The day after Labor Day, just as campaign season was entering its final frenzy, FreedomWorks, the Washington-based tea party organization, went into free fall.
Richard K. Armey, the group’s chairman and a former House majority leader, walked into the group’s Capitol Hill offices with his wife, Susan, and an aide holstering a handgun at his waist. The aim was to seize control of the group and expel Armey’s enemies: The gun-wielding assistant escorted FreedomWorks’s top two employees off the premises, while Armey suspended several others who broke down in sobs at the news.
The coup lasted all of six days. By Sept. 10, Armey was gone — with a promise of $8 million — and the five ousted employees were back. The force behind their return was Richard J. Stephenson, a reclusive Illinois millionaire who has exerted increasing control over one of Washington’s most influential conservative grass-roots organizations.
Stephenson, the founder of the for-profit Cancer Treatment Centers of America and a director on the FreedomWorks board, agreed to commit $400,000 per year over 20 years in exchange for Armey’s agreement to leave the group.
The episode illustrates the growing role of wealthy donors in swaying the direction of FreedomWorks and other political groups, which increasingly rely on unlimited contributions from corporations and financiers for their financial livelihood. Such gifts are often sent through corporate shells or nonprofit groups that do not have to disclose their donors, making it impossible for the public to know who is funding them.
In the weeks before the election, more than $12 million in donations was funneled through two Tennessee corporations to the FreedomWorks super PAC after negotiations with Stephenson over a pre-election gift of the same size, according to three current and former employees with knowledge of the arrangement. The origin of the money has not previously been reported.
These and other new details about the near-meltdown at FreedomWorks were gleaned from interviews with two dozen current and past associates, most of whom requested anonymity in order to speak freely.
The disarray comes as the conservative movement is struggling to find its way after the November elections, which brought a second term for President Obama and Democratic gains in the House and Senate. Armey said in an interview that the meltdown at his former group has damaged the conservative cause.
“FreedomWorks was the spark plug, the energy source, the catalyst for the movement through the 2010 elections,” Armey said, referring to the GOP midterm sweep. “Harm was done to the movement.”
Stephenson, 73, declined a request for an interview. Matt Kibbe, the group’s president, and Adam Brandon, its senior vice president, declined to discuss the issue.
“I don’t comment on donors,” Brandon said. “He’s on our board, he’s a board member like anyone else. That’s it. I see him at board meetings.”
Stephenson, a longtime but little-known player in conservative causes, is a resident of Barrington, Ill., a northwest suburb of Chicago known for its affluence and sprawling horse estates such as his Tudor Oaks Farm. He founded the Cancer Treatment Centers of America in 1988 following his mother’s death from bladder cancer, according to the for-profit company’s Web site and his own public remarks. Stephenson also holds investments in a broad portfolio of other businesses, including finance and real estate companies.
