, Comcast’s Leo Munoz, PC Koch, Invariant’s Mary Beth Stanton, the International Association of Fire Fighters’ Frank Lima, Squared Communications’ Michael Meehan and Subject Matter’s Barry LaSala.

— Karen Elliott is now vice president of strategic communications and publications at the U.S.-China Business Council. She was most recently vice president for communications and public affairs at the Entertainment Software Association.

— Christine Keck is now vice president of national government and regulatory affairs at American Water. Keck most recently served as managing director of federal government affairs for CenterPoint Energy.

— Clare Considine and Annabelle Jefferies have joined National Public Affairs as senior research analyst in the research and strategy department and digital account manager, respectively. Considine previously was an analyst at Brilliant Corners Research & Strategies and Jefferies previously was digital fundraising manager at the RNC.

— Karina Lipsman is now associate director of comms for the Victims of Communism Memorial Foundation. She previously ran for Congress in Virginia and was corporate strategy development lead at Peraton.

New Joint Fundraisers

FRIENDS OF KENNEDY (Sen. John Kennedy, Pelican PAC, MT Senate Republican Nominee Fund 2024, NV Senate Republican Nominee Fund 2024, OH Senate Republican Nominee Fund 2024, WI Senate Republican Nominee Fund 2024, WV Senate Republican Nominee Fund 2024, NRSC)

LCA Victory Fund (Reps. Lisa Blunt Rochester, Abigail Spanberger, Chrissy Houlahan)

New PACs

Al-Corn PAC (PAC)

INTEGRATION INNOVATION, INC. PAC (PAC)

LAKE COUNTY CONSERVATION AND AGRICULTURAL ALLIANCE CORPORATION (Hybrid PAC)

PA UNITED FOR EVERYONE INC (Hybrid PAC)

New Lobbying REGISTRATIONS

Actum I, LLC: Elizabeth Seton Childrens

Akin Gump Strauss Hauer & Feld: Saronic, Inc.

American Statistical Association: American Statistical Association

Best Best & Krieger LLP: City Of Eugene, Oregon

Brumidi Group: Supergoop!