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by Andrew Kerr
\nThe Citizen’s Audit<\/p>\n
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David Brock is at it again.<\/p>\n
From individual users on social media to the highest levels of government, Brock\u00a0aspires to deploy his network of organizations to contest conservatism in every aspect of our society.<\/p>\n
The longtime liberal operative held a fundraising conference in late January where he solicited over $40 million from 120 top donors\u00a0for his \u201cDemocracy Matters\u201d initiative.<\/p>\n
The Washington Free Beacon\u00a0obtained<\/a>\u00a0a confidential\u00a0memo distributed at the\u00a0retreat that outlines Brock\u2019s\u00a0four year plan to unleash\u00a0his network to fight back against President Trump and Republicans.<\/p>\n David Brock aims to be at the center of the opposition against Trump, and by all means he\u2019s free to\u00a0engage in that effort. However, if he wishes to exert such an intense degree of\u00a0political influence upon everyday Americans, it\u2019s critical that he do so within the rule of law.<\/p>\n Unfortunately, after analyzing the\u00a0relationship between Brock\u2019s tax-exempt charities and political organizations, a number of ethical and potentially legal issues\u00a0are brought to the forefront.<\/p>\n This report is the first in a series that will\u00a0unravel the complexity of David Brock\u2019s network, starting with American Bridge 21st Century Foundation and its Super PAC.<\/p>\n <\/p>\n American Bridge 21st Century is comprised of two separate business entities \u2013 American Bridge 21st Century Super PAC (the \u201cSuper PAC<\/strong>\u201c), and\u00a0American Bridge 21st Century Foundation (the \u201cFoundation<\/strong>\u201c).<\/p>\n The key difference between the two entities is their donor disclosure requirements.<\/p>\n The Super PAC reports to the Federal Election Commission (FEC), and is required to disclose who gives them money. For example, we can see here<\/a> that George Soros gave\u00a0$1,000,000 to the Super PAC last March.<\/p>\n The Foundation reports to the IRS. As a 501(c)(4) social welfare nonprofit, the\u00a0IRS does not<\/strong>\u00a0require the Foundation to disclose the identity of its\u00a0donors,<\/strong> hence the term \u201cdark money\u201d.<\/p>\n Since one entity reports to the FEC, and the other reports to the IRS, there\u2019s potential for abuse.<\/p>\n <\/p>\n <\/p>\n From 2011 to the end of 2015, the Foundation funneled\u00a0$7.6 Million<\/strong>\u00a0into the Super PAC. The\u00a0Foundation isn\u2019t required to disclose who donated that money, so we will never know who donated those dollars.<\/p>\n Despite millions being passed through to the Super PAC, not once has the Foundation disclosed any of the transfers to the IRS in its end of year tax filings. See for yourself: (H1 2011<\/a>)(2011<\/a>)(2012<\/a>)(2013<\/a>)(2014<\/a>)(2015<\/a>)<\/p>\n The only way to view the transfers is by reviewing the Super PAC\u2019s\u00a0filings<\/a> with the FEC.<\/p>\n The sheer amount\u00a0of funds being transferred out of the Foundation into the Super PAC is alarming. For the past couple tax years, transfers to the Super PAC consisted of over\u00a050% of the Foundation\u2019s\u00a0total expenditures.<\/p>\n <\/p>\n This immediately raises concerns\u00a0\u2013 why is so\u00a0much dark money being funneled into the\u00a0Super PAC?<\/p>\n <\/p>\n <\/p>\n The answer to that is maybe. It all depends on the percentage of salary expenditures\u00a0spent on Foundation activities.<\/p>\n American Bridge\u00a0came under fire in 2012 when campaign finance experts questioned why\u00a0the Super PAC received\u00a0$240,000 from the Foundation.<\/p>\n At the time, representatives for American Bridge\u00a0said<\/a> the transfers were not donations, instead, they were \u201creimbursements from the nonprofit to the Super PAC to cover administrative costs.\u201d<\/p>\n <\/p>\n <\/p>\n It turns out that the Foundation has a pretty extensive cost sharing agreement with the Super PAC.<\/p>\n The last time the Foundation disclosed their\u00a0cost sharing agreement to the IRS was in 2012.<\/p>\n<\/div>\n The two organizations share the same pool of employees under a \u201ccommon paymaster\u201d arrangement.<\/p>\n The Super PAC manages salary and payroll taxes for both organizations, and pays employees 100% of their wages with one consolidated paycheck.<\/p>\n The Foundation then \u201coffsets\u201d\u00a0the Super PAC\u2019s expenditures for the time their\u00a0employees spent on Foundation activities, in addition to any applicable payroll taxes.<\/p>\n For example:<\/p>\n <\/p>\n <\/p>\n Here\u2019s where things start to get interesting.<\/p>\n The Foundation has reported a grand total of\u00a0zero<\/strong> employees since its founding in 2011.<\/p>\n Tax filings from 2011 to 2015 indicate\u00a0that the Foundation spent\u00a0$6.5 million<\/strong> on employee salaries and payroll taxes.<\/p>\n Since the Foundation has zero employees,\u00a0every dollar spent on payroll was routed to the Super PAC as a reimbursement under the common paymaster agreement.<\/p>\n As shown in the chart below, there\u2019s a clear correlation between the reported salary expenses of the Foundation and the total amount of funds transferred to the Super PAC.<\/p>\n The little amount that\u2019s not accounted for in the chart above would be\u00a0expenditures for shared office space and supplies.<\/p>\n <\/p>\n <\/p>\n We\u2019ve\u00a0established the following:<\/p>\n If\u00a0we compare the total salary expenses reported by the Super PAC with the reimbursements provided by the Foundation, we can\u00a0deduce the percentage of salary\u00a0expenditures allocated to\u00a0Foundation activities.<\/p>\n What\u2019s striking here is the irregularity of American Bridge\u2019s\u00a0total<\/em> salary expenses put up against the consistent increase in\u00a0Foundation-only salary expenses.<\/p>\n <\/p>\n <\/p>\n The legality of the Foundation\u2019s funneling of dark money into the Super PAC is\u00a0determinant on the honesty of the American Bridge\u2019s\u00a0expense reporting.<\/p>\n It\u2019s possible that the Foundation is falsifying the true number of hours worked by employees in an effort to hide the transfer of dark money into the Super PAC. It wouldn\u2019t be the first time<\/a> something like that happened.<\/p>\n <\/p>\n The importance of proper\u00a0timekeeping by\u00a0shared employees between a 501(c)(4)and a PAC is \u201ccritical\u201d to ensure administrative compliance, according to\u00a0Bolder Advocacy<\/a>.<\/p>\n For example, to ensure compliance,\u00a0American Bridge would need to produce timesheets from\u00a0each<\/em> employee for\u00a0every\u00a0<\/em>pay period from July to December 2014 proving that\u00a043.72%\u00a0<\/strong>of staff expenditures were incurred by the Foundation.<\/p>\n Any amount overpaid by the Foundation would constitute a\u00a0contribution to the Super PAC, something the IRS would require\u00a0disclosure of.<\/p>\n If any such contributions took place, American Bridge could face a litany of legal and compliance issues from the IRS and FEC.<\/p>\n <\/p>\n <\/p>\n Easy \u2013 let\u2019s say someone wants to support American Bridge Super PAC, but doesn\u2019t want his name disclosed publicly.<\/p>\n That person could donate to the Foundation, shielding his identity from public disclosure.<\/p>\n The Foundation would send the donation directly to the Super PAC under the guise of an expense reimbursement.<\/p>\n The IRS doesn\u2019t consider cost-sharing reimbursements to be donations, so the Foundation\u00a0wouldn\u2019t be required to disclose the\u00a0\u201cdonation\u201d to the\u00a0Super PAC.<\/p>\n <\/p>\n <\/p>\n There\u2019s no way for us to know for sure without a thorough review of American Bridge\u2019s employee timesheets.<\/p>\n What we can do is look at what the Foundation has done with all that money.<\/p>\n The Foundation has a YouTube channel<\/a>, with most of its videos pulling less than 100 viewers.<\/p>\n Ask yourself: does this look like the the result of\u00a0$6.5 million\u00a0<\/strong>in staff expenditures?<\/p>\n The Foundation also publishes \u201cresearch\u201d reports on its website<\/a>.<\/p>\n On the surface, these reports seem impressive \u2013 some are over 100 pages.<\/p>\n But when you actually\u00a0read<\/em> the reports, it becomes very clear that they\u2019re really just one step away from plagiarism.<\/p>\n Take a look at this report published September 2015, titled \u201cConservatives\u2019 Road Map To Another Republican Shutdown<\/a>\u201c.<\/p>\n The entire report is like this \u2013 it\u2019s a 21 page copy-paste job with\u00a0no original content or insights.<\/em><\/p>\n All of the Foundation\u2019s reports are like this\u00a0\u2013 quoted content from other outlets with no original content. David Brock should be ashamed of himself for passing this nonsense\u00a0off as \u201cresearch\u201d.<\/p>\n Ask yourself: does this look like the the result of\u00a0$6.5 million\u00a0<\/strong>in staff time?<\/p>\n <\/p>\n American Bridge 21st Century Foundation funnels millions of dollars into its Super PAC\u00a0for reimbursed staff time.<\/p>\n For example, from July to December 2014, the Foundation reimbursed the Super PAC for\u00a043.72%\u00a0of its salary expenditures.<\/p>\n But the result of the Foundation\u2019s work does not appear to match the amount of money spent to produce it.<\/p>\n If the Foundation is falsifying expenditures and overpaying the Super PAC,\u00a0American Bridge could face a litany of legal and compliance issues from the IRS and FEC.<\/p>\n Only with a thorough review of American Bridge\u2019s employee timesheets\u00a0can we verify if the Foundation has been honest in its reported salary expenditures. Consider signing our petition<\/a> to the IRS and FEC to audit American Bridge and the rest of David Brock\u2019s network.<\/p>\n What do you think?<\/p>\n Do you think the Foundation is reporting its expenditures honestly?<\/p>\n Ethically, do\u00a0you think a Super PAC should be able to share its employees with a nonprofit organization to such a degree?<\/p>\n We are curious to hear your thoughts about all this in the comments below.<\/p>\n Thank you for reading!<\/p>\n\n
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\nAMERICAN BRIDGE 21ST CENTURY<\/strong><\/h3>\n
THE FOUNDATION HAS TRANSFERRED OVER\u00a0$7 MILLION\u00a0INTO THE SUPER PAC SINCE 2011<\/strong><\/h3>\n
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<\/p>\nIS IT LEGAL FOR THE FOUNDATION\u00a0TO FUNNEL DARK MONEY INTO THE SUPER PAC LIKE THIS?<\/strong><\/h3>\n
WHY IS THE FOUNDATION REIMBURSING THE SUPER PAC?<\/strong><\/h3>\n
![](\"http:\/\/www.thecitizensaudit.com\/wp-content\/uploads\/2017\/02\/American-Bridge-Foundation-Cost-sharing-Agreement.jpg?ab89ad\")
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THE FOUNDATION HAS ZERO DEDICATED EMPLOYEES<\/strong><\/h3>\n
![\"\"](\"http:\/\/www.thecitizensaudit.com\/wp-content\/uploads\/2017\/02\/American-Bridge-Foundation-Individuals-Employed.png?ab89ad\")
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<\/p>\nCOMPARING THE FOUNDATION\u2019S SALARY EXPENDITURES WITH THE SUPER PAC\u2019S<\/strong><\/h3>\n
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![\"\"](\"http:\/\/www.thecitizensaudit.com\/wp-content\/uploads\/2017\/02\/American-Bridge-All-Payroll-vs-Foundation-Payroll.jpg?ab89ad\")
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WHAT ARE YOU GETTING AT HERE?<\/strong><\/h3>\n
![\"\"](\"http:\/\/www.thecitizensaudit.com\/wp-content\/uploads\/2017\/02\/Common-Fraud-Schemes.jpg?ab89ad\")
<\/p>\n![\"\"](\"http:\/\/www.thecitizensaudit.com\/wp-content\/uploads\/2017\/02\/Sample-Timesheet.jpg?ab89ad\")
<\/p>\nWHAT WOULD BE THE FOUNDATION\u2019S MOTIVATION FOR OVERPAYING STAFF EXPENDITURES?<\/strong><\/h3>\n
ON WHAT GROUNDS ARE YOU CLAIMING THAT AMERICAN BRIDGE IS FALSIFYING EXPENDITURES?<\/strong><\/h3>\n
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\n<\/h4>\n
SUMMARY<\/strong><\/h3>\n
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