In this February 26, 2007 file photo, Charles Koch, head of Koch Industries, raves about his new book on Market-Based Management.
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The liberal political advocacy group Americans for Prosperity, backed by industrial tycoon Charles Koch, has been rocked by an alleged affair involving an outgoing leader, as well as the departure of key network sponsors while the organization underwent major changes.
CNBC also learned that Arlington, Virginia, USA for Prosperity, which has more than 3 million volunteers spread across 35 states, recently quietly settled a lawsuit alleging sexism and retaliation at its branch. North Carolina corporation.
In response to this story, group spokesman Bill Riggs told CNBC they’ve found a “friendly resolution” of the lawsuit and that protecting the organization’s work environment is “respectful, rewarding, and respectful.” integration.”
This week, Tim Phillips announced he would step down as chairman of Americans for Prosperity after 15 years in office, citing what he called “challenging personal issues.”
Phillips is believed to have had what is described as an affair with a Virginia-based Republican official, according to multiple people familiar with the matter. The people declined to be named to speak freely about a private matter.
The statements about the incident come after Americans for Prosperity announced it had launched an internal investigation into Phillips.
The team will not confirm or deny to CNBC what they discovered in the Phillips investigation. Instead, it offers the same commands that it went to the Washington Examiner, which first reported Phillips had quit.
Phillips said in a statement provided by the group: “This morning, I announced my resignation as president of Prosperous Americans in order to focus on a number of challenging personal issues that require me to devote myself wholeheartedly. It’s hard to leave this organization, but doing so now is in everyone’s best interest.”
Phillips did not return repeated requests for comment from CNBC.
A person familiar with the matter said: “While the underlying issues were personal in nature, issues of integrity violated our principles.
“AFP’s internal investigation did not uncover any financial wrongdoing. This is a personal matter and, to our knowledge, does not affect anyone else inside AFP,” the person said. speak.
The person chose to speak on condition of anonymity to openly discuss the broad topics of what Phillips is alleged to have done.
Sponsors and board members leave
When Phillips left, only two board members were left listed on the 501(c)(4) nonprofit group’s website, including Mark Holden, who was listed as chairman. The group’s CEO, Emily Seidel, is also a member of the board of directors. AFP’s 2020 tax release 990 lists at least six board members before resigning.
In an internal notice late last year, which has not been previously reported, the organization said two board members had resigned from AFP’s board. Frayda Levy, one of the board members who resigned, has been listed as chairman in previous tax disclosure forms. Jim Miller, who was relationship for Koch-backed Citizens for a Solid Economy, also resigned from the AFP council.
The announcement said Levy will continue as a sponsoring partner and actively participate in AFP’s New Jersey branch. Those leaving the board have moved on to take an active role in a formal advisory committee.
Several major donors have abandoned funding Koch-backed organizations as they have adjusted their political messages under the administration of former President Donald Trump.
AFP has been supported by Koch and pro-Republican donors for more than 15 years.
990 tax returns for 2020 show that the corporation raised just over $58 million that year and had a net worth of about $3 million at the end of that year. AFP, like other similar nonprofits, does not publicly disclose the names of its donors. It ended 2020 with more than $64 million in revenue compared with the roughly $54 million it received in 2019.
The Chamber of Commerce Stand Together, another Koch-backed group, revealed in its 2020 form 990 that it has donated $40 million to Americans for Prosperity.
A spokesman for the group told CNBC that AFP is preparing for the upcoming 2022 elections.
“AFP has grown into a world-class organization with hundreds of employees across 35 state chapters with more donors and more resources than we’ve ever had before. In 2020, AFP and AFP Action entered – and won – more races than ever before, and we fully expect to surpass those numbers by 2022,” Riggs said in an emailed statement.
During the administration of former President Barack Obama, the group ran ads targeting the Affordable Care Act, his signature healthcare act known as Obamacare.
The group has also seen major wins under Trump, including reforms to the tax code and the appointment of three Supreme Court Justices that the AFP openly supports.
But the AFP also clashed with Trump when it came to trade issues such as the enforcement of tariffs the then president had imposed.
And since the start of Trump’s administration in 2017, AFP has publicly said it is open to working with Democrats as well as Republicans.
In the 2020 election, however, the related but separate super PAC of the group largely favors GOP candidates at the federal level, according to data from the Center for Nonpartisan Reaction Politics. This year, it supported Glenn Youngkin in his victory over Democrat Terry McAuliffe in the Virginia captain’s race.
Some previous sponsors have Koch-backed entities supported has signaled that it is not interested in supporting AFP or Koch-affiliated groups in the future.
Wealthy entrepreneurs like Randy Kendrick, Diane Hendricks, David Humphreys, Bob Luddy and Chris Rufer have suggested to allies that they have no immediate plans to contribute to a Koch-backed group, according to one person talk about this issue.
Kendrick could not be reached for comment.
Other sponsors did not respond to emails seeking comment.
Workplace discrimination lawsuit
The AFP controversies are not limited to the departure of Phillips and a number of sponsors.
Last year, former AFP official Anna Beavon Gravely sued the group in North Carolina state court for sexism, retaliation and unfair discharge.
An AFP spokesman said the two sides had settled the case amicably.
“We have reached an amicable resolution of each issue. AFP is committed to providing a respectful, rewarding and inclusive work environment,” said Riggs.
Gravely claims she was not promoted to state superintendent of North Carolina in 2018 despite her apparent qualifications for the job, which had been given to a less experienced man, according to a copy of the complaint. CNBC obtained.
Gravely was ultimately fired by the same man who took the job she was after, the suit said.
The lawsuit is directed against Phillip Joffrion, who served as AFP’s regional director. The group’s public 990 form from 2016 lists Joffrion and says he was paid just over $125,000 that year. He is not listed in the next form.
Joffrion, according to the lawsuit, is an authorized hiring manager for jobs that include the position of the corporation’s North Carolina state director, a job Gravely hopes will be permanent after filling in the acting capacity. .
The lawsuit says “has been informed of the existence of previous complaints of sexism and/or sexual harassment”.
The lawsuit highlights a 2017 dinner in which Joffrion allegedly mocked Gravely for her “rigid” personality and criticized her for being too “process-focused”.
Joffrion later told Gravely that one of the reasons she didn’t get the job was because of concerns related to her modesty, according to the lawsuit.
The lawsuit also refers to a separate class action lawsuit filed against the organization for workplace discrimination.
It is not clear where the purported lawsuit was filed. Now, the former AFP official, who is said to be part of that complaint, is based in Arkansas.
Immediately after Gravely’s lawsuit was filed, AFP referred the lawsuit to North Carolina federal court.
After the case was moved there, the AFP said in a court filing that the group “particularly denied it.” [Gravely] have been subjected to any act of discrimination or retaliation. “
Court records show Gravely dismissed her lawsuit, with AFP’s consent, dismissing her case “with prejudice” in late September.
Such dismissal, which prevents the plaintiff from filing a similar lawsuit against the defendant, is usually done in cases where the parties have reached an out-of-court settlement of the claim.
Gravely declined to comment to CNBC. Her attorney did not return a request for comment.
