IOWA CITY, Iowa (AP) — The passionate support of an eclectic group of libertarians and young people has Ron Paul in contention to win the Iowa caucus. So has the work of two well-funded nonprofits that for the past three years have kept his aides employed, his volunteers organized and his ideas afloat.

Those nonprofits, including Paul’s flagship Campaign for Liberty, blur the line between his presidential campaign and issue advocacy in a way experts say runs afoul of the spirit, and perhaps the letter, of federal tax and campaign finance law.

But unlike a political campaign organization, whose finances are tightly regulated and made public, such advocacy nonprofits can raise unlimited sums of money and aren’t required to disclose where it came from or all the details about how it was spent.

“It sounds like it was a way to maintain a permanent campaign,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a nonpartisan watchdog group. “These groups were never supposed to be political organizations, but more and more, we’re seeing them used that way. All of this is leading to our elections getting more and more out of control with fewer regulations.”

Paul, a 76-year-old Texas congressman, finished fifth in the 2008 Iowa caucus and abandoned his long-shot presidential campaign that summer. As he left the race, he urged his supporters to continue their fight for libertarian principles by joining his new group, the Campaign for Liberty. He called the transformation of his presidential campaign into the nonprofit a “legal formality” that would allow him to continue building his famously energetic network of volunteers, online activists and college students.

The Campaign for Liberty and Young Americans for Liberty, a separate group formed to spread his message to high school and college students, were organized as “social welfare organizations” under U.S. tax law. That means they cannot make politics and promoting candidates their primary activities.

The groups quickly found a home in the tea party movement, hosting conferences, training activists and distributing petitions asking members of Congress to support one of Paul’s signature policies — a plan to audit the Federal Reserve. The Campaign for Liberty raised more than $13 million between 2008 and 2010 that paid for direct mail, telemarketing, staff salaries and other expenses. The group claims more than 600,000 members and more than 170 chapters of Young Americans for Liberty at high schools and colleges.

Drew Ivers, who founded the Iowa chapter of Campaign for Liberty, said the nonprofit’s goal was never to lay the groundwork for Paul’s 2012 presidential campaign. Organizers were careful to separate political work from the work of advocating Paul’s ideas, he added. But he acknowledged the organization has helped Paul in Iowa, which will hold its first-in-the-nation presidential nominating caucuses on Jan. 3.

“It kept the ideas alive. And as people who were involved in the Campaign for Liberty liked the idea of limited government, they look at the field of presidential candidates and say, ‘You know, I think Ron Paul is serious about this idea,'” Ivers said.

The other candidates from 2008 who are again running in 2012 also took steps between campaigns to build their political clout. President Barack Obama formed his “Organizing for America” group at the Democratic National Committee, while Republican Mitt Romney used a political action committee to raise money, shower donations on lawmakers and pay for his travel to key states. Paul had a PAC, too.

But the finances of both the DNC and political action committees such as Romney’s Free and Strong America PAC — unlike Paul’s nonprofits — are regulated by the Federal Election Commission and subject to financial disclosure rules.

Paul’s presidential campaign is thoroughly intertwined with the nonprofits. The Campaign for Liberty calls itself a lobbying group for “individual liberty, constitutional government, sound money, free markets and a noninterventionist foreign policy” — a tidy summation of Paul’s campaign platform. Young Americans for Liberty’s support of Paul is even more explicit, calling itself the continuation of the Students for Ron Paul wing of his 2008 campaign, coordinating his visits to campuses and publishing a magazine in which he laid out his “agenda for a freedom president.”

Between the 2008 and 2012 campaigns, both nonprofits were stocked with Paul aides and relatives. Ivers served as Paul’s Iowa campaign chairman in 2008 and holds the same position again this year. The Campaign for Liberty’s president, John Tate, was paid a total of $338,000 by the group in 2009 and 2010. He is now Paul’s national campaign manager. The nonprofit’s senior vice president was Jesse Benton, who is now Paul’s campaign chairman; its vice president was Debbie Hopper, who is now Paul’s assistant campaign manager.

Lori Pyeatt, Paul’s daughter, served until recently as the Campaign for Liberty’s part-time secretary and treasurer, earning $34,000 for her work last year. Her daughter is married to Benton. Paul’s son Ronnie is the group’s unpaid chairman.

In all, nine out of the 16 staff members at the Campaign for Liberty are on leaves of absence from the group to work for Paul’s campaign. The nonprofit’s executive director, Matthew Hawes, said the group is still able to function and is an active advocate on state and federal issues unrelated to Paul’s presidential campaign.

Paul campaign spokesman Gary Howard — who for 18 months served as the Campaign for Liberty’s spokesman — said Paul resigned as Campaign for Liberty’s honorary chairman when he joined the presidential race and believes the nonprofits complied with Internal Revenue Service rules. Still, like Ivers, he acknowledged the nonprofits have indirectly aided the campaign by training activists and raising his issues.

Paul isn’t the first to use such a strategy to keep his name in the public’s view between bids for the White House. Democrat John Edwards did the same between the 2004 and 2008 campaigns by founding a nonprofit center dedicated to fighting poverty, his central campaign issue.

Federal investigators later issued a subpoena for information about Edwards’ nonprofit, according to details previously provided to The Associated Press. An attorney for Edwards has said the nonprofit paid money to Edwards’ mistress’ video production firm, and the former senator from North Carolina was later indicted on campaign finance charges related to payments from wealthy donors that were used to help hide the woman.

Marcus Owens, a Washington lawyer who headed the exempt organizations division at the IRS from 1990 to 2000, questions whether such nonprofits were truly designed to serve the “social welfare purpose” as required by law.

In Paul’s case, the groups also helped his son’s political career. At least two aides from the Campaign for Liberty left to help Rand Paul win election to the U.S. Senate in Kentucky last year.

“Any family campaign seems to draw them out. It’s not conclusive, but it tends to suggest a private, not a public, purpose behind the organization,” Owens said. “It’s not a social welfare purpose to keep a campaign staff together and to promote the personal ideas of one individual.”

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments (27)
  1. Murph says:

    All the people supporting GOP saboteurs running for political office are probably graduates of Shatfer college! In fact all the current GOP POTUS candidates are Shatfer graduates.They must be because they all have Shatfer brains!

    1. Matt says:

      How I see it Bush looks smarter than any of these idiots running for president.

      1. Murph says:

        OMG,Matt now that really is scary! One day there will be a really scary movie made about this power play by the super rich.”Meet the Shatfer’s” might be a good title!

  2. Richard in Minneapolis says:

    “But unlike a political campaign organization, whose finances are tightly regulated and made public, such advocacy nonprofits can raise unlimited sums of money and aren’t required to disclose where it came from or all the details about how it was spent.”

    BULLFEATHERS! Non-Profits are required to file IRS Form 990, which includes income statements, balance sheets, supplemental schedules of expenses sorted into program, management, and fundraising categories. It requires the disclosure of key employees – and their compensation, as well as the disclosure and amount paid to the 5 highest paid independent contractors. And I was able to pull this information up on the Internet in less than a minute.

    1. insignificant says:

      yeah,richard…lamestream media tryin’ to smear Paul as some criminal fraudster,eh?…aint gonna work…millions have opened their eyes and see the establishment candidate creeps for what they are

  3. Mary says:

    The liberal main stream media will continue to attack every Republican candidate except Romney.

    Once Romney gets the nomination, there will be hundreds of stories about his ‘cult’ of Mormonism. They are setting him up to fail.

    1. RIII says:

      Romney is a RINO, I would not trust him to sweep my floor.

  4. Fed up says:

    This is a hit job on a dedicated servant who has always represented the people honorably.

    If a public servant doesn’t have a “D’ after their name on the ballot box, this media outlets tries to destroy them. Many people in this country are saying “we should get rid of crooked politicians”, I agree, but we should also shut down corrupt journalism like this too.

    They do just as much damage because it’s obvious they are a political front group attempting to shape your opinion about good, honest Americans trying to do the right thing.

    1. Agreed says:

      And I’m glad the CCO censor squad allowed your comment to post. Ron Paul clutches the cleanest of all political money out there. Ron Paul is the cleanest politician out there. Ron Paul is too good a man to even participate in politics. I thank that he does.

      1. insignificant says:

        so good to see these posts …people actually seeing what the press is up to smearing the only honorable candidate out there…Paul!

  5. angus says:

    Mary, Fed Up, & Agreed, there are doctors and counselors who can help you overcome your feelings of paranoia, insecurity, and inadequatacy. Just because someone doesn’t agree with you does not make them evil.

    Actually I think the three of you have nice comfortable lives and you have no empathy for anyone else. It is a shame you live such desolate lives. And remember, Ron Paul comes from Texas that believes in executing people, particularly if they are a minority and poor.

    1. Agreed says:

      Angus, I agree their is appropriate psychological assistance for the likes of yourself. I wonder how spewing assists you. All that was stated is that the media frames positions to the likes of big money and often tells partial truths. I can’t imagine any disagreement with that. Those of us who happen to have comfortable lives tend to show just as much empathy as others and we are certainly not desolate. Therefore Angus, Merry Christmas.

      1. Frankie says:

        What Ron Paul advocates benefits big money more than any other candidate. From statements made in the past, Ron Paul has fecal matter for empathy.

        1. No says:

          No Frankie, you are wrong. But I sense your brainwashing is too deep to amend.

          1. Frankie says:

            The censor was out again. @No, Who benefits most from the oversight that Paul wants to cut out? If you say that people will behave without oversight consider you could not even disagree with me without disrespect directed at me?

          2. Frankie says:

            In any of Paul’s proposals has there never been one mention of cutting corporate subsidies? No.
            He says he wants to end all taxes and have a balanced budget. That would lead to the only way to fund the US government is through tariffs only. He would sell all the assets. Somebody else is going to have to provide you with the short answer why that will not work

    2. flouridatedangusburger says:

      d-andus…yer post shows us the complete utter non-sense thats been pounded into yer numb skull…you don’t like liberty,justice,and constitutional rule of law…. somethings gone awry

  6. Murph says:

    It seems there are a lot of dreamers out there who think the Republicans won’t ruin their pensions, make good wages into slave wages and everyone is going to accept this as a NEW deal. Well,it is neither new or will any deal be made under GOP terms.The wanted a fight and they wanted to ruin peoples lives to make Obama look bad and they have done so! If anyone can’t see that,they should tune out the mislabeled “America’s News Channel” and look instead at a the devasted lives and livelyhoods ruined by the Party of NO! If they continue to show no mercy,none will be granted in their direction either! Since that is the way they want to play! But playtime is just about over! I think they found that out last week! Hahahahaha

    1. Murph, Murph, Murph says:

      I’m not raising my own corn, toiling at a washboard, boiling water at a stoked hearth, worried about an infection from a simple scratch. Companies aren’t freely offering pensions, the government is. The rest of us save our money by our own will. Nobody is getting raises, we are spending less. It’s called a recession and if you would have read Ron Paul in 2001, you would have known it was coming and known what to do. Government does not have all the answers Murph. “Livelihood” in America is still the best “livelihood” even for the poor republicans and poor democrats.

      1. frozenrunner says:

        Any person that paid the least bit of attention to history would know that a recession would come sooner or later. Economies go up and down. That has been a historical fact. Big deal that Ron Paul said there would be another. If he told you to save money, then he is with a multitude of people who have yold you the same thing. In that line of thinking Ron Paul is no messiah, it is what even the most ignorant of finacial planner is telling you as they tell you of these fantastic returns he is getting from this Madoff guy.
        If you haven’t read, government is for the people and by the people. People make mistakes. I have yet to meet one that does not. The people in government can only try to have an answer. As pigheadedness, err partisanship takes over, answers become less workable as a problem is really worked on from one view or another rather than a collective.

      2. Murph says:

        Honey I understand your confusion and yes I know you are female.,as I am an alpha.I am old but not nearly forgotten! There are certain truths in this world that should not be forgotten!Number one of which is the Nazi takeover of Germany! I take it you are way to young to remember “crystal naght”, but sweety this is YOUR night!Enjoy it in freedom for as long as you can! I love you! Please don’t get swept up in the herding to follow a GOP Win in 2012.There will be partisans in the fields and revolutionaries in the ranks,Few will survive,but be one of them!I will pray for you!

      3. Murph says:

        I hate to bring this up,BUT we had eight years of BUSH,…where were you? This is the land that the GOP wants to rename Amerika!. I’ll see you in the REX 84 death camps ..fool! Maybe we can shovel everyone else in the ovens before it is our turn? That makes us pards..NO!

  7. keel says:

    Oh for heaven’s sake! Write about all the rest of the candidates and their anonymous donors then…don’t single Paul out. Every single politician is on the take…just a matter of from whom.

    1. frozenrunner says:

      John Edwards was mentioned. In the past articles it mentioned how Bachmann staffers ventured from one employer to anther under Bachmann’s control. Perhaps as a Libertarian Ron Paul should exhibit a little more values of independence. Instead we have more politics as usual from the GOP. That is the do as I say not as I do.

  8. Murph says:

    Speaking of witch Hazelnut.Where can we find out how much MN taxpayer money is going to her ‘security thug detail. How much went to splendiforous Tim’s. It’s outrageous that you should have to pay for the dreams of these two complete moron politicians! It needs to be changed!

  9. Murph says:

    If Paul is crooked toss him out! He is probably the GOP’s last and only hope! The GOP does not deserve to have a real candidate and God has obviously chosen them NOT to have one!I will let all of you make that decision and hope all to Hell you are not turned into pillars of salt. If it happens however,I will dance as a teenager,just as I did before before your heroe’s ruined my retirement!

  10. Don't Tread on Me says:

    Does the author of this article realize that corporations can also contribute unlimited funds to campaigns? See Citizens United v. Federal Election Commission. How is an advocacy group donating unlimited amounts any worse? There’s a lot of information left out in this piece, ultimately rending this a worthless act denigration. Nonetheless, Paul makes more money from individual donors than any other candidate. The fact that this article is actually questioning the legitimacy of his funding is absurd. At least his donors aren’t doubling down on both sides and profiting from our economic woes!!

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