This report is the second in a series aimed at unraveling the complex relationship between David Brock’s American Bridge 21st Century Foundation and its Super PAC.
The first report established the presence of a cost sharing agreement between American Bridge Super PAC and American Bridge Foundation, a 501(c)(4).
Since 2011, the Foundation has transferred over $7.6 Million into the Super PAC. Over the past couple tax years, over 50% of the Foundation’s expenditures were checks cut out to the Super PAC.
The Foundation, which has zero employees, uses the Super PAC’s employees, and reimburses the Super PAC for its share of employee time under a common paymaster arrangement.
For example, from July 2014 to December 2014, the Foundation offset 43.72% of the Super PAC’s salary expenditures. From January 2015 to December 2015, the Foundation offset 37.29% of the PAC’s salary expenditures.
Our hypothesis is that the Foundation is overpaying the Super PAC for its share of salary expenditures in an effort to shield the identity of its donors.
Any amount overpaid by the Foundation would constitute a contribution to the Super PAC, something the IRS would require disclosure of. If any such contributions took place, American Bridge could face a litany of legal and compliance issues from the IRS and FEC.
The only way to know for sure if Foundation is being honest in its salary expenditures would be to review American Bridge employee timesheets showing the allocation of time from each employee for every pay period.
In the absence of employee timesheets, this report will present a number of discrepancies between the Super PAC and the Foundation in an effort to encourage authorities to conduct a full audit of American Bridge 21st Century.
American Bridge’s Cost Sharing Agreement
American Bridge isn’t the only entity that has a cost sharing agreement between a Super PAC and a Foundation.
Senate Majority PAC is another Democrat aligned Super PAC that from 2013 to 2015 had a cost sharing agreement with an affiliated 501(c)(4), Patriot Majority USA.
Patriot Majority USA reimbursed Senate Majority PAC for its share of salary expenditures, mirroring the arrangement between American Bridge Super PAC and its Foundation.
Let’s review the staff reimbursement payments Patriot Majority USA sent to Senate Majority PAC:
There are two key takeaways here:
- The randomness of the amount being reimbursed by Patriot Majority USA each month. Each disbursement varies slightly.
- All reimbursements range from $20,000 to $60,000, indicating that staff spent a similar amount of time at Patriot Majority USA month to month.
This makes sense.
It’s reasonable to expect variances in the amount of reimbursement owed to Senate Majority PAC. The percentage of employee time spent between the two organizations can vary day by day.
Patriot Majority USA reimburses the PAC for its share of employee time and nothing more – if John Doe spends 20% of his time one week at Patriot Majority USA, and 30% of his time another week, that’s precisely the amount that gets reimbursed to Senate Majority PAC.
Now, let’s review the staff reimbursement payments American Bridge Foundation sent to the Super PAC.
There are two striking differences between American Bridge and Senate Majority PAC:
- For the most part, American Bridge Foundation’s reimbursements to the Super PAC are very uniform. Most payments are even – $20,000, $50,000, $110,000, ect.
- The month to month variances in reimbursements. In March 2015, the Foundation reimbursed the Super PAC $52,320. In December 2015, the Foundation reimbursed the Super PAC $827,500.
This doesn’t make sense.
How is it that the Foundation is offsetting the Super PAC’s staff expenditures exactly $110,000 one payment, exactly $190,000 in another, exactly $315,000 in another? And why is there such a large variance in the amount being reimbursed month to month?
It’s way too uniform and convenient, especially when compared to Senate Majority PAC, where each reimbursement was similar, yet unique – $28,568 one month, $30,146 in another.
And then there’s this
Schedule B of the Foundation’s 2015 end of year tax return indicates that the Foundation raised $4,632,000 from only 20 individual contributors.
The Foundation sent 23 reimbursement checks to the Super PAC in 2015.
A large number of the donations to the Foundation match the amounts that ended up being sent to the Super PAC. For instance:
- Contributor 1 donated $20,000 to the Foundation in 2015
- Matches the $20,000 reimbursement to the Super PAC on 9/30/2015
- Contributor 5 donated $25,000 to the Foundation in 2015
- Matches the $25,000 reimbursement to the Super PAC on 11/09/2015
- Contributor 8 donated $250,000 to the Foundation in 2015
- A very close match to the $250,481 reimbursement to the Super PAC on 4/02/2015
- Contributor 10 donated $200,000 to the Foundation in 2015
- A very close match to the $200,249 reimbursement to the Super PAC on 2/05/2015
- Contributor 12 donated $100,000 to the Foundation in 2015
- Matches the $100,000 reimbursement to the Super PAC on 11/25/2015
- Contributor 14 donated $100,000 to the Foundation in 2015
- Matches the $100,000 reimbursement to the Super PAC on 12/02/2015
- Contributor 15 donated $50,000 to the Foundation in 2015
- Matches the $50,000 reimbursement to the Super PAC on 10/19/2015
Almost half of the individual contributions to the Foundation are exact matches to the amounts being reimbursed to the Super PAC.
All but one of the contributions not listed above can be closely paired with reimbursements to the Super PAC. For example, Contributors 19 and 20 both gave $25,000, which could theoretically be matched with the $49,000 reimbursement to the Super PAC on 9/28/2015.
American Bridge will have a hard time explaining these numbers.
There is one outlier
Contributor 7 donated $2,650,000 to the Foundation in 2015.
This one donation could have funded the entirety of the Foundation’s expenditures that were not reimbursements to the Super PAC.
- The Foundation spent a total of $5,009,986 in 2015.
- $2,906,050 of that were reimbursements to the Super PAC.
- $2,103,936 of the expenditures were kept within the Foundation.
That one $2,650,000 donation could have covered the entirety of the Foundation’s $2,103,936 leftover expenditures, with enough remaining to fund the $412,500 reimbursement to the Super PAC on 12/31/2015.
What does this mean?
The Foundation is supposed to be reimbursing the Super PAC for its share of staff salary and office expenses and nothing more.
The fact that so many of the Foundation’s reimbursements are exact matches to the contributions it receives is alarming. One could argue that the Foundation is passing those contributions directly to the Super PAC under the guise of an expense reimbursement.
If that is the case, it would mean that the Foundation failed to disclose millions in donations to a political committee.
It would mean the Super PAC has failed to disclose millions in contributions received from the Foundation.
That would be a very big deal – both the IRS and the FEC are extremely strict in their reporting requirements for money being passed into a political committee.
The Citizens Audit is the first to report the existence of American Bridge’s cost sharing agreement, and the first to report the correlation between the contributions to the Foundation and the reimbursements to the Super PAC.
The Foundation has failed to notify the IRS of its cost sharing agreement with the Super PAC for the past four tax years.
The Super PAC has given no notification to the FEC of its relationship to the Foundation.
Nobody knows this is going on.
We need answers from David Brock and American Bridge 21st Century:
- Justify how the Foundation offset 43.72% of the Super PAC’s salary expenditures from July 2014 to December 2014.
- Justify how the Foundation offset 37.29% of the Super PAC’s salary expenditures from January 2015 to December 2015.
- Prove to us that your employees keep timesheets of the time they spend at the Foundation vs. the Super PAC.
- Explain why the Foundation doesn’t have any dedicated employees, despite the Foundation expending $6.5 Million on employee salaries since 2011.
- Explain why so many of the reimbursement checks from the Foundation to the Super PAC are exact matches to the individual contributions received by its donors.
The FEC and IRS need to conduct a full audit on American Bridge 21st Century if they are unable to answer these questions.
We need your help
We need your help sharing this report and our previous report.
The more people that are aware of what’s going on between American Bridge Super PAC and its Foundation, the better chance we have of forcing an audit on David Brock’s organizations.