Prosecutors Scrutinize Political Nonprofit Groups for Fund-Raising Fraud

Federal prosecutors are scrutinizing at least 10 political nonprofit groups — including five recently profiled in The New York Times — seeking to determine if the groups defrauded donors, according to two recent subpoenas.

The subpoenas, both signed by the same Manhattan-based federal prosecutor, sought recordings of the fund-raising calls made by two separate networks of political nonprofits that together have raised tens of millions of dollars.

In the last five years, the Justice Department has charged a handful of other political operatives with fraud for running what prosecutors called “scam PACs.” Prosecutors said these groups deceived donors by promising that their money would be used to help politicians — then using it to enrich themselves.

The groups listed in the recent subpoenas have not been charged with any crime, and they have denied wrongdoing in the past. Spokesmen for both the New York F.B.I. office, which is conducting the investigation with federal prosecutors, and the U.S. attorney’s office for the Southern District of New York declined to comment.

One of the two recent subpoenas was signed May 15, according to a copy obtained by The Times. It sought recordings of fund-raising calls from five nonprofits that The Times had profiled a day earlier: the American Police Officers Alliance, the National Police Support Fund, the American Veterans Honor Fund, the Firefighters and EMS Fund and the Veterans Action Network.

The subpoena said that prosecutors in the Southern District of New York were investigating allegations of wire fraud and conspiracy to commit fraud.

These groups are “527s,” named for a section of the tax code and overseen by the Internal Revenue Service. They are supposed to focus primarily on helping candidates for office.

Together, these five groups have raised $89 million since 2014, mostly from small-dollar donors who answered fund-raising robocalls. The largest of the five groups, the American Police Officers Alliance, promised in its calls to “support legislators whose goals are to keep our communities safer,” and to help the families of first responders killed in the line of duty.

But about 90 percent of the money raised was used to pay for more robocalls. Another 3 percent was paid to three political operatives from Wisconsin, who appeared to be the driving force behind all five groups.

Only about 1 percent of their money was spent to help candidates, via donations, advertisements or targeted get-out-the-vote operations. The American Police Officers Alliance did not give any to families of fallen first responders, records showed.

One of the five groups, the Veterans Action Network, shuttered in 2019. Its former president did not respond to a request for comment.

A lawyer for the other four, James Skyles, said in an email on Wednesday that the groups “are aware” of a Justice Department investigation, but declined to say how they learned of it or when.

Previously, the nonprofits have said that they followed the law, and that the I.R.S. had recently examined their returns and told them they would face no penalties. On Wednesday, Mr. Skyles said the groups had “absolutely not” committed wire fraud.

In the other subpoena, federal prosecutors sought recordings of fund-raising calls from a separate network of five related political groups. These groups were political action committees — a similar kind of political group to a 527, but overseen primarily by the Federal Election Commission and not the I.R.S.

In that subpoena, prosecutors also said they were investigating allegations of wire fraud — as well as an additional charge, money laundering.

Of the five groups mentioned in that subpoena, only one — Standing by Veterans PAC — remains active. Two others have shuttered: Americans for the Cure of Breast Cancer PAC and Traditional American Values PAC. And two more, the Association for Emergency Responders and Firefighters PAC and the U.S. Veterans Assistance Foundation PAC, are seeking the Federal Election Commission’s permission to close.

All five shared the same treasurer: a Wisconsin activist named Robert Piaro, according to election commission records.

In 2019, the watchdog group Center for Public Integrity reported that some groups run by Mr. Piaro had given nothing at all to political candidates, despite raising millions of dollars. In 2020, Reuters reported that Mr. Piaro’s groups had paid more than 80 percent of their money to fund-raising vendors.

Mr. Piaro did not respond to requests for comment on Wednesday. In 2018, he told Politico that his fund-raising costs were high because his groups were just getting off the ground.

Mr. Piaro’s groups do not share officers or major vendors with the 527 groups profiled in The Times. Mr. Skyles, the lawyer for the 527 groups, said that none of them “have or have ever had any relationship or even contact with Mr. Piaro.”