The largest subsidiary of the liberal dark money behemoth Arabella Advisors will soon have to open its books to a former executive, who alleges she was unlawfully terminated after blowing the whistle on the group’s alleged abuse of charity laws.
Former New Venture Fund vice president, Sarah Walker, alleged in an October 2022 lawsuit that she lost her job after warning her superiors that the group was violating IRS tax laws in 2020 and 2021 by secretly directing the 501(c)(4) nonprofit Secure Democracy to run ads against Republican lawmakers and lobby in over 20 states to expand mail-in balloting. New Venture Fund sought to dismiss the lawsuit, but Washington, D.C., District Judge Amit Mehta issued a ruling on March 14 authorizing the case to proceed to discovery.
Mehta’s ruling comes at a precarious time for Arabella Advisors and its dark money network, which faces an ongoing investigation from District of Columbia attorney general Brian Schwalb (D.). In September, Schwalb issued sprawling subpoenas to Arabella and its funds seeking documentation on its business practices, as well as any records related to Walker’s allegations, including those that could "create a risk to the tax-exempt status of [the New Venture Fund.]"
The ramifications of Schwalb’s investigation could be calamitous for Arabella Advisors. The for-profit consulting firm relies on the nonprofit status of New Venture Fund and other affiliates to draw billions of dollars from Democratic megadonors like George Soros and the Swiss billionaire Hansjörg Wyss.
Walker’s allegations center on whether New Venture Fund misused its charity status to achieve its political objectives from behind the veil of Secure Democracy, which shared its employees with the Fund. As a charity, New Venture Fund is prohibited from engaging in overtly political activities, but internal documents obtained by the Washington Free Beacon show that the charity had the final say over everything Secure Democracy did, including activities that its attorneys said crossed the line into politics.
"Every lawmaker at the state level was misled," a former New Venture Fund employee involved in Secure Democracy’s state lobbying operations told the Free Beacon in July.
Walker’s attorneys estimated the New Venture Fund illegally subsidized Secure Democracy to the tune of more than $10 million in 2020 and 2021.
New Venture Fund placed Walker on administrative leave one day after she brought her concerns to its general counsel Andrew Schultz in late October 2021. But the charity still appeared to take her allegations seriously. New Venture Fund abruptly shut down Secure Democracy and replaced it with a new group, Secure Democracy USA, just three weeks after Walker blew the whistle.
New Venture Fund ultimately cut ties with Secure Democracy USA in June 2022. Former staffers told the Free Beacon the split was due to friction caused by the "Sarah matter." Secure Democracy USA, which is also subject to discovery in Walker’s lawsuit, did not return a request for comment.
Walker’s attorney, Mark Lanier, told the Free Beacon he was pleased with Mehta’s ruling.
"Sarah reported the problems she saw at New Venture Fund exactly in the manner she was required to do so and as set out in the employee handbook," Lanier said. "We look forward to getting discovery to better expose the wrongdoing at New Venture Fund and further substantiate Sarah’s claims that she was wrongfully terminated for bringing forward her concerns."
Arabella and New Venture Fund did not return requests for comment. However, a New Venture Fund spokesperson told the Free Beacon in July that Walker’s allegations were "false" and that the group complies with the law.