Charles Koch, head of Koch Industries, talks passionately about his new book in this February 26, 2007, file photograph.
The libertarian political advocacy group Americans for Prosperity, which is backed by billionaire industrialist Charles Koch, has been hit by an alleged extramarital affair involving a departing leader, as well as an exodus of key donors.
Americans for Prosperity, which has over three million volunteers spread across 35 states, quietly settled a lawsuit in North Carolina that claimed gender discrimination and retaliation.
The spokesman for the group told CNBC that they found an "amicable resolution" in the lawsuit and defended the organization's workplace environment as "respectful, rewarding, and inclusive."
TimPhillips, the president of Americans for Prosperity, resigned this week due to personal issues.
Multiple people familiar with the matter say thatPhillips had an extramarital affair with a Virginia Republican official. The people were not named in order to speak freely about a private matter.
Americans for Prosperity said it had conducted an internal investigation intoPhillips.
The group wouldn't confirm or deny what it had found during the investigation ofPhillips. The same statements were provided to the Washington Examiner, who first reported thatPhillips was quitting.
In a statement provided by the group,Phillips said that he had resigned as president of Americans for Prosperity in order to focus on some challenging personal matters. It is difficult to leave, but doing so now is in everyone's best interest.
CNBC had repeated requests for comment fromPhillips.
A person who is familiar with the matter said that the underlying issues were personal in nature, but that the integrity of the matter was a problem.
The internal investigation by the Agence Francais did not uncover any financial malfeasance. The person said that this was a personal issue and did not affect anyone else.
This person chose to speak on the condition of anonymity in order to discuss the broad themes of whatPhillips allegedly did.
There are only two board members listed on the nonprofit group's website, including the chairman. The CEO is also a member of the board. At least six board members are on the tax disclosure.
In an internal announcement late last year, the organization said that two board members resigned. Frayda Levy, one of the board members who resigned, was listed as the board's chair on previous tax disclosure forms. Jim Miller resigned from the board because he had ties to the Koch-backed Citizens for a Sound Economy.
Levy would continue to be a donor partner and active participant in the New Jersey branch.
Several major donors have left the group as it has adjusted its political messaging during the administration of former President Donald Trump.
Koch and Republican-leaning donors have supported the news organization for more than 15 years.
The group raised over $58 million in 2020 and had net assets of $3 million by the end of the year, according to its tax filing. Like other nonprofits, the names of their donors are not publicly disclosed. It finished with over $65 million in revenue, compared to over $54 million in 2019.
The Stand Together Chamber of Commerce gave 40 million dollars to Americans for Prosperity.
The group is getting ready for the upcoming elections, a spokesman told CNBC.
The organization has grown into a world-class organization with hundreds of staff across 35 state chapters with more donors and resources than ever before. In 2020, the number of races engaged by the Agence Franais de Provence and its affiliates will be more than ever before, and we expect to exceed those numbers in 2022,” said the statement.
The group ran ads against the health care law during the Obama administration.
The group saw major victories under Trump, including the appointment of three Supreme Court Justices whom the group openly supported.
When it came to trade issues, the then-president imposed tariffs on the news organization.
Since the beginning of Trump's administration, the Agence Francais de Provence has said it is open to working with both Democrats and Republicans.
According to data from the Center for Responsive Politics, the group's related but separate super PAC mostly backed GOP candidates at the federal level during the 2020 election. Glenn Youngkin won the Virginia governor's race.
Some donors who have supported Koch-backed entities in the past are no longer interested in doing so in the future.
A person briefed on the matter says that wealthy business people such as Randy and Diane, David and Bob, and Chris have told their allies that they have no immediate plans to contribute to Koch-backed groups.
He could not be reached for comment.
The other donors didn't reply to emails.
The departure ofPhillips and some donors aren't the only controversies of the organization.
Anna Beavon Gravely, a former official of the group, filed a lawsuit against the group in North Carolina state court.
The two parties settled the lawsuit amicably, according to a spokesman for the Agence Francais.
We reached an agreement in each case. The work environment of the company is respectful, rewarding, and inclusive.
According to a copy of the complaint obtained by CNBC, Gravely claimed that she did not get a promotion to North Carolina state director despite her clear qualifications for the job, which was given to a man with less experience.
The suit says that Gravely was fired by the man who got the job she was looking for.
Phillip Joffrion was a regional director at the time. Joffrion was paid just over $125,000 in the year 2016 according to the group's public form. He isn't listed on subsequent forms.
Joffrion was the authorized hiring manager for jobs that included the group's North Carolina state director post, the job that Gravely hoped to secure permanently after filling it in an acting capacity.
The suit says that Gravely was aware of prior complaints about gender discrimination and sexual harassment.
Joffrion ridiculed Gravely for having a "rigid" personality and critiqued her for being too "process-focused" during a dinner in 2017, according to the complaint.
According to the lawsuit, Joffrion told Gravely that she did not get the job because of her humility.
There is a class-action lawsuit against the organization for workplace discrimination.
It is not clear where that other suit was filed. The official who is said to be part of the complaint is based in Arkansas.
The complaint was transferred to North Carolina federal court after it was filed.
The group denied thatGravely was subjected to any discrimination after the case was transferred there.
According to court documents, Gravely dismissed her lawsuit with prejudice in late September.
In cases where the parties have reached an out-of-court settlement of claims, dismissals are done to prevent a lawsuit from being refiled against the same person.
Gravely didn't comment to CNBC. Her attorney didn't reply to a request for comment.
