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New Koch problems for Cain?

There are more potential legal headaches for Herman Cain’s presidential campaign: The Internal Revenue Service is being asked to investigate allegations that the Cain campaign’s chief of staff improperly used $40,000 of funds from a tax exempt non-profit to pay for private jets, travel and computers for Cain’s presidential campaign. 

In a written complaint being filed today, the Center for Media and Democracy -- a Madison, Wisconsin based watchdog group -- charges that leaked financial records show that Block used a non profit group, called Prosperity USA,  to improperly pay Cain campaign expenses. If verified, the group says Prosperity USA – which was founded by Cain’s chief of staff Mark Block -- should be stripped of its tax exempt status.

“A charity founded by Mr. Block appears to have fronted tens of thousands of dollars to a political  campaign that was led by Mr. Block … This requires an investigation by the IRS into the charity’s activities and expenditures,” said Lisa Graves, the executive director of the Media and Democracy Group in an eleven page letter to IRS Commissioner Douglas Shulman.

The Cain campaign did not immediately respond to a request for comment Monday morning. The campaign’s lawyer last week told NBC News that the Cain campaign takes the allegations “very seriously” and had hired an outside counsel to review the issue ... The Center for Media and Democracy’s  letter is the second legal complaint in four days triggered by the publication of Prosperity USA internal financial records by a blogger, Dan Bice, who writes for the Milwaukee Journal Sentinel.  The IRS will investigate such complaints, but the probes – which can result in fines and a denial of tax exempt status – can often take years before they are resolved.  (On Friday, the Citizens for Ethics and Responsibility filed a complaint alleging election law violations with the Federal Election Commission.)

The leaked  records appear to show repeated financial dealings among Prosperity USA, the non profit headed by Block, the Cain campaign, and Americans for Prosperity -- a major political advocacy group founded by oil billionaire David Koch.

Koch, together with his brother, Charles Koch, have pumped tens of millions of dollars into conservative causes in recent years and are widely credited with helping to spawn the emergence of the Tea Party.

Cain, who used to serve as a paid speaker for Americans for Prosperity (AFP), has not shied away from his relationship with the Koch brothers. In a speech at an Americans for Prosperity Conference on Friday, he declared himself the Koch brothers’ “brother from another mother”-- a line that got a boisterously enthusiastic response from the  AFP activists at the Washington Convention Center.

But the legal complaints could turn Cain’s Koch connection into a problem for the candidate, even as he struggles to recover from last week’s sexual harassment allegations. (A spokesman for AFP last week said the group was reviewing unspecified “financial dealings” it had with the Cain presidential campaign).

Prosperity USA was one of a number of Wisconsin groups -- all with the name “prosperity” -- that Block started during a period he was serving as the executive director of AFP’s Wisconsin chapter. Entries from the leaked financial documents appear to show AFP funds flowing into Prosperity USA that were then used for the benefit of Cain’s campaign:  “From AFP- H.Cain travel- Hill Aircraft,” one of the entries reads.

Non-profits like AFP and Prosperity USA are barred by law from contributing to presidential campaigns. The Center for Media and Democracy’s letter to the IRS commissioner notes that Block has previously been fined for election law violations and was barred from participating in Wisconsin politics for three years.