As ads rip Knox, watchdog plans a look

With just over two weeks remaining until the Philadelphia mayoral primary, the city's Board of Ethics is taking notice of the Swift boats circling the campaign.

J. Shane Creamer Jr., the interim chief of the ethics board, said yesterday that he planned to conduct an "initial inquiry" into the activity of several so-called 527 political organizations to make sure they are truly independent of the candidates.

"I want to know more about these 527s," Creamer said. The 527s, which take their name from the section of the IRS code that governs them, were made famous by the Swift Boat Veterans for Truth, which in 2004 challenged Democratic presidential nominee John Kerry's Vietnam War record.

One new Washington organization calling itself Working People for Truth yesterday began running the first of two commercials bashing businessman Tom Knox, who is largely financing his mayoral campaign out of his personal fortune.

The ad calls Knox a "fake," the same word used in a recent attack ad by U.S. Rep. Bob Brady, one of Knox's rivals in the May 15 Democratic primary.

"I don't think it's a coincidence," said Josh Morrow, Knox's campaign manager.

Brady spokesman Kate Philips denied there was a connection. "We're not afraid of Tom Knox's millions of dollars," she said. "We don't need a 527 to get our message out for us."

The candidates' campaigns must keep an arms-length relationship with the 527 organizations to comply with city laws governing campaign-finance limits. The 527s can accept unlimited contributions - from donors they need not identify - and spend as much as they want to advocate the election or defeat of a candidate, as long as they do not coordinate with candidates.

On Friday, Brady adviser Ken Smukler resigned from the campaign after it was revealed he had spoken with several people about creating 527 groups while working for Brady.

Smukler maintained yesterday that he had done nothing wrong in talking about the committees with Frank Keel, a close adviser to labor leader John Dougherty, and with former City Commissioner Alex Z. Talmadge Jr. Talmadge later created a group that vows to run anti-Knox TV ads.

"My idea was never to run a stealth campaign," Smukler said. But he said he regarded the 527 committees as the only way Knox opponents could counter the businessman's enormous financial advantage. Knox has given $5 million to his campaign. The courts have ruled that candidates cannot be limited in committing their own resources to their campaigns.

Smukler said he had spoken with Keel in February, but only after Dougherty contacted Brady's campaign, offering to help. He said he sensed that Dougherty's political support could exceed the $20,000 maximum his union could donate under the city finance limits, and he called Keel to suggest that Dougherty create a 527 committee.

Smukler said he believed he had done nothing wrong because he'd had the conversations with others before any 527s were formed - "as long as all communications stopped once it was created."

The Brady campaign said it had been unaware of Smukler's contact, and Smukler agreed to leave the campaign to limit the distraction. "It was too hard for the campaign to explain it," he said.

Through a spokesman, Brady expressed regret. "I accepted Ken Smukler's resignation as an adviser, and I will no longer be seeking his counsel on political matters," Brady said Friday. "It is unfortunate because he is a good friend, and I wish him well."

Keel, a media consultant for the electricians' local, denied yesterday that Dougherty had initiated contact with Brady, a longtime rival.

"I believe that the Brady camp, using Smukler as the emissary, thought that by offering me the so-called 'opportunity' to run this clandestine operation against Knox, John Dougherty would perceive it as Brady extending an olive branch," Keel wrote in an e-mail to The Inquirer.

"This was the Brady camp's illicit idea, no one else's."

Creamer, the head of the ethics board, said that if campaigns were colluding with the organizers of the 527 committees, the board could impose fines or seek a restraining order. The board could impose a fine of $1,500 for each violation - each time a committee ran an ad.

"I want to conduct an initial inquiry here to see if there's sufficient cause to open an investigation," he said.

The machinations among the camps reflect the close competition in the five-way mayoral race. A recent poll indicated Knox and former Councilman Michael Nutter were in a virtual dead heat.

Last week, Talmadge and others announced they had formed a 527 committee called Economic Justice Coalition for Truth to raise money for anti-Knox ads. It is not known whether the group has run any ads, and Talmadge could not be reached for comment yesterday.

Working People for Truth, formed last week, spent about $75,000 to buy time for a 30-second TV commercial this weekend critical of Knox.

The group's contact person is Washington lawyer Donald R. Dinan, who has donated $21,200 since 1993 to Democratic candidates. According to his spokesman, Robert Bedard, Dinan is a "political activist" not aligned with any mayoral candidate. Bedard, a former spokesman for Local 234 of the Transport Workers Union, said Dinan had attended the University of Pennsylvania.

The commercial that began airing yesterday mocks Knox's claims to be an outsider, saying Knox has "gotten rich off of no-bid city contracts." It cites an Inquirer article that documented one 1998 no-bid contract in which a company Knox owned earned $28,000 in commissions for acting as the health insurance broker for the Pennsylvania Convention Center.

"Tom Knox," the ad concludes. "Fake, fake, fake."

A second ad, produced but not yet scheduled for broadcast, takes aim at Knox's ownership of a bank that devoted a small portion of its business to high-interest payday loans.

"As a banker, Knox made millions by taking advantage of desperate people and charging 400 percent interest," it states. "It's why none of us should have an interest in Tom Knox."