Leonard Leo, a rightwing legal activist, has raked in more than $73m over six years from non-profit groups that may be diverting money illegally to his businesses, according to a watchdog complaint seen by the Guardian.
Leo is a hugely influential figure said to have been the chief curator of supreme court nominees when Donald Trump was US president. The devout Catholic is a staunch opponent of abortion rights.
The Campaign for Accountability, a non-profit watchdog organisation based in Washington, has called for an investigation into seven non-profit groups linked to Leo that it said may be misusing millions of dollars for the personal benefit of insiders – a violation of their tax-exempt status.
On Wednesday, the watchdog filed an Internal Revenue Service (IRS) complaint dissecting six years of filings from the Leo-affiliated organisations and presenting an accounting of more than $73m paid to his for-profit businesses.
The document concludes that Leo “caused” several recently formed non-profits “to pay him (directly or indirectly) more than $73m over a six-year period from 2016 through 2021”.
It adds that there is some evidence to suggest Leo’s for-profit businesses, BH Group and CRC Advisors, which received millions of dollars for alleged consulting, research or public relations services, “may have either not have provided those services at all or may have provided services at a level not commensurate with the payments received”.
The non-profits are the Rule of Law Trust, 85 Fund (formerly known as the Judicial Education Project), Concord Fund (formerly known as the Judicial Crisis Network), Federalist Society for Law & Public Policy Studies, Freedom and Opportunity Fund, Wellspring Committee and Marble Freedom Trust.
Last month the Politico website reported that Leo’s personal wealth rocketed at the same time that he hit new heights in political fundraising. The article said spending by Leo’s aligned non-profits on his for-profit business “demonstrates the extent to which his money-raising benefited his own bottom line”.
The Campaign for Accountability also charts a considerable boost in Leo’s own finances in recent years.
Between 2006 and 2016, it says, he earned between $305,000 and $435,000 annually as an employee of the Federalist Society, a group founded in 1982 to challenge what conservatives perceived as liberal dominance of courts and law schools. He appeared to live an upper-middle-class lifestyle consistent with those wages and bought a $710,000 home in McLean, Virginia.
But from 2016 Leo began “living more lavishly” and, in 2018, paid off the 30-year mortgage on his McLean house, according to the IRS complaint. Later that year he bought a $3.3m summer home with 11 bedrooms in Mount Desert, Maine. And in 2021, he bought a second home in Mount Desert for $1.65m.
The complaint observes that Leo “had a reputation for wearing fine tailored suits and gold jewelry, as well as an intimate familiarity with the best and most expensive wines and restaurants in every major city in the world”.
The Campaign for Accountability has written to the attorney general of Washington DC referring the non-profits for potential investigation and enforcement action. Although the non-profits are based outside Washington, most conduct business inside the capital.
Michelle Kuppersmith, executive director of Campaign for Accountability, said it was asking for the tax exempt status of the groups to be revoked. The IRS does not approve of “using nonprofits as basically laundromats to wash money through in a tax exempt way and then out the other end to two private entities”, she added.
“We’re hopeful that the IRS and/or the DC AG [attorney general] will take up this complaint and use the evidence that we’re presenting, which is very carefully thought out and laid out in legal language with all of the relevant statutes that we believe are being violated, along with a lot of the background to provide the evidence as to why.”
Leo rose to become the Federalist Society’s co-chair and oversaw its expansion of influence at the expense of the more liberal American Bar Association, in part through the effectiveness of his fundraising to back conservative judicial nominees.
After the death of Justice Antonin Scalia, Leo drew up a list of 11 potential supreme court nominees to help Trump win over conservative and evangelical voters. All three eventually chosen during the Trump presidency – Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett – were on the list and voted to overturn the Roe v Wade ruling on abortion.
After Trump’s victory in the 2016, Leo took time away from the Federalist Society to work as an advisor to the president.
Last year it emerged that the Marble Freedom Trust received a $1.6bn donation to promote conservative causes ahead of last year’s midterm elections. Leo defended the influx of money by claiming that it merely levelled the playing field against Democrats bankrolled by liberal donors.
Kuppersmith commented: “He certainly is committed to the cause and after many years of working on it, he is reaping the benefits of his success but in a way that most people do not get to.”
Leo, who is chairman of CRC Advisors, rejected the self-enrichment allegations. He said in a statement: “We put our clients’ money to work more effectively than any other enterprise of its sort, as the media has confirmed numerous times.”
Leo sought to turn the tables by claiming that the Campaign for Accountability was itself created by a liberal “dark money” network run by the consulting firm Arabella Advisors. “Does Campaign for Accountability plan to ask the IRS to investigate Arabella Advisors and its web of nonprofits that have received hundreds of millions of dollars from a foreign billionaire seeking to influence US elections? Of course not, they are part of it.”