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On August 3, 2006, U.S. Term Limits, a tax-exempt advocacy group in New York City, gave $50,000 to a Missouri organization that was seeking to get two initiatives on the state’s ballot this November 7.

The initiatives, neither of which made it onto the ballot, were aimed at capping state spending and taxation and requiring government to compensate landowners for “regulatory takings.”

Why would a term-limits organization use money from its donors for such unrelated causes?

Documents obtained by the Center for Public Integrity show that the unexplained largess isn’t unusual. The founder and president of U.S. Term Limits, which seeks to “rally Americans to restore citizen control of government by limiting the terms of politicians,” is Howard Rich, a political activist from New York City who has spearheaded efforts this year to pass takings initiatives in eight states. Rich’s various tax-exempt organizations — there are at least 11 of them — have aroused considerable interest this year for shifting funds from one to another before the money ends up at its ultimate destination.

Like all the other Rich-backed organizations, U.S. Term Limits does not publicly identify its donors. Records obtained by the Center, however, show that the organization and its affiliate, the U.S. Term Limits Foundation, collected contributions of $25,000 or more in 2004 from nine donors:

  • $500,000 from Robert Wilson, a philanthropist in New York City who made a $25 million gift in 2004 to the New York Public Library.
  • $120,000 from Jackson T. Stephens, Jr., the chairman of Exoxemis, Inc., a biopharmaceutical research and development company in Little Rock, Arkansas. Along with Rich, Stephens is one of the four directors of the Club for Growth, which advocates free-market economic policies.
  • $50,000 from Joseph Stillwell, an investment manager in New York City.
  • $50,000 from Virginia Manheimer, a philanthropist in Lambertville, New Jersey, who is a member of the Club for Growth’s leadership council.
  • $30,000 from Excited States, LLC, a biotech company in Little Rock, Arkansas. The firm’s chairman is Jackson T. Stephens, Jr. (see above).
  • $25,000 from John Whitehead, a former co-chairman of the investment banking firm Goldman, Sachs & Company in New York City, deputy secretary of state during Ronald Reagan’s presidency, and the chairman of the Lower Manhattan Development Corporation. (Whitehead has also been a donor to the Center for Public Integrity.)
  • $25,000 from Paul Farago, a chiropractor and term-limits advocate in Portland, Oregon.
  • $25,000 from Peter Farago, a retired businessman and philanthropist who lives in Little Compton, Rhode Island. He is the father of Paul Farago (see above).
  • $25,000 from Warren A. Stephens, the chairman and chief executive officer of Stephens, Inc., an investment banking firm in Little Rock, Arkansas. He is the brother of Jackson T. Stephens, Jr. (see above).
  • At least six other donors made contributions ranging from $5,000 to $13,000.
The Center contacted all nine donors listed above; only one offered comment.

“I have in fact made contributions to U.S. Term Limits,” Paul Farago wrote in an October 26 e-mail to the Center. “But by asking about specific amounts you clearly have come into possession of proprietary information. Either you stole it or it was illegally given to you by someone in the IRS. Either way, you have raised the prospect of a criminal act of your own part. I intend to refer this matter to my attorney and will recommend to U.S. Term Limits that they likewise seek redress.”

The Center for Public Integrity obtained the documents in question from a government agency. They were furnished in response to a public-records request made by the Center.

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A journalist since 1978, Jim Morris has won more than 80 awards for his work, including the George Polk...