Washington, D.C., Democratic Attorney General Brian Schwalb recently launched an investigation into conservative judicial activist Leonard Leo’s network, an effort that Leo’s lawyers say will silence Republican activists and their associates. It is said to be a “politically driven” attempt to
Politico reported in August that Mr. Schwalb had launched an investigation into Mr. Leo and his affiliated organizations. The investigation appears to have stemmed from accusations from the left-wing Accountability Movement that Leo was enriching himself with consulting fees through his network.
The campaign for accountability began as a project of America’s largest liberal dark money network, controlled by Arabella Advisors, a for-profit consulting firm based in Washington, D.C. Arabella Advisors monitors a large network of groups and has similar consulting fee arrangements with the targeted Leo. For-profit and non-commercial purposes.
Campaign for Accountability has also secured millions of dollars in funding from groups within the Arabella-controlled network since it spun off and became an independent entity.
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Additionally, Mr. Schwalb’s deputy, Seth Rosenthal, has past ties to left-wing judicial groups that led attacks on two conservative Supreme Court justices. Mr. Leo, co-chairman of the Federalist Society, has been a consistent target of Democrats over his role as former President Donald Trump’s judicial adviser.
“Washington, D.C. Attorney General Brian Schwalb launched a politically driven fishing expedition to silence Leonard Leo and his associates,” Leo’s attorney David Rivkin told FOX News Digital.
“The D.C. Attorney General has no legal or factual basis to launch this investigation, and the accusation itself is full of irony, given that the source of the information was the Arabella Advisors Network,” Rivkin said. said. “Any effort to weaponize our legal system for political purposes will only undermine true justice, which D.C. desperately needs given the prevalence of crime.”
Months before Mr. Schwalb’s investigation into Leo became public, the Guardian reported that Mr. Leo had diverted $73 million from 2016 to his commercial companies, BH Group and CRC Advisors, for consulting services. Reported on the accountability campaign’s complaint, which alleges the network’s “misuse” of nonprofit funds. 2021.
The Guardian and Politico noted that the complaint appears to be the basis of Schwalb’s investigation, even though the Leo-linked group is outside of Schwalb’s jurisdiction. Michelle Kuppersmith, executive director of the Accountability Campaign, also told the Guardian that her group had filed complaints with the IRS and Schwalb’s office, investigated the materials and confirmed the tax-exempt status of seven nonprofits linked to LEO. He said he asked that it be revoked.
“We expect the IRS and/or DC AG to take up this complaint and use the evidence we are submitting. The evidence has been very carefully considered and we believe It is explained in legal language, along with all relevant statutes, “and a lot of context that provides evidence as to why it has been violated,” Kuppersmith said at the time.
Kuppersmith’s group began as a network with similar arrangements to Leo’s group. The Campaign for Accountability began as a project of the Hopewell Foundation managed by Arabella Advisors and spun off as an independent nonprofit organization in 2017.
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The group managed by Arabella also includes New Venture Fund, Sixteen Thirty Fund and Windward Fund. Together, these funds raise more than $1 billion annually from anonymous donors and provide financial sponsorship for dozens of liberal nonprofits by providing tax and legal status to their affiliated nonprofits. fulfills its role as
“The Campaign for Accountability has nothing to do with Arabella Advisors. The fact that we briefly received financial support from the Hopewell Foundation approximately seven years ago is completely unrelated to our work. ” Kuppersmith told FOX News Digital. “Our mission is to prosecute fraud wherever we find it, and we hope that the IRS and the D.C. Attorney General will thoroughly investigate our charges against Leonard Leo.”
Tax documents show that at least another nonprofit controlled by Arabella, New Venture Fund, was transferred. $2.2 million for accountability campaign after departure from network; From 2017 to 2020, New Venture Fund cash passed to Campaign for Accountability accounted for between 15% and 89% of total reported revenue each year.
Several members of the Campaign for Accountability leadership team, including Kuppersmith, previously worked at Accountable.US, which was financially sponsored by New Venture Fund.
The group did not address questions about the millions of dollars in grants it received from foundations controlled by Arabella after she left the network.
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The Campaign for Accountability’s complaint centers around allegations that Leo was compensated and enriched through his network, which is nearly identical to Arabella Advisors and the funds it manages. be.
During the period in which the Campaign for Accountability said Mr. Leo benefited from $73 million in consulting fees, Arabella Advisors provided management, operational and administration services, according to an examination of each fund’s tax returns. It collected $190 million in fees from four affiliated funds. During this period, Arabella collected nearly $120 million more in consulting services than he passed from nonprofit organizations associated with Leo to his for-profit organizations.
Eric Kessler, a former White House appointee of Bill Clinton who later worked at the Clinton Global Initiative, founded Arabella Advisors, which has led four nonprofits that funnel consulting money into the for-profit side of its services. He has been closely involved with the organization. Mr. Schwalb, who worked at the Justice Department during the Clinton administration, is currently investigating Mr. Leo’s group, but does not appear to be interested in the network associated with Mr. Kessler.
“Arabella Advisors has hundreds of employees who are experts in the services we provide our nonprofit clients, including human resources, compliance, accounting and grants management,” said Steve Sampson, Arabella spokesperson. told Fox News Digital.
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“We regularly benchmark our pricing structures to ensure our clients get the best value, and our nonprofit clients continue to benefit from the best-in-class service we provide. We will continue to work with them,” Sampson added. “Arabella Advisors is not a funder and cannot control how our clients spend their resources. Any comparison to Leonard Leo, who takes pride in his work, is completely false.” ”
Meanwhile, the Accountability Campaign’s charges against LEO-affiliated groups “provided no direct evidence of the accusations,” Politico wrote. Still, Mr. Schwalb’s office is currently seeking documents from a number of organizations, according to people familiar with the situation.
Mr. Schwalb and his deputy, Mr. Rosenthal, previously worked at the Venable Law Firm. groups represented Arabella Management’s network for New Venture Funds, Sixteen Thirty Funds, and more.
From 2005 to 2006, Rosenthal also served as legal director for the Alliance for Justice, a left-wing black money justice organization dedicated to “court reform.”
During Mr. Rosenthal’s tenure with the group, he attempted to block Chief Justice Roberts’ confirmation over his ties to the Federalist Society, of which Mr. Leo is co-chairman. Rosenthal also opposed Justice Samuel Alito’s confirmation on political grounds when he was with the Alliance for Justice, and in 2005, on Democracy Now!, he “took to the conservative drumbeat on almost every issue.” He said he was a “conservative activist” marching. interview.
In recent years, the Alliance for Justice has worked to influence President Biden on judicial nominations, including Supreme Court Justice Ketanji Brown Jackson.
A spokesperson for the D.C. attorney general’s office said that as a matter of policy, the attorney general’s office cannot confirm or deny the existence of an investigation. A spokesperson declined to address questions about the Accountability Movement’s allegations or Rosenthal’s previous work with the Justice Alliance.
The D.C. attorney general’s office is not the only official to take aim at Leo in recent months.
Democratic Sens. Sheldon Whitehouse (Rhode Island) and Dick Durbin (Illinois) sent a letter to Leo and billionaires Paul Singer and Robin Arkley II in July. He requested more information about a ProPublica report that Justice Alito “accepted a lavish Alaska fishing vacation but did not publicize it.” In 2008 with two billionaires. It is said that Leo organized the trip.
The senators asked for an itemized list of gifts and payments from Leo and organizations he was associated with decades ago and associated with Supreme Court justices.
“To date, Chief Justice Roberts has done little to acknowledge, much less investigate or resolve, the ethics crisis engulfing our nation’s highest court. must be addressed,” the White House and Durbin said in a written statement. press release. “Answers to these questions will aid the commission’s efforts to build reliable ethical guardrails for the courts under Congress’ clearly established oversight and legislative authority.”
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Mr. Leo’s lawyers responded that the Democrats’ request was inconsistent with the First Amendment and other parts of the Constitution.
“For similar reasons, your investigation cannot be reconciled with the equal protection portion of the Due Process Clause of the Fifth Amendment,” his attorney said. “And your investigation appears to lack legitimate legislative purpose, as the bill your committee is considering would be unconstitutional if enacted, regardless of any other constitutional flaws.”
Fox News Digital’s Andrew Mark Miller contributed to this report.