Influential Koch network rocked by an alleged affair scandal, donor departures and a discrimination lawsuit

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  • The influential, liberal-leaning Coach network has been rocked by an alleged affair scandal, the departure of major donors and a workplace discrimination lawsuit.
  • American for Prosperity President Tim Phillips announced his resignation this week. She is said to have had an extramarital affair with a Republican officer based in Virginia.
  • CNBC also learned that Arlington, Virginia-based American for Prosperity recently quietly settled a lawsuit alleging gender discrimination and retaliation at the group’s North Carolina branch.

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The liberal political advocacy group Americans for Prosperity, backed by billionaire industrialist Charles Koch, has been rocked by an alleged extramarital affair involving a late leader as well as an exodus of major donors while the organization undergoes major changes.

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CNBC has also learned that Arlington, Virginia-based American for Prosperity, which has more than three million volunteers in 35 states, recently quietly settled a lawsuit alleging gender discrimination and retaliation at the group’s North Carolina branch .

In response to this story, group spokesman Bill Riggs told CNBC that he found an “amicable settlement” in the lawsuit and defended the organization’s workplace environment as “respectful, rewarding and inclusive.”

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This week, Tim Phillips announced he was resigning as president of Americans for Prosperity after 15 years, citing “challenging personal matters.”

Phillips is said to have had an extramarital affair with a Virginia-based Republican official, according to several people familiar with the matter. These people declined to be named to speak openly about a private matter.

The affairs claims came after American for Prosperity announced it had conducted an internal investigation into Phillips.

The group would not confirm or deny CNBC what it uncovered during the Phillips investigation. Instead, it provided the same Statement He did it with the Washington Examiner, who was the first to report Phillips leaving.

Phillips said in a statement provided by the group: “This morning, I announced my resignation as President of Americans for Prosperity to focus on some challenging personal matters that require my full attention. It is difficult to leave this organization, but it is in everyone’s interest to do so now.”

Phillips did not return repeated requests for comment from CNBC.

“While the underlying issues were personal in nature, it was a matter of integrity that violated our principles,” a person within AFP said.

“AFP’s internal investigation did not reveal any financial irregularities. This was a personal issue and to our knowledge did not internally affect anyone else at AFP,” the person said.

This person opted to speak on condition of anonymity so that Phillips reportedly discussed a wide range of topics openly.

Donors and board members leave

With Phillips gone, the 501(c)(4) non-profit group’s website lists only two board members, including Mark Holden, who is listed as chairman. Their CEO, Emily Seidel, is also a member of the board. AFP’s 2020 990 tax disclosure lists at least six board members prior to their resignations.

In an internal announcement late last year that was not previously reported, the organization said two board members had resigned from AFP’s board. Freida Levy, one of the board members who resigned, was listed as the chairman of the board on previous tax disclosure forms. Jim Miller, who has ties Koch-backed Citizens for a Sound Economy also resigned from the AFP board.

The announcement said Levy will continue as a donor partner and active participant in AFP’s New Jersey branch.

A number of major donors have turned away from the group as they adjusted their political messaging during the administration of former President Donald Trump.

AFP has been endorsed by Koch and Republican-leaning donors for more than 15 years.

Its 990 tax filing for 2020 shows that the group raised just over $58 million that year, and had a net worth of nearly $3 million by the end of it. AFP, like other similar nonprofits, does not publicly disclose the names of its donors. It ended 2019 with over $64 million in revenue compared to over $54 million received.

Stand Together Chamber of Commerce, another Coach-backed group, revealed in its 2020 990 form that it donated $40 million to Americans for Prosperity.

A spokesperson for the group told CNBC that they are gearing up for the upcoming 2022 elections.

“AFP has grown into a world-class organization with hundreds of employees in 35 state chapters, with more donors and more resources than we ever have. In 2020, AFP and AFP Action are in a race more than ever – and won — , and we fully expect to exceed those numbers in 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 health care law, which became known as Obamacare.

The group also saw major victories under Trump, including reforming the tax code and the appointment of three Supreme Court justices, which AFP openly supported.

But AFP also clashed with Trump when it came to trade issues such as the implementation of tariffs, imposed by the then-president.

And since the start of Trump’s administration in 2017, AFP has publicly said it is ready to work with Democrats as well as Republicans.

However, during the 2020 election, the group’s related but separate Super PACs largely supported GOP claimants at the federal level, according to statistics From the nonpartisan center for responsible politics. This year, it supported Glenn Youngkin in his victory over Democrat Terry McAuliffe in the Virginia gubernatorial race.

some donors who Supported Coach Supported Institutions have indicated they are not interested in supporting AFP or Koch-affiliated groups in the future.

Wealthy businessmen such as Randy Kendrick, Diane Hendrix, David Humphries, Bob Ludi and Chris Ruffer have suggested to colleagues that they have no immediate plans for a Koch-backed group, according to a person with knowledge of the matter.

Kendrick could not be reached for comment.

Other donors did not respond to emails seeking comment.

workplace discrimination lawsuit

AFP’s controversies are not limited to the departure of Philips and some donors.

Last year, former AFP official Anna Bevan Gravely sued the group in North Carolina state court for gender discrimination, retaliation and wrongful discharge.

An AFP spokesman said the two sides settled the case amicably.

“We reached an amicable solution in each case. AFP is committed to a respectful, rewarding and inclusive work environment,” Riggs said.

According to a copy of the complaint obtained by CNBC, Gravely claimed that she did not receive a promotion as North Carolina state director in 2018 despite clear qualifications for the job, which was awarded to a person with less experience.

The suit states that Gravely was eventually fired by the same man who got the job she was gunning for.

The target of the complaint is Philippe Joffrian, who was once a regional director at AFP. Joffrian has been listed in the group’s public 990 form since 2016 and is said to have been paid just over $125,000 that year. He is not listed in the later forms.

The suit says Joffrian was the authorized hiring manager for jobs that included the group’s North Carolina state director position, a job that Gravely hoped to secure permanently after filling in an acting capacity.

Seriously “was made aware of the existence of prior complaints involving gender discrimination and/or sexual harassment,” the suit says.

The complaint highlights a 2017 dinner during which Joffrian ridiculed Gravelly for his alleged “rigorous” personality and criticized him for being “process-focused”.

According to the lawsuit, Joffrian later told Gravely that one of the reasons he didn’t get the job was his concerns about his modesty.

The lawsuit also refers to a separate class-action lawsuit filed against the organization for workplace discrimination.

It is not clear where that other alleged lawsuit was filed. Now the former AFP official, who is said to have been part of that complaint, is based in Arkansas.

Soon after Gravely’s lawsuit was filed, AFP moved the complaint to be referred to North Carolina federal court.

After the case was transferred there, AFP said in a court filing that the group “specifically denies it”. [Gravely] was subject to any discriminatory or retaliatory conduct.”

Court filings show that Gravely, with the consent of AFP, dismissed her suit, dismissing her trial “with prejudice” in late September.

Such dismissal, which prevents a plaintiff from renewing the same suit against a defendant, is routinely done in cases where the parties reach an out-of-court settlement of claims.

CNBC grudgingly declined to comment. His lawyer did not return a request for comment.

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