An Oklahoma dark money organization that drew scrutiny from journalists, campaign finance watchdogs, tax officials and even law enforcement after its heavy involvement in Oklahoma’s 2014 U.S. Senate race has dissolved as a corporation.
Heartland Principles, Inc., formerly known as Oklahomans for a Conservative Future, was quietly dissolved on Dec. 31, after its officers voted to disband the organization, according to Oklahoma Secretary of State Records.
The nonprofit group, based in Oklahoma City, was considered a 501 c(4) “social welfare” organization under the IRS regulations, and in 2014 it spent more than $1.4 million on behalf of former Oklahoma House Speaker T.W. Shannon during the Republican primary race to fill former Sen. Tom Coburn’s seat.
[perfectpullquote align=”full” cite=”” link=”” color=”” class=”” size=””]“For whatever reason, we are glad to see Heartland Principles gone, as they were one of the more blatant offenders we’ve seen with this kind of thing.” – Jordan Libowitz, communications director for Citizens for Responsibility and Ethics in Washington[/perfectpullquote]
Calls and messages by The Frontier to the organization’s treasurer Ryan Owens, its president Scott Parman and its director Joshua Grogis were not returned Wednesday. A message left for Shannon at his Tulsa office was also not returned Wednesday.
Though it is unclear exactly why the organization’s officers voted to dissolve the group, its demise came about six months after the campaign finance watchdog organization Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint with the IRS alleging the organization had violated IRS rules that bar social welfare groups from spending the majority of their money on political campaigns.
Under IRS regulations, at least 51 percent of money spent by a social welfare organization must be on its core purpose and not politics, CREW states in its complaint. However, CREW states that tax records show that at least 67 percent of all expenditures by Oklahomans for a Conservative Future were political, with most coming during the 2014 Senate Republican primary race between Shannon and James Lankford, who eventually won the seat.
“As a matter of statute, the IRS does not give that kind of information out, so we really have no way of knowing what action they did or did not take,” said Jordan Libowitz, communications director for CREW.
“For whatever reason, we are glad to see Heartland Principles gone, as they were one of the more blatant offenders we’ve seen with this kind of thing,” he said.
From the beginning of its incorporation in February 2014, the organization threw up red flags — first by accidentally incorporating as a for-profit company instead of a non-profit, followed shortly afterwards by one of its more high-profile founding members being arrested for cocaine possession.
Though the organization was not the first “dark money” organization — so named because these nonprofit groups are often used to mask political donors who are free to give unlimited sums of money — it was one of the first groups to back only a single candidate.
Such “independent expenditure” groups came about after the U.S. Supreme Court’s 2010 decision in Citizens United vs. Federal Election Commission, which allowed corporations and unions to spend unlimited funds on elections, but kept many of the existing candidate donation limits and disclosure requirements.
Though dark money groups and Super PACs are permitted to raise and spend unlimited amounts of money on independent expenditures to campaign for or against candidates, they are legally barred from coordinating their efforts with the candidate or the candidate’s official campaign committee.
The organization was incorporated by political consultant and former state GOP head Chad Alexander, Alexander’s longtime lobbying and business partner Stephanie Milligan (the two married in 2016) and Manhattan Construction vice president Xavier Neira. Ryan Owens, who was serving as general counsel for the Cooperative Council for Oklahoma School Administrators, would be added later as the group’s treasurer, incorporation records show.
Alexander was a former partner at the Oklahoma City-based political consulting firm AH Strategies, which was co-founded by Robert “Fount” Holland and had become a powerful consulting firm in the mid-2000s for Republican politicians in the state.
In 2012, Alexander left the firm to start his own consulting business. However, records show that Alexander and Milligan formed at least one nonprofit organization — Coalition for Oklahoma’s Future — that year that spent money in political races that had AH Strategies clients, and even used AH’s in-house sister company Majority Designs for direct mail pieces.
After formation, Oklahomans for a Conservative Future quickly began work campaigning for T.W. Shannon, a Republican state representative from Lawton who became the first black Oklahoma Speaker of the House in 2013.
Shannon, a member of the Chickasaw Nation and former employee of the tribe, stepped down from the House Speaker position in early 2014 to run for U.S. Senate. He took up the Tea Party mantle and was endorsed by former Alaska Gov. Sarah Palin and Texas Sen. Ted Cruz, among others.
Shannon, who was an AH Strategies client during his House campaigns, stuck with the firm for his Senate campaign.
Campaign records from that period show Alexander and some of his clients had written donation checks to Shannon’s official Senate campaign days prior to the candidate announcing that he planned to run for the seat, and at least one member of Shannon’s exploratory committee was a founder of Oklahomans for a Conservative Future and later sponsored fundraisers held for Shannon’s official campaign.
Around the same time as the Senate primary race was moving forward, another nonprofit organization similar to Oklahomans for a Conservative Future was incorporated — Oklahomans for Public School Excellence.
Incorporated and operated by Milligan and allegedly Owens, according to court records, that group began taking out ads attacking former Republican State Superintendent Janet Barresi, who was facing Joy Hofmeister in the primary.
Later, email records would reveal that Hofmeister had met with both Holland and Alexander in 2013 about a possible run for State Superintendent and had discussions about Alexander possibly running an independent expenditure group while Holland ran her official campaign.
But only a few days after Oklahomans for Public School Excellence was incorporated something unexpected happened — Alexander was arrested in Oklahoma City for cocaine possession.
Oklahoma County District Attorney David Prater said in 2014 that his office had already received complaints about the groups when Alexander was arrested, and authorities were able to seize Alexander’s cell phones and laptop to search for evidence after his arrest. Former State Superintendent Janet Barresi’s campaign had also filed a complaint with Prater’s office at the time, alleging illegal coordination between Hofmeister’s campaign and Oklahomans for Public School Excellence, The Oklahoman reported.
Investigators stated in a search warrant affidavit for Alexander’s electronic devices that they had also received complaints from people who alleged some of the individuals behind Oklahomans For a Conservative Future had demanded they donate to both the dark money group and to the official campaign committees of AH Strategies clients.
Oklahomans for a Conservative Future spent at least $1.4 million to help Shannon in the primary election, taking out ads both praising the Lawton Republican and attacking Lankford. However, Shannon was ultimately defeated in the Republican primary by Lankford. Hofmeister fared better in her race, beating Barresi and cruising to victory in the November general election.
After the primary election in June 2014, the board of Oklahomans for a Conservative Future was altered radically, and many former staffers of U.S. Rep. Tom Cole were brought on board. Milligan and Alexander were removed, according to the group’s incorporation records.
Secretary of State records show that Owens was made treasurer, Scott Parman (who is director of community relations at the estate-planning firm of Parman & Easterday and son of the former Secretary of State and Oklahoma Department of Commerce chief Larry Parman) was made president, and Washington D.C. political consultant Evan Kozlow was appointed secretary.
Owens and Parman are both former staffers for Cole, while Kozlow served as deputy director for the National Republican Congressional Committee while Cole served as its director. Shannon is also a former field representative for Cole.
Joshua Grogis, Cole’s former campaign manager and Congressional district director, was also named director of the organization, Secretary of State records show.
In January 2015, the group renamed itself “Heartland Principles,” according to a document filed with the Oklahoma Secretary of State, and later that year it partnered with the Domestic Energy Producers Alliance on a national public awareness campaign in an effort to push Congress to lift the United States’ crude oil export ban.
However, early last year the Center for Responsive Politics found that the group had admitted to the IRS that it spent too much of its funds on 2014 Oklahoma Senate primary race. IRS regulations require that groups classified as 501 c(4) groups spend the majority of their money on social welfare issues.
In June last year, CREW sent a formal complaint letter to the IRS alleging the group had violated IRS regulations by spending more than 70 percent of its funds on election campaigning.
Then in November 2016, the Oklahoma County District Attorney’s Office filed felony charges against Hofmeister, Holland, Milligan, and Crawford, prompting some state Super PACs to back away from AH Strategies, according to media reports. AH’s website (along with the website of its sister company Majority Designs) has recently been deactivated, and other consultants there have formed a new political consulting firm.
Though Ryan Owens was not charged with wrongdoing, the affidavit filed in the case points toward him as a key link between Hofmeister’s campaign and Oklahomans for Public School Excellence. Shortly after the charges were filed, Owens, who had only recently become head of the CCOSA, resigned his position.
Following the 2014 primary election, Milligan formed her own consulting company, according to Oklahoma Secretary of State Records. Both she her firm worked for the Trump campaign, election records show, and she was named state director of Trump’s campaign in Arkansas and Oklahoma in November 2015. In March 2016, she was named as Midwest Regional Director of the successful presidential campaign.
However, days before Trump’s election, the charges against her were filed in Oklahoma County. Milligan was not offered a position in the Trump administration following the election, according to media reports.
Shortly after the primary loss in 2014, Shannon began making appearances as a commentator on Fox News. He was named as head of the investment banking division at the Tulsa-based Premier Consulting Partners later that year, was named as chairman of the Republican State Legislative Committee’s Future Majority Project, and was a resident fellow in the spring of 2017 at the Harvard University’s Institute of Politics.
In November, Shannon met with then-president elect Trump to discuss a possible cabinet position, though he was not named to a position afterwards.
Shannon is scheduled to speak at Tulsa Community College’s commencement ceremony on May 5.