If there’s one thing that distinguishes Ron Paul from the rest of the GOP field, it’s his principled stand against American empire and his ardent defense of individual liberties. Paul’s opposition to wars, bloated defense budgets and government spying on US citizens has made him a hero among some young conservatives. His seemingly rock-solid principles and radicalism have even drawn some on the left; unlike even left-wing Democrats, Paul has said he wants to abolish both the CIA and the FBI to protect individual “liberty.”

So it should come as a shock and disappointment to his followers that Ron Paul’s single largest donor—his Sheldon Adelson, as it were—founded a controversial defense contractor, Palantir Technologies. The company profits from government espionage work for the CIA, the FBI and other agencies, and last year it was caught organizing an illegal spy ring targeting opponents of the US Chamber of Commerce, including journalists, progressive activists and union leaders. (Palantir takes its name from the mystical seeing stones used by characters in Tolkien’s Lord of the Rings to spy on one another.)

According to recently filed FEC disclosure documents, Ron Paul’s Super PAC, Endorse Liberty, has received nearly all of its money from a single source, billionaire Peter Thiel. So far, Thiel has contributed $2.6 million to the Super PAC, providing 76 percent of the its total intake.

Thiel, a self-described libertarian and opponent of democracy who made his fortune as the founder of PayPal, launched Palantir in 2004 to profit from what the Wall Street Journal described as “the government spy-services marketplace.” The CIA’s venture capital firm, In-Q-Tel, was brought in to back up Thiel as one of Palantir’s first outside investors. Today, Palantir’s valuation is reported to be in the billions.

A recent BusinessWeek profile explained how Palantir makes its money—and why Ron Paul’s followers should be bothered:

Depending where you fall on the spectrum between civil liberties absolutism and homeland security lockdown, Palantir’s technology is either creepy or heroic. Judging by the company’s growth, opinion in Washington and elsewhere has veered toward the latter. Palantir has built a customer list that includes the U.S. Defense Dept., CIA, FBI, Army, Marines, Air Force, the police departments of New York and Los Angeles, and a growing number of financial institutions trying to detect bank fraud. These deals have turned the company into one of the quietest success stories in Silicon Valley—it’s on track to hit
$250 million in sales this year—and a candidate for an initial public offering. Palantir has been used to find suspects in a case involving the murder of a U.S. Immigration and Customs Enforcement special agent, and to uncover bombing networks in Syria, Afghanistan, and Pakistan. “It’s like plugging into the Matrix,” says a Special Forces member stationed in Afghanistan who requested anonymity out of security concerns. “The first time I saw it, I was like, ‘Holy crap. Holy crap. Holy crap.’ ”

It gets worse: the technologies and know-how acquired over years of spying on suspected foreign terrorists and threats were turned against US citizens. In what became known last year as “Chamber-gate,” Palantir was outed by Anonymous as the lead outfit in a private espionage consortium, with security technology companies HBGary and Berico; the groups spent months “creating electronic dossiers on political opponents of the Chamber through illicit means.”

According to ThinkProgress, Palantir “may have used techniques and technologies developed under military contracts in their pro-Chamber campaign.”

Thiel’s Palantir and its two intelligence contractor partners—collectively named “Team Themis” after the Roman goddess of law and order—proposed a plan to the Chamber’s lawyers that involved illegal cyber-espionage targeting the Chamber’s enemies, including activists’ families and children. Among those targeted: ThinkProgress, union leaders, MoveOn, Brad Friedman and Glenn Greenwald, whose support for WikiLeaks reportedly rankled Chamber member Bank of America.

Ron Paul came out vocally in support of WikiLeaks and Julian Assange, which made him popular among young libertarians and progressives. Just weeks before PayPal announced it had cut off funding for Wikileaks, Thiel’s stake in PayPal was reportedly worth $1.7 billion (he sold the company to eBay in 2002).

Thiel has funded a number of far-right causes over the years: he was an early investor in conservative filmmaker James O’Keefe’s career, funding a cruel hoax video called “Taxpayers’ Clearing House,” which shows O’Keefe duping working-class minorities into believing they’d won a sweepstakes, then sticking them with a tax bill for the big bank bailouts. O’Keefe, of course, later produced the infamous ACORN and Planned Parenthood videos and was also charged with entering a federal building under false pretenses to try to wiretap the offices of Senator Mary Landrieu. Thiel was a member of the right-wing Federalist Society while at Stanford Law School, and he co-wrote an anti–affirmative action book, The Diversity Myth: Multiculturalism and Political Intolerance on Campus, which belittles “imaginary oppressors” of minorities, blames homophobia on homosexuals and attacks domestic partnerships. (Thiel is gay.)

In a recent article published in the libertarian Cato Unbound, Thiel came out against democracy and majority rule and blamed women’s suffrage for ending “freedom”:

The 1920s were the last decade in American history during which one could be genuinely optimistic about politics. Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women—two constituencies that are notoriously tough for libertarians—have rendered the notion of “capitalist democracy” into an oxymoron.

Thiel funds a libertarian project, headed by Milton Friedman’s grandson Patri Friedman, called the Seasteading Institute, which designs offshore “libertarian utopias.” Patri Friedman also denounced democracy as “ill-suited for a libertarian state.”

What exactly is Ron Paul talking about when he warns his followers that America is becoming a “fascist system”? In a recent speech, Paul defined this “fascist system” as “a combination of government and big business and authoritarian rule and the suppression of the individual rights of each and every American citizen.” There’s no suggestion, so far, that Thiel’s interest in Palantir and its business with the CIA have altered Paul’s positions on civil liberties. But what kind of message does it send when his campaign is bankrolled by one of the chief protagonists and beneficiaries of the very “fascist system” Ron Paul claims to oppose?