A complaint filed with the Internal Revenue Service (IRS) alleges that the founder of the largest Democratic dark money network in the country is using its operations for his own financial benefit.
Fox News reports that the complaint was filed on Tuesday by Americans for Public Trust (APT), and targets any entities that are affiliated with Arabella Advisors, a consulting firm based out of Washington D.C. which manages numerous nonprofits serving as fiscal sponsors for left-wing dark money groups.
Arabella was founded by Eric Kessler, a former appointee in the Clinton Administration. It has since brought in hundreds of millions of dollars for its services in managing various nonprofits.
“Eric Kessler created one of the most complex and sophisticated dark money networks influencing U.S. politics and policy today,” said Caitlin Sutherland, executive director of APT. “Now, it appears as though he misled the IRS and may have illegally personally benefited by rerouting nonprofit cash back into his own pocket through Arabella Advisors. The IRS must immediately investigate this scheme, and determine to what degree Eric Kessler has used Arabella and their managed-nonprofits for his own self-enrichment.”
Arabella currently manages at least four nonprofits: New Venture Fund, Sixteen Thirty Fund, Windward Fund, and Hopewell Fund; a fifth nonprofit, the North Fund, also has connections to Arabella. Each of these nonprofits subsequently sponsors other nonprofits by providing their own tax and legal status to those arranged below them.
This structuring of the network allows all of the sponsored groups to avoid having to file tax records with the IRS, thus shielding their financial information from the public. Arabella’s nonprofits are also allowed to withhold donor information from their tax forms. With this arrangement, billions of dollars have been funneled through the network with total anonymity.
“There are serious questions as to whether the Kessler-Affiliated Nonprofits have directly diverted substantial portions of their income and assets for the personal benefit of Mr. Kessler,” the complaint states. “Each of these entities has made substantial independent contractor payments to a for-profit, limited liability company founded and controlled by Mr. Kessler. These payments were generally recorded as being made in exchange for administrative support services; however, there is reason to believe that the payments made far exceeded the fair market value of the services rendered.”
The APT complaint requests that the IRS “determine that the Kessler-Affiliated Nonprofits have engaged in egregious and systemic violations of their tax-exempt status,” and if so, the agency “should take appropriate regulatory actions” and refer “violations to the Department of Justice for possible criminal prosecution.”
Steve Sampson, an Arabella spokesman, dismissed the claims as “a meritless complaint from an organization that is obviously pursuing an agenda.”
“To be clear,” Sampson continued, “Arabella Advisors is a business dedicated to making philanthropic work more efficient, effective, and equitable. We pride ourselves on helping our clients identify efficiencies, saving them tens of millions of dollars in operational costs and allowing them to focus their resources on their intended impact.”