Timing of nonprofit's status questioned

CHARLESTON – West Virginia Consumers for Justice, sponsor of televised attack ads in the 2004 campaign for the state Supreme Court, raised hundreds of thousands of dollars before it filed for tax exemption as a nonprofit organization.

Consumers for Justice received its first contribution on April 13, 2004. Two days later the group received a $441,200 contribution.

The group filed Internal Revenue Service form 8871, "Political Organization Notice of Section 527 Status," on June 30, 2004.

Section 527 allows campaign spending by groups independent of candidates. A political organization must file form 8871 to be tax exempt, according to an IRS fact sheet from 2002.

"Until it files the form, its income (including contributions) is subject to taxation," the fact sheet stated.

Mike Plante of Plante and Associates in Charleston, general consultant to Consumers for Justice in 2004, said July 5 that there was a time lag between the first contributions and the filing for tax exemption.

He said the group operated on a tax exempt basis because it had applied for a certificate of exemption.

Gray Marion, manager of Jim Rowe's 2004 campaign for the Supreme Court, said July 6 that, "I have never heard anyone use that explanation before."

Consumers for Justice attacked Rowe in commercials leading up to his primary election contest with incumbent Justice Warren McGraw.

"None of us knew who this group was. They were simply the first group out of the gate," Marion said. "We tried to find out where these ads came from but they covered their tracks pretty well."

Records of the Secretary of State show that on April 12, 2004, West Virginia AFL-CIO president Kenny Perdue signed an application to organize Consumers for Justice as a nonprofit voluntary association.

Perdue gave the address of the AFL-CIO, 501 Leon Sullivan Way, as the office address of the group.

The application listed Perdue and Ted Hapney of the United Mine Workers as officers with authority to sign documents. The application identified Beth White as contact person, with Plante's phone number.

On April 13, 2004, the American Federation of State, County and Municipal Employees gave the group $1,000, and executive director Sam Hickman of the National Association of Social Workers gave $50.

On April 15, Consumer Attorneys of West Virginia gave the group $441,200.

Records of the Secretary of State show that Mark Ferguson of Charleston incorporated Consumer Attorneys of West Virginia in 1997, with Charleston attorney Stuart Calwell as president.

According to articles of incorporation, Consumer Attorneys of West Virginia was formed "to promote the welfare of the citizens of the State and members of the legal community."

On April 16, the official existence of Consumers for Justice began when Secretary of State Joe Manchin filed its application. That same day the group paid $441,200 to Media Strategies and Research of Denver, to begin its television campaign.

In the primary election, McGraw defeated Rowe.

Marion said Rowe's campaign did not protest or call for investigation because, "It was crying over spilled milk at the time.

"We have encouraged the appropriate authorities to look into these matters. ... If anyone violated West Virginia campaign law during the course of that primary election campaign it needs to be looked into and people need to be identified. When and where appropriate they need to be punished.

"The Rowe campaign conducted itself according to law. It is the height of hypocrisy to violate the law in an election to choose a candidate for the highest court in the state.

"To willingly, knowingly and deliberately violate the law to place someone on the highest court smacks of being outrageous."

After the primary, Consumers for Justice aired ads attacking Brent Benjamin, McGraw's Republican opponent in the general election.

When Consumers for Justice filed IRS form 8871 on June 30, 2004, the form stated that the association was established April 1, 2004. Twelve days later, in a quarterly report to the IRS, the group gave May 27 as the date it was formed.

In its next quarterly report the group reported that Consumer Attorneys of West Virginia contributed $500,000 in September 2004.

In the November general election, Benjamin won.

In 2005, Consumers for Justice declared $1,976,450 in total revenue for 2004.