Democrats

ACRONYM Denied Deep Connections With Controversial Iowa App Firm, But Tax Forms Say Otherwise

New docs raise further questions about shadowy Dem tech firm and CEO Tara McGowan

Tara McGowan on C-SPAN
Tara McGowan on C-SPAN

Progressive-media powerhouse ACRONYM aggressively distanced itself from the tech operation responsible for Democrats’ disastrous Iowa caucuses, but had a controlling share in the company as recently as April 2019, new documents reveal.

ACRONYM’s 2018 Form 990, obtained by the Washington Free Beacon, identifies it as holding 84 percent of shares in Shadow, Inc., the progressive tech firm whose app caused chaos at February’s Democratic caucuses in Iowa.

The documents contradict ACRONYM CEO Tara McGowan, who sought to distance her conglomerate from Shadow, as she and employees took to social media to emphasize Shadow’s status as an "independent company" with "other private investors" about which they had no special insight. That move appeared calculated to place the blame for the meltdown of the app—and ensuing intraparty feuding over the unclear caucus results—on Shadow, rather than McGowan.

The form also reveals that McGowan’s six-figure salary was paid not by ACRONYM, but by Lockwood Strategy, the private advertising agency ACRONYM owns. That arrangement, one dark money expert told the Free Beacon, "shows the extent of ACRONYM’s cozy relationship" with Lockwood.

The new evidence of McGowan’s post-Iowa dissembling, as well as her apparent compensation by Lockwood, raises further questions about ACRONYM’s shadowy media empire—an agglomeration of private and semi-public entities which critics have argued are dangerously opaque.

The Form 990 specifically indicates that ACRONYM was the "direct controlling entity" of Shadow as of its filing in mid-2019. Reached for comment, Kyle Tharp, vice president of communications for ACRONYM, told the Free Beacon that "‘Direct controlling entity' is a technical term that means that ACRONYM owned more than 50 percent stake in a company by the end of the filing period in 2018."

"You'll note that the form 990 clearly states that ACRONYM owned 84 percent stake in Shadow Inc. Other investors owned the rest," Tharp added.

McGowan's group, however, downplayed its controlling share in the controversial developer immediately following the Iowa caucus meltdown. McGowan called Shadow "an independent company ACRONYM invested in," and claimed to be in the dark about the situation. Tharp released a statement describing ACRONYM as "an investor in several for-profit companies across the progressive media and technology sectors" and emphasizing that one of those, Shadow, "also has other private investors." David Plouffe, Obama's 2008 campaign manager and an ACRONYM director, also denied having any knowledge of Shadow.

The 2018 Form 990 also offers new insight into McGowan’s compensation. McGowan was paid zero dollars by ACRONYM, her more public 501(c)4, in 2018, instead collecting a $159,000 salary from Lockwood Strategy, ACRONYM’s wholly owned for-profit subsidiary. That contrasts with 2017, when ACRONYM reported paying McGowan $16,667 directly.

Asked about the change in the source of McGowan’s salary, Tharp said "the 2018 990 includes all of Tara McGowan's compensation from Lockwood Strategy and ACRONYM-related entities as it clearly states. As you can see, ACRONYM owns 100% of Lockwood Strategy, and Tara McGowan herself owns no equity in that company."

Anna Massoglia, a researcher at the nonpartisan Center for Responsive Politics, told the Free Beacon that "Acronym’s president getting six figures from Lockwood Strategy but not drawing a salary directly from the nonprofit shows the extent of ACRONYM’s cozy relationship with Lockwood Strategy." The form, Massoglia said, shows that over $1 million flowed from ACRONYM to Lockwood in 2018 alone, "meaning that work Lockwood Strategy paid McGowan for may have ultimately benefited ACRONYM."

Massoglia also noted that the shift occurred despite the 2017 and 2018 returns showing the same number of hours worked at ACRONYM and its related organizations, meaning the shift in payments "is not readily explained by any reported change in hours [McGowan] worked." Additionally, the 2018 form reveals that ACRONYM’s conflict of interest policy is not public—further clouding its relationships with Lockwood and Shadow.

These relationships became publicly apparent following the disastrous failure of an app developed by Shadow during February’s Democratic caucuses in Iowa. The app, meant to help the state party collate results, instead produced inconsistent outcomes. That left the race’s results ambiguous for weeks, with some supporters of Sen. Bernie Sanders (I., Vt.) alleging that the app facilitated misconduct by Democratic Party officials on behalf of eventual official winner Pete Buttigieg.

Since then, Shadow has sought to shed its baggage, rebranding as "BlueLink." ACRONYM, Tharp told the Free Beacon, is "in the process of divesting all of its equity in Shadow Inc."

That divestment still leaves ACRONYM, and McGowan, with an expansive network, including the nonprofit, a PAC, and multiple private entities. The opaque, startup-like nature of McGowan’s operations has raised questions even among fellow Democrats about where her millions in receipts go—as one Democratic operative put it to the Free Beacon, "what some people rightly or wrongly believe about her is that she’s in some ways the Elizabeth Holmes of politics."

The new tax forms also show that just three anonymous individuals provided more than half ($4.9 million) of the $9.5 million in contributions ACRONYM hauled in between May 1, 2018, and April 30, 2019. Liberal billionaire George Soros is the biggest donor ($1.75 million) to its affiliated super PAC. The PAC, in turn, has funneled millions over to its Lockwood Strategy arm for anti-Trump attack ads in swing states. Once money is parked in the private firm, it is virtually untraceable.