DC Attorney General Subpoenas Arabella Advisors' Dark Money Network Following Free Beacon Report

Brian Schwalb (@attorneygeneralbrianschwalb75 YouTube)
October 3, 2023

The attorney general of the District of Columbia issued subpoenas to the liberal dark money behemoth Arabella Advisors and its largest clients, documents obtained by the Washington Free Beacon show.

Subpoenas were also issued to Arabella offshoots, including the New Venture Fund, the Sixteen Thirty Fund, and the North Fund. The move comes months after a series of Free Beacon reports exposed the inner workings of Arabella Advisors, using extensive interviews and documentation to show how Arabella wields centralized control over a multibillion-dollar network of dark money funds.

Issued on Sept. 22, the subpoenas seek information related to the allegations covered in the Free Beacon series, including that the Arabella network's largest client, the New Venture Fund, ran roughshod over charity tax laws in an effort to elect Democrats and influence Republicans to change voting laws before and after the 2020 elections.

Spokesmen at the New Venture Fund and the Sixteen Thirty Fund denied any wrongdoing and said they would cooperate with the D.C. government's investigation. A spokesman for Arabella Advisors said the same and added that the firm is "confident in the systems we have in place to ensure our business conforms with legal and regulatory requirements."

The documents and communications related to the D.C. attorney general's subpoenas are sprawling and will likely comprise thousands of pages. Among the documents sought include records that would show whether Arabella Advisors is deriving illegal profits from New Venture Fund and its other dark money funds, which have paid the firm a combined $230 million in management fees since 2006. A spokesman for the D.C. Office of the Attorney General declined to comment.

Arabella and its funds have extensive ties to the Democratic Party. Any legal blow to the groups, which hauled in a combined $3.3 billion in 2020 and 2021 to facilitate the creation of left-wing advocacy groups across the country, could transform left-wing political spending just months before a presidential election year. Arabella Advisors fired its CEO in July and more than 30 employees in May.

The IRS in 2006 granted charity status to Arabella Advisors' first group, the New Venture Fund, after the fund persuaded authorities to drop their concerns that it was paying management fees to the consultancy. Arabella's founder and sole owner, Eric Kessler, also served as the New Venture Fund's chairman and president.

New Venture Fund promised the IRS that Arabella would provide temporary administrative support to the charity for no more than a year. Their relationship never ended, and Arabella Advisors works with New Venture Fund and its other dark money funds to this day. Records obtained by the Free Beacon show the consultancy wields significant control over all aspects of the multibillion-dollar dark money network.

The New Venture Fund has retained Levy Firestone Muse, a boutique Washington, D.C., law firm that specializes in white-collar litigation, to represent it in connection to the subpoenas, documents obtained by the Free Beacon show.

The subpoenas also seek extensive records related to New Venture Fund's control of an ostensibly nonpartisan 501(c)4 nonprofit, Secure Democracy, which in 2020 and 2021 pushed lawmakers in over 20 states to expand mail-in balloting and ran ads against vulnerable Republican senators.

Internal documents obtained by the Free Beacon and interviews with former Secure Democracy employees suggest that New Venture Fund crossed a legal red line as it used its charitable resources to direct Secure Democracy's partisan political activity. All the while, New Venture Fund worked diligently to conceal its control of Secure Democracy to lawmakers and the public because revealing that control would have hurt its ability to influence Republican lawmakers and voters, former staffers said.

The D.C. attorney general's subpoenas seek records of any transaction that could create a risk to the tax-exempt status of Arabella Advisors' funds.

The subpoenas also seek records related to former Secure Democracy executive director Sarah Walker, who alleges she lost her job after she informed New Venture Fund general counsel Andrew Schultz that the charity's control over Secure Democracy put her and the two groups in "legal jeopardy." Walker in November 2022 filed a wrongful termination lawsuit in federal court, which is ongoing.

Within weeks of Walker blowing the whistle, New Venture Fund moved to shut down Secure Democracy and replace it with a new group, Secure Democracy USA. A former New Venture Fund employee told the Free Beacon that Secure Democracy's abrupt shutdown was directly related to the legal implications of New Venture Fund's control of the group's political activity.