Leonard Leo Groups Paid CRC $100 Million for Services, Report Says

(Bloomberg) -- Nonprofit groups founded by or affiliated with conservative power broker Leonard Leo have paid more than $100 million over a decade to the consulting firm that he took over four years ago, watchdog group Accountable.US said in a new report.

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The sums paid to CRC Advisors by seven nonprofit groups have doubled since Leo came aboard as co-owner and chairman in 2020, according to the figures in the report, which marks the most recent and comprehensive accounting of the money flowing from a number of Leo-connected nonprofits to CRC.

Bloomberg News independently verified the figures using public tax filings.

Leo founded five of the groups, is co-chair of another and has done fundraising for the seventh.

CRC announced in 2020 it was creating a new advocacy network with the consulting firm at the center. Since Leo joined the firm, the seven groups have paid it at least $69 million, according to the report and the tax filings. Between 2012 and 2019, they paid CRC about $34 million. One group, the 85 Fund, increased payments to more than $21 million in 2022 from $5.8 million in 2019, the figures show.

The payments have drawn an IRS complaint from another ethics group, Campaign for Accountability. The groups say Leo and his firm are being improperly enriched through an extensive network of tax-exempt organizations, a claim he has denied.

The close relationship between Leo’s nonprofit network and CRC is also the subject of an investigation by DC Attorney General Brian Schwalb, according to people familiar with the matter, who asked not to be identified discussing a confidential probe. The investigation was reported earlier by Politico.

A spokesperson for Leo declined to comment on the probe. The AG’s office said it doesn’t confirm or deny investigations. It isn’t clear whether the inquiry by Schwalb, a Democrat, will result in any enforcement actions.

Leo called the criticism of the payments “baseless” and said CRC’s nonprofit clients get significant benefits from their payments to the consultancy. “CRC Advisors employs nearly 100 best-in-class professionals that put its clients’ money to work,” he said.

The ethics watchdogs say Leo has violated federal rules that bar people from using money meant for tax-exempt organizations for their own enrichment, a practice known as “private inurement.” To determine whether a tax-exempt group is wrongly benefiting someone, investigators often look at whether the nonprofit is paying an excessive amount for the services it gets from an outside vendor.

The public tax filings reviewed by Bloomberg show the payments from the nonprofits to CRC were for public relations services.

Read More: Right, Left ‘Dark Money’ Groups Trade Accusations Over Fees

Influential Conservative

Leo, 58, has long been one of the most influential conservatives in the US. He stepped into the spotlight as an orchestrator of the Supreme Court’s conservative supermajority, helping to put together the list of prospective nominees for former President Donald Trump. He has raised hundreds of millions of dollars for conservative causes, funding groups that oppose diversity programs, medical care for transgender people, abortion rights, government regulations and more.

In 2021 another of his nonprofit groups received one of the largest known political advocacy donations in US history: $1.6 billion from libertarian businessman Barre Seid.

“Every step of the way Leonard Leo has cashed in on his own activism,” Accountable.US President Caroline Ciccone said in a statement.

Arabella Advisors

For his part, Leo pointed to Accountable.US’s association with Arabella Advisors, a consulting firm that helps run a network of nonprofits that have given hundreds of millions of dollars to liberal causes. Attorney General Schwalb is also looking into Arabella, according to a person familiar with the matter.

Arabella spokesman Steve Sampson said in a statement the group is cooperating with the inquiry. He said that there is no comparison between Leo and his funding of an “extreme right-wing agenda” and Arabella, which he said “provides nonprofit clients with best-in-class administrative services like HR, compliance, accounting and grants management.”

Accountable.US was founded as a project of the New Venture Fund, one of the largest funders of left-leaning causes in the US. The fund, which receives administrative services from Arabella, is one of Accountable.US’s largest donors and has given it $10.9 million since 2019, including more than $2 million in 2022, according to public tax filings. New Venture Fund paid Arabella $33 million for administrative services in 2022, the filings show.

There’s no indication that Arabella’s relationship with Accountable.US is part of the attorney general’s scrutiny, which Sampson said is a civil inquiry.

(Updates with New Venture Fund payment to Arabella in penultimate paragraph)

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