Pro Publica reports:

To see how easy it is for a dark money group to ignore the Internal Revenue Service, look no further than the loftily named Government Integrity Fund.

The Fund, an Ohio nonprofit, spent more than $1 million in 2012 on TV ads attacking Ohio Sen. Sherrod Brown and praising his Republican opponent, Josh Mandel. The group spent most of its money on politics — even though IRS rules say nonprofits like the Fund aren’t allowed to do that.

The Fund’s return highlights the ways such nonprofits, known as dark money groups because they are not required to disclose their donors, can skirt IRS rules designed to limit their political activities. Such groups are playing an increasingly prominent role in elections, spending more than $256 million on election activity in 2012.

Dark money groups can spend money on politics as long as they can persuade the IRS that their primary purpose is social welfare. This can lead to quite creative accounting on tax forms, with groups describing ads that should qualify as political under IRS rules as “education” or “issue advocacy.”

Unraveling what the Government Integrity Fund spent in 2012 wasn’t possible until recently because the group didn’t file its tax return until January of this year, when it was two months overdue. The long wait highlights one of the major problems with regulating dark money groups and their spending: The IRS typically doesn’t look at these groups until a tax return is filed, often more than a year after an election has been decided.

Even with the return in hand, several aspects of its operations remain confusing.

In one spot, the group says $4.6 million of its $5.2 million in expenditures were made as grants “and similar amounts paid.” But it doesn’t identify which groups received the grants, as the IRS requires, or what the “similar amounts paid” might have gone toward. At the end of the form, the group says only $1.1 million went toward grants — again, without saying who received the grants — with the rest of the $4.6 million going to its sister super PAC and what it classifies as “public education.”

The group offers no details on what the $1.5 million attributed to education included — mathematically, though, it would have to include the ads it bought related to the Brown-Mandel race.

Experts scoffed at the idea that the ads qualified as education.

“There’s no way you can claim these are education. If this is public education, then everything is public education,” said Donald Tobin, a law professor at Ohio State University who specializes in the intersection of tax and campaign finance law. “These are clearly designed to be political ads to benefit or oppose a candidate. And that’s not social welfare activity.”

It’s an open question how vigorously the IRS, which doesn’t comment on individual taxpayers like the Fund, will pursue groups for irregularities. The agency has revoked the nonprofit status of only one social welfare nonprofit, a liberal group, and its affiliates since the Supreme Court’s Citizens United decision in 2010 paved the way for dark money groups to pour hundreds of millions of dollars into outside election ads.

Experts on nonprofits say the IRS has taken an even more hands-off approach since top officials admitted the agency had targeted applications from conservative groups for extra scrutiny, sparking a scandal and investigations.

Is this a platform for a Presidential campaign, public policy or both?

Elizabeth Warren’s new book advocates for the disappearing middle class in America.

An unlikely political star tells the inspiring story of the two-decade journey that taught her how Washington really works–and really doesn’t As a child in small-town Oklahoma, Elizabeth Warren yearned to go to college and then become an elementary school teacher–an ambitious goal, given her family’s modest means. Early marriage and motherhood seemed to put even that dream out of reach, but fifteen years later she was a distinguished law professor with a deep understanding of why people go bankrupt. Then came the phone call that changed her life: could she come to Washington DC to help advise Congress on rewriting the bankruptcy laws? Thus began an impolite education into the bare-knuckled, often dysfunctional ways of Washington. She fought for better bankruptcy laws for ten years and lost. She tried to hold the federal government accountable during the financial crisis but became a target of the big banks. She came up with the idea for a new agency designed to protect consumers from predatory bankers and was denied the opportunity to run it. Finally, at age 62, she decided to run for elective office and won the most competitive–and watched–Senate race in the country. In this passionate, funny, rabble-rousing book, Warren shows why she has chosen to fight tooth and nail for the middle class–and why she has become a hero to all those who believe that America’s government can and must do better for working families.

Our correspondent Andreas Frank notes a ruling by the US Court of Appeals in the cast of the European Union against RJ Reynolds, a tobacco company.  The lower court threw out the case because the racketeering was done in Europe.  The appeals court found: the alleged scheme began with the smuggling of illegal narcotics into Europe by Colombian and Russian crime groups, with euro-denominated proceeds from the sale of those drugs then “laundered” by money brokers.

Importers would allegedly use these proceeds later to buy RJ Reynolds cigarettes via wholesalers, with payments and shipments shielded from government scrutiny. Brokers using funds derived from the importers would then allegedly repeat the cycle.

The EU accused the RJ Reynolds entities of essentially directing the scheme from the United States, using U.S. mails and wires and frequent travel by employees to Colombia.

In dismissing the case, Garaufis said RICO did not apply because the scheme was centered on foreign crime groups operating outside the country.

Judge Leval in the Appeals Court said that standard could create “illogical” results, such as immunizing people from RICO liability for murders and kidnappings in the United States simply because they were done in conjunction with a foreign enterprise.  “Surely the presumption against extraterritorial application of United States laws does not command giving foreigners carte blanche to violate the laws of the United States in the United States,” he wrote.

“We conclude that RICO applies extraterritorially if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate,” Leval added.
The 2nd Circuit took more than two years to decide the case, having heard oral arguments on February 24, 2012.