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Prosecutors allege Wisconsin governor part of criminal campaign scheme

By Brendan O'Brien

MILWAUKEE (Reuters) - State prosecutors accused Wisconsin Governor Scott Walker and others of participating in a broad plan to circumvent the state's campaign finance laws during recall elections in 2011 and 2012, according to court documents unsealed on Thursday.

Prosecutors spelled out their case against Walker, who is seeking re-election this year and is considered a potential 2016 Republican White House candidate, and others in formerly sealed court documents that were released by the U.S. Court of Appeals for the 7th Circuit.

In the documents, prosecutors asserted that Walker's campaign coordinated fundraising with conservative groups, including the Wisconsin Club for Growth, during recall elections involving state Senate candidates in 2011 and Walker in 2012.

By doing so, prosecutors suggest Walker's campaign advisers gained control over both the funding and strategy of independent conservative groups, in what could be a violation of campaign finance laws.

"The coordination under investigation resulted in either prohibited and illegal in-kind or direct contributions that were not reported by the candidate campaign committees as required by law," prosecutors said.

The unsealed documents are part of a drawn-out investigation of Walker's campaign activities during a series of recall elections. The elections were spurred by unions angered by laws passed by state Republicans that limited the power of organized labor.

After almost two years of investigating Walker and his aides, prosecutors have yet to charge anyone in the case. A judge found that prosecutors had not shown that the interest groups violated any campaign finance laws.

In February, the Wisconsin Club for Growth filed a federal lawsuit to try to stop the investigation that was launched in August 2012 by Milwaukee County District Attorney John Chisholm, a Democrat. A federal judge halted the investigation and state prosecutors have appealed that ruling.

Walker said in a statement on Thursday the arguments brought by the prosecutor had been heard and rejected by the courts and it was time for prosecutors to end the investigation.

"The accusation of any wrongdoing written in the complaint by the office of a partisan Democrat district attorney by me or by my campaign is categorically false," Walker said.

An attorney for the Wisconsin Club for Growth said the materials released on Thursday demonstrate an abuse of power by prosecutors, not a violation of campaign finance law.

"These documents show how the ... prosecutors adopted a blatantly unconstitutional interpretation of Wisconsin law that they used to launch a secret criminal investigation targeting conservatives throughout Wisconsin," said attorney Andrew Grossman, who represents the Wisconsin Club for Growth.

The investigative documents, which were unsealed on Thursday after a request by prosecutors, included an email that Walker sent in May 2011 to Republican strategist Karl Rove. In the email, Walker discussed the importance of a campaign consultant, R.J. Johnson, in leading an effort to coordinate fundraising campaigns among conservative groups.

"Bottom line: R.J. helps keep in place a team that is wildly successful in Wisconsin," Walker said in the email. "We are running 9 recall elections and it will be like running 9 Congressional markets in every market in the state (and Twin Cities)."

Walker became the first governor to survive a recall election. Since then, he has taken steps to raise his national profile ahead of a possible presidential bid, meeting with big Republican donors and publishing a book.

He has won praise from conservatives, but opinion polls at this early state show Walker well behind better known Republicans such as former Florida Governor Jeb Bush and Kentucky Senator Rand Paul.

(Reporting by Brendan O'Brien in Milwaukee, David Bailey in Minneapolis and Andy Sullivan in Washington; Editing by Will Dunham, Bill Trott and Ken Wills)

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