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This Week's Updates:
DC Attorney General Investigates Leonard Leo’s Non-Profits
In April, CfA urged the IRS and D.C. Attorney General Brian Schwalb to investigate a network of non-profits associated with Leonard Leo, a conservative donor-whisperer who played a major role in shaping Trump’s Supreme Court. Now, sources tell Politico’s Heidi Przybyla that Schwalb has begun investigating Leo, though the scope of his office’s inquiry is unclear. CfA’s original complaint concerned a total of seven tax-exempt organizations with ties to Leo, which paid more than $73 million to him personally or businesses that he owned over several years. These non-profits included the Federalist Society, the Concord Fund, and the Marble Freedom trust, among others. Leo’s spending patterns began to shift after the payments began; he has since paid off a mortgage, purchased two multi-million-dollar vacation homes, and pledged $1 million to Vatican initiatives.
Leo’s apparent windfall deserves scrutiny, as IRS rules forbid individuals from enriching themselves through a charity’s income or assets. Should evidence of wrongdoing be found, the agency may revoke an organization’s tax-exempt status or impose penalties to recover ill-gotten funds.
The Great Algorithm Opt-Out
Katie Paul, the director of CfA’s Tech Transparency Project (TTP) appeared on NPR Marketplace earlier this week to discuss a recent YouTube policy change; by turning off their watch history, users can now entirely opt-out of the platform’s video suggestions. TTP has previously drawn attention to the dangers of YouTube’s recommendation algorithms, which suggested real-life firearms videos to test accounts registered as children. Without adequate safeguards, these algorithms can shape the way a user interacts with online media and gradually draw them towards more extreme content. The EU’s Digital Services Act (DSA), which goes into effect today, will also grant users the ability to exit algorithmic feeds and view content chronologically.
As the DSA ramps up, the difference between true algorithmic opt-outs and weaker concessions will become increasingly stark. An EU Instagram user, for instance, can now turn off algorithms in their home feed, stories, Reels, and search. A user in the US, however, can only temporarily view a chronological feed by navigating to a specific menu on Instagram. When the app is closed and reopened, the algorithmic suggestions return. For individuals or families concerned about the influence of algorithms, that’s hardly a meaningful solution.
Deepening Legal Problems for True the Vote
In the aftermath of the 2020 election, the Texas-based organization True the Vote (TTV) has been fighting a multitude of lawsuits related to its claims of voter fraud – including some initiated by its own dissatisfied donors. In fact, CfA has urged the IRS and the Texas Attorney General to investigate whether TTV improperly funneled money to its founders, Catherine Engelbrecht and Gregg Phillips, through loans and expensed payments. This week, Engelbrecht and Phillips appeared in federal court to ask for the dismissal of a defamation lawsuit related to 2000 Mules, an election conspiracy documentary that TTV helped produce. U.S. District Judge Steven Grimberg, a Trump appointee, questioned why the documentary publicly accused the defendant of breaking the law by submitting absentee ballots for his family. “He’s not a candidate. He’s not a celebrity,” said Grimberg. “...The narrator didn’t say, ‘I think this is a crime.’ The narrator said, ‘What you’re watching is a crime.’”
On top of defamation cases, TTV could also face consequences for openly declaring that it would be “partnering” with the Georgia Republican Party to audit voter rolls. This type of partisan coordination is illegal under the Internal Revenue Code, which prompted CfA to file an IRS complaint regarding TTV’s apparent political activity.
