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An Unusual $1.6 Billion Donation Bolsters Conservatives

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WASHINGTON — A latest conservative nonprofit group scored a $1.6 billion windfall last 12 months via a little-known donor — a rare sum that might give Republicans and their causes an enormous financial boost ahead of the midterms, and for years to return.

The source of the cash was Barre Seid, an electronics manufacturing mogul, and the donation is amongst the biggest — if not the biggest — single contributions ever made to a politically focused nonprofit. The beneficiary is a latest political group controlled by Leonard A. Leo, an activist who has used his connections to Republican donors and politicians to assist engineer the conservative dominance of the Supreme Court and to finance battles over abortion rights, voting rules and climate change policy.

This windfall will help cement Mr. Leo’s status as a kingmaker in conservative big money politics. It could also give conservatives a bonus in a style of difficult-to-trace spending that shapes elections and political fights.

The money infusion was arranged through an unusual series of transactions that appear to have avoided tax liabilities. It originated with Mr. Seid, a longtime conservative donor who made a fortune because the chairman and chief executive of an electrical device manufacturing company in Chicago now referred to as Tripp Lite.

Quite than merely giving money, Mr. Seid donated one hundred pc of the shares of Tripp Lite to Mr. Leo’s nonprofit group before the corporate was sold to an Irish conglomerate for $1.65 billion, in accordance with tax records provided to The Latest York Times, corporate filings and an individual with knowledge of the matter.

The nonprofit, called the Marble Freedom Trust, then received the entire proceeds from the sale, in a transaction that appears to have been structured to permit the nonprofit group and Mr. Seid to avoid paying taxes on the proceeds.

For perspective, the $1.6 billion that the Marble trust reaped from the sale is barely greater than the entire of $1.5 billion spent in 2020 by 15 of essentially the most politically energetic nonprofit organizations that generally align with Democrats, in accordance with an evaluation by The Times. That spending, which Democrats embraced to help the campaigns of Joseph R. Biden Jr. and his allies in Congress, dwarfed the roughly $900 million spent by a comparable sample of 15 of essentially the most politically energetic groups aligned with the Republican Party.

The Marble Freedom Trust could help conservatives level the playing field — if not surpass the left — in such nonprofit spending, which is often known as dark money since the groups involved can raise and spend unlimited sums on politics while revealing little about where they got the cash or how they spent it.

In a press release, Mr. Leo cited a number of the left’s biggest donors and an advisory firm that helps manage the nonprofit groups they fund.

“It’s high time for the conservative movement to be among the many ranks of George Soros, Hansjörg Wyss, Arabella Advisors and other left-wing philanthropists, going toe-to-toe within the fight to defend our structure and its ideals,” Mr. Leo said. Mr. Seid and an associate didn’t reply to messages looking for comment.

The Marble Freedom Trust’s formation in May 2020, the donation of Tripp Lite shares by Mr. Seid, and Mr. Leo’s role haven’t been previously reported.

The funds are difficult to trace through public records. Tripp Lite is a non-public company that is just not subject to corporate disclosure rules for public firms. On its tax filing, Marble indicated that the $1.6 billion got here from the “sale of gifted company and subsidiaries,” but indicated that it withheld identifying information “to guard donor confidentiality.”

And Eaton, the publicly traded Irish company that bought Tripp Lite, doesn’t check with Marble in statements related to the sale.

The person with knowledge of the matter said that the Tripp Lite shares were donated to Marble months before the take care of Eaton was announced in January 2021. The sale was accomplished in March 2021.

Katy Brasser, a spokeswoman for Eaton, said in a press release, “We have now no additional information to share regarding the acquisition that was announced last 12 months.”

Ray D. Madoff, a professor of tax law at Boston College who’s the director of the varsity’s Forum on Philanthropy and the Public Good, said the structure of the transaction was almost definitely legal but did appear to permit a donor to avoid federal tax obligations from the sale of the corporate.

Here is how it really works: Marble Freedom Trust is registered under a bit of the tax code — 501(c)4 — for organizations that focus totally on what the Internal Revenue Service calls “social welfare” and because of this are exempt from paying taxes. Such groups are allowed to have interaction in political advocacy, but their supporters should not entitled to deduct donations from their income taxes. Supporters can, nonetheless, donate assets that a nonprofit can sell and avoid capital gains taxes on the sale.

How Times reporters cover politics.
We depend on our journalists to be independent observers. So while Times staff members may vote, they should not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.

“These actions by the super wealthy are literally costing the American taxpayers to support the political spending of the wealthiest Americans,” Ms. Madoff said.

She said that donating corporate shares to a nonprofit was a method that those with incredible wealth skirt taxes when gifting away money not simply to charities, but to more politically minded nonprofits.

The tax filings shows that the Marble trust paid $940,000 for legal fees related to the sale to Sullivan & Cromwell, a number one Latest York law firm that focuses on business transactions. Other law firms paid by Marble include Kirton McConkie, a Utah corporate firm that was paid $140,000, and Holtzman Vogel, a Virginia firm specializing in political law that was paid greater than $100,000.

The mission that the Marble trust lists in its tax filings is vague. “The trust exists to take care of and expand human freedom consistent with the values and ideals set forth within the Declaration of Independence and the Structure of america,” it says within the filing.

The person with knowledge of the matter said that the group’s name derived from the metamorphic rock, signaling the group’s intent to be enduring and maintain a clarity of purpose.

Mr. Seid has kept a low political profile in recent times. His last federal campaign donation, in 2008, was to a Republican running for Congress in Illinois, and his name has previously appeared just once in The Times, in 1990, for lending a Republican candidate for governor of Illinois nearly half 1,000,000 dollars.

His family foundation, the Barbara and Barre Seid Foundation, has operated with an annual budget of several million dollars, giving most frequently to the Chamber Opera Chicago, which Mr. Seid founded a long time ago. He has been linked as a donor to some conservative causes previously, though nothing at the dimensions of the Marble Freedom Trust.

Mr. Leo developed relationships with many major donors during his years as executive vice chairman of the Federalist Society, an influential conservative legal group through which he helped advise Republican presidents on the collection of Supreme Court justices.

In 2018, during a live event, Justice Clarence Thomas joked about how honored he was to be sharing the stage with Mr. Leo, calling him “the No. 3 strongest person on this planet.”

In recent times, Mr. Leo increasingly expanded right into a broader role within the conservative movement, shaping the large money flow as an adviser to donors and nonprofit organizations. In 2020, he left the Federalist Society to develop into chairman of an organization called CRC Advisors, which advises and helps manage conservative nonprofits.

He’s trustee and chairman of the Marble trust and has “primary authority” to choose how the cash is spent, in accordance with the tax filing, which shows that he was paid $350,000 in salary by the group.

Others named on the tax filing include Jonathan Bunch, who’s listed as successor trustee. Mr. Bunch is president of Mr. Leo’s firm, CRC Advisors.

The Marble trust, which has already reported donations totaling nearly $229 million to other nonprofits, will expand the capabilities of a network of nonprofit groups that Mr. Leo has helped shape and guide in recent times.

In 2020, groups linked to Mr. Leo spent a complete of $122 million on issues that animate the conservative base, including working to verify conservatives to federal judgeships, fighting to limit access to abortion and defending measures that Republicans forged as protections against voter fraud but that Democrats contend are hurdles to voting.

Certainly one of the groups, the Rule of Law Trust, which has been involved in judicial confirmation fights, received $153 million from the Marble trust last 12 months. One other, the Concord Fund, received $16.5 million from the brand new group.

Two other funds that steer money into conservative politics, Donors Trust and Schwab Charitable Fund, received a complete of $59.1 million from the Marble trust, in accordance with the filing.

That left the Marble trust with a whopping $1.4 billion to spend at the top of April 2021. While that cash can’t be donated on to campaigns or party committees, it could help mitigate slowing Republican fund-raising ahead of a 2022 midterm cycle that otherwise looked as if it would favor the party in some ways.

Kenneth P. Vogel reported from Washington, and Shane Goldmacher from Latest York.

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