EXCLUSIVE — Conservative activist Leonard Leo is punching back against a Democratic-led investigation into his finances he views as politically motivated and lacking legal jurisdiction.
In late June, Washington, D.C., Attorney General Brian Schwalb issued subpoenas to groups tied to Leo to uncover documents as part of an inquiry launched months after the liberal Campaign for Accountability accused the conservative activist of enriching himself with consulting fees charged to tax-exempt organizations in his network. As far as Leo is concerned, the investigation is simply “not legitimate,” David B. Rivkin, an attorney for Leo, co-chairman of the Federalist Society legal group, told the Washington Examiner.
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“Past experience with the D.C. attorney general has featured an almost exclusive focus on conservative organizations,” Rivkin said in an interview. “In our case, this investigation is entirely lacking authority. The combination of those two factors suggests it is ideologically driven.”
Rivkin, who has long been a partner at the white shoe law firm Baker Hostetler LLP in the nation’s capital, added that “so much” of the investigation “is driven by that complaint” from Campaign for Accountability, a left-wing watchdog and ex-project of the Hopewell Fund, a charity managed by Arabella Advisors, the largest Democratic-tied dark money network in the United States.
One month after the attorney general’s demands were made, Leo’s legal team declined in writing to Schwalb’s office to turn over any records, according to a source close to Leo, who is not authorized to speak publicly. Later, in mid-August, his lawyers held a private meeting with the attorney general’s office in order to push back against the investigation and try to assuage the government’s concerns in the fallout from the declined subpoenas, said the source.
It’s unclear if that effort was successful. Leo, who is often cited as the “architect” behind a conservative Supreme Court majority, is awaiting the next steps. Still, his legal team thinks Washington, D.C., is overstepping and doesn’t have jurisdiction over Leo’s network, which Rivkin pointed out includes entities incorporated in Virginia and Texas. Virginia Attorney General Jason Miyares recently sent a letter to the Washington, D.C., attorney general in connection to the Leo inquiry, according to a source familiar, though his office declined to provide any comment on that revelation.
The investigation, which Schwalb’s office told the Washington Examiner it wouldn’t “confirm or deny the existence of,” comes as liberal advocacy groups and Democratic lawmakers slam Supreme Court Justices Clarence Thomas and Samuel Alito for their ties to Leo and other wealthy conservatives. Meanwhile, Washington, D.C.’s attorney general on Sept. 22 subpoenaed Arabella Advisors and groups it manages, including New Venture Fund, Sixteen Thirty Fund, and North Fund.
The revelation of the Arabella investigation is also notable, given the left-wing dark money network reportedly “inspired” Leo and his allies years ago to launch a similarly structured conservative network. Schwalb’s subpoena to Arabella followed both an IRS complaint from Americans for Public Trust, a conservative watchdog bankrolled by Donors Trust, which has steered cash to Leo’s 85 Fund, and reporting from the Washington Free Beacon on how “Arabella wields centralized control over a multibillion-dollar network of dark money funds.”
“Arabella Advisors complies with the law and will cooperate with the District of Columbia Attorney General’s civil inquiry,” Steve Sampson, a spokesman for Arabella, told the Washington Examiner. “We’re confident in the systems we have in place to ensure our business conforms with legal and regulatory requirements, and Arabella Advisors is proud of the work we do.”
The source close to Leo told the Washington Examiner they find Schwalb’s Arabella investigation “completely not serious,” likening it to the Justice Department’s Hunter Biden inquiry, which Republicans have said reeks of politicization. The individual thinks it’s clear Arabella flouted federal rules by controlling activities for tax-exempt groups but foresees a situation in which the attorney general’s office and the consultancy reach a settlement that amounts to a slap-on-the-wrist to the dark money network.
President Scott Walter of Capital Research Center, a conservative think tank that’s been granted money through Donors Trust, agrees. “It’s laughable to think these left-wing operatives will thoroughly investigate the Left’s most important ‘dark money’ empire,” he told the Washington Examiner. Walter referenced how Chief Deputy Attorney General Seth Rosenthal used to be the legal director for Alliance for Justice, a judicial group allied with President Joe Biden that has slammed Leo and the Federalist Society for “selling judgeships to the highest bidders.”
Rosenthal and Schwalb also worked in the past for the law firm Venable, which has represented groups in the Arabella network, including Sixteen Thirty Fund, the Hub Project, and New Venture Fund, according to Federal Election Commission records.
The subpoenas to Leo groups closely mirrored Campaign for Accountability’s complaint, which Leo’s lawyers cited in the mid-August meeting with the attorney general’s office, according to the source close to Leo, who reviewed the subpoenas.
The complaint called for an investigation into seven nonprofit groups tied to Leo, including Rule of Law Trust, Wellspring Committee, the 85 Fund, the Concord Fund, the Federalist Society, Freedom and Opportunity Fund, and Marble Freedom Trust, for allegedly paying excessive compensation to Leo. CFA said the nonprofit groups have paid millions of dollars combined to Leo’s firm CRC Advisors and BH Group, which the liberal watchdog said Leo owns at least 35% of.
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As for the Arabella subpoenas, the attorney general is demanding records on Secure Democracy, which is a 501(c)(4) nonprofit group that New Venture Fund appeared to unlawfully direct activities for, according to the Washington Free Beacon.
Ex-Secure Democracy Executive Director Sarah Walker in November 2022 filed a lawsuit in federal court, which is ongoing, alleging wrongful termination after she reportedly said to New Venture Fund general counsel Andrew Schultz that its relationship with Secure Democracy placed both entities in “legal jeopardy.” New Venture Fund shut down Secure Democracy weeks later, and a new entity called Secure Democracy USA replaced it, according to public filings and reports.
