BREAKING NEWS: Leonard Leo accused of illegal use of non-profit funds to buy Maine homes
NORTHEAST HARBOR, April 6, 2023 - Leonard Leo of 46 South Shore Road isn’t having a good week.
Donald Trump for whom Leo served as a key advisor on judicial nominations was indicted on 34 counts of falsifying tax records in New York. Voters in Wisconsin overwhelmingly repudiated the Republican anti-abortion and gerrymandering agenda for which Leo was its chief architect.
ProPublica reported Thursday Supreme Court Justice Clarence Thomas accepted luxury trips around the globe for more than two decades, including travel on a superyacht and private jet, from a prominent Republican donor without disclosing them. Leo’s close relationship with Thomas goes back to 1991 when he worked to gather evidence to support the judge during his confirmation hearing for the supreme court.
On Wednesday, Campaign for Accountability (CfA) filed an IRS complaint against seven tax-exempt organizations linked to Leonard Leo that appear to have funneled large amounts of money to the lawyer via multiple payments to his for-profit businesses.
“There is evidence that from the moment the payments began, Leo began personally spending millions of dollars in amounts commensurate with the amounts transferred to these for-profit entities.
“In 2017 - shortly after the first of the multimillion-dollar payments to his companies - Leo personally pledged to donate $1 million to Vatican initiatives worldwide. The next year, he paid off the 30-year mortgage on his McLean, Virginia home, most of which was still outstanding on the payoff date. Later that same year, he bought a $3.3 million summer home with 11 bedrooms in Mount Desert, an affluent seaside village on the coast of Maine, using, in part, a 20-year mortgage of $2,310,000. He paid off the entire balance of that mortgage just one year later. And, in September 2021, Leo bought a second home in Mount Desert for $1.65 million.
“This type of explicit and coordinated self-enrichment appears to be in direct violation of IRS rules against private inurement, and CfA is asking the agency to investigate. Additionally, since all seven nonprofits are registered to do business in the District of Columbia, CfA also sent a notice to the DC Office of the Attorney General asking it to pursue any appropriate enforcement actions.”
CfA Executive Director Michelle Kuppersmith said, “Non-profits are meant to serve the public good, not as pass throughs for mega-donors to enrich their political foot soldiers, but that’s exactly how the Leo-affiliated organizations named in CfA’s complaint operate. Those in the private sector are free to grossly overpay for whatever services they please, but when it comes to tax-exempt activities, the IRS has a duty to ensure no improper self-dealing occurs.”
According to CfA’s analysis, seven tax-exempt organizations linked to Leo - Rule of Law Trust, Wellspring Committee, Inc., The 85 Fund, The Concord Fund, The Federalist Society, Freedom and Opportunity Fund, and Marble Freedom Trust - paid him (directly or indirectly) more than $73 million over a six-year period from 2016 through 2021.
“During most of this period—from 2016 to 2020—Leo worked a full 40 hours a week at the Federalist Society, according to its tax filings, raising serious questions about how he was able to commit sufficient time for all of the services rendered to his affiliated nonprofits to be worth millions of dollars.
“The supposed services were rendered through two for-profit groups—BH Group and CRC Advisors—that do not publicly market, advertise, or even describe their services. It is therefore not readily apparent the exact details of the “work” that Leo put in to earn his firms this sum. When given the chance by the media to explain what it did to earn tens of millions of dollars, CRC Advisors declined to specify.
“While it’s unclear exactly what portion of the $73 million went directly to Leo, he owns at least 35% of BH Group and serves as a director and the chairman of CRC Advisors. Yet, given what is publicly known about his spending patterns, it appears that he could be pocketing a sizable amount.
The IRS says its rules against private inurement are designed “to prevent anyone in a position to do so from siphoning off any of a charity’s income or assets for personal use” and “without regard to accomplishing exempt purposes.” If the agency finds that this indeed occurred with Leo-affiliated organizations, it may revoke any organization’s tax-exempt status, or impose financial penalties to regain some of the excess benefit.
Ms. Kuppersmith continued, “CfA is unfortunately limited to reviewing publicly available material, but even this limited information reveals a litany of Leo excesses. With comprehensive investigatory resources at its disposal, the IRS should finish unraveling this web of excessive payments and, if there is wrongdoing, impose financial penalties to discourage Leo and others from engaging in these sorts of prohibited excessive benefits transactions.”
Protestors encamped in front of Leo’s house here all last summer. One protestor was arrested in July. See video of the arrest.
On March 1, Politico published, “Dark money and special deals: How Leonard Leo and his friends benefited from his judicial activism.”
Well, at least now we know how Lenny paid off those million-dollar mortgages a year after he took them out. He just took the cash from the tax-exempt charities. The sheer effontry of the behavior of these Federalist Society chums is just staggering. Then again, pals of Clarence don't much need to worry; the image of Lenny slumming with Clarence at Harlan Crow's mega-mansion in the Adirondacks, complete with a staff of chefs, flown over on a Global 5000 (costs running at $17,000 a hour), putting in a good word over a nice glass of sherry, just warms your soul.
We need to buy more sidewalk chalk.