Two groups founded by Karl Rove that are looking to influence midterm elections may have crossed the line.
American Crossroads and Crossroads GPS announced Tuesday a $4.2 million ad buy. This increases the total spent mostly on ads by the groups to $18 million.
MSNBC's Rachel Maddow noted Wednesday that a large majority of the money raised by the groups -- 75 percent -- came from anonymous donors by way of Crossroads GPS. As a 501(c)(4) organization, the group doesn't have to disclose the name of their donors.
The other 25 percent of the ad buy comes from American Crossroads which must report donor names because they are a 527 group.
"Records show that a handful of billionaires and their companies have contributed nearly all of American Crossroads' money, including Texas oilman Trevor Reese-Jones, Public Storage founder B. Wayne Hughes, and longtime Republican fundraiser Carl Lindner of American Financial Group," The Washington Post reported.
"The grassroots anti-incumbent tidal wave financed 75 percent by people you'll never know and 25 percent by mostly three guys," explained Maddow.
American Crossroads and Crossroads GPS are being accused of abusing their designation as 501(c)(4) organizations. Under the law, groups can spend up to half of their contributions on campaigns as long the primary purpose is "the promotion of social welfare."
Two U.S. election watchdog groups filed a complaint Tuesday, saying a non-profit group set up by Karl Rove has engaged in blatant political campaigning.
Democracy 21 and the Campaign Legal Center asked the Internal Revenue Service to determine whether conservative-leaning American Crossroads Grassroots Policy Strategies is abusing laws governing the political activity of non-profit organizations, The Washington Post reported. While its parent organization is a "super PAC," Rove's GPS group is barred from spending money on advertising that favors particular candidates or parties.
"We're living in a new world now, and the IRS can't just stand on the sidelines anymore," said Fred Wertheimer of Democracy 21, one of the litigants. "You have groups basically using their non-profit status to keep their donors secret."
"What we are seeing this year on the Republican side is really -- could be quite unprecedented," Peter Stone of The Center for Public Integrity told Maddow Wednesday.
"American crossroads and allied GPS raised $32 million thus far and they seem on track to reach their goal of $52 million. The Chamber of Commerce is trying to raise $75 million. They have spent about 20 million thus far," he said.
"Right now, under the IRS rules they never have to disclose their donors but file reports on their spending and other activities sometime next year. But the IRS now grants groups like GPS 501(c)(4) and Chamber of Commerce total freedom not to disclose the donors and most of the new groups set up this year have been set up purposefully as 501(c)(4)s to protect the identity of large donors who are nervous about the climate this year," he continued.
The Supreme Court's "Citizen United" ruling earlier this year opened the floodgates for ad spending by lifting restrictions on how much a single person or organization could donate.
But major donors are hesitant to give large amounts of money to organizations like the Republican National Committee which must disclose names.
"They're nervous because 80 percent of the populace said in polls they oppose the decision. Many corporate donors decided it was safer to go with groups that will protect our identity, safer to go with groups under the radar basically," said Stone.
This video is from MSNBC's The Rachel Maddow Show, broadcast Oct. 6, 2010.