MADISON (WITI) -- A secret John Doe investigation is exploring the link between Governor Scott Walker's recall campaign and outside political groups to see if there was any illegal coordination. Outside groups are spending tens of millions of dollars to get candidates elected on both sides of the aisle in Wisconsin. Open government advocates say the practice has the potential to undermine elections. FOX6's Mike Lowe has followed the money trail -- to find out how politically influential organizations hide their donors using "dark money."
The headlines were splashed across the state. From Milwaukee to Madison, and from Washington to New York -- saying the Wisconsin governor was at the center of a vast fundraising case.
Prosecutors are investigating Gov. Scott Walker's re-election campaign on suspicion that it illegally coordinated with outside groups as part of a "criminal scheme" to tap a nationwide network of undisclosed donations known as "dark money."
"Dark money is money spent to influence an election whose origins are impossible to trace," Mike McCabe, the executive director of the non-partisan watchdog group Wisconsin Democracy Campaign said.
McCabe says those "front groups" heavily influenced the most polarizing election in Wisconsin history -- the 2012 recall of Gov. Scott Walker.
Of the $137 million spent, $75 million was from outside groups, and only one out of every $81 was traceable to an actual person.
"It's like one of those Russian Dolls. You see the organization. You pull off the top to look inside and see where the money comes from and all you see is another organization. You pull the top off that and all you see is another organization and eventually you reach a dead-end, because ultimately the source is some (c)(4) group that doesn't have to disclose its donors," McCabe said.
FOX6 News examined how special interest groups across the political spectrum avoided disclosing their donations during the 2012 recall.
Through open records requests, FOX6 News obtained the IRS tax documents for the Wisconsin Club for Growth -- the group at the center of the investigation into Scott Walker.
What FOX6 News found is a clear picture of how it funneled money to other organizations, while keeping the public in the dark.
The Wisconsin Club for Growth started the election cycle with more than $12 million. It is nearly impossible to tell where that money came from.
Of that $12 million, $4,620,000 was donated to another group, called "Citizens for a Stronger America."
That donation made up the group's entire budget -- except for a single $25 donation.
"Citizens for a Stronger America," acting as nothing more than a filter, donated that same money to a number of other conservative organizations like "Wisconsin Right to Life," "United Sportsmen of Wisconsin," "Safari Club International" and "Wisconsin Family Action," which got nearly $900,000.
That so-called "dark money" donated to Wisconsin Family Action accounted for more than 80 percent of the group's entire budget.
And none of it was disclosed -- meaning all of it was "dark money."
"That phrase is ridiculous. Look, organizations -- 501(c)(3)s and 5019(c)(4)s have a right and legal standing not to disclose the people who give them money, and it's just ridiculous we have to spend all this time and money defending ourselves against something we shouldn't even have to be talking about -- where we get our money. As long as it's legal -- and it is legal -- it frankly is no one else's business," Julaine Appling, the executive director of Wisconsin Family Action, a group that opposes gay marriage and abortion, and generally supports conservative candidates said.
Appling says her organization is following the rules.
"That's out there in 990s for anyone to look at. How is that dark money?" Appling said.
FOX6's Mike Lowe: "Because we don't know where it came from in the first place."
"That's not something that -- at this point -- anybody's had to disclose, and I hope we never get there. That is an effort to shut down legitimate voices on behalf of people who are concerned about the direction of our state and country," Appling said.
The John Doe investigation focused on conservative groups, but it works the same way on the other side of the aisle.
"Both sides play the dark money game. There's no question about this. This is not a partisan problem, it's a bipartisan problem," McCabe said.
During the 2012 recall, an organization called the "Greater Wisconsin Committee" ran ads that promoted Democratic candidates and criticized Governor Walker.
Records show almost none of its money is disclosed.
"We've got these sort of secret advertising campaigns going on," Mordecai Lee, professor of governmental affairs at UW-Milwaukee said.
Lee studies the influence of money on politics.
"Most of the money is self-interested, and most of the money is self-interested because of economic reasons, and so when we see labor unions or major corporations giving money it's because they do want something," Lee said.
The Greater Wisconsin Committee is another 501(c)(4) group that is funded by organized labor unions and groups aligned with Democratic ideology.
In a kind of shell game, it operates four separate entities that shift money back and forth. There's the committee itself, a separate political action committee, a corporate arm and a 5-27 group called the "Greater Wisconsin Political Fund."
"They all have these names that sound like motherhood and apple pie, and there's no real clue about who is behind there," McCabe said.
So how do these outside groups do it?
"They exploit something that I call the 'magic words loophole,'" McCabe said.
It comes down to the distinction between "express advocacy" and "issue advocacy."
When candidates expressly ask for your vote, they must disclose exactly who donated to the campaign, but when a so-called "social welfare group" spotlights an "issue," and doesn't use any of the "magic words" that include: "vote for, vote against, oppose, support, elect, defeat" -- it is not required to disclose a thing.
It's all a result of the Supreme Court's 2010 "Citizens United" decision, which held that political spending is a form of protected speech and such groups are allowed to spend as much as they'd like.
That decision famously recognized corporations as people -- with the same free speech rights to make their voices heard in elections.
"On the assumption that corporations are the same as people. Since when? We have a separate set of laws that govern corporations different from people. There's no constitutional right for a corporation like there is for an individual. It's crazy," Sen. John McCain (R-Arizona) said.
It comes a decade after Wisconsin Senator Russ Feingold and Arizona Senator John McCain in their joint reform law "McCain/Feingold" attempted to cleanse the process of soft money.
Now, former Senator Feingold says Citizens United, in its fine print, opened a spigot of dark money.
"The problem is the Citizens United decision is allowing corporations to spend this kind of money in a variety of ways. One of them is going through tax loopholes in something called 'social welfare groups.' Well, they're not really social welfare groups. They're being used for political ads," Feingold said.
The Citizens United decision does have its supporters -- like former Marquette University Law School Professor Rick Esenberg.
"I think it's a good law because it maximized political participation," Esenberg said.
Esenberg says there is new meaning to the phrase "money talks."
"People often say, 'money is not speech.' But, the fact is, if you're going to have robust protection of freedom of speech, you have to let people spend resources in order to be heard," Esenberg said.
"I think this is the first problem our country faces. It may not be the biggest problem our country faces, but it's the first problem because it's the problem behind every other problem," McCabe said.
Open government advocates say "dark money's" real threat is not to obscure finance laws or political operations.
Instead, those critics say, it is a threat to Democracy itself -- providing wealthy donors an anonymous avenue of free speech, but no responsibility or accountability for what they say.