Washington DC attorney general concludes inquiry into progressive undisclosed funding network linked to his office

Washington, D.C., Attorney General Brian Schwalb is no longer investigating Arabella Advisors, the $1 billion left-wing dark money network sharing connections to his office, according to a lawyer for Arabella’s funds.

The investigation’s end comes months after Schwalb, a Democrat, issued subpoenas last year to Arabella Advisors and the consulting firm’s offshoot nonprofit organizations, which conservatives in recent years have increasingly accused of violating federal law to boost Democrats. It also comes on the heels of a March ruling from a Washington, D.C. district judge authorizing discovery in a lawsuit against New Venture Fund by its former employee Sarah Walker, who is accusing the Arabella-managed group of racial and gender discrimination, as well as retaliating against her for warning about New Venture Fund engaging in alleged tax fraud.

“The D.C. Office of the Attorney General closed its investigation into the Funds and Arabella after finding no evidence of a violation of law,” Joshua A. Levy, an attorney for New Venture Fund, Windward Fund, Sixteen Thirty Fund, and other groups managed by Arabella, told the Washington Examiner. “We fully cooperated with this investigation and have long known that the Funds and Arabella comply with the law.”

Levy declined to comment on when his team was notified of the investigation being closed or how many meetings occurred between them and the attorney general’s office. The attorney general’s office also declined to comment.

Conservatives have raised conflict of interest concerns over the Arabella inquiry since Schwalb and Chief Deputy Attorney General Seth Rosenthal once worked for Venable, a law firm that represented New Venture Fund and Sixteen Thirty Fund. Schwalb also received campaign donations from people linked to Arabella, conservatives noted last year.

“What’s concerning is when you have an elected, partisan law enforcement officer charged with investigating a partisan organization that supports all these candidates and, of course, will exonerate the organization that is aligned,” Timothy C. Parlatore, an attorney for Walker, told the Washington Examiner. “When you have a central party jurisdiction, then your chief law enforcement officers are primarily focused on winning the next primary to keep their jobs — as opposed to seeking justice and making things safer for citizens.”

“It’s particularly bad news in single-party jurisdictions,” Parlatore added. “It’s certainly something we’ve seen in New York, something we’ve seen in Fulton County, Georgia, and it’s something we’re seeing in D.C.”

But Schwalb’s office still appears to be investigating groups linked to Leonard Leo, co-chairman of the Federalist Society legal group and an influential conservative activist. The attorney general’s office previously said it declines to confirm or deny the existence of investigations.

That investigation launched after the left-wing Campaign for Accountability accused Leo in an IRS complaint last year of illegally enriching himself because his CRC Advisors and BH Group, which Leo partly owns, received consulting cash from various nonprofit groups. News of the inquiry prompted House Republicans to threaten to subpoena Schwalb, whom lawmakers accused of trying to “intimidate and silence” political opponents, the Washington Examiner reported.

They argued Schwalb was overstepping since Leo’s network includes entities incorporated in Virginia and Texas. In a December 2023 letter, House Judiciary Committee Chairman Jim Jordan (R-OH) and House Oversight Committee Chairman James Comer (R-KY) slammed Schwalb’s office for “tolerating — if not authorizing — politicized leaks[to[toPolitico]that prejudice the course and outcome of your investigation.”

To conservatives and those close to Leo, the investigation into Arabella was never going to be serious, sources told the Washington Examiner in October 2023. That contention was based on the premise that Schwalb may have merely opened the investigation into his left-wing allies to check a box and move on to looking further into the conservative network — Schwalb’s actual foe, they said. The Arabella investigation followed an August 2023 IRS complaint by the conservative Americans for Public Trust that called for an investigation into whether Arabella illegally “diverted substantial portions of their income and assets” to Arabella founder Eric Kessler.

“The D.C. attorney general quickly whitewashed Arabella Advisors’ network, despite two lawsuits from former employees against Arabella, the conclusions of which will likely embarrass Schwalb,” Scott Walter, president of the Capital Research Center think tank, told the Washington Examiner. “But that isn’t surprising because the attorney general and his chief deputy are alumni of a law firm that represented Arabella.”

“Shamefully, Arabella’s left-wing media allies have suppressed these embarrassing facts,” said Walter, author of Arabella: The Dark Money Network of Leftist Billionaires Secretly Transforming America, which released on Tuesday. “This is cheap partisan lawfare.”

Regarding the Arabella-managed New Venture Fund, it appears to have unlawfully subsidized a nonprofit group called Secure Democracy to the tune of more than $10 million in prior years, according to attorneys for Sarah Walker, the former staffer for the fund. Tax experts said in 2023 that New Venture Fund may have directed political activity for Secure Democracy in violation of IRS law, the Washington Free Beacon reported, citing internal documents.

Arabella spokesman Steve Sampson and Kessler, a former Clinton administration aide, did not reply to requests for comment. Leo’s attorney, David B. Rivkin, declined to comment.

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Asked if he thinks Schwalb should have waited to close the Arabella investigation, Parlatore, Walker’s attorney, said there is “always a risk for government agencies when they’re investigating something and there’s a parallel civil suit.”

“Sometimes, it’s just better to sit back, wait, and allow the civil process to play out,” Parlatore told the Washington Examiner. “Because the last thing you want, if you’re a truly honest, nonpartisan law enforcement officer, is to come to a hasty decision and then have a civil suit that reveals information you should have uncovered before making your decision.”