Koch network rocked by affair scandal, donor departures, discrimination lawsuit
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Charles Koch talks passionately in this file photograph from February 26, 2007, about Market Based Management.
Getty Images| Tribune News Service | Getty Images
Charles Koch is the billionaire industrialist who backs libertarian group Americans for Prosperity. The scandal involving an extramarital affair between a leader and a key donor has caused major disruption to the organization.
CNBC has also learned that Americans for Prosperity in Arlington, Virginia, has quietly settled a case alleging discrimination against women and retaliation at the North Carolina branch.
CNBC received a response from Bill Riggs, the spokesperson for the group, who said they reached an “amicable settlement” to the lawsuit. He also defended the workplace as being “respectful and rewarding and inclusive.”
Tim Phillips announced that, after 15 years as the President of Americans for Prosperity he is stepping down due to “challenging personal matter”.
Multiple people who are familiar with the situation claim that Phillips had an affair, which was described by multiple sources as being extramarital. The people were not allowed to discuss a confidential matter.
After Americans for Prosperity revealed that it had launched an internal investigation into Phillips, there were claims of the affair.
CNBC did not get confirmation or denial from the group regarding Phillips’s probe. It provided the exact same information. statementsThe Washington Examiner was the first to report Phillips quitting.
Phillips made the following statement in an official release from Americans for Prosperity: “This morning I announced that my resignation as president was effective immediately in order for me to devote my attention to some difficult personal matters.” Although it is hard to quit this organization, doing so is best for everyone.
CNBC repeated Phillips’ requests for comment, and she did not reply.
“While the underlying issues were personal in nature, it was a matter of integrity that violated our principles,” said a person within AFP who is familiar with the matter.
“AFP’s internal investigations did not reveal any financial mismanagement. “This was a personal problem and did not impact anybody else at AFP,” said the source.
The person spoke on condition of anonymity to discuss the broad topics of Phillips’ alleged actions.
Board members and donors leave
Phillips has been gone and there are only two remaining board members on the website of the nonprofit 501(c), including Mark Holden who is listed in his role as chairman. They also have a CEO in Emily Seidel. AFP’s 2020 990 tax disclosure includes at least six board members before the resignations.
Two board members resigned last year in an internal announcement that went unreported. Frayda Leviy was one of those who resigned. She had previously been identified as chair of the board on previous tax disclosure forms. Jim Miller has been tiesCitizens for a Sound Economy, a Koch-backed group, also resigned as a member of the AFP board.
Levy will continue to be a donor partner as well as an active participant in AFP’s New Jersey Branch.
As the organization has changed its political message during President Donald Trump’s administration, several major donors have left the group.
Koch and Republican donors have supported AFP over the past 15 years.
The group’s 2020 990 tax filing shows that it raised over $58M in the year and had approximately $3 million of net assets at the close of the year. AFP is similar to other nonprofits that do not disclose names of donors. It ended with $64million in revenue, which is more than the $54 million it earned in 2019.
Another Koch-backed organization, the Stand Together Chamber of Commerce disclosed that it had donated $40 Million to Americans for Prosperity in 2020.
CNBC was informed by a spokesperson for the group that they were preparing for the 2022 elections.
“AFP has evolved into a top-tier organization, with hundreds of employees in 35 states chapters and with more donations and resources than ever before. In 2020, AFP and AFP Action engaged in – and won – more races than ever before, and we fully expect to exceed those numbers in 2022,” Riggs said in an emailed statement.
In ads that were run during former President Barack Obama’s presidency, they targeted Obamacare, Obamacare’s health-care law.
Trump also made major achievements for the group, such as reforms to tax codes and the appointment three Supreme Court Justices. This was something that AFP publicly supported.
However, AFP was also in conflict with Trump regarding trade issues like the imposition of tariffs by the former president.
AFP also stated publicly that it was open to working alongside Republicans and Democrats since Trump’s 2017 election.
According to However, the related, but distinct super PAC of the group favored GOP nominees at the federal stage during the 2020 election. dataFrom the Center for Responsive Politics, a non-partisan organization. It supported Glenn Youngkin, who defeated Terry McAuliffe, Democrat, in Virginia’s gubernatorial contest.
Donors that have donated previously supported Koch-backed entitieshave stated that they will not support AFP and Koch-linked groups in future.
According to someone briefed, wealthy businesspeople like Randy Kendricks, Dianne Hendricks, David Humphreys and Bob Luddy have told their allies they don’t have any immediate plans to join a Koch-backed organization.
Kendrick couldn’t be reached for comment.
Emails seeking comments from the other donors were not answered.
Workplace discrimination lawsuit
The controversies surrounding AFP are not limited to Phillips’ departure and the withdrawal of some donors.
Anna Beavon Gravely, a former AFP official, sued the group last year in North Carolina for gender discrimination.
According to an AFP spokesperson, the parties reached an amicable settlement.
“We came to an amicable conclusion in all matters. Riggs explained that AFP values a positive, supportive, inclusive environment at work.
Gravely claimed Gravely was denied a 2018 promotion as North Carolina’s state director despite being qualified for the job. CNBC has a copy to the complaint.
According to the suit, Gravely was fired by the man who had offered her the job.
Phillip Joffrion was once a regional Director at AFP. Joffrion is listed on the public 990 from 2016, which states that he earned just more than $125,000. On subsequent forms, he isn’t listed.
According to the suit, Joffrion was the approved hiring manager for the jobs which included North Carolina’s state director position. Gravely wanted this job permanently and had previously filled it as an interim.
According to the suit, Gravely was made aware that there were previous complaints voicing in the area of gender discrimination or sexual harassment.
Joffrion accused Gravely of being too focused on the process and ridiculing her “rigid” personality at a dinner in 2017.
Gravely later learned that Joffrion had told Gravely, in part, that she was concerned about her humility.
This lawsuit refers also to the separate class action lawsuit against the company for discrimination at work.
It’s not clear where the other purported suit was filed. Arkansas was the home of an ex-AFP official, who is believed to have been part in that lawsuit.
Shortly following Gravely’s suit was filed, AFP applied for the transfer of Gravely’s complaint to North Carolina federal courts.
After the case had been transferred to AFP, AFP filed a court document stating that it “specifically denied that.” [Gravely]In any way, was discriminated against or retaliated at.”
Court documents show that Gravely dismissed her case with the consent and prejudice of AFP in late September.
In cases in which the claims have been settled out of court, such dismissals can be used to stop a plaintiff filing the same type of lawsuit against another defendant.
CNBC declined Gravely’s comment. An inquiry by CNBC was not returned by Gravely’s lawyer.
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