Mystery New GOP Dark Money Org Raises All Kinds of Red Flags

With Roger Sollenberger, Political Reporter

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This week’s Big Dig . . . How a Mysterious New GOP Dark Money Group Is Raising All Kinds of Red Flags

In late October, a mysterious nonprofit registered with the state of Delaware. Within months, it was funneling millions of dollars to conservative causes.

Last week, the Campaign Legal Center (CLC) filed a complaint with the Federal Election Commission alleging that the new group, Ardleigh Impact Corporation, bears the marks of a shell entity created specifically to pump big donors’ money into politics while masking their identities.

The alleged setup, known as a “straw donor” scheme, would violate federal law, the complaint states.

The invisible hand

It’s no surprise that the entity drew the CLC’s attention. As the complaint notes, Ardleigh does not operate a website or any social media pages, does not appear in various corporate databases, and has no “discernible public footprint.” In fact, at the time of the complaint—before news sites picked up the story—the only publicly available evidence of the nonprofit’s existence were the donations documented in FEC reports and its articles of incorporation, which it had unsurprisingly registered with the notoriously opaque state of Delaware.

However, those incorporation documents, obtained by The Daily Beast, reveal key details not found in the complaint. Ardleigh’s officers, however, refused to provide The Daily Beast with any information about the group’s activities.

First, the incorporation records identify the group’s organizers as experienced political operatives, including, apparently, the professional strategist who ran Dr. Mehmet Oz’s failed Senate campaign in 2022. They also show that Ardleigh Impact Corp. is not organized as a private company, but a 501(c)(4) nonprofit—a “dark money” group. However, additional business filings show that Ardleigh Impact Corp. has an apparent twin entity—a private limited liability corporation called “Ardleigh Impact LLC,” also registered in Delaware.

The new information increases the likelihood that Ardleigh Impact Corp. is, as the complaint alleges, specifically designed to function at least in part as a vehicle for anonymously funding political activity. However, the fact that Ardleigh Impact Corp. is a dark money nonprofit—and therefore permitted to participate in limited election activity—would also seem to rule out claims that it is a “shell company,” potentially deflating one of the complaint’s arguments while simultaneously introducing new questions about transparency.

Tax regulations do not require nonprofits like Ardleigh Impact Corp. to disclose their donors, making it highly unlikely that the public will ever learn who funds the entity. By extension, that means the public will also likely never know the ultimate source of the millions of dollars that Ardleigh has already poured into those GOP groups—hence the “dark” in “dark money.”

Reid the room

Chief among the group’s organizers is Alexander Reid, a partner at BakerHostetler who specializes in tax-exempt organizations. Reid has a history of challenging transparency regulations, including a 2016 Supreme Court brief in support of a nonprofit’s ultimately failed effort to scrap disclosure requirements.

The month before Reid incorporated Ardleigh Impact Corp. as a 501(c)(4), he told Bloomberg that political pressures can make it difficult for the IRS to enforce existing laws regulating 501(c)(4) groups. Such action, Reid said, “always creates a perception of fairness or unfairness,” based on which side of the argument you’re on. (It is difficult to see the downside to a “perception of fairness.”) Reid’s firm, BakerHostetler, promoted his appearance on its website.

Reid, it turns out, is also listed as the authorized representative of the nonprofit’s apparent twin, Ardleigh Impact LLC. The LLC was registered in Delaware just one week after Ardleigh Impact Corp, though its purpose is unclear. Outside of those filings, the LLC does not appear to have any public presence whatsoever. Its registered agent is Registered Agents Inc., a company that Wired reported “enables hundreds of thousands of businesses to operate in near-total secrecy.”

Asked about the arrangement, Reid was light on the details, telling The Daily Beast in a text message, “I’m not sure what else I can say about the 501(c)(4).”

“I’m afraid I don’t have materials to share about all the c4’s activities,” he added. “I’ve asked the client but they are not prepared to share anything at present. Sorry about that!”

However, Reid shed a little more light on the LLC, saying that the company “was formed to hold an asset,” but that the LLC “was never used because it wasn’t needed.” He did not clarify the nature of the asset or whether it was held under any other entity, and did not say whether the LLC would be shut down.

Expert opinion

Saurav Ghosh, director of federal reform at CLC, told The Daily Beast that Ardleigh’s nonprofit status “does not change the fact that it appears to have been used as a straw donor to funnel over $2.5 million to multiple super PACs.”

“As our complaint makes clear,” Ghosh said, “there is no indication that Ardleigh engaged in any activity from which it could finance these contributions without others giving it money for that purpose. And the apparent involvement of a well-known political operative only further supports the conclusion that Ardleigh was unlawfully used to conceal the true contributors’ identities from required public disclosure.”

Even if everything Ardleigh is doing turns out to pass legal muster, experts told The Daily Beast that the steps its creators took to obscure its purposes were all but guaranteed to spark suspicion.

“Everything about how this corporation was organized seems fishy,” Robert Maguire, vice president for research and data at Citizens for Responsibility and Ethics in Washington, told The Daily Beast.

“Then the fact that this corporation apparently, just months after incorporating, had enough money to pour millions into PACs, also raises more red flags,” Maguire said “All while it has no apparent public facing materials or business operations. It really checks all the boxes when it comes to the kind of questionable shell companies we have seen in campaign finance data.”

Ardleigh there

And because Ardleigh is registered as a 501(c)(4) nonprofit, it is tax-exempt with the understanding it is created exclusively to promote social welfare. But that doesn’t always turn out to be the case.

“501(c)(4s) are social welfare organizations that increasingly have been misused to spend money for political purposes,” Aaron Scherb, director of legislative affairs at Common Cause, told The Daily Beast. “Under the IRS tax code, they don't have to disclose their donors. And so that's why they've become a popular vehicle for people who are trying to use dark money to influence political outcomes.”

Technically, the law allows these types of nonprofits to engage in political campaigns, as long as doing so does not constitute their “primary activity.” But it can be tricky to define what is political engagement and what is a primary activity. For instance, a 501(c)(4) may argue that it spends 51 percent of its money on politics but the bulk of its time on other, exempt activities, like issue advocacy or public engagement. Such groups also frequently violate the spirit of the law by masking political advocacy as issue advocacy, for instance, by running ads that tell voters to “call their congressman” about a particular topic, rather than vote against him.

Ardleigh, of course, doesn’t currently seem interested in demonstrating to the public that it really does perform issue advocacy work.

“Just from an optics standpoint, they would need to have public facing websites, information about who's behind the group, who's employed by the group,” Maguire said when asked what would legitimize the group. “Basically make a case for their social welfare function beyond giving to political groups.”

This is an excerpt. Read the full story here.

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MORE FROM ROGER AND MINI’S NOTEBOOKS

The siege of Troy. The Office of Congressional Ethics announced last Friday that it had found cause to believe that Rep. Troy Nehls (R-TX) converted campaign funds to personal use—a ruling that prompted the House Ethics Committee to launch its own investigation.

The OCE’s final report noted that none of the nine parties involved cooperated with the probe, including Nehls, his treasurer Tom Datwyler, and the business entities at the center of the allegations. But an attorney for Nehls did write the Ethics Committee after it opened its investigation in January, explaining that the targeted events—campaign rent payments made out to a company owned by Nehls—were benign, with Nehls acting as middleman for rent to the actual landlord. The letter cited a number of other people, including other local candidates in Texas who also rented the same venue, who would theoretically be able to vouch for the legitimacy of the arrangement.

But Texas state filings return just one hit—a $5,000 payment to Nehls’ company in February 2022 from state Rep. Gary Gates, reported not as rent, but an “event expense” for a “March primary watch party.” Nehls, however, did not even reveal that he owned the company—Liberty 1776 LLC—until he filed amended 2021 and 2022 personal financial disclosures this February. Those reports don’t list any income from the company.

Golden goose. Counsel for Sen. Bob Menendez (D-NJ) told the jury judging his ongoing criminal trial this week that he had in fact known that his wife owned gold bars, but believed they came to her from her family—not from the New Jersey developer and co-defendant alleged to have bribed the senator.

To support that argument, the attorney told jurors that Menendez had included the bars “in a financial disclosure form filed with the Senate in 2021,” the Washington Post reported on Wednesday.

However, Menendez had not included the gold bars when he first filed that form in 2021. He only included them in an amended version one year later—after the developer was subpoenaed.

Primary school. Rep. Marjorie Taylor Greene (R-GA) has been hitting up donors for cash, sending an email that cites political pressures on her as primary election approaches next week. Only problem: Greene doesn’t have a registered Republican primary opponent this year.

Gotcha. A.J. Delgado, a senior advisor on the 2016 Trump campaign who became pregnant with the child of chief spokesperson Jason Miller, has been engaged in an ongoing sex discrimination lawsuit against the Trump operation that continues to turn up damaging revelations.

Last week, she filed a document suggesting that Trump’s team had admitted intentions to use a middleman to cover up a settlement payment, sparking a new watchdog complaint. This week, she has a new claim: that Trump’s lead lawyer, part of a team recently sought to bail on him, knowingly hid information about a sexual harassment complaint.

In a motion accusing the Trump team of failing to cooperate in discovery, Delgado notes that, when asked to produce complaints related to sexual harassment, gender discrimination, and/or pregnancy discrimination, Trump’s team named only four women, whose complaints were already widely reported on. The defense even admitted to getting those names from a web search and to failing to contact the campaign’s former human resources director.

Delgado alleged that Trump’s team was purposefully withholding additional complaints, and that she has proof. According to her filing, she “obtained documentation reflecting that a staffer in 2016 raised sexual harassment concerns about a very senior official (who was, as a result, relocated to the D.C. Campaign office).”

The campaign did not mention this complaint in its deposition or when asked to produce additional documents.

“Not only should the Campaign have produced this, if it conducted a reasonable effort to ascertain the information, but it withheld the information knowingly and was fully aware, given that the issue came up in a deposition taken in another case, at which Mr. Blumetti was present,” Delgado’s motion reads. “There is no denying at this point that the Defendant-Campaign knowingly and willfully withheld information that is [sic] simply does not want to produce.”

AIPAC your bags. The American Israel Public Affairs Committee (AIPAC) and its super PAC, United Democracy Project (UDP), have already pumped millions into Democratic primaries this cycle. This week, the group saw some return on its investment.

In Maryland’s 3rd District, Capitol police officer Harry Dunn, who enjoyed the national spotlight since Jan. 6, lost the nomination on Tuesday to state Sen. Sarah Elfreth, who benefited from AIPAC money. Dunn, who had raised millions and had the backing of former Speaker Nancy Pelosi, previously suggested that Elfreth should condemn the support.

According to reporting from Semafor, “pro-Israel donors and campaign groups have gone after a fairly wide range of Democrats this cycle.” Some of the candidates they’ve spent against, like Dunn, have not even taken controversial stances on Israel, but are “merely in the way of a preferred candidate who enjoys their support.”

That was also the case with Multnomah County Commissioner Susheela Jayapal, the sister of Rep. Pramila Jayapal (D-WA) who is running in Oregon’s 3rd District, The Intercept reported earlier this month, though UDP has not directly spent in the race.

The group has spent money directly in other races, opposing state Sen. Dave Min in California and community organizer Kina Collins in Illinois. Many of the Democrats AIPAC has targeted are people of color.

Next up: a massive spend in Squad member Jamaal Bowman’s (D-NY) district. AIPAC this week launched a $2 million ad buy targeting Bowman, who faces a tough primary fight with Westchester County Executive George Latimer. While Latimer launched an attack against Bowman related to The Daily Beast’s reporting about the congressman engaging with fringe content, Bowman got busy hitting him on his ties to AIPAC, pointing out that the group “also supports Republicans.”

That playbook didn’t work for Dunn; we’ll find out next month how Bowman fares.

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A clown car of GOP congressional officials rolled into Trump’s Manhattan criminal trial on Thursday, where Lauren Boebert was joined by Matt Gaetz, Andy Biggs, and Anna Paulina Luna in the courtroom. Jose Pagliery brings you the sights and sounds from the courthouse.

Kamala Harris finally let loose at a D.C. event this week, sounding positive and confident—and dropped her share of f-bombs. Read about how the new vibes went over in Mini’s on-the-scene reporting here.

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