Morgan: Fight's About Curbing Groups' Influence, Not Revenge

Instead, Morgan, one of five GOP incumbents targeted by the Republican Legislative Majority of North Carolina, told the State Elections Board that he wants it and similar so-called "527" groups curbed in North Carolina even after he leaves office.

"The election was over on May 2 of this year and very quickly and intellectually I was beyond that," Morgan, R-Moore, testified to board members, adding that his complaint was filed three weeks before the election.

"Nowhere in America do I believe that this kind of activity ought to go on," Morgan added. "This is for the future."

A leader for the Republican Legislative Majority and its attorneys pushed back allegations by Morgan's lawyers that the group had violated state law by coordinating campaign literature with GOP challengers and the state Republican Party.

The Republican Legislative Majority sent out more than 300,000 mailings citing the incumbents' voting records on taxes, redistricting and a power-sharing arrangement between Morgan and Speaker Jim Black, D-Mecklenburg. Morgan and another ally -- Rep. Rick Eddins, R-Wake -- were defeated in the election.

The Republican group filed paperwork with the IRS, but said it didn't have to file reports with the State Board of Elections because it advocates for issues and not candidates and failed to surpass thresholds that 527 groups must meet to do so.

"This organization was founded on that principle that Republican legislators were voting one way in Raleigh and telling their constituents something else," group attorney Camden Webb told the board. "They simply should have the facts presented their constituents."

The group was bankrolled by the family business of Republican activist and former lawmaker Art Pope. Morgan argues the committee hid contributions and coordinated with candidates backed by Pope and the state GOP, and should be cited by the board for accepting corporate contributions, return any unlawful donations and possibly fined.

The hearing, which will resume Wednesday, is the latest clash between moderate GOP members such as Morgan, who have been open to working with Democrats in the state House, and conservative Republicans such as Pope, who believe Morgan and his political friends have betrayed the party.

In a heated cross-examination by Webb, Morgan said he couldn't recall or didn't have evidence to back up some of the claims he cited in his complaint, such as whether the group spent money on broadcast advertisements.

"I don't think we've established that," Morgan responded. He said he couldn't provide other evidence because elections board chairman Larry Leake limited attorneys from seeking documents to this year only.

In filings with the IRS, the group reported receiving at least $186,000 this year from Variety Stores Inc. or Variety Wholesalers Inc., which are owned by the Pope family. The 527 committees can receive unlimited corporate contributions, according to federal law.

But a 2004 state law requires them to report expenditures 30 days before a primary that exceed certain thresholds -- 5,000 pieces of mail in a legislative race, for example. The law also bars the use of corporate donations for those materials within the 30-day window. The General Assembly approved tougher restrictions this year.

Direct mail invoices provided by Republican Legislative Majority show four separate mailers were sent out to 4,900 addresses, while two others were sent to 4,659 addresses. Webb said the mailers were different, so the group didn't have to file reports.

Morgan says a mailing that included the phrase "Call Richard Morgan Out" crossed the line into express advocacy and should have required the committee to file with the state as a political committee and be subject to other campaign reporting requirements.

"I would suggest that the sole purpose (of the mailers) wasn't to educate voters," said Harvey Hukari, a San Francisco-based political consultant who testified on Morgan's behalf. "I suggest it was the defeat of those five incumbents."

Heather Royster, general counsel for Pope's companies and an officer with the Republican Legislative Majority, denied that she had shared the group's strategy with challengers to the five incumbents or the state party, which was seeking Morgan's defeat.