Investigation Reportedly Launched Into Federalist Society’s Leonard Leo’s Network Of Organizations

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Leonard Leo (Photo by Michael Robinson Chavez/The Washington Post via Getty Images)

According to reporting by Politico, Washington D.C. Attorney General Brian Schwalb has opened up an investigation into the man most responsible for the current federal judiciary, the Federalist Society’s Leonard Leo. While for years Leo peddled his influence in relative obscurity, known only by legal nerds, his role has received increased attention. And with that focus has come headlines about dark money, billionaires, and Leo’s ballooning personal wealth.

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Now comes word of Schwalb’s investigation. Though the scope of it is unclear, there’ve been questions about Leo’s network of nonprofit and for-profit organizations and the relationship between them:

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[The investigation] comes after POLITICO reported in March that one of Leo’s nonprofits — registered as a charity — paid his for-profit company tens of millions of dollars in the two years since he joined the company. A few weeks later, a progressive watchdog group filed a complaint with the D.C. attorney general and the IRS requesting a probe into what services were provided and whether Leo was in violation of laws against using charities for personal enrichment.

Though sources close to Leo have derided that complaint:

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David B. Rivkin Jr., an attorney for the parties in the investigation, said in a statement that the complaint “is sloppy, deceptive and legally flawed and we are addressing this fully with the DC Attorney General’s office.”

Regardless, there’s quite a web of Leo-related entities for regulators to look at. For example, back in 2016, Leo was involved in the formation/reorganization of two for-profit businesses — CRC Advisors and BH Group. Who, in turn, did work for nonprofits associated with Leo:

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In those five years, BH Group brought in $15 million from the nonprofits. Yet unlike CRC, BH Group doesn’t appear to have advertised itself as a consulting or public relations firm, or even have had a website. During some of that time, Leo was employed full-time as a vice president at the nonprofit Federalist Society, raising questions about how he could have reasonably generated millions of dollars in consulting fees at the same time, the complaint says.

And there’s more:

A number of the groups that receive contributions from Leo’s “dark money” network, in turn, hold sizable contracts with his firm, CRC Advisors. This includes the Federalist Society, the nation’s preeminent conservative debating society where Leo was executive vice president and still serves as co-chairman. Among payments the complaint flagged to the IRS and DC attorney general is $3.1 million which the Federalist Society paid to CRC between 2020 and 2021 for “media training.”

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Recently The 85 Fund, the nonprofit fund aligned with Leo, filed paperwork to move from the D.C. area down to Texas — as a for-profit entity. Though that move doesn’t necessarily end the investigation:

“This gambit isn’t going to deprive the regulator [DC] of jurisdiction over past wrongdoing but it could create some hurdles,” she said. They include complications in gaining injunctive relief or obtaining evidence, “but there are ways of getting over those,” said [Yael] Fuchs, former head of charities enforcement in the New York attorney general’s office.

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It’ll be worth paying attention to where this investigation leads.

Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @[email protected].

Topics

Courts, Federalist Society, Leonard Leo