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Conservative Watchdog Claims Anti-Trump Group Violated Tax Laws

April 24, 2020, 12:44 AM

A high-profile progressive organization, known for its fiery ads against President Donald Trump, may have violated its tax-exempt status by blurring the line between nonprofit and political activities, according to a complaint filed Thursday with the Internal Revenue Service by a conservative watchdog group.

The Patriots Foundation, a Republican-leaning ethics organization based in Iowa, says American Bridge 21st Century Foundation, a nonprofit, is primarily a political organization, in violation of tax laws. The group also raises questions about a $2.7 million investment in a for-profit company co-owned by its founder, David Brock, a Democratic operative.

American Bridge has a super-PAC arm that can spend unlimited sums to influence elections. But the primary purpose of nonprofits organized under section 501(c)4 of the tax code like American Bridge cannot be politics. The complaint quotes material given to potential donors to the nonprofit arm in 2017 saying the organization’s mission is “to take on Donald Trump.”

Groups like American Bridge do not have to disclose their donors, which is why they are sometimes called “dark money.”

The complaint also alleges that American Bridge has made improper payments that benefited Brock. The nonprofit made a total of $2.7 million in equity investments in 2017 and 2018 in True Blue Media Services LLC, a private, for-profit company that has used content from American Bridge. Brock, a “conservative hit man” during the Clinton administration who became a progressive activist, held a 35% interest in the firm, according to American Bridge’s tax returns.

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Bradley Beychok, president of American Bridge and a co-founder, dismissed the complaint as a partisan attack. “The Patriots Foundation has chosen to purposely mislead the public in order to further its right wing agenda,” he said in an email. He said the advocacy against Trump’s policies were well within the mission of a nonprofit organization, and said a review would prove the charges were “fake and intentionally misleading.”

He added that Brock resigned from the organization in 2016, before the transfers to True Blue Media were made, and that the group’s board of directors determined the investment would further the mission of American Bridge.

The complaint is part of a growing backlash among some conservatives against “dark money,” or donations from anonymous individuals used to influence elections.

Craig Robinson, a Republican operative who started the Iowa-based Patriots Foundation in 2013, said Brock’s groups, which include the watchdog Media Matters, raise millions to influence politics, campaigns and even news coverage. “Behind the scenes, his network of organizations have engaged in very troubling behavior that warrants serious investigation,” Robinson said.

American Bridge has spent $10 million in battleground states attacking Trump. Its ad accusing him of leaving the country unprepared for the coronavirus pandemic by shipping tons of medical supplies to China provoked Trump to call it “fake news” in a tweet on Wednesday.

Advantage Shifts

Republicans benefited more from undisclosed dark money than did Democrats after the Supreme Court’s 2010 ruling in the Citizens United case made it legal for nonprofits and other corporations to independently spend money to influence elections.

GOP-aligned political nonprofits spent $144 million in 2016, nearly four times as much as ones supporting Democrats, according to the Center for Responsive Politics. But that has changed and groups that don’t disclose donors spent $82 million backing Democrats in 2018, compared to just $42 million for the Republicans.

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Many of the progressive organizations targeted for such scrutiny are umbrella organizations that have related super-PACs, for-profit companies and in some cases charitable organizations, which offer contributors a tax donation for their donations. Donors get a tax exemption when they give to the nonprofit but not the super-PAC.

Brock started American Bridge 21st Century Foundation and a related super-PAC, now known as AB PAC, in 2010 to research Republican candidates.

In March, Unite the Country, the super-PAC that backed Joe Biden in the primaries, and the Bridge groups announced plans to coordinate activities on behalf of the former vice president while raising $175 million.

To contact the reporter on this story:
Bill Allison in Washington DC at ballison14@bloomberg.net

To contact the editors responsible for this story:
Wendy Benjaminson at wbenjaminson@bloomberg.net

Magan Crane, John Harney

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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