DC AG closes investigation into Arabella Advisors

Apr 05, 2024 | POLITICO

As it appeared in POLITICO


FIRST IN PI — D.C. AG CLOSES ARABELLA PROBE: D.C. Attorney General Brian Schwalb has cleared Arabella Advisors, the consulting firm that oversees a wide swath of liberal nonprofit groups, of engaging in any inappropriate business conduct, according to an attorney representing several of those nonprofits.

— “The D.C. Office of the Attorney General closed its investigation into the Funds and Arabella after finding no evidence of a violation of law,” the lawyer, Joshua A. Levy, said in a statement. “We fully cooperated with this investigation and have long known that the Funds and Arabella comply with the law.”

— A spokesperson for Schwalb’s office, Gabe Shoglow-Rubenstein, declined to comment on the probe, citing the office’s policy against confirming or denying the existence of potential investigations.

— Arabella Advisors complied with subpoenas issued by Schwalb’s office, which is also investigating the nonprofit network aligned with conservative judicial activist Leonard Leo.

— The probes stemmed from dueling IRS complaints from liberal and conservative watchdogs in response to POLITICO’s reporting about the lavish lifestyle Leo and several of his allies embarked upon around the same time Leo was tapped as an unpaid adviser on judicial nominations to former President Donald Trump.

— Campaign for Accountability, a liberal dark money group previously affiliated with a nonprofit managed by Arabella, accused Leo of violating nonprofit tax laws against personal enrichment by steering millions of dollars from his network of affiliated nonprofits to his for-profit consulting firm CRC Advisors.

— In turn, conservative watchdog Americans for Public Trust targeted Arabella Advisors. Americans for Public Trust receives much of its funding through DonorsTrust, which is often described as the “dark money ATM” of the conservative movement that has given millions to Leo-aligned nonprofits and CRC Advisors.

— Leo’s attorney has said he’s refusing to comply with Schwalb’s investigation, and did not immediately respond to questions about the status of Schwalb’s probes.

— There are significant differences between Leo’s network and Arabella Advisors, the company his allies often cite in claiming that Leo and his consultancy are being unfairly treated. Arabella is a for-profit company that provides administrative, HR and accounting services to largely philanthropic nonprofits that are largely independently run. In Leo’s network, a few individuals have managed nonprofits taking in tens of millions of dollars that have also flowed to his for-profit company.

— As Schwalb’s investigations played out behind closed doors, the AG’s office has come under a deluge of criticism from Leo’s defenders — and beneficiaries of his dark-money network — ranging from investigations announced by GOP committee chairs in the House, to critical pieces in conservative media, to objections lodged by Schwalb’s Republican counterparts in other states.