Daily Beast: Did David Brock manipulate non-profit to enrich himself?

David Brock has long been a bête noire of the Right and the center of speculation about many nefarious plots, but a new allegation of corruption and tax violations might have some meat on it, reports the Daily Beast’s Lachlan Markey and Lachlan Cartwright.  What started off as an IRS complaint against the founder of Media Matters and other non-profits has pulled the veil back on several “murky” financial ties in Brock’s empire.

Conservative action group Patriots Foundation kicked this off with an IRS complaint after reviewing the filings from American Bridge 21st Century, a Brock non-profit, and a for-profit media outlet now called American Independent, owned by Brock’s True Blue Media LLC. Brock told donors in 2017 that True Blue’s news operation would be a profit center complete with advertising and subscription revenues, which Markay covered while working at The Free Beacon, and which caused a ripple of laughter from observers at that time:

Democratic operative David Brock wants to charge users for a “Twitter-like” website exclusively for progressives, one of his many ideas to monetize his network of political advocacy and nonprofit groups, internal documents reveal.

For a fee, visitors to Brock’s Shareblue website will gain access to an exclusive knock-off of the popular social network, one “free from conservative trolls and harassment.”

The plan is one of eight revenue-generation ideas pitched to donors at a retreat in Florida over the weekend. Brock assembled wealthy liberals at the conference to plot political strategy in the Trump era and promote four organizations that he founded or currently oversees.

Shareblue turned into American Independent, but that’s not the problem. The problem is that Brock’s American Bridge non-profit invested over $2.6 million into True Blue Media LLC at the same time that Brock owned at least 35% of the for-profit company. “The structure appears to have resembled a convertible note,” wrote Markay and Cartwright, with equity promised to American Bridge in True Blue Media in exchange. They could not find any evidence that equity was ever transferred to the non-profit, however, which is why Patriots Foundation wants the IRS to investigate. It looks like Brock was pumping tax-exempt donations from his non-profit to support his for-profit enterprise.

Current American Bridge president Bradley Beychock told the Daily Beast that Brock resigned from the non-profit’s board in 2016. Markay and Cartwright say it’s not that clear that he ever actually did:

Brock’s official role hasn’t always been as clear as that statement suggests. Indeed, American Bridge’s nonprofit arm referred to Brock as its chairman in 2018. Brock continues to describe himself as the chairman of American Bridge’s super PAC arm.

If Brock is still part of the leadership of American Bridge, or at least was at the time of those “investments,” he could be in real trouble:

The complaints filed this week underscore the often murky relationships between the various nodes in Brock’s network of advocacy outfits. American Bridge’s super PAC and dark money arms, for instance, share executives, employees, and office space, according to audited financial statements for the latter.

That’s fairly common for advocacy groups with political and nonprofit arms, but best practices generally call for a clear delineation of how shared resources are divided up among those groups, so as not to commingle tax-exempt resources with those devoted to outright politicking. According to its most recent publicly-available financial statements, covering 2018, “the Foundation and American Bridge did not have a formal agreement relating to the allocation of expenses between the two entities.” A source familiar with the arrangement told The Daily Beast that a more formal agreement to that effect was put in place last year.

While such arrangements are common among various forms of nonprofit groups such as charities, dark money advocacy groups, and political action committees, they can be even more legally dicey when for-profit entities are added to the mix.

Indeed. And perhaps an IRS investigation might clear this up. It certainly smells a bit fishy at American Bridge, even more so than their political attacks these days.

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Jazz Shaw 12:01 PM on December 04, 2023
Jazz Shaw 9:21 AM on December 04, 2023