Dark Money

by Jane Mayer

  The Koch network was no longer a secret. A squadron of local police in riot gear cordoned off the long, winding driveway to the Rancho Mirage resort, which was in virtual lockdown, while a ragtag assortment of protesters out front waved signs proclaiming, “Koch Kills!” and “Uncloak the Kochs!” Some twenty-five arrests were made, and the Kochs’ private security guards, wearing gold-colored Ks in their lapels, threatened to add one more when they caught the Politico reporter Kenneth Vogel in the resort’s café. Unless he left the premises immediately, they warned, they would make a “citizen’s arrest,” forcing him to spend “a night in the Riverside County Jail.”

  Inside the fortified resort, some of America’s most celebrated corporate chieftains huddled with Charles Koch, including the DeVos family of Amway, Ken Langone of Home Depot, and Tully Friedman, the private equity tycoon who was also chairman of the American Enterprise Institute. Like besieged royalty, David Koch and his wife, Julia, in dark sunglasses, made a brief appearance from one of the hotel’s balconies, from which they grimly surveyed the street theater below.

  The heavy-handed security reflected a more combative stance on the part of the Kochs toward the backlash that their outsized role in the public arena was stirring. Confidants described the brothers as obsessed with leaks and stung by the critical press coverage. They seemed surprised and resentful that their growing political influence had resulted in heightened scrutiny. They were accustomed to thinking of themselves as private citizens, and public-spirited ones at that. A golf partner said David “spumed and sputtered” about The New Yorker and other publications that had scrutinized the brothers, blaming the media for spurring death threats and forcing his family to hire personal bodyguards.

  The Kochs also spoke darkly and inaccurately about the Obama White House conspiring with reporters to smear them. “They somehow thought that they could run tens of millions of dollars in ads, but fly under the radar screen, and that nobody was going to find out,” a conservative source familiar with the Kochs told Politico. “So they’re scrambling now because they weren’t nearly as prepared as they should have been.”

  To handle the growing number of critics, particularly in the press, they brought in a new team of public relations advisers specializing in aggressive tactics. Michael Goldfarb, for instance, a Republican political operative whom the company hired at this point to improve its image, was described by The New York Times as “a conservative provocateur” who used “a blowtorch as his pen.” Goldfarb had worked for Sarah Palin’s vice presidential campaign, where he described his job as “attack the press.” Later, he founded an online publication called The Washington Free Beacon that practiced what its editor called “combat journalism” against “liberal gasbags.” Its motto was “Do unto them.” In a profile, one conservative journalist told The New Republic, “I mean no disrespect, and I like him personally, but he is the single shadiest person on the right.”

  Joining Goldfarb was Philip Ellender, co-president of Koch Companies Public Sector, who oversaw the company’s lobbying and public relations operations in Washington and who had a reputation, as Politico described it, for using “tactics that have helped cement the view that the Kochs play rough.” Ellender oversaw a crisis communication project that included frequent polling to assess damage to the company’s public image. To fight back, he launched a pugnacious corporate Web site called KochFacts that waged ad hominem attacks, questioning the professionalism and integrity of reporters whose work the company found unflattering, ranging from The New York Times to Politico. Brass-knuckle tactics were nothing new for the Koch brothers, but they were now deploying them against legitimate news reporters.

  I got a taste of these tactics on the afternoon of January 3, 2011, when an e-mail popped onto my screen from David Remnick, the editor of The New Yorker, where I had been a staff writer since 1994. Remnick is a brilliant and busy editor who doesn’t bother his writers unnecessarily. When he gets in touch, there’s usually a good reason.

  In his e-mail, Remnick explained that ten minutes earlier he’d received a baffling inquiry about me from Keith Kelly, the reporter who covered the media industry for the New York Post. Unsure how to respond, Remnick forwarded it and asked, “Can you help me out on this stuff?” He added courteously, “Sorry to bother you with this.”

  “Hi,” Kelly’s inquiry began, breezily. “We’re hearing that a right-wing blogger may be preparing to let fly some pretty serious claims against Jane Mayer. On the one hand, it may be seen as payback for her bringdown of the Koch Brothers in August 2010.”

  His reference was to a ten-thousand-word article I had written for The New Yorker five months earlier, titled “Covert Operations,” with the reading line “The billionaire brothers who are waging a war against Obama.” The story revealed in depth for the first time how the publicity-shy Koch brothers had stealthily leveraged their vast fortune to exert outsized influence over American politics. It also showed that their environmental and safety record was woefully at odds with their burnished public images as selfless philanthropists.

  I had previously devoted the same amount of space in The New Yorker to profiling another such plutocratic donor, George Soros, a billionaire investor who spent a fortune underwriting liberal organizations and candidates. Soros hadn’t liked the story, but he’d accepted that tough questions were to be expected from the press in a democracy. In contrast, when the New Yorker story on the Kochs came out, the brothers were enraged. Their company’s general counsel, Mark Holden, later described the story as “a wake-up call,” admitting, “We didn’t have a response that was ready to go.” Spearheading an aggressive damage-control effort, he soon sent a letter of complaint to the magazine. He was unable to identify any factual errors but argued that contrary to the article’s title, “Covert Operations,” there was nothing secretive or “covert” about them. Yet the Kochs, unlike Soros, had declined to grant The New Yorker an interview. Instead, after our story ran, David Koch denounced it in The Daily Beast as “hateful,” “ludicrous,” and “plain wrong.” But his complaints lacked specificity, requiring no corrections, and so the magazine stood by the story, and we moved on. The calm, however, was deceptive.

  In a squat Washington office building three blocks from the White House, a boiler room operation formed. Beginning in the summer of 2010, as the Kochs were ramping up spending on the midterm elections, half a dozen or so highly paid operatives labored secretly in borrowed office space in the back of the lobbying firm run by the former congressman J. C. Watts. Their aim, according to a well-informed source, was to counteract The New Yorker’s story on the Koch brothers by undermining me. “Dirt, dirt, dirt” is what the source later told me they were digging for in my life. “If they couldn’t find it, they’d create it.”

  Reprising the intimidating tactics that critics of Koch Industries had complained of for years, a private investigative firm with powerful political and law enforcement connections was retained. The firm, it appears, was Vigilant Resources International, whose founder and chairman, Howard Safir, had been New York City’s police commissioner under the former mayor Rudolph Giuliani. The firm advertised itself as upholding “the highest standards of confidentiality and discretion.”

  It’s uncommon for a private detective to be hired to conduct a retaliatory investigation into a reporter’s character. It is after all the job of the press to cover politics. How much, if at all, the Kochs were personally involved in these activities remains unclear. Often private investigators are hired indirectly, working for law firms retained by the principals, so that they can claim attorney-client privilege, preserve deniability, and erase fingerprints. Asked whether he had investigated me, Howard Safir said only, “I don’t comment. I don’t confirm or deny it.” His son, Adam Safir, who worked with him in the firm, also declined to comment. An effort to interview Charles and David Koch resulted in an e-mail from their company’s spokesman, Steve Lombardo, saying simply, “We will have to decline.” Asked in a follow-up e-mail w
hether the company had mounted a private investigation into me, he declined to respond.

  However, clues leading back to the Kochs were everywhere. Sources described Goldfarb, Ellender, and other Koch Industries personnel as deeply involved in the project. Leading it, one source said, was Nancy Pfotenhauer, a longtime member of the Kochs’ inner circle who has served as a Koch Industries spokesperson, as the head of its Washington office, and as the president of Americans for Prosperity.

  I had no inkling about this until that fall, when, a few months after my story ran, a blogger called me to ask if I had heard the rumor that I was the target of some sort of cloak-and-dagger private detective’s investigation. I laughed it off. At a Christmas party that winter, I was equally nonchalant when a former reporter pulled me aside with an odd warning. “This may be nothing,” she said, but a private investigator she knew had mentioned there were a couple of conservative billionaires who wanted help digging up dirt on a Washington reporter. The reporter had written a story they disliked. “It occurred to me afterward that the reporter they wanted to investigate might be you.”

  These warnings flashed through my mind as I read the e-mail that Remnick forwarded from the New York Post reporter that afternoon in January. Kelly, the Post reporter, was hoping to get comment on “allegations” that he said were about to be published against me, claiming that I had “borrowed heavily” from other reporters’ work. Before I had the chance to respond, though, a second set of e-mails reached both Remnick and me. This time the sender was Jonathan Strong, then a reporter at the online conservative news site The Daily Caller, whose editor, Tucker Carlson, was a senior fellow at the Cato Institute. Strong, too, it appeared, was about to publish a hit piece on me. His e-mails were ominous, asking Remnick outright whether my work fell “within the realm of plagiarism.” He provided several samples of my writing and demanded an answer by ten o’clock the next morning.

  Plagiarism ranks pretty high up on the list of crimes of moral turpitude in journalism. In a business where your name and credibility are everything, allegations like these could prove ruinous. Upon close inspection, though, it became clear that the allegations were inane and easily refutable. Someone, probably using a computer program, had mechanically sifted through almost a decade of my work and isolated quotations from officials, and other widely repeated phrases, to argue that “the structure and wording” were “quite close” to four other reporters’ news stories. None of the supposedly purloined sentences were of any particular significance. This wasn’t the sort of material anyone who actually knew anything about journalism would pay any attention to. Even sillier, in two of the four stories I was alleged to have “plagiarized,” I had specifically given credit to the authors whose work The Daily Caller was claiming I’d stolen.

  In twenty-five years of journalism, I’d made my share of spectacular mistakes, but no one had ever accused me of misappropriating their work. In fact, I’d always gone out of my way to credit others. But I also knew that if these charges weren’t answered immediately, the truth would scarcely matter. Once the smear got into print, people would assume that there must have been something to it.

  I was later told that by cooking up these charges, the boiler room operatives felt close to victory. “They thought they had you. They thought they were going to be knighted by the Kochs,” said one source. Their search for dirt had started with my personal life, I was told, but when that turned up nothing truly incriminating, they moved on to plagiarism.

  With only a few hours before these allegations were set to go online, all I could do was to try to get out the truth before the lies were spread. By midnight, I had reached three of the four authors from whom I was alleged to have plagiarized. All offered to make public statements supporting me and denying I had misappropriated their work. The Daily Caller’s reporter hadn’t even interviewed them.

  Lee Fang, a blogger for the liberal Web site ThinkProgress whose pathbreaking work on the Kochs I had cited in my story, issued a statement saying, “These accusations are without merit.” He went on, “Ms. Mayer properly credited me in her story, and clearly did a ton of her own research. I have nothing but admiration for her integrity as a journalist.”

  Paul Kane, a reporter at The Washington Post, quickly looked up the story in question and sent me an e-mail saying, “Not only did you not steal from me, you Frickin’ credited me in the VERY NEXT line.” The New Yorker had even linked to his story online. And, I later learned, my husband, who was then an editor at The Washington Post, had edited the story that I supposedly stole. The allegations were becoming comical. The third reporter I reached also gave a statement saying she had no complaints. Later, the fourth did as well. If this was the best opposition research money could buy, it was pretty shoddy.

  I sent the facts to The Daily Caller, which, after confirming them, dropped the story.

  But Keith Kelly, to his credit, kept reporting. He tried to press the Koch spokesmen on whether they were behind the smear but, interestingly, got no response. He wrote a follow-up called “Smear Disappears,” asking, “Who is behind the apparently concerted campaign to smear the New Yorker’s Jane Mayer?” He noted, “The story is dead but the person or persons behind the allegations remains a shadowy mystery.” He asked The Daily Caller’s editor, Carlson, who its source was, but Carlson claimed, “I have no clue where we got it.”

  There actually was a big clue. The plagiarism ploy had been timed to try to stop The New Yorker from nominating the Koch story for a National Magazine Award, according to the New York Post. And when The New Yorker went ahead and nominated the story anyway, the Kochs tried to stand in the way. Koch Industries’ general counsel, Holden, sent a highly unusual letter to the board of the American Society of Magazine Editors, trying to stop it from picking my story for the prize. (The story didn’t win anyway. Que sera.)

  By then, as David Remnick told the New York Post, the whole opposition research campaign seemed “pathetic.” He added derisively, “I’m a little surprised to see a big-time operation behave like a bunch of Inspector Clouseaus.”

  The Kochs also went after Ed Crane, the Cato Institute head, who admitted to having been behind an unattributed quotation in my New Yorker story making light of Charles’s “Market-Based Management” system. In response, shortly before the January 2011 summit, Charles invoked his ownership of Cato shares to force a management change, insisting that two longtime company loyalists, Nancy Pfotenhauer and Kevin Gentry, neither of whom was known as a deep libertarian thinker, join the think tank’s board. Crane, who had co-founded Cato, was furious, but it was prelude to the final shake-up later that year in which Charles and David forced him out completely. David reportedly told Cato’s chairman of the board, Robert Levy, that instead of producing esoteric intellectual theories, the ostensibly nonpartisan think tank should provide “intellectual ammunition that we can then use at Americans for Prosperity and our allied organizations” to influence elections.

  —

  If anything, the Kochs’ ham-fisted reaction to criticism, and sense of aggrieved embattlement, seem to have only spurred their backers on, because by the time they left the guarded enclave near Palm Springs on February 1, 2011, the Koch coffers had $49 million more to spend. The bidding during the final fund-raising spree was so exuberant that one hotel staffer claimed he heard donors making pledges in increments of $5 million. With the House of Representatives safely delivered, the group was now on a roll, looking ahead to finishing off Obama once and for all in 2012.

  First, though, there was a lot of discussion about how they could help the Republicans in the House, now that the GOP had the majority. Sean Noble, who continued as a contract political consultant to the Kochs, was pushing hard for them to start by helping Paul Ryan, the Wisconsin congressman who was the incoming chairman of the House Budget Committee.

  For the big donors, Ryan was a superstar, a square-jawed, blue-eyed, earnest young Ayn Rand disciple described as “wonky” so often it seemed affixed t
o his title. His problem, though, was that his budget-slashing ideas scared the public, horrified liberals, and worried many Republicans, too. As he put it himself, “There’s a lot of sharp knives in my drawer.”

  In the coming congressional session, Ryan planned to introduce a budget proposal that would serve as a blueprint for hard-line fiscal conservatives. No one expected it to pass in 2011, because the Democrats still held the Senate and the White House. But if Ryan gathered enough support, he could push the party hard to the right, tie Obama in knots, and provide a first draft for the GOP’s 2012 platform. Tactically, a lot was riding on his success.

  For several years, Ryan had been advocating radically deep cuts in government spending, including to Medicare and Medicaid, the two main government health programs for the elderly and the poor. He had also floated the idea of partially privatizing Social Security by introducing alternative private retirement accounts. He argued that the bloodletting was necessary for the country’s fiscal health. The deficit, in his view, was reaching a crisis level, and these programs were unsustainable. His ideas were wildly popular with most of the wealthy donors. As the country’s highest taxpayers, they would be the biggest beneficiaries of the tax savings produced by spending cuts. Moreover, none of them needed to rely on government social services for their health or welfare.

  But many of Ryan’s ideas were anathema to much of the middle class. When President George W. Bush had tried to privatize Social Security, a plan pushed by the Cato Institute, he had been forced to retreat in the face of overwhelming public opposition. The reality was that despite mobilizing the Tea Party, the big conservative donors had a number of different priorities from the less affluent followers. Tea Party leaders had deliberately “fudged” their agenda on Social Security in order not to alienate the followers, according to one study. They talked in vague terms about keeping America from “going broke” but avoided specifics. Meanwhile, not one grassroots Tea Party supporter encountered by the study’s authors argued for privatizing Social Security. Entitlement programs aiding the middle class were in fact so popular with most Americans that they were virtually sacrosanct. While rich free-market enthusiasts often favored replacing these programs with market-oriented alternatives, polls showed that virtually everyone else was adamantly opposed to the kinds of changes that Newt Gingrich candidly called “right-wing social engineering.”