This article is part of an investigation with ProPublica and WNYC’s “Trump Inc” podcast
The committee that ran President Trump’s inaugural celebrations and surrounding events in January 2017 recently filed its annual tax return with the IRS, giving the public its first glimpse at how it spent the record $107 million it raised in the months after the 2016 election.
But rather than clearing up the questions that swirl around the committee — about charitable contributions, secret donors and massive vendors paydays — the filing only adds to the mystery. So OpenSecrets teamed up with the “Trump Inc” podcast, a partnership between WNYC and ProPublica, to explore some of these questions.
We looked into suspiciously high vendor costs, which included a more than $50 million payday for two firms, and we trekked out to a small Virginia town to try to get to the bottom of what appears to be an anonymous shell corporation that gave $1 million to the inaugural committee.
The Dark Money Inauguration
Trump’s inauguration was not only a bonanza for special interests and high-dollar event planners, it was also a chance for wealthy donors and government contractors to show support for the new administration — and to do so in secret, if they choose.
Since inaugural committees were first required to report their donors to the Federal Election Commission in 2002, no inauguration has reported any significant contributions from secretive dark money groups or shell corporations.
That is, until Trump’s inauguration, which took $2 million from two entities whose sources of funding are mostly or entirely untraceable.
The first came on December 20, 2016, in the form of a $1 million check from a 501(c)(4) social welfare organization closely tied to Paul Ryan and the Republican establishment in the House. The group, called American Action Network, spent more than $5.5 million in 2016 to help House Republicans keep their majority.
Groups like American Action Network (AAN) can spend heavily in elections without disclosing their donors, which is why they are often referred to as “dark money” groups.
Such groups aren’t just conduits for wealthy individual donors to spend on elections without any fingerprints, they are also attractive to corporations that don’t want their name publicly tied to political attack ads. The beauty is that while the public may not know who provided the money, politicians and party officials almost certainly know who’s bankrolling the groups.
As OpenSecrets has previously reported, tax documents from other organizations show that AAN has received significant funding from trade associations like PhRMA and the American Petroleum Institute that represent major corporations. In one instance, the health insurer Aetna accidentally disclosed a contribution to the group.
But AAN is downright transparent compared to a limited liability company called BH Group that, two days later, on December 22, gave another $1 million to the inaugural committee. Whereas AAN is an organization with a website, an agenda and employees, BH Group is largely a black hole.
Very little is known about the company. Virginia incorporation records show that it was formed four months to the day before it handed its seven-figure check to the inaugural committee. And tax filings obtained by OpenSecrets last year show that sometime between its formation and the end of the year, the BH Group received $750,000 from another dark money group, the Wellspring Committee, as OpenSecrets first reported last November. The Wellspring Committee payment was for “Public Relations,” which is interesting given that the Wellspring Committee appears to have no public-facing operation.
We went to the address listed on BH Group’s incorporation records only to find that it’s a “virtual office” run by a company called Regus, which rents temporary and virtual office space and provides clients with “call answering services and mail handling.”
A Regus representative would not provide any names or contact information for BH Group, so we left empty-handed.
From there we headed out to Warrenton, Virginia, home to one of the most prominent conservative law firms in the country, Holtzman Vogel Josefiak Torchinsky (HVJT) — which is connected to both the inaugural committee and, potentially, BH Group.
The primary address the inaugural committee listed on its tax return was HVJT’s office. And BH Group’s incorporation records were signed by someone named Donna Smith, which happens to be the name of a longtime paralegal at the firm.
When we arrived at their offices on a Tuesday afternoon, we were not met with the bustle one might expect from one of the most prestigious law firms in the Washington area, but with silence. Many of the offices were dark, and no one was sitting at the reception desk. We rang the bell twice and, finally, someone strolled out to meet us.
We presented BH Group’s incorporation papers and asked if we could speak with Donna Smith about the company. The receptionist called Smith on the phone and proceeded to repeat the words “BH Group” over and over to an apparently stupefied Smith.
Moments later we were met, not by Donna Smith, but by HVJT partner Michael Bayes, who greeted us, but only provided a very lawyerly “we don’t have any comment on client matters” in response to our questions about Smith and BH Group.
We left their offices with little more than a first hand illustration of why wealthy donors and high-powered political operatives pay top dollar to retain the services of a firm like HVJT: discretion and protection.
It’s an axiom of political dark money that if you have enough money to spend millions on politics, you have enough money to hire the best lawyers in the country to cover your tracks. But one thing to keep in mind is that while the public doesn’t know who’s funding these groups, the people the groups support — in this case, Trump and his administration — almost certainly know, including the source of BH Group’s $1 million.
In other words, they know whose interests to keep in mind when deciding on a matter of policy, and they know whose call to answer when the phone rings.
On the spending side, the Trump inaugural simply doesn’t make sense. It’s just basic math.
President Obama’s first inauguration in 2009 spent a little under $51 million on five packed days of events and celebrations. Eight years later, the committee responsible for Trump’s inaugural festivities spent nearly double that, more than $97 million, on hardly 48 hours of events, with the rest going to charity.
Roughly speaking, that works out to about $8,600 per minute for Obama’s inauguration — from the morning of January 17, 2009, when he began his whistle-stop tour in Philadelphia, to the end of the National Prayer Service in Washington, D.C. on January 21.
Meanwhile, Trump’s inaugural committee spent about $37,000 per minute from the moment he laid a wreath at the Tomb of the Unknowns on the afternoon of January 19, to the end of the National Prayer Service on January 21.
Not only was Trump’s inauguration schedule shorter than President Obama’s, the inauguration’s less-than-historic turnout should have helped contain the costs that come with managing crowds at events and festivities outside of the swearing-in itself.
So the question is, how could an inauguration that Trump officials were selling as a “workmanlike” affair, and “not a coronation,” manage to spend nearly twice as much as an historic inauguration that was both longer, busier and better attended?
The new tax documents show that one way is to pay vendors an unprecedented amount of money for their services.
For example, the 2009 and 2017 inaugural committees made payments to a Maryland company called Hargrove Inc. for “event production services.” However, the 2009 inauguration paid just over $5 million, whereas the 2017 inaugural paid five times that.
Hargrove did not respond to repeated calls and emails from OpenSecrets seeking explanation for what the Trump inauguration got for five times the cost.
But Hargrove was only one of two contractors who received an eight-figure payout from the inaugural committee. The other, first reported by The New York Times last month, was a more than $25.8 million payment to a firm formed just weeks before the inauguration.
The firm, Wis Media Partners, was founded by Stephanie Winston Wolkoff, a longtime friend of Melania Trump.
The payouts seem outrageous, and they are unprecedented, at least in recent memory. Organizers of Trump’s inaugural have blamed everything from inexperience to broadcasting costs for the explosion in spending.
“I couldn’t tell you how we possibly could have spent $25 million on a concert,” Steve Kerrigan, head of Obama’s 2013 inaugural committee, told the Associated Press about the cost of Trump’s “Make America Great Again! Welcome Celebration” the night before the inauguration.
OpenSecrets contacted a number of event planning firms that have put on large events, including past inaugurations, to get a sense of just how extraordinary the costs were. None wanted to speak on the record.
Absent expert input, we looked for information on major music festivals. There’s surprisingly little info here, too, so we turned to our IRS data.
We looked at nearly a decade’s worth of IRS data for similarly large payments to firms that do event planning. That review, of more than 70,000 vendor payments reported to the IRS on annual tax returns filed by thousands of nonprofits, showed not a single event payment of $25 million or more.
Only three payments were in the eight-figure range, with the closest being the Mobile World Congress in 2015, which was put on by a trade association called GSMA Limited.
The four-day conference is the world’s largest exhibition for the mobile industry, bringing over 90,000 visitors from 200 countries, with exhibits from 2,000 tech companies — and in 2015, a keynote from Mark Zuckerberg, according to GSMA’s website. A company called Fira Barcelona was paid $22.2 million — less than half of what Trump’s inaugural committee paid its top two contractors — to plan the four-day international conference.
One reason these payments matter is that they could be a way to repay friends and allies by letting vendors charge above-market rates and keep the difference. For example, there is no information in the filing about what subcontractors were paid by Hargrove and Wis Media Partners.
The New York Times reported, for example, that Stephanie Winston Wolkoff, Melania Trump’s friend, only kept about $1.6 million of the $25.8 million her firm was paid. The rest, The Times reports, was spent to “help pay other inaugural workers who reported to” Winston Wolkoff. We will likely never know precisely where the remaining $24 million went, or whether it involved payments to friends or family of the President.
Tom Barrack, a close friend of Trump who served as chairman of the inaugural committee, told the Associated Press last September that “a full and clean external audit has been conducted and completed.”
OpenSecrets sought a copy of the audit from Barrack’s representatives, but none was provided.