by Jane Mayer
In both cases, the courts embraced the argument that independent spending, as opposed to direct contributions to the candidates, wouldn’t result in corruption. From the start, critics like Richard Posner, a brilliant and iconoclastic conservative federal judge, declared the Court had reasoned “naively,” pointing out that it was “difficult to see what practical difference there is between super PAC donations and direct campaign donations, from a corruption standpoint.” The immediate impact, as the New Yorker writer Jeffrey Toobin summarized it, was that “it gave rich people more or less free rein to spend as much as they want in support of their favored candidates.”
Among the few remaining restraints that the majority of the Court endorsed was the long-standing expectation that any spending in a political campaign should be visible to the public. Justice Anthony Kennedy, who wrote the majority opinion, predicted that “with the advent of the Internet, prompt disclosure of expenditures” would be easier than ever. This, he suggested, would prevent corruption because “citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
The assumption soon proved wrong. Instead, as critics had warned, more and more of the money flooding into elections was spent by secretive nonprofit organizations that claimed the right to conceal their donors’ identities. Rich activists such as Scaife and the Kochs had already paved the way to weaponize philanthropy. Now they and other allied donors gave what came to be called dark money to nonprofit “social welfare” groups that claimed the right to spend on elections without disclosing their donors. As a result, the American political system became awash in unlimited, untraceable cash.
In striking down the existing campaign-finance laws, the courts eviscerated a century of reform. After a series of campaign scandals involving secret donations from the newly rich industrial barons in the late nineteenth and early twentieth centuries, Progressives had passed laws limiting spending in order to protect the democratic process from corruption. The laws were meant to safeguard political equality at a time of growing economic inequality. Reformers had seen the concentration of wealth in the hands of oil, steel, finance, and railroad magnates as threatening the democratic equilibrium. The Republican William McKinley’s elections in 1896 and 1900, for instance, were infamously lubricated by donations raised by the political organizer Mark Hanna from big corporations like Rockefeller’s Standard Oil. In a growing backlash to the corruption, at President Theodore Roosevelt’s behest, Congress passed the Tillman Act in 1907, which banned corporate contributions to federal candidates and political committees. Later scandals resulted in further restrictions limiting spending by unions and the size of individual contributions, and requiring public disclosure. By overturning many of these restrictions, the Citizens United decision was in many respects a return to the Gilded Age.
Justice John Paul Stevens, a moderate Republican when first appointed but long part of the court’s liberal wing, described the decision as “a radical departure from what has been settled First Amendment law.” In a lengthy dissent, he argued that the Constitution’s framers had enshrined the right of free speech for “individual Americans, not corporations,” and that to act otherwise was “a rejection of the common sense of the American people who have recognized the need to prevent corporations from undermining self-government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt.” Memorably, Stevens added, “While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.”
Most analyses attributed the about-face on these vital rules guaranteeing fair elections to the increasingly assertive conservatism of Chief Justice John Roberts’s Court. Clearly, this was the decisive factor. But there was a backstory, too.
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For almost four decades, a tiny coterie of ultrarich activists who wished to influence American politics by spending more than the laws would allow had been chafing at the legal restraints. One family had been particularly tireless in the struggle, the DeVos clan of Michigan. The family, whose members became stalwarts in the Kochs’ donor network, had made a multibillion-dollar fortune from a remarkable American business success, the Amway direct-marketing empire. Founded in 1959 by two boyhood friends, Richard DeVos Sr. and Jay Van Andel, in Ada, Michigan, a suburb of Grand Rapids, it sold household products door-to-door while preaching the gospel of wealth with cultlike fervor. Over time, the private company grew into a marketing behemoth, generating revenues of nearly $11 billion a year by 2011.
The DeVoses were devout members of the Dutch Reformed Church, a renegade branch of Calvinism brought to America by Dutch immigrants, many of whom settled around Lake Michigan. By the 1970s, the church had become a vibrant and, some would say, vitriolic center of the Christian Right. Members crusaded against abortion, homosexuality, feminism, and modern science that conflicted with their teachings. Extreme free-market economic theories rejecting government intervention and venerating hard work and success in the Calvinist tradition were also embraced by many followers. Within this community of extreme views, no family was more extreme or more active than the DeVoses. They were less well-known outside Michigan than some of the other founding families of the conservative movement, but few played a bigger role as its bankrollers. Among the many causes they supported was the Koch donor network. Although their views on social issues were considerably more reactionary than those of the Kochs, they ardently shared the brothers’ antipathy toward regulations and taxes.
Amway in fact was structured to avoid federal taxes. DeVos and Van Andel achieved this by defining the door-to-door salesmen who sold their beauty, cleaning, and dietary products as “independent business owners” rather than employees. This enabled the company’s owners to skip Social Security contributions and other employee benefits, greatly enhancing their bottom line. It resulted, however, in numerous legal skirmishes with the Internal Revenue Service and the Federal Trade Commission (FTC). In a charge that was later dropped, the government alleged that the company was little more than a pyramid scheme built upon misleading promises of riches to prospective distributors, many of whom bought its products in bulk, found themselves unable to sell them, and so were forced to cover their debts by recruiting additional distributors.
The gray zone in which the company operated made its cultivation of political influence important. In 1975, after Grand Rapids’s Republican congressman Gerald R. Ford became president, the usefulness of political clout became particularly apparent. While the Federal Trade Commission investigation was ongoing, DeVos and Van Andel obtained a lengthy meeting with Ford in the Oval Office. Two of Ford’s top aides, soon after, became investors in a new venture founded by DeVos and Van Andel. After news of their involvement surfaced, the White House aides dropped out, but Amway later hired one of them as a Washington lobbyist. Meanwhile, perhaps coincidentally, the FTC investigation into whether Amway was an illegal pyramid scheme fizzled, resulting only in the company having its knuckles rapped for misleading advertising about how much its distributors could earn.
The company’s political activism was so unusually intense that one FTC attorney at the time told Forbes, “They’re not a business, but some sort of quasi-religious sociopolitical organization.” Indeed as Kim Phillips-Fein writes in Invisible Hands, “Amway was much more than a simple direct-marketing firm. It was an organization devoted with missionary zeal to the very idea of free enterprise.”
There were legal limits, however, to how much the DeVoses could spend on elections. In 1974, after the Watergate scandal, Congress set new contribution limits and established the public financing of presidential campaigns. Opponents struggled to find ways around the new rules. In 1976, they partly succeeded when the Supreme Court, judging a case brought by a Republican Senate candidate, William F. Buckley Jr.’s brother James, struck down limits on “independent expenditures.” Thi
s opened what became an ever-expanding opportunity for big donors.
In 1980, Richard DeVos and Jay Van Andel led the way in “independent expenditures,” becoming the top spenders on behalf of Ronald Reagan’s presidential candidacy. By 1981, their titles reflected their growing clout. Richard DeVos was the finance chair of the Republican National Committee (RNC), while Jay Van Andel headed the U.S. Chamber of Commerce. In Washington, the pair cut a swath, hosting lavish parties on the Amway yacht, which was docked on the Potomac River, attended by Republican big shots and dignitaries from the dozen countries in which Amway operated. DeVos, the son of a poor Dutch immigrant, appeared as if dressed by a Hollywood costume department, flashing a pinkie ring and driving a Rolls-Royce.
The flood of money from Amway’s founders failed, though, to quash an investigation by the Canadian government into a tax-fraud scheme in which both DeVos and Van Andel were criminally charged in 1982. The scandal exploded when Kitty McKinsey and Paul Magnusson, then reporters for the Detroit Free Press, shocked readers accustomed to DeVos and Van Andel’s professions of patriotism and religiosity with an exposé tracing an elaborate, thirteen-year-long tax scam directly to the bosses’ offices. At its highest levels, they revealed, Amway had secretly authorized a scheme creating dummy invoices to deceive Canadian customs officials into accepting falsely low valuations on products the company imported into Canada. Amway had thus fraudulently lowered its tax bills by $26.4 million from 1965 until 1978.
Amway denounced the news reports and threatened to file a $500 million libel suit against the Free Press. But the next year, the company released a terse statement announcing that it had pleaded guilty to defrauding the Canadian government and would pay a $20 million fine. In exchange, the plea agreement called for criminal charges to be dropped against four of the company’s top executives, including DeVos and Van Andel. In 1989, Amway paid an additional $38 million to settle a related civil suit.
DeVos was soon dethroned as the RNC’s finance chair. His standing hadn’t been helped by his reference to the brutal 1982 economic recession as a welcome “cleansing process” or by his insistence that he’d never seen an unemployed person who wanted to work. Top donors were also put off by his attempts to transform RNC meetings into patriotic pep rallies akin to those run for Amway salesmen. DeVos would call wealthy contributors to the stage and ask, “Why are you proud to be an American?” A longtime Republican activist told The Washington Post, “We were losing contributions and that was the last straw.”
The DeVos family nonetheless remained huge financiers of the Republican Party and the growing conservative movement, as well as sponsoring efforts to undo campaign-finance laws. Starting in 1970, they began to direct at least $200 million into virtually every branch of the New Right’s infrastructure, from think tanks like the Heritage Foundation to academic organizations such as the Intercollegiate Studies Institute, which funded conservative publications on college campuses. “There’s not a Republican president or presidential candidate in the last fifty years who hasn’t known the DeVoses,” Saul Anuzis, a former chairman of the Michigan Republican Party, said.
The DeVoses were also deeply involved in the secretive Council for National Policy, described by The New York Times as “a little-known club of a few hundred of the most powerful conservatives in the country,” which it said “met behind closed doors in undisclosed locations for a confidential conference” three times a year. Membership lists were secret, but among the names tied to the organization were Jerry Falwell, Phyllis Schlafly, Pat Robertson, and Wayne LaPierre of the National Rifle Association (NRA). There was overlap with a number of other participants in the Koch seminars, too, including Foster Friess, the multimillionaire founder of a Wyoming mutual fund, Friess Associates, who had collaborated politically with the Kochs at least since the 1996 election, when they both channeled money into Triad Management to surreptitiously fund attack ads. Charles Koch accepted an award from the Council for National Policy but was not a member of the group. It was, in Richard DeVos’s phrase, a place that brought together “the doers with the donors.”
If anything, the DeVos family’s brushes with the law merely emboldened them. During the 1994 midterm elections, Amway gave $2.5 million to the Republican Party, which was the largest known soft money donation from a corporation in the country’s history. In 1996, clean-government groups criticized the family for skirting campaign contribution limits by also donating $1.3 million to the San Diego tourist bureau to help air the Republican National Convention there that year.
By then, Richard DeVos Sr. had bought the NBA’s Orlando Magic and had passed the management of Amway on to his son Richard junior, who was known as Dick. The younger DeVos shared his father’s political and religious views. But he was a pragmatist when it came to business, expanding the zealously free-market company deeply into China. By 2006, fully a third of Amway’s revenue came from the Communist state.
The DeVos family’s stature and wealth were magnified by Dick’s marriage to the other royal family of Michigan’s Dutch Reformed community, Betsy Prince. Her father, Edgar Prince, had founded an auto parts manufacturing company that sold for $1.35 billion in cash in 1996. Her brother Erik Prince, meanwhile, founded the global security firm Blackwater, which the reporter Jeremy Scahill described as “the world’s most powerful mercenary army.”
Betsy DeVos, who eventually became the chairwoman of Michigan’s Republican Party, was said to be every bit as politically ambitious as her husband, if not more so. With her support, in 2002 Dick DeVos ceased managing Amway in order to devote more time to his political career. The results, though, were dismal. The DeVos family spent over $2 million in 2000 on a Michigan school voucher referendum that was defeated by 68 percent of the voters. The family then spent $35 million in 2006 on Dick DeVos’s unsuccessful bid to become the state’s governor.
In their zeal to implement their conservative vision, few issues were more central to the DeVos family’s mission than eradicating restraints on political spending. For years, the family funded legal challenges to various campaign-finance laws. Ground zero in this fight was the James Madison Center for Free Speech, of which Betsy DeVos became a founding board member in 1997. The nonprofit organization’s sole goal was to end all legal restrictions on money in politics. Its honorary chairman was Senator Mitch McConnell, a savvy and prodigious fund-raiser.
Conservatives cast their opposition to campaign-finance restrictions as a principled defense of free speech, but McConnell, who was one of the cause’s biggest champions, had occasionally revealed a more partisan motive. As a Republican running for office in Kentucky in the 1970s, when it was almost solidly Democratic, he once admitted “a spending edge is the only thing that gives a Republican a chance to compete.” He had once opened a college class by writing on the blackboard the three ingredients that he felt were necessary to build a political party: “Money, money, money.” In a Senate debate on proposed campaign-finance restrictions, McConnell reportedly told colleagues, “If we stop this thing, we can control the institution for the next twenty years.”
The James Madison Center aimed to make this dream a reality by taking the fight to the courts. In addition to the DeVos family, early donors included several of the most powerful groups on the right, such as the Christian Coalition and the NRA. But the driving force behind the organization was a single-minded lawyer from Terre Haute, Indiana, James Bopp Jr., who was general counsel to the antiabortion National Right to Life Committee. Bopp also became the Madison Center’s general counsel.
In fact, Bopp’s law firm and the James Madison Center had the same office address and phone number, and although Bopp listed himself as an outside contractor to the center, virtually every dollar from donors went to his firm. By designating itself a nonprofit charitable group, though, the Madison Center enabled the DeVos Family Foundation and other supporters to take tax deductions for subsidizing long-shot lawsuits that might never have been attempted otherwise. “The relationship be
tween this organization and Bopp’s law firm is such that there really is no charity,” observed Marcus Owens, a Washington lawyer who formerly oversaw tax-exempt groups for the Internal Revenue Service. “I’ve never heard of this sort of captive charity/foundation funding of a particular law firm before.”
In 1997, the same year that she helped found the Madison Center, Betsy DeVos explained her opposition to campaign-finance restrictions. At the time, there was a national outcry against the way both the Democratic and the Republican Parties had evaded contribution limits in the 1996 presidential campaign by paying for what they claimed were “issue” ads rather than campaign ads, with unlimited funds that came to be known as soft money. There was a bipartisan Senate push for reform. But in a guest column in the Capitol Hill newspaper Roll Call, DeVos defended the unlimited contributions.
“Soft money,” she wrote, was just “hard-earned American dollars that Big Brother has yet to find a way to control. That is all it is, nothing more.” She added, “I know a little something about soft money, as my family is the largest single contributor of soft money to the national Republican Party.” She said, “I have decided, however, to stop taking offense at the suggestion that we are buying influence. Now I simply concede the point. They are right. We do expect some things in return. We expect to foster a conservative governing philosophy consisting of limited government and respect for traditional American virtues. We expect a return on our investment; we expect a good and honest government. Furthermore, we expect the Republican Party to use the money to promote these policies, and yes, to win elections. People like us,” she concluded archly, “must surely be stopped.”