An anonymous donor gave a new conservative nonprofit organisation a windfall of $1.6 billion in 2017, which is an astounding sum that has the potential to offer Republicans and their causes a significant financial boost ahead of the midterm elections, as well as for years to come.
The money came from an entrepreneur in the electronics manufacturing industry by the name of Barre Seid, and the payment is one of the largest, if not the largest, single contributions that has ever been made to a politically focused nonprofit organisation.
The beneficiary is a new political group that is controlled by Leonard A. Leo, an activist who has used his connections to Republican donors and politicians to help engineer the conservative dominance of the Supreme Court and to finance battles over abortion rights, voting rules, and climate change policy.
The battles over abortion rights, voting rules, and climate change policy have been financed by Leonard A. Leo.
Because of this windfall, Mr Leo will be able to further solidify his position as a kingmaker in the conservative big money political scene. It’s also possible that it’ll give conservatives an advantage in a form of spending that’s tough to track down but has a significant impact on elections and political battles.
The injection of cash was made possible by a peculiar series of transactions that appear to have circumvented any legal obligations to pay taxes. It was Mr Seid, a longtime supporter of conservative causes who built his money as the chairman and chief executive of an electrical device manufacturing company in Chicago that is now known as Tripp Lite, who is credited with founding the organisation.
According to tax records that were provided to The New York Times, corporate filings, and a person with knowledge of the matter, Mr Seid donated one hundred per cent of the shares of Tripp Lite to Mr Leo’s nonprofit group before the company was sold to an Irish conglomerate for $1.65 billion. This donation was made before the company was sold to an Irish conglomerate.
The Marble Freedom Trust, which is the name of the nonprofit organisation that later received all of the revenues from the sale, appears to have been involved in a transaction that was arranged to allow both the nonprofit organisation and Mr Seid to avoid paying taxes on the proceeds of the sale.
According to an analysis conducted by The Times, the total amount of $1.5 billion spent in 2020 by 15 of the most politically active nonprofit organisations that generally align with Democrats is slightly less than the $1.6 billion that the Marble trust reaped from the sale. To put this into perspective, the Marble trust reaped $1.6 billion from the sale.
That spending, which Democrats embraced to assist the campaigns of Joseph R. Biden Jr. and his allies in Congress, dwarfed the approximately $900 million spent by a comparable sample of 15 of the most politically active groups aligned with the Republican Party.
Democrats embraced that spending to help the campaigns of Joseph R. Biden Jr. and his allies in Congress.
It is commonly referred to as “dark money” because the organisations involved can raise and spend an unlimited amount of money on politics without disclosing much about where they got the money or how they spent it.
The Marble Freedom Trust could help conservatives level the playing field, if not surpass the left, in this type of nonprofit spending, which is why it is commonly referred to as “dark money.”
In a statement, Mr Leo mentioned several prominent benefactors on the left as well as an advisory firm that assists in the management of the charitable organisations that they support financially.
Mr Leo remarked that “it is high time for the conservative movement to be in the ranks of George Soros, Hansjorg Wyss, Arabella Advisors and other left-wing donors, going toe-to-toe in the struggle to defend our constitution and the ideals it upholds.” The comment was sought from Mr Seid and an associate, but neither of them responded to our queries.
It has not been previously stated that Mr Seid will donate Tripp Lite shares, that The Marble Freedom Trust will form in May of 2020, or that Mr Leo will have a part in any of these events.
It is difficult to track down the monies using the available public records. As a privately held firm, Tripp Lite is exempt from the corporate disclosure regulations that apply to publicly trade businesses.
Marble disclosed in its tax return that the $1.6 billion came from the “selling of gifted firm and subsidiaries,” but the company stated that it did not disclose identifying information “to protect donor confidentiality.”
In addition, Eaton, an Irish company that is publicly traded and was the buyer of Tripp Lite, does not include Marble in any announcements relating to the transaction.
According to the individual who was knowledgeable about the situation, the shares of Tripp Lite were given to Marble some months before the announcement of the contract with Eaton in January 2021. The closing of the deal took place in March of 2021.
A spokesperson for Eaton named Katy Brasser issued a statement in which she claimed, “We do not have any new information to share regarding the acquisition that was announced last year.”
Ray D. Madoff, a professor of tax law at Boston College and the director of the school’s Forum on Philanthropy and the Public Good, stated that the structure of the transaction was most likely legal, but it did appear to allow a donor to avoid federal tax obligations from the sale of the company. Madoff is the director of the school’s Forum on Philanthropy and the Public Good.
The operation is as follows: Marble Freedom Trust is free from paying taxes as a result of the fact that it is registered under a provision of the tax code known as 501(c)4, which is reserved for organisations that are primarily concerned with what the Internal Revenue Service refers to as “social welfare.”
These kinds of organisations are permitted to engage in political lobbying, but the donors who support them are not eligible to take charitable contributions off their taxable income.
Donors, on the other hand, can hand over assets to a charitable organisation with the expectation that the organisation will sell those assets and therefore avoid paying capital gains taxes.
According to Ms Madoff, “these activities by the ultra-wealthy are actually costing American taxpayers to support the political spending of the wealthiest Americans.”
She mentioned that one method extremely wealthy people get around paying taxes on the money they give away to charitable organisations as well as other types of NGOs with a political agenda is by donating business shares to a nonprofit organisation.
According to the tax documents, the Marble trust paid Sullivan & Cromwell, a prominent New York law firm that specialises in corporate transactions, a total of $940,000 in legal fees associated with the sale of the property.
Other law firms that Marble paid include Holtzman Vogel, a Virginia firm that specialises in political law and received more than $100,000 from Marble, and Kirton McConkie, a Utah corporate law firm that received $140,000 from Marble. Holtzman Vogel was also paid.
The Marble trust provides only a hazy description of its objective when it files its tax returns. In the filing, it states that the purpose of the trust is “to safeguard and extend human freedom consistent with the values and ideals outlined in the Declaration of Independence and the Constitution of the United States.”
According to the individual who is familiar with the situation, the name of the group was derived from the metamorphic rock. This was done to convey the group’s intention to be long-lasting and to keep their focus on their goals.
In recent years, Mr Seid has maintained a low profile in the political sphere. His name has only ever been mentioned in The Times once, and that was in 1990 when he lent a Republican candidate for governor of Illinois nearly half a million dollars as a campaign loan. His most recent federal campaign donation was made in 2008 to a Republican who was running for Congress in Illinois.
The Barbara and Barre Seid Foundation, which is his family’s foundation, has been operating with an annual budget of several million dollars, and most of its donations have gone to the Chamber Opera Chicago, which Mr Seid established many years ago. In the past, he has been connected as a donor to several conservative causes; however, his contributions have never been on the size of those made by the Marble Freedom Trust.
During his tenure as executive vice president of the Federalist Society, a prominent conservative legal organisation through which he assisted Republican presidents in the selection of Supreme Court justices, Mr Leo built relationships with a large number of major donors and was in a position to provide advice to those presidents.
In 2018, when speaking at a live event, Justice Clarence Thomas made a joke about how honoured he was to be sharing the stage with Mr Leo and referred to him as “the No. 3 most powerful person in the world.”
In recent years, Mr Leo has become increasingly involved in a broader role within the conservative movement. In this capacity, he has influenced the flow of major funding by acting as a consultant to philanthropic organisations and donors. In 2020, he resigned from his position as president of the Federalist Society to take over as chairman of CRC Advisors, a company that provides guidance to and assistance with the management of conservative nonprofit organisations.
According to the tax return, which reveals that he was given a salary of $350,000 by the organisation, he serves as trustee and chairman of the Marble trust, and he has “primary authority” to decide how the money is spent. He also receives this salary from the organisation.
One of the other individuals included on the tax return is Jonathan Bunch, who is given the role of a successor trustee. CRC Advisors is a company owned by Mr Leo, while Mr Bunch serves as the company’s president.
The Marble trust, which has already reported donations to other nonprofits totalling nearly $229 million, will expand the capabilities of a network of nonprofit groups that Mr Leo has assisted in shaping and guiding over the past few years. These nonprofit groups include:
In the year 2020, organisations with ties to Mr Leo spent a total of $122 million on issues that animate the conservative base.
These expenditures included working to confirm conservatives to federal judgeships, fighting to restrict access to abortion, and defending measures that Republicans cast as protections against voter fraud but that Democrats contend are hurdles to voting.
The Rule of Law Trust, which is one of the organisations and has been active in conflicts over judicial confirmation, received $153 million from the Marble trust in the previous year. The Concord Fund, which is another organisation, was given $16.5 million by the new entity.
According to the report, Donors Trust and Schwab Charitable Fund, both of which funnel money into conservative politics, got a combined total of $59.1 million from the Marble trust.
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At the end of April 2021, this resulted in the Marble trust having a whopping $1.4 billion available for expenditure. Even though the money cannot be donated directly to campaigns or party groups, it may help buffer the slowing down of Republican fund-raising ahead of a midterm election cycle in 2022 that seemed to favour the party in many other ways.