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Secret Summit: 24 Hours With The Koch Brothers

June 17, 2014 1:11 p.m.

Secret Summit: 24 Hours With The Koch Brothers

GUESTS:

Joanne Faryon, inewsource reporter

Brad Racino, inewsource reporter

Related Story: Secret Summit: 24 Hours With The Koch Brothers

Transcript:

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

MAUREEN CAVANAUGH: Our top story on Midday Edition, of all the issues and arguments surrounding the 2012 presidential election, you could argue that it was a cell phone video that actually decided the race. That video was recorded at a private fundraising dinner for Mitt Romney in which he declared that 47% of Americans are dependent on government, and consider themselves victims. The fallout did not end well for Mister Romney. Just last weekend, another private political event just to place right up the road in orange County. Two of the richest men in the world, Charles and David Koch hosted a conference at the posh Saint Regis Monarch Beach Resort in Dana Point. Two inewsource reporters decided to step out of their tax bracket for a weekend and get a room at the Saint Regis just to see who might be attending and see if they could overhear some of the buzz. They got an earfull, but it was not easy. I would like to welcome inewsource reporters JoAnne Faryon and Brad Racino. Inewsource is a media partner of KPBS. First, Joanne, how did you find out about the conference?

JOANNE FARYON: Well, we got a tip, it was as simple as that. We made a few phone calls, called the hotel to see if we could pick a hotel room on the weekend on Saturday or Sunday. We were told that it was basically bought out. It kind of was enough for us to take the chance and go down there Friday.

MAUREEN CAVANAUGH: When did you book the rooms?

JOANNE FARYON: We could only book Friday night, that was the thing. Whether you call or go online, you could get a room Friday night but could not get anything past Friday night. We went down Friday afternoon checking was at 4 and it was 3:39 when we pulled up, into the very nice driveway.

MAUREEN CAVANAUGH: Brad, what was your objective in doing this?

BRAD RACINO: I think our objective was to really be on the ground eyes and ears of this event to see what we could find. Research shows that these events are attended by some very influential people, politicians as well as funders who in a way help determine through hundreds of millions of dollars the course of American politics in the near future. We kind of wanted to see what we could find and what these people were talking about.

MAUREEN CAVANAUGH: And Joanne?

JOANNE FARYON: Really who was there, they have the people there that can remain anonymous, that's what you do have a hotel, that's what you do in this place that way you can don't have to declare who you are. It's that too, who showed up.

MAUREEN CAVANAUGH: We will get back to that in a minute. First I want to take a step back to make sure we're all on the same page, remind us about the Koch brothers, how rich are they, how involved in politics?

JOANNE FARYON: Defending depending on what year you look at, they are the fourth or the fifth richest, it varies, but it is in the hundreds of billions of dollars in in terms of worth.

BRAD RACINO: Their worth is tied with the most recent projections, $41.3 billion collectively, the two of them, the sixth richest people in the world.

MAUREEN CAVANAUGH: What is their background in politics?

JOANNE FARYON: I want to go back to their father first of all, their father Fred was one of the founders of the John Birch society which is basically an anti-Communist organization, some may call it a radical right organization. I think this obviously must have had influence on the brothers who were staunch libertarians. They are industrialists, they are in the oil business.

BRAD RACINO: Huge in oil.

JOANNE FARYON: Yeah. They are rich, involved in that sort of strata of political involvement, they very much want to get the government out of our lives.

MAUREEN CAVANAUGH: They were actually called out after the United Supreme Court decision by Democrat Harry Reid. What did their critics accuse them of, is it the power of their money and where they are putting it? Is that the problem?

JOANNE FARYON: I think there a lot of things, personal I think Harry Reid is making a career lately of calling them out for various things. He talks about climate change, and them being responsible for this, and I think it is secrecy. If we back up even further, you have now got a Supreme Court citizens United decision from 2010 that basically says that PACs or super PACs can spend an unlimited amount of money, in political campaigns. That go back a step further, you have got nonprofits political corporations that are set up that people can give money to. Once you give your money to one of those nonprofit political poor corporations, they are not obligated to disclose who gave the money. Those nonprofit political corporations in turn give money to PACs and super PACs, that is the flow. You have got the Koch brothers who put money into these nonprofit political corporations and once they do that, right away that is the anonymity where that steps in.

MAUREEN CAVANAUGH: Brad, what did you know about this meeting before you got there?

BRAD RACINO: We did not know a lot, we knew most likely that the Koch brothers would be there, and that we would possibly see some familiar Republican politicians and faces. As it turned out Friday night, we had a hard time identifying who a lot of these people were because they are insiders, people from inside the beltway in D.C. who are connected and influential. But we do not know about them and who these people are. It was a lot of looking at favorite faces and doing research online as quick as we could and overhearing names and looking them up that way as well, but we just knew that there would be some politicians and some players, we did not know what else.

JOANNE FARYON: We did a lot of cramming. We read everything we could. There have been reporters who have infiltrated these events in the past, so we read whatever they wrote, we obviously read up a lot more on the Koch brothers, and how this sort of dark money process works. We really crammed ahead of time.

MAUREEN CAVANAUGH: So who did you see, anyone you were able to identify?

JOANNE FARYON: David Koch.

BRAD RACINO: Charles Koch.

JOANNE FARYON: I think that was also key, even though you are fairly certain that this is happening and you have all sorts of corroboration, and the fact that we could positively identify both of these men over the course of twenty-four hours, we knew this is really taking place.

BRAD RACINO: When I first checked in, the people checking in gave their emails and it was @freedompartners, so I looked that up and the guy was the vice president of Freedom Partners and he was also the 2012 Republican convention spokesman, and now he is the vice president of the Freedom Partners. We knew right away that we were onto something, that this was not a bad tip.

MAUREEN CAVANAUGH: The overarching idea is that the summons might've had something to do with helping conservative candidates for next year's election. What does it look like? How was the Saint Regis repairing for this big exclusive political event?

JOANNE FARYON: A couple of things, first of all it is a very posh hotel, you literally come into the lobby and there are butlers with white gloves on. The lobby isn't a traditional lobby, you have an area where you are created and beyond that it breaks off to the left and the right and further beyond is a bar, Terrace, etc. There is no area to actually sit and watch people come in without looking really conspicuous. So when you first come in, it looks like a really nice hotel and there is no indication that they're setting up for anything special. The only indication is, as we check in and speak to the various staff members, we say we could not extend our stay. We wanted to book tomorrow night, but over and over we're told it was for a private event, a wedding, something else, a VIP. So ultimately we knew someone has bought the entire hotel for not just the weekend, for three days, including the restaurants, the bar service, everything. It did not take us long to go through go to one wing of the hotel and that is where we saw these giant posters, I don't want to call them posters because they were much more spectacular, they were the us these oversized black and white prints attached to giant mirrors writing this hallway into the joint meeting rooms and we saw that to be the theme of the conference, American Courage.

BRAD RACINO: Our commitment to a free society, that is what it said.

MAUREEN CAVANAUGH: The hallway was lined with these?

JOANNE FARYON: Lined with them.

BRAD RACINO: We saw this guy that had a backpack on and had some really weird tools, and Joanne that these are beautiful mirrors, she even asked if she could buy one and he kept saying thank you. I guess he is the one that made them, she said what are these for, he said for a conference, and she said what about, he said it's about freedom and he told us of the wing was closed and no one was allowed there or anything. But that was kind of where we got our first taste of what was happening.

MAUREEN CAVANAUGH: Did you have any concerns that if someone found out that you are reporters that you would be asked to leave the hotel before your reservation was over?

BRAD RACINO: I think if they did that we were going to throw a fit, because we spent a lot of money for these things. For that Friday night we were hotel guests, we check in under our and real names, our real email addresses, and we paid for it, so we had a right to be there. It was Saturday after check out that we're getting a little bit worried, but I'm sure we will get to that.

MAUREEN CAVANAUGH: Did you speak with any of the conference attendees, anybody that you think was there to spend that weekend for this conference?

JOANNE FARYON: Kind of, I spoke with some of the audiovisual crew, the men who had arrived came a few days previous to set up equipment in these meeting rooms. I can't say that I had a conversation with somebody that attended beyond a few sentences, I think really what we did, we were listeners. I think a problem with when you engage in a conversation like that, there is an issue of disclosing, so I think it is a fine line between just being good listeners and observers and then, we are there under our field names we were not going to hide our identities, and we did not want to get into a position where we were crossing any ethical lines.

MAUREEN CAVANAUGH: What kind of political talk, if any, did you hear?

BRAD RACINO: We heard a bunch of stuff, Joanne heard talk of the IRS email issue going on right now and how you have to delete emails from the delete inbox.

JOANNE FARYON: These guys were outraged, right now there is an investigation about whether or not the IRS unfairly targeted tea party and conservative groups. There was a story Saturday morning that said they could not find a bunch of emails that went missing, and I heard two guys in the hallway outraged. What you mean you lost in email, you have to delete the deleted email! I heard the women they were with talking about common core, and they wanted to learn more about that. And also this whole notion of freedom, they were joking, there is no freedom in this hotel, they are telling us where to go. It's and pieces like that.

BRAD RACINO: Political correctness, hearing conversations talking about being politically correct and things that we cannot repeat over the air, as well as some people talking about prospects, I think we heard one man saying he really liked Herrera and we looked that up, it was a congresswoman from DC, Jamie Herrera she is about thirty-five, as a prospect that they were thinking of running for something larger. Just bits and pieces of conversations.

JOANNE FARYON: Brad saw the banners, the list of these nonprofit corporations and other conservative groups that were going to be there.

BRAD RACINO: We saw nine or ten banners around one of the lobbies in the rooms of the West Wing where they would be setting up, and they had some familiar names. Americans for Prosperity, the Charles Koch Institute, Charles Koch Foundation, I-360 and a bunch of others that we put up on our story that have connections in this network in this dark money and that help fund these super PACs.

MAUREEN CAVANAUGH: Tell us a little bit about the security, because it was rather unprecedented.

BRAD RACINO: Yeah, at first it was not too bad, in fact it is what you would expect in a normal hotel. But as Friday went on, they were actually setting up a room, where they would give a packet of information to the people that came. This room was carefully guarded later that night, or the next morning, by men who were wearing blue suit jackets and tan pants, they became very obvious after a while because they were everywhere. My favorite guy there was this man in a dark black suit and dark sunglasses with what looked like a Google Glasses piece of hardware over his lenses and he would just stakeout busy quarter was or walk around and look at people, I don't know if it was facial recognition or what he was wearing, but he was the most conspicuous man I have ever seen in my life. And be overcome overheard a conversation by two people who are walking by and one guy said that guy is pretty shady looking and the woman said he is our intelligence guy. So it became more and more obvious as Friday night went on and into Saturday that they were really laughing down. And this was two layers of security, hotel security and then a private force.

JOANNE FARYON: And that is what hotel staff basically, many hotel staff members said that they never seen security like this. Even hotel staff members were being stocked when they were checking into work by security.

MAUREEN CAVANAUGH: How much did this cost you and inewsource?

JOANNE FARYON: I have not handed in my receipts yet, it was at least $600 for the hotel, we ate dinner there.

BRAD RACINO: I think it was around $2200 or $2300 total with everything.

JOANNE FARYON: And because of my salon appointment. I made a nail appointment Saturday afternoon hoping to stay in the hotel longer because I got a checkout at 130, and I asked him if I make an appointment can I stay in the hotel? They said yes, and they listed all of the facilities. So, that turned into something different, I checked into my appointment and I was there within thirty minutes, there was security there, security had asked Brad to leave. He said I am waiting for my friend, and they confirmed I had an appointment so they basically quite literally surrounded him and watched him and waited for me to complete this appointment. I will let you tell them what happened while security was watching you.

BRAD RACINO: I had been led down to the atrium area of the spa while Joanne was having her nails done, and I was told that I could not leave this area. I had to sit there and wait 2 1/2 hours for her to finish. While I was sitting down there, I was just reading a magazine and a guy came down and said really close to me and he again looks very professional and very stern and it turned out he was security as well because about a minute later, Charles Koch came down the stairs and went to the gym, and there was a glass wall between the atrium and the gym. For the next half hour I was just watching him work out, which sounds really creepy so I don't want to have it sound creepy, but he was just they are working out the whole time.

MAUREEN CAVANAUGH: Some people might say these two rich men have a perfect right to be politically active, why should they be the target of investigative reporters trying to crash their soirÈe no matter how expensive it is.

JOANNE FARYON: Absolutely they have a right to be politically active just as everyone has that right. I think the issue with secrecy, it is really about should voters know, should they be informed as to who is influencing debate with campaign literature, campaign spending, and we're talking about hundreds of millions and billions of dollars ultimately in the election cycle. Should they know who is funding this, should they know who where the messages coming from? I think that is the point, disclosure and transparency. You have two layers of secrecy, that one which is entrenched in politics is evolving, and the second layer that money buys secrecy even on this sort of microlevel of the hotel. They can buy at the resort and say everybody leave, you will not know what the political agenda is.

MAUREEN CAVANAUGH: And in your story, Brad, you also let readers know the fact that there are several versions of the Koch brothers and these very exclusive invitation-only political events.

BRAD RACINO: I think the most well-known one now is the democracy alliance, but there are others, there is the majority PAC, the house majority PAC, and something called Emily's list. I don't think these are on the level of money that the Koch brothers raise and spend, they are in the level of hundreds of millions and these are in the tens of millions, but there's really no equivalent of the Koch brothers on the left. And people have opinions as to why, but it is just an interesting phenomenon. Not on that level.

MAUREEN CAVANAUGH: We have probably whetted a lot of appetites, there's a lot more information in your story and it is on the KPBS website at KPBS.org.

JOANNE FARYON: And that inewsource.org we also have a separate story where you can see the lists of all of the organizations that were there as well.

BRAD RACINO: Our researcher and reporter Leo Casteneda put together a list of all the banners that we took a photo of an looked them up, who they were and what their involvement was in politics, their budgets, everything. So if you really want to get wonky about it, you can go there and learn more.

MAUREEN CAVANAUGH: Great weekend. Thank you both very much.