Could Rand Paul’s Shadowy Fundraising Machine Sink His Presidential Ambitions?

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March 31 2014 7:32 PM

Paul, Inc.

Could the shadowy network of Rand Paul’s old fundraising machine sink his presidential ambitions?

Rand and Ron Paul
Sen. Rand Paul talks to his father Rep. Ron Paul on Capitol Hill in 2011.

Photo by Alex Wong/Getty Images

The race for the 2016 Republican presidential nomination looks, for the moment, like the race to beat Rand Paul. At the start of last week, the New York Times reported that Paul could claim “contributors from all 50 states,” despite his own skittishness about organizing. A few days later, the Washington Post published a sort of rebuttal—a guide to the “mainstream coalition” that had coalesced around Paul while his possible rivals pandered, stumbled, or slumbered.

David Weigel David Weigel

David Weigel is a reporter for Bloomberg Politics

But Paul’s network is older and stranger than they know. Six months ago, for example, hundreds of diehards in the “liberty movement” (the catchall term often used to refer to people who agree with Ron and Rand Paul’s politics) gathered in Chantilly, Va., for the annual Liberty Political Action Conference. Rand Paul showed up, as did his father, but the most revealing moment of the weekend came when a man named Mike Rothfeld took the stage. His speech, he said, was supposed to be about leadership. Halfway through it, he pivoted.

“Money!” said Mike Rothfeld. “Oh, that’s a dirty word, isn’t it?”

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Rothfeld, founder of Virginia-based Saber Communications was delivering his pitch at the annual conference. In Paul-world, Rothfeld is an important figure; of the $40.6 million raised for Ron Paul’s 2012 presidential campaign, nearly $7.7 million went to Saber. Rothfeld’s firm had basically mastered the art of direct-mail fundraising, and some people in the liberty movement—some very loud people—had a problem with this.

We shouldn’t really need money to fight for our liberty,” said Rothfeld, imitating the voice of a whining critic. “Bless your little socialist hearts. I don’t like that direct mail, because all they do is ask for money. And then they earn a living. Outrageous! People that spent 40, 50, 60, 70 hours a week of their lives, who have wives and children, husbands, dreams, sicknesses just like you do. How dare they earn a living, huh? And you know who you are, bless your heart, that think like that.”

Bless your heart, Rothfeld explained, was “Southern” for “you’re an idiot.” He was talking to activists that had already shelled out to learn how to campaign harder for their causes, and who now had the option of paying $250 to enter an LPAC reception with Ron Paul or $550 for a “private briefing.” They needed to know how campaigns actually worked.

Only the volunteer is pure? You better be darn glad there’s professionals doing it. It’s hard work. It’s unpleasant work sometimes. And yeah, we didn’t take a vow of poverty, most of us. We’re free market guys. If we’re really good at what we do, we want to be paid more for it.”

Rothfeld went on, rebutting his critics, explaining the costs of snail mail and Internet ads. “When you spam people to the sum of 50 or 60 or 70 million pieces of spam a month, as my shop does—those of you who get Rand Paul spa—” Rothfeld smiled at his intentional verbal gaffe—“uh, email, or Campaign for Liberty or National Association for Gun Rights or National Right to Work or National Pro-Life Alliance, that is all my spa—uh, email!”

Rothfeld had given a guided tour of a little-understood sector of the Ron Paul/Rand Paul universe. (He later told me that he does not talk on the record to reporters.) Critics on the right call it Ron Paul, Inc., the byzantine array of organizations that helped create and staff the “liberty movement.” Some of these critics insist that the network will sink Rand Paul’s ambitions in 2016, either through misdirection of funds or scandal, and they point to an ongoing grand jury investigation of a former Iowa state senator who allegedly solicited a bribe from Paul’s 2012 deputy campaign manager.

Rand Paul is approaching his new network more carefully. He didn’t linger at LPAC, for example, giving his speech then flying to Michigan to meet with a more elite group of Republican donors. His national fundraisers include a 2004 Bush–Cheney bundler and veterans of the Club for Growth and FreedomWorks. But the new organization is built on the foundation of a group of long-term staffers activists, who are mistrusted by some in the “liberty movement” and linked to a 2011 campaign finance scandal that was equal parts Byzantine and brazen.

“Rand can learn, from his dad’s campaign, who to rely on for good support that will be totally above board and ethical,” says Drew Ivers, a former Iowa Republican Party official who’s considered one of the nascent campaign’s top men in the caucus state. “I always look for the silver linings, and here’s one—people become transparent in hindsight.”

The starting point of the scandal that could dog Rand Paul is the anti-union National Right to Work Committee. Founded in 1955, it really sprung to life in 1965, when a re-elected Lyndon Johnson attempted to strengthen unions by gutting the Taft-Hartley Act. The committee, as Lee Edwards recalled in his 1999 history of conservatism, “concentrated on two objectives: to arouse public opinion at the grass roots, which would in turn influence members of Congress, and to provide sympathetic members of Congress with every possible assistance.”  

It did this by lobbying, and by building a sprawling network of donors via direct mail. National Right to Work was an early client of Richard Viguerie, the godfather of conservative direct mail. By the mid-1970s, when he helped National Right to Work kill legislation that would have expanded the right to picket construction sites, Viguerie claimed to have 15 million names on 3,000 rolls of magnetic tape. These were conservatives who could be activated by the right pitch or warning about what would happen if they didn’t join up.

National Right to Work was effective. In good years, it raised eight-figure sums and spawned spinoff groups across the country. It created an infrastructure outside the “Republican establishment” and “consultant class,” one that existed for years, with little hype, as individual Republican stars rose and plummeted. From 1987 to 1991, Mike Rothfeld oversaw National Right to Work’s direct-mail program. He left to form Saber Communications, which would run mail operations for the National Association for Gun Rights and the National Pro-Life Alliance, and then do direct mail for Ron Paul’s presidential campaign Different groups, same strategy: reaching out to the maximum number of conservatives to bring them aboard a campaign for (usually hopeless) legislation the establishment wouldn’t touch.

This network, little understood even inside the right, would supply some of the key talent to Ron Paul’s growing organization. John Tate spent 14 years at National Right to Work, six of them as vice president. He went on to become the political director for Ron Paul’s 2008 campaign, and has led the Campaign for Liberty (the main organization that grew out of the 2008 run) since 2010. Doug Stafford, who was Rand Paul’s chief of staff until he left to run his RANDPAC, came directly from National Right to Work. So did Dimitri Kesari, who was National Right to Work’s government affairs director until he became deputy campaign manager of Ron Paul 2012.

Ron Paul’s 2008 campaign marked a turning point in the history of direct mail. He started, as he had started his 1988 Libertarian presidential campaign, as a fringe candidate with a mailing list. In the summer of 2007, especially after an explosive debate confrontation with Rudy Giuliani, Paul became the master of Internet fundraising. A December 2007 “moneybomb” for Paul raised $6 million, all from small donors logging onto his campaign site.

When the 2008 campaign ended, its vigorous organizing and fundraising drew on the lessons of National Right to Work. Activists interested in the Campaign for Liberty could be trained in $35 workshops run by the Foundation for Applied Conservative Leadership, an outfit led by Mike Rothfeld. Some of these graduates went on to swamp the GOP establishment in Kentucky, helping Rand Paul win an upset in the 2010 primary for U.S. Senate. Rand Paul’s campaign paid nearly $800,000 to Saber Communications. In 2011, when Ron Paul started another run for president, it called Rothfeld a key adviser.

And it was during the 2011 primary run up that things went awry. Iowa was one of Ron Paul’s best-wired states, with a strong “liberty movement” on college campuses and allies in the home school movement. It was also wired by National Right to Work. NRW had a convoluted relationship with local Iowa candidates, as revealed via leaks to journalist Lee Stranahan and surreptitiously recorded interviews between the key players and Dennis Fusaro, formerly of National Right to Work and briefly national political director for the 2008 Paul campaign.

The gist was that National Right to Work co-operated with some 2010 Republican candidates for Iowa’s state senate. Candidates’ family members were interviewed or encouraged to write about their lives together—the state senate hopeful that you wish you knew. NRTW then printed these up as letters to be sent to key direct-mail lists.  

It was effective, and necessarily under the radar. Even in the wild and untamed plains of campaign finance law, a nonprofit, nonpartisan group can’t appear to be coordinating any messages with candidates. But Fusaro proved that when he turned on his colleagues, and unbeknownst to them, hit record when he called them to talk about the direct-mail campaign. In 2010 he recorded a conversation in which Doug Stafford, then vice president of National Right to Work, explained why Dimitri Kesari—who’d just launched Mid-America Right to Work, in Indiana—was being tasked with so much. “Four years of election cycles, of having Dimitri and his guys run the mail shop, shows me that that’s who needs to be running the mail shop,” said Stafford in the call. Kesari was good at a task few people understood, and doing it in a way that seemed to skirt laws against candidate “coordination.” That became more important in 2011. Iowa State Sen. Kent Sorenson, one of the candidates aided by National Right to Work’s 2010 letter program, became a power player in the state’s Republican caucuses. Sorenson endorsed Michele Bachmann, and his Grassroots Strategies group started receiving monthly $7,500 checks from her campaign, which wasn’t even legal in Iowa. He could, in other words, be bought. Later in 2011, according to some documents leaked by Fusaro and some obtained by an investigator in Iowa, the Iowa Gun Association’s Aaron Dorr drafted a proposal under which Sorenson could switch his endorsement to Ron Paul. Dorr’s memo was addressed to John Tate, who’d temporarily left the Campaign for Liberty to manage the 2012 Paul effort. The plan would require Sorenson being paid off secretly.

“The money for salary and the PAC needs to be paid in advance,” wrote Dorr in the Oct. 29, 2011 memo. “To be blunt, there is an issue of trust involved, likely on both sides, and as a result KS, etc. needs to have the financial side met in advance.” In return, “KS would naturally speak at RP events in Iowa and be visible with him.”

Dorr’s plan called for the Paul campaign to pay nearly a quarter-million dollars: $100,000 for a PAC to be run by Sorenson, $8,000 a month for the senator, and $5,000 a month for Aaron’s brother Chris Dorr, who was Sorenson’s clerk. Had the plan been carried out, it would have tied the Paul campaign to a career-ending scam.

But it wasn’t carried out, at least not to completion. Under investigation in 2013, Sorenson handed over to investigators a $25,000 check from Ron Paul’s deputy campaign manager Dimitri Kesari, dated Dec. 26, 2011. Sorenson had endorsed Paul two days later, but the check had never been cashed. Sorenson had previously said as much in a secretly taped phone call with Fusaro, in which he revealed his intention to “give it back,” wondering only whether he should “hold onto it so I have something over” Kesari. Drew Ivers, who introduced Sorenson at the endorsement event, says he was shocked when the senator showed up.

“I’ve been around for a long time, and I can smell out people pretty good,” says Ivers. “I put distance between Ron Paul and Kent Sorenson and Aaron Dorr.”

In 2013, Sorenson resigned in disgrace from the Iowa state Senate. He’s been talking to a grand jury, but no one else—his old phone numbers have been changed and he doesn’t answer questions from reporters. Kesari has remained active with candidates in the Saber/National Right to Work network. He made the rounds at March’s Conservative Political Action Conference, and was spotted partying with Rep. Steve Stockman.

But with every week there’s more distance between the Pauls and the people involved in the Sorenson mess. Jesse Benton, who’d been Ron Paul’s spokesman and Rand Paul’s 2010 campaign manager, went on to manage Mitch McConnell’s re-election bid. In 2013, campaign finance records revealed that McConnell’s campaign had paid $61,954 to Hyllus Corp., a newly incorporated company that happened to be located at a P.O. Box used by Kesari. There have been no payments to Hyllus Corp. since OpenSecrets reported this figure.

But Rand Paul remains deeply connected to the little-understood world of conservative direct mail. One of the first bills he took up in January 2011, after being sworn into the Senate, was a national right to work bill. (South Carolina Sen. Jim DeMint had introduced the legislation, fruitlessly, in prior Congresses.) Soon, Rand Paul’s name and face started appearing on e-­mails endorsing the latest efforts of National Right to Work and asking readers to sign a petition—i.e., to join a larger mailing list.

“They snickered when I said I came to the U.S. Senate to change Congress,” read one letter, sent on Jan. 21, 2011 to users of the conservative site TownHall.com. “Their laughter stopped when I sponsored the National Right to Work Act to free U.S. workers from forced unionization and break Big Labor's multi-billion dollar political machine forever. President Barack Obama and Big Labor allies in the Senate are now feverishly scheming to bury the National Right to Work Act without a vote. So I have a question for you. Will you be my sledgehammer?”

Rand Paul’s name has also appeared on scores of emails from Mike Rothfeld’s Saber clients, emails like the appeals from the National Association for Gun Rights asking conservatives to help stop the “U.N. gun ban” and take a “sovereignty survey.” In April 2013, the NAGR started running ads against Republicans who’d spoken about a need for “gun safety” legislation.

One of those Republicans, Virginia Rep. Scott Rigell called out Paul. “Your good name is being leveraged, with your permission one must assume, by a corrupt, detestable outfit,” said Rigell.

The attacks continued. According to Rigell, Doug Stafford made it clear that Paul would not distance himself from the National Association for Gun Rights. But after Politico reported on the spat, the e-mails stopped.

This was a teaching moment for the Paul network. By April 2013, Rand Paul had already delivered his 13-hour filibuster on drones and civil liberties. Pieces of a new network were coming together, and the senator no longer needed to rely on the more troublesome aspects of Paul, Inc. The direct mail industry and the outsider class of consultants had helped build a new libertarian political movement when the mainstream had wanted no part of it. But the mainstream had been gentled. Paul, if he chose to, could move on.

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