CMD Requests IRS Investigate Charity Accused of Fronting Private Jets for Presidential Campaign

PRESS RELEASE, NOVEMBER 7, 2011

CONTACT: NIKOLINA LAZIC (312) 731-1292

Madison -- Today, the Center for Media and Democracy (CMD) filed a letter requesting that the Internal Revenue Service investigate a charity operated by Wisconsin political veteran Mark Block that spent over $40,000 of tax-exempt donations to pay for private jets, travel, and computers for Herman Cain's presidential bid. CMD also requested an examination of other Mark Block-related groups sharing the same address or other commonalities. Mr. Cain, who has denied knowing who paid for his various travels, is not the target of these requests to the IRS.

These requests follow an October 30 story by the Milwaukee Journal-Sentinel's Dan Bice revealing that "Prosperity USA," which was created by Mr. Block, had footed the bill for expenses related to Mr. Cain's bid for the White House. Prosperity USA's financial records show the charity expected to get reimbursed. Tax-exempt charities are prohibited from intervening in the political campaign for any candidate for public office, no matter the post.

Mr. Block founded Prosperity USA in 2010 and acted as its president. He also led the Wisconsin arm of billionaire David Koch's "Americans for Prosperity" (AFP). Mr. Block stepped down from AFP in December to lead Mr. Cain's campaign. In May, the campaign's Political Action Committee (PAC) registered with the Federal Elections Commission, with Mr. Block as treasurer. Prosperity USA anticipated the PAC's existence as far back as February, when it identified Mr. Cain's travel expenses as needing reimbursement from Friends of Herman Cain. That PAC spent over $160,000 on expenses in January against donations of only about $60,000 that month, and had similar gaps between expenses in receipts in the first part of the year when Prosperity USA listed the $41,366 it incurred to be reimbursed by the campaign. (AFP is also listed on the Prosperity USA financial documents, with AFP reimbursing the charity for having paid over $17,947* for Mr. Cain's travel to AFP gatherings.)

"A charity founded by Mr. Block appears to have fronted tens of thousands of dollars to a political campaign that was led by Mr. Block, to be reimbursed by a campaign PAC helmed by Mr. Block. This requires an investigation by the IRS into the charity's activities and expenditures," said Lisa Graves, CMD's Executive Director.

CMD's Fellow Brendan Fischer said "Charities are offered tax-exempt status so they can ostensibly advance some social good, not so they can facilitate donations to political campaigns. We are asking the IRS to investigate the close relationship between Mr. Block, a tax-exempt charity, and the political campaign Mr. Block leads, based on financial documents that have come to light."

Ms. Graves added "The tax-free donations to a 501(c)(3) group should not be treated like a bank or credit card to serve the financial needs or expediency of a candidate's campaign. Unfortunately, Mr. Block has previously been sanctioned after an investigation into blurring the lines between his electoral ventures and nonprofit activity. We also believe the relationships between groups closely connected to Mr. Block and Prosperity USA should be examined."

Mr. Block was previously fined and barred for three years from political campaigns in Wisconsin as a result of an election board investigation into illegal coordination between a campaign he led and a non-profit group. Following that bar, his time at Americans for Prosperity in Wisconsin was marred by other controversies, like allegations of vote caging in the state, although Mr. Block has taken credit for getting Scott Walker and others elected in 2010.

The Center for Media and Democracy is a non-profit investigative reporting and watchdog group in Madison, WI.

*CORRECTION: This article was updated at 12:00 pm to reflect that the AFP travel totaled $17,947, not $60,000 as previously noted.