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Project Veritas claimed James O’Keefe risked group’s nonprofit status

The board of directors issued a memo before O’Keefe’s departure arguing that his actions had put the sting group at odds with the IRS

James O’Keefe, founder of Project Veritas, takes questions from the audience at a gathering hosted by the Young Americans for Freedom at Southern Methodist University on Nov. 29, 2017. (Laura Buckman for The Washington Post)
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James O’Keefe’s departure from Project Veritas, the right-wing organization known for conducting undercover sting operations, came after the board of directors claimed to staff that O’Keefe had endangered the group’s nonprofit status, according to documents and people familiar with the situation.

In a memo sent to employees last week, the board warned, “THERE IS NO PROJECT VERITAS WITHOUT THE IRS,” referring to the Internal Revenue Service, which regulates nonprofits.

Project Veritas is registered under section 501(c)3 of the Internal Revenue Code, meaning it cannot engage in politics or operate for the benefit of private interests. In exchange, the group is exempt from paying federal income taxes and disclosing its donors, allowing it to build a reservoir of financial support as it seeks to expose alleged wrongdoing by journalists, liberals, labor unions and others. Project Veritas reported raising about $21 million in 2021, the most recent year for which a public filing is available.

“Donors donate to our organization in part because of the Tax Deduction available to the donor,” the board members wrote in the memo, which was obtained by The Washington Post. If the tax deduction were no longer available, the board members warned, “the organization folds, and with it go our employees.”

O’Keefe, who exited the organization on Monday after a standoff with the board, did not respond to requests for comment.

The memo declared that board members moved earlier this month to suspend him because of concerns related to the organization’s bylaws and, by extension, its good standing with the IRS. It stated that O’Keefe’s attempt to fire the group’s chief financial officer, Tom O’Hara, was in violation of Project Veritas bylaws, which spell out that, “Any officer elected or appointed by the Board of Directors may be removed by the Board of Directors with or without cause.”

“Tom O’Hara was appointed as CFO and granted signatory authority by the board of directors, and only the Board of directors can remove him,” the memo added. It further suggested that O’Keefe falsely claimed to have buy-in for the firing from a board member, John K. Garvey, “which was quickly denied by Mr. Garvey.”

O’Keefe argued in farewell remarks to staff on Monday that he had fired O’Hara and another officer of the group because of what he described as their attempts to revamp the organization in a way that would sideline him or negate his approach to fundraising. O’Hara did not respond to a request for comment.

The board reinstated both officers and put O’Keefe on paid leave. He claimed, also in his remarks on Monday, that he was then removed from the board and essentially stripped of all authority at the group, which he founded in 2010. On Feb. 16, he proposed that the board of directors resign as a condition for him to stay, he said. When that ultimatum went unmet, he packed up his things and left the organization.

The internal power struggle prompted dueling allegations — against O’Keefe on the one hand and the officers and board members perceived as his adversaries on the other. A letter from some employees, circulated after he was placed on paid leave, said he demeaned his staff and mistreated the organization’s benefactors. His supporters said he was the victim of a “coup.”

O’Keefe insinuated that his removal was related to the group’s recent sting against Pfizer, the pharmaceutical giant behind one of the coronavirus vaccines. Project Veritas has trumpeted the operation as offering evidence that Pfizer is intentionally mutating the coronavirus to test new vaccines, prompting members of Congress to demand answers from federal health agencies based on the group’s purported findings. Pfizer has defended its research methods.

The memo from the board of directors — one of several released last week — appeared aimed at tamping down that suggestion. “The Board has an immediate growing concern that due to the one-sided narrative currently prevalent on social media, there is a significant potential for lost financial support from our donor base by making uninformed decisions about the full picture,” it stated.

Beyond the alleged violation of the group’s bylaws, the memo did not go into detail about possible violations of the Internal Revenue Code. Instead, it stressed the board’s responsibility to ensure compliance.

“The Board takes this responsibility as well as the right to have a healthy work environment for the employees very seriously,” it stated. “It is the duty and responsibility of the board to act whenever there is any doubt or suspicion that such a violation may have occurred.”

Additional memos signed by individual board members — and addressed directly to O’Keefe — elaborate on some of the concerns about his stewardship of the organization.

Matthew Tyrmand, a right-wing commentator and member of the board, wrote, “Do you not realize this org has a bigger bullseye on its back than any in the history of American non profits where the politicized regulators want to put it and you to sleep for good?”

Tyrmand declined to comment. He has argued privately that people weighing in on internal developments at Project Veritas “don’t have a clue” about what’s going on, according to messages reviewed by The Post.

In his three-page letter, in which he describes O’Keefe as a “brother,” Tyrmand implored the Project Veritas founder, “In what world is unilaterally firing the CFO and misrepresenting (read: lying) about board buy in on that anything but suicidal?” He said that action was akin to saying, “hey regulators come check my books out please.”

Garvey, the board member who denied supporting the removal of the CFO, according to the joint memo, told O’Keefe he considered him an “amazing national treasure.”

But he put his criticism in blunt terms. “No one thinks managing people is in your wheelhouse James,” he wrote in a one-page letter. “No one.”

Garvey, in a text message to The Post, wrote, “I stand by my letter in its entirety. I was trying to speak James’ language with lavish but sincere praise, but also being a constructive and helpful friend in telling him something dozens of others have.”

A public statement issued by the board on Monday accused O’Keefe of improper personal spending but referred only elliptically to concerns about the group’s nonprofit status. It argued that O’Keefe’s removal of the CFO was a “violation of our non-profit’s bylaws” and added, “The Board has a legal obligation to comply with state and federal law, and these matters are serious ones that cannot be ignored.”

The statement asserted that an ongoing review had already found evidence of “financial malfeasance” — specifically that O’Keefe “has spent an excessive amount of donor funds in the last three years on personal luxuries.” It accused him of spending $14,000 on a charter flight under the pretense of seeing a donor but instead to meet someone to fix his boat; paying $60,000 for theatrical productions; and shelling out $150,000 for drivers over the previous 18 months.

O’Keefe, in his Monday remarks, denied wasting the group’s resources and said donors were aligned with him. A lawyer who claimed to be representing a “large group of significant donors to Project Veritas” sent a cease-and-desist letter on Feb. 9 to the group’s board of directors expressing “grave concerns” about any effort to remove O’Keefe and warning that the board “may already be acting in violation” of charity law.