Secret $1.5 million donation from Wisconsin billionaire uncovered in Scott Walker dark-money probe

Wisconsin Gov. Scott Walker (Photo: Charlie Neibergall/AP)

John Menard Jr. is widely known as the richest man in Wisconsin. A tough-minded, staunchly conservative 75-year-old billionaire, he owns a highly profitable chain of hardware stores throughout the Midwest. He’s also famously publicity-shy — rarely speaking in public or giving interviews.

So a little more than three years ago, when Menard wanted to back Wisconsin Gov. Scott Walker — and help advance his pro-business agenda — he found the perfect way to do so without attracting any attention: He wrote more than $1.5 million in checks to a pro-Walker political advocacy group that pledged to keep its donors secret, three sources directly familiar with the transactions told Yahoo News.

Menard’s previously unreported six-figure contributions to the Wisconsin Club for Growth — a group that spent heavily to defend Walker during a bitter 2012 recall election — seem to have paid off for the businessman and his company. In the past two years, Menard’s company has been awarded up to $1.8 million in special tax credits from a state economic development corporation that Walker chairs, according to state records.

And in his five years in office, Walker’s appointees have sharply scaled back enforcement actions by the state Department of Natural Resources — a top Menard priority. The agency had repeatedly clashed with Menard and his company under previous governors over citations for violating state environmental laws and had levied a $1.7 million fine against Menard personally, as well as his company, for illegally dumping hazardous wastes.

John Menard Jr. at the NASCAR Busch Series Meijer 300 at the Kentucky Speedway in 2006 (Photo: Joe Robbins/NASCAR/Getty Images)

“This, in a nutshell, is what’s wrong with the dark-money world we live in,” said Bill Allison, senior fellow at the Sunlight Foundation, a Washington-based based nonprofit group that tracks the influence of money in politics. “Here’s somebody who obviously has issues before the state, and he’s able to make a backdoor contribution that nobody ever sees. My sense is [political] insiders know about these contributions. It’s only the public that has no idea.” Menard did not respond to email and phone requests from Yahoo News for comment about his contributions. (His company’s spokesman, Jeff Abbott, said he was not authorized to speak for the company’s owner and could not respond, either.)

Laurel Patrick, Walker’s press secretary, strongly denied that the governor had provided any special favors for Menard and said Walker was “not involved” in the decision to award his firm tax credits, which were approved by the Wisconsin Economic Development Corporation for expansions of existing facilities in order to create jobs. (She also noted that Menard’s firm had been awarded $1.5 million in tax credits in 2006 under Democratic Gov. James Doyle. State records show these were reduced to $1 million when the company failed to meet its full job-creation requirements.)

Patrick declined, however, to respond to any questions about the Menard contributions. Citing a “pending legal” investigation into Wisconsin Club for Growth fundraising that will be argued next month before the state Supreme Court, AshLee Strong, a spokeswoman for Walker’s political organization, Our American Revival, said she also could not answer any questions about the Menard donations, including whether the governor had solicited them, was aware of them or had ever discussed state business with Menard.

Asked about the Menard donations, David Rivkin, a lawyer for the Wisconsin Club for Growth, said he could not discuss any contributors to the group but added in an email: “Wisconsin Club for Growth has never advocated on behalf of any specific individuals or corporations. Rather, it has vigorously advocated on behalf of issues and causes that are consistent with its philosophy of limited government, free markets and individual liberty.” Still, the funds from Menard — and other hefty secret donations to nonprofit groups closely aligned with Walker — could loom larger as the Wisconsin governor emerges as a top-tier candidate for the Republican presidential nomination.

The contributions by Menard, made in 2011 and 2012, were uncovered among hundreds of emails and internal documents seized by state prosecutors in the course of a wide-ranging criminal investigation into whether Walker’s campaign committee violated state campaign finance laws — including those requiring public disclosure — by funneling large donations to outside, nondisclosing advocacy groups, such as the Wisconsin Club for Growth, with which they were believed to be closely coordinating their efforts, sources knowledgeable about the investigation told Yahoo News.

That investigation was launched three years ago by John Chisholm, the Democratic district attorney in Milwaukee County, who has been a consistent thorn in the governor’s side. Chisholm initiated the probe under Wisconsin’s so-called “John Doe” laws, which give local prosecutors wide berth to conduct criminal investigations under requirements of strict secrecy. (An earlier “John Doe” probe overseen by Chisholm into Walker’s administration as Milwaukee County executive netted six criminal convictions involving improper fundraising and conducting political business, including use of a secret email system, on government property.)

Some court records that have been made public about the new fundraising probe, known as “John Doe 2,” show that, when he first faced a potential recall election in 2011, Walker had personally solicited donations to the Wisconsin Club for Growth in order “to ensure correct messaging” in ads that were supporting his policies, according to an email sent by one of his fundraisers. His aides referred to the group as “your 501c 4,” a reference to the provision of the tax code under which nondisclosing advocacy groups are organized.

Key to the effort, the email indicated, was secrecy. “Stress that donations to WiCFG [Wisconsin Club for Growth] are not disclosed and can accept corporate donations without limits,” reads one June 20, 2011, email from a Walker aide to the governor prior to one of his out-of-state fundraising trips. “Let them know you can accept corporate contributions and it is not reported.”

But the investigation has proven hotly controversial in Wisconsin, in part because it has involved unusually aggressive tactics: A bulk of the evidence was seized in October 2013 during early-morning raids by sheriff’s deputies in which they beamed searchlights on the homes of Walker’s chief political consultant, the director of the Wisconsin Club for Growth and other targets while executing searches and seizing computers, cellphones and other documents.

Chris Cline, owner of Foresight Energy (Photo: Andrew Harrer/Bloomberg/Getty Images)

Now the probe is stalled after coming under sustained legal attack from advocacy groups, which have depicted it as a partisan-driven rogue operation. “The John Doe investigation is a transparent attempt to target and silence Wisconsin conservatives,” said Rivkin, the Wisconsin Club for Growth lawyer, who has directed the legal attack on the probe.

One federal judge, concluding that the investigation was a violation of the free-speech rights of the advocacy groups, ordered last year that the probe be shut down and directed prosecutors “to permanently destroy” all the evidence they had obtained. That order was later reversed, and next month the Wisconsin Supreme Court will hear arguments on whether the investigation should proceed. The outcome could well determine whether Walker will be confronted with questions about the secret donations — and any benefits the contributors might have received — while he runs for president.

“This is the stuff that attack ads are made of,” said Julia Azari, a Marquette University assistant professor of political science who has followed the investigations into Walker. So far, she noted, Walker has effectively “stonewalled” any questions about the probe — saying only that he is not a target. And given the polarized political atmosphere in the state, he has paid little political price for not answering questions, Azari said, adding: “He’s been successful in this narrative: ‘I’ve been persecuted, the unions are after me.’” But Gerald C. Nichol, a retired judge who chairs the Wisconsin Government Accountability Board, the state agency that enforces state election laws, strongly disputed that there were any political motives behind the investigation. “I have seen nothing in terms of political bias,” Nichol told Yahoo News in an interview. “This is not a witch hunt.”

Nichol, a former Republican district attorney, was originally appointed to his post by Democratic Gov. James Doyle and was reappointed by Walker in 2012. He noted that his nonpartisan board voted unanimously in June 2013 to participate in the John Doe probe — and helped select a special prosecutor, Francis Schmitz, a former U.S. Justice Department national security lawyer — after being presented with the evidence about the close connections between Walker’s campaign and the outside advocacy groups. “This is a way of giving money to a campaign and not having it identified, and the amount involved,” said Nichol. “I find this disturbing to the system generally. I don’t care if it’s on the Republican or Democratic side. Both of them are now using this.”

Among the evidence that has been made public are records showing Walker secured large, undisclosed donations for the Wisconsin Club for Growth group from some of the Republican Party’s biggest contributors, giving him early inroads into a well-heeled donor base that could prove useful in his presidential run. These include such big-money figures as Donald Trump, Home Depot co-founder Ken Langone and hedge fund billionaire Stephen Cohen, who deposited $1 million into the Wisconsin Club for Growth’s account two months after one of his deputies met with Walker in March 2012 at a resort on Sea Island, Georgia, during an event sponsored by the conservative American Enterprise Institute.

Another big GOP donor at that same event: Paul Singer, the Wall Street billionaire. One email from a Walker fundraiser to the governor reads: “meetings to make happen while in Sea Island … Paul Singer. Grab him.” Two months later, Singer wired $250,000 into the Wisconsin Club for Growth’s account.

The contributions that have gotten the most attention so far are $700,000 to the Wisconsin Club for Growth from a mining company called Gogebic Taconite, owned by Florida coal baron Chris Cline. At the time of the contributions in 2011 and 2012, Gogebic was aggressively lobbying the Wisconsin General Assembly for a controversial change in state law that would allow it to open an iron ore mining operation in northern Wisconsin — a proposal that was backed by Walker but drew fierce opposition from environmental groups and local Indian tribes.

Dale Schultz, a former Republican state senator who once served as Wisconsin Senate Majority Leader, said he worked countless hours attempting to negotiate a compromise version that would satisfy all parties, only to have his efforts overrun by fellow GOP lawmakers who, with Walker’s support, enacted a version of the legislation drafted by the mining company’s lobbyists.

When he later learned about the secret donations by Gogebic Taconite and other contributors to the Wisconsin Club for Growth, Schultz said in an interview, “I was heart-broken. I was crushed. All of a sudden, I saw something that had never happened before in Wisconsin. You had to go back to when the railroad barons bought the entire legislature during the Gilded Age.” (The mining firm last month announced it was shelving the project for now because of new concerns about federal environmental restrictions.)

(Source for graphics above: Center for Media and Democracy Complaint against Wisconsin Club for Growth filed with the IRS on Oct. 27, 2014.)

The Menard contributions could also raise questions about undue influence. George Meyer, a former secretary of natural resources under Republican Gov. Tommy Thompson, said he had intense confrontations with Menard during the late 1990s over state environmental laws. In one instance, he said, state officials caught the billionaire store owner on videotape personally dumping arsenic-laden hazardous waste ashes from one of his lumber plants in a state landfill.

“I swear to God, he would have his employees bag up [the ashes] in plastic bags, and he would take them home and put them in his personal garbage,” said Meyer, who is now executive director of the Wisconsin Wildlife Federation. “They were going to a regular landfill, not to a hazardous waste facility. We were trying to get the attorney general to file criminal charges. If it had been you or me, it would have happened, but it didn’t to John Menard.”

Instead, Menard and his company settled and agreed to pay the $1.7 million civil fine, then a record in Wisconsin. But during meetings he had with Menard, Meyer said, the hardware baron made no secret of his views on environmental enforcement. “He told me he just didn’t believe in environmental regulations,” said Meyer. “He was upfront about it.”

Although he cannot draw any direct connection to Menard, Meyer said the more lax approach he favored is reflected in a sharp drop in state environmental enforcement actions under Walker: The number of environmental cases referred by the Department of Natural Resources (DNR) to the state Justice Department for prosecution has dropped in half — from an average of 68 under the previous Democratic administration of Doyle to 34 in each of the past two years under Walker, according to the latest state figures.

But this had nothing to do with Menard — and everything to do with how the governor believes such matters should be handled, according to Walker press secretary Patrick.     

“Governor Walker believes it’s possible to protect our clean air, clean land, and clean water while enacting policies that improve our business climate and spur economic growth,” she said in an email. “We are proud that the number of referrals has gone down. Under Governor Walker, DNR has taken a proactive approach of working with applicants, businesses, and land owners at the beginning of the process. The goal would be to someday have no referrals or citations because those actions mean something went wrong. Governor Walker wants to help employers and landowners avoid problems in the first place.”

This article has been updated to reflect additional comments Tuesday from Gov. Walker’s press secretary.