POLITICS
08/17/2015 07:55 am ET

These Dark Money Groups Shed Some Light On Secretive Megadonors

Three wealthy investors appear to be behind two conservative dark money groups.

WASHINGTON -- Two Pennsylvania-based nonprofits that have funded everything from a super PAC supporting Sen. Pat Toomey (R-Pa.) to education privatization efforts across the country are likely connected to the operators of the global investment firm Susquehanna International Group.

The nonprofits, Rosebush Corp. and Green Orchard Inc., both appear to be associated with the Bala Cynwyd, Pennsylvania-based investment firm and its three wealthy principals: Jeffrey Yass, Joel Greenberg and Arthur Dantchik. The two groups have dispersed at least $6.5 million to conservative nonprofits and super PACs since 2011, though the source of those funds has remained unclear because nonprofits are not subject to disclosure requirements -- a phenomenon that led to those funds being known as “dark money.”

The three traders are known for spending big on Pennsylvania politics through super PACs, including governor’s races and Philadelphia’s most recent mayoral primary elections, and in support of a public education privatization agenda. Yass has recently emerged as the biggest backer of Sen. Rand Paul's (R-Ky.) bid for the Republican presidential nomination, giving more than $2 million to super PACs that support his campaign.

While the structure of the two organizations shields their funders, the executives appear to be tied to the groups through one man: Brian Patrick Sullivan, who is listed as both the director and treasurer for Rosebush Corporation and Green Orchard. (His jobs with the Rosebush Corp. ended in 2013 when the nonprofit terminated. Green Orchard was created that same year.)

Sullivan’s distinct “BPS” signature also appears on documents filed with the Securities and Exchange Commission on behalf of Susquehanna International Group, where he is the chief financial officer and treasurer. The same signature appears on tax forms filed with the Internal Revenue Service for the Susquehanna Foundation, a charitable foundation started and funded by Yass, Greenberg and Dantchik. And his signature appears on the tax forms for Students First, a Pennsylvania education reform group that the three traders have supported.

SEC
IRS
IRS
IRS
IRS

Images above show (from top to bottom) Brian Sullivan's signature on a Securities and Exchange Commission filing for a subsidiary of Susquehanna International Group, the 2014 tax filing of Green Orchard Inc., the 2013 tax filing of the Susquehanna Foundation, the 2012 tax filing of Rosebush Corporation and the 2014 tax filing of Students First. 

When The Huffington Post contacted Sullivan at the phone number provided on Green Orchard’s tax forms, he denied any connection to the nonprofit. “No, nah,” he said, in response to whether he was the same Brian Sullivan who worked for Susquehanna International Group, before promptly hanging up the phone. Yet Sullivan’s voice -- or, at least, someone who sounds remarkably like him -- also appears on an answering machine at the phone number listed for the Susquehanna Foundation, which is also Sullivan's office line at Susquehanna International Group headquarters.

Sullivan’s signature is not the only piece of evidence linking the Susquehanna International Group and its wealthy principals to Rosebush and Green Orchard.

The other clue comes from an apparent contribution error on Green Orchard’s 2013 tax form. On this form, Green Orchard lists a contribution of $250,000 to Purple PAC Inc., a libertarian super PAC run by Cato Institute founder Ed Crane that spent more than $500,000 to boost Virginia Libertarian Party gubernatorial candidate Robert Sarvis in 2013. Purple PAC, however, never reported a contribution from Green Orchard. Instead, the super PAC’s filing with the Federal Election Commission shows a $250,000 contribution from Susquehanna International Group’s Jeffrey Yass. When reached for comment, Crane initially stated he would look into the discrepancy, but never followed up and ignored a later attempt to contact him.

IRS
FEC

Green Orchard Inc. reported $250,000 contribution to Purple PAC in 2013 (top), but Purple PAC never reported that contribution. Instead the super PAC reported receiving $250,000 from Jeffrey Yass in 2013.

Purple PAC is now supporting Paul’s presidential campaign, and has reported a $1 million contribution from Yass.

The Susquehanna International Group did not respond to questions about their directors’ connection to the dark money groups.

The company has become well known as a leader in the options trading field since it was founded in 1987. The firm’s trading philosophy came from Yass’s years as playing high stakes poker and betting on horses: Spread your bets, bet big and bet often, as it was once described in a Philadelphia Magazine piece on the secretive trader. The Susquehanna International Group makes tens of millions of trades per day using high frequency trading quantitative formulas developed to maximize profits.

The difficulty in confirming connections between nonprofit groups funding electoral and lobbying campaigns and their wealthy donors shows how hard it can be to follow the money in the wake of the Supreme Court’s 2010 Citizens United decision. That decision opened the door to unlimited political spending by corporations, unions and, following a subsequent lower court ruling, wealthy individuals. The decision indirectly gave certain nonprofit groups not subject to disclosure laws a free hand to spend at least 49 percent of their funds on political activities. Since then, undisclosed funding of elections has soared.

Grants from the Rosebush Corp. and Green Orchard overlap with the known interests of Yass, Greenberg and Dantchik.

In 2011, Rosebush Corp. contributed $100,000 to the American Federation for Children, an education reform group that billionaire Republican donor Betsy DeVos founded in 2010. Greenberg previously served as a director for the group. American Federation for Children was also a major funder of Students First, giving the organization more than $700,000 in donations in 2011.

Legislative Education Action Drive, another education reform group, received $300,000 from Rosebush Corp. in 2012 and $900,000 from Green Orchard in 2013. In 2013, Green Orchard donated $100,000 to Education Reform Now Advocacy and $25,000 to the anti-union National Right to Work Committee.

In May, Green Orchard donated $863,000 to the New York nonprofit Coalition for Opportunity and Education, which was lobbying the New York state legislature to enact a tax credit for contributions to private education like charter schools. The donation was the largest single contribution to the group. The legislation is in line with priorities that Yass, Greenberg and Dantchik have supported in Pennsylvania and other states. 

Other grantees represented the libertarian leanings of Yass, who serves as a board member at the libertarian Cato Institute. Green Orchard gave $200,000 to Liberty For All Inc., a nonprofit founded by libertarian donor John Ramsey. Citizens Alliance for Pennsylvania, a libertarian group that has injected itself into Republican primaries in the state, received $170,000 from Rosebush Corp. in 2011 and $80,000 from Green Orchard in 2013. Green Orchard gave another $100,000 to the libertarian-leaning D.C.-based nonprofit Freedomworks Inc. in 2013. 

Rosebush Corp. also gave $2 million to the general fund of Americans for Job Security in 2012, a group that spent $15 million against President Barack Obama’s reelection campaign that year. At the same time, the group acted as an illegal conduit to transfer millions of dollars from nonprofit groups connected to the billionaire Koch brothers into an anti-union and anti-tax California ballot initiative campaign. The transfer of funds resulted in a $1 million settlement with the state, a record for a campaign finance violation.

In 2013, Green Orchard contributed $1 million to YG Network, a nonprofit connected to then-Rep. Eric Cantor (R-Va.), who was a fierce defender of high frequency traders -- and top recipient of their campaign cash -- as high frequency trading films were facing increased scrutiny following the 2011 “flash crash.” YG Network spent $1.6 million to support Republican House candidates in the 2014 elections.

The group’s most recent donation was a $100,000 contribution to Prosperity for Pennsylvania, a super PAC run by former aides to Sen. Pat Toomey that will likely support his 2016 re-election campaign.

CONVERSATIONS