Koch Network is shocked by extramarital affairs scandal, donor resignation, discrimination lawsuit

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In this archive photo on February 26, 2007, Charles Koch, the head of Koch Industries, talks enthusiastically about his new book on market-based management.

Bollard | Forum News Service | Getty Images

The liberal political advocacy organization “Americans for Prosperity,” backed by billionaire industrialist Charles Koch, has been outflows of major donors for alleged extramarital affairs of outgoing leaders and major changes in the organization And shocked.

CNBC also learned that the American Prosperity Organization, headquartered in Arlington, Virginia, has more than 3 million volunteers in 35 states, and recently quietly settled the North Carolina branch of the organization’s sex discrimination and retaliation lawsuits.

In response to this story, the organization’s spokesperson Bill Riggs told CNBC that they found a “friendly solution” in the lawsuit and defended the organization’s working environment as “respectful, beneficial and inclusive”.

This week, Tim Phillips announced that he will resign as chairman of the American Prosperity Society after 15 years at the helm, citing what he calls “challenging personal affairs.”

According to multiple sources familiar with the matter, Phillips allegedly had a so-called extramarital affair with a Republican official based in Virginia. These people refused to be named in order to freely discuss private matters.

After the American Prosperity Organization announced that it had conducted an internal investigation of Phillips, a statement on the matter came out.

The organization will not confirm or deny to CNBC what it discovered during the Phillips investigation. Instead, it provided the same statement they made to the Washington examiner, who first reported that Phillips was resigning.

Phillips said in a statement provided by the organization: “This morning, I announced my resignation as chairman of the Prosperity Society of America to focus on challenging personal matters that require my full concentration. It is difficult to leave this organization, but Doing so is now in everyone’s best interest.”

Phillips did not respond to CNBC’s multiple requests for comment.

“Although the underlying problem is essentially a personal problem, it is a question of integrity that violates our principles,” said a person familiar with the matter in Agence France-Presse.

“AFP’s internal investigation did not find any financial irregularities. This is a personal issue, and as far as we know, it will not affect anyone else within AFP,” the person said.

This person chose to speak anonymously to openly discuss a wide range of topics of what Phillips allegedly did.

Donors and board members leave

With the departure of Phillips, only two board members remain on the 501(c)(4) nonprofit website, including Mark Holden, who is listed as chairman. Their CEO Emily Seidel is also a member of the board of directors. Agence France-Presse’s 2020 990 tax disclosure listed at least six board members before resigning.

The organization stated in an internal announcement at the end of last year that two board members had resigned from the AFP board of directors. The announcement had never been reported before. One of the board members who resigned, Frayda Levy, was listed as the chairman of the board in the previous tax disclosure form. Jim Miller has connections with the stable economic citizens supported by Koch, and he has also resigned from the AFP board of directors.

The announcement stated that Levy will continue to be a donor partner and an active participant in the New Jersey branch of AFP.

As the organization adjusted its political messages during the administration of former President Donald Trump, some major donors have withdrawn from the organization.

Agence France-Presse has received support from Koch and Republican-oriented donors for more than 15 years.

According to its 2020 tax return 990, the group raised more than US$58 million that year and had a net worth of approximately US$3 million by the end of the year. AFP, like other similar non-profit organizations, does not publicly disclose the names of its donors. Its revenue exceeds 64 million U.S. dollars, and in 2019 it exceeded 54 million U.S. dollars.

The Stand Together Chamber of Commerce, another group supported by Koch, disclosed in its 2020 990 form that it donated $40 million to Americans to promote prosperity.

A spokesperson for the organization told CNBC that they are preparing for the upcoming 2022 elections.

“AFP has developed into a world-class organization, with hundreds of employees in 35 state branches, and more donors and resources than ever before. In 2020, AFP and AFP have participated in and won the competition. There have been more games at any time, and we fully hope to exceed these numbers in 2022,” Riggs said in an emailed statement.

During the administration of former President Barack Obama, the organization advertised for the Affordable Care Act, his signature health care law, which was later called Obamacare.

The organization also achieved major victories under Trump, including tax law reforms and the appointment of three Supreme Court justices publicly supported by Agence France-Presse.

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

Since Trump took office in 2017, AFP has publicly expressed its willingness to cooperate with the Democrats and Republicans.

However, according to data from the political center of non-party response, during the 2020 general election, the organization’s related but independent super political action committee mainly supports Republican competitors at the federal level. This year, it supported Glenn Youngkin in defeating Democrat Terry McAuliffe in the Virginia governor race.

Some donors who previously supported Koch-backed entities stated that they are not interested in supporting AFP or Koch-related groups in the future.

According to a person familiar with the matter, wealthy businessmen such as Randy Kendrick, Diane Hendrix, David Humphries, Bob Ludy and Chris Rufer have advised their allies that they have not Immediately establish a plan for the Koch-supported group.

Kendrick could not be reached for comment.

Other donors did not respond to emails seeking comment.

Workplace Discrimination Litigation

The AFP dispute is not limited to the departure of Phillips and some donors.

Last year, former AFP official Anna Beavon Gravely sued the organization for gender discrimination, retaliation and improper dismissal in a North Carolina court.

A spokesperson for Agence France-Presse said that the two sides settled the lawsuit amicably.

“We have reached a friendly solution in everything. AFP is committed to creating a respectful, helpful and inclusive working environment,” Riggs said.

According to a copy of the complaint obtained by CNBC, Gravely claimed that although she had clear job qualifications, she was not promoted to the governor of North Carolina in 2018, and that the qualifications for this job were for someone with less experience.

The lawsuit alleges that Graveley was eventually fired by the same person who got the job she was seeking.

The target of the complaint was Philip Joffreen, who was once the regional director of AFP. The organization listed Joffrion in its public form 990 in 2016 and stated that his salary that year was slightly more than $125,000. He was not listed in the following table.

The lawsuit alleges that Joe Frien is the authorized hiring manager for the organization’s North Carolina supervisory position, and Graveley hopes to obtain the position permanently after assuming the acting position.

The lawsuit stated that it was “seriously aware of previous complaints of gender discrimination and/or sexual harassment.”

The complaint highlighted a dinner in 2017, during which Joffrion allegedly mocked Gravely’s character as “stiff” and criticized her for being too “process-oriented.”

According to the lawsuit, Joe Frien later told Graveley that one of the reasons she did not get the job was because of her humility.

The lawsuit also involves a separate class action lawsuit against the organization for discrimination in the workplace.

It is not clear where the alleged other lawsuits were filed. The current former AFP official involved in the complaint is allegedly located in Arkansas.

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

After the case was transferred there, AFP stated in a court document that the organization “especially denied [Gravely] Subject to any discrimination or retaliation. “

Court documents show that Gravely dismissed her lawsuit with the consent of AFP, and “biasedly” dismissed her lawsuit in late September.

This type of dismissal prohibits the plaintiff from filing similar lawsuits against the defendant, and is usually carried out when both parties reach an out-of-court settlement.

Seriously refuse to comment on CNBC. Her lawyer did not respond to a request for comment.

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