Sunday, December 4, 2022

Why Is LITfest Sponsorship Money Being Funneled Through An Unregistered “Charity”?

This is the kind of story that can become a bit confusing due to the number of overlapping moving parts. So, for clarity and efficiency,1 let’s start by naming and defining the key players.

Frank Scott Jr. is the mayor of Little Rock, elected in 2018 and currently up for re-election.

Kendra Pruitt is the current chief of staff for Mayor Scott. She is technically a lawyer, though that seems to be more so she can brag about being a lawyer than for any actual practice-of-law or understanding-the-law reasons.

Think Rubix is a Delaware company that does various types of political campaign work, consulting, and event planning. They were a paid consultant for Mayor Scott’s first campaign,2 and they were selected by the city to produce and promote LITfest. They are not registered as a company in Arkansas, either as an Arkansas entity or a registered foreign entity, which should have disqualified them from being selected for the LITfest contract, but they lie about that fact a lot, so it didn’t.

The Foundation for Social Impact is one of two non-profits owned by the same people who own Think Rubix. It is a 501(c)(3) and an Arkansas LLC, but, while Think Rubix and the city refer to it as a “charity,” it is not a charity registered with the State of Arkansas. While nominally a separate entity, this foundation is under the control of Durwin Lairy and Tristan Wilkerson, who are both principals with Think Rubix as well.

Everyone on the same page? Great. Now let’s light this candle.

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The general plan for LITfest–to the extent there has been one at all–was that the city would pay Think Rubix $45,000 from city funds, then Think Rubix and the city would work together to locate sponsors whose donations would be used to pay for things like musicians, venues, and other costs associated with the festival. To the limited credit of everyone involved in drafting the otherwise terribly written contract, the agreement even had an unequivocal statement about what was to happen with funds received from sponsors. Right there, in schedule A where the contract talks about deliverables, the agreement makes clear that Think Rubix is to comply with city fiscal rules, help raise money, and make sure this whole Hindenburgian adventure does not go over budget.

Even more to the point, in that same document there is a section labeled “Sponsorships,” which includes among Think Rubix’s defined duties: “Ensuring the timely receipt of funds that have been pledged and the prompt deposit of those funds with the city.”

Pretty straightforward. The city is putting on a festival, they are seeking sponsors for that festival, and their consultant for the festival has to make sure that the funds received actually go to the city and help make sure the whole thing doesn’t go over budget. That might be the most sensical part of the entire contract, honestly.

The negotiations that led to the contract screenshotted above began in February 2022, with a lot of back-and-forth emails about specific deliverables and requirements in March and April. The provisions outlined in red above were in the contract the entire time that these negotiations were ongoing. The contract was finalized, and it was signed by Tristan Wilkerson on behalf of Think Rubix on May 14, 2022. It was signed by City Manager Bruce Moore on June 9.

So–just to be crystal clear here–as of June 9, the city and Think Rubix had a contract for Think Rubix’s work on LITfest that explicitly required Think Rubix to ensure that pledged funds from sponsors were promptly deposited with the City of Little Rock. That part is not disputable.

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Near the end of June, the city and Think Rubix began working on a fundraising letter that would go out to prospective sponsors. Now, it is unclear whether this was the plan all long, or if something changed between June 9 and June 30, but by June 30, the communications about the sponsorship letter show that the plans had changed as far as who would be handling the money.

This first sign of this change in approach is on June 30, when Kendra Pruitt emailed the various people who were working on the LITfest project to ask about “the name of the foundation” that would be referenced in the sponsorship letter.

The following day, Durwin Lairy of Think Rubix answered, “The Foundation for Social Impact.” He added that someone named Bjorn Simmons would be the point of contact for that foundation as well.

A week later, Bjorn Simmons emailed Pruitt to introduce her to Tra’Jhan Wilkerson “to make sure we get the LitFest [sic] Sponsorship Agreement finalized with the Foundation for Social Impact.”

Huh? Why would there need to be a “Fiscal Sponsorship Agreement” between the city and a non-profit that is run by the same people who run Think Rubix, if the contract already required Think Rubix to deposit received funds with the city?

On July 11, Pruitt emailed Simmons, asking for “a simple MOU that outlines the agreement between the City and the Foundation that clarifies that sponsorship funds raised are strictly for the use of LF programming and operations?”

It seems that, contrary to the negotiated terms of the contract between Think Rubix and the city, someone–or multiple someones–got the bright idea that, rather than deposit sponsorship funds into the city’s account like we promised, what we should actually do is have sponsors send their money to a 501(c)(3) that is owned and operated by the people who own and operate Think Rubix.

Exactly a month later, an email from Simmons to Pruitt, with Durwin Lairy and Tristan and Tra’Jhan Wilkerson copied on it, gives away the reasoning behind this change. Think Rubix, through the Foundation for Social Impact, was going to keep 10% of the sponsorship dollars raised.

Apparently, even Kendra Pruitt–a deeply unserious person who never met a public dollar that she wouldn’t gladly waste–thought giving the foundation 10% of the funds was too much. In her mind, the right amount was 5-7%. (Not 0%, mind you, even though that’s the right answer.) She tasked Bridgette Newson with “negotiat[ing] that down” to an acceptable level.

The sides seemingly reached a number that they could agree on, and the sponsorship letter went out to prospective sponsors. The letter, bearing Mayor Frank Scott’s face and signature, specifically informed would-be sponsors that their contributions would be tax deductible, since they were sending the money to the Foundation for Social Impact, “the official partner source for receiving the sponsorship funds.” (The letter did not note, however, that the actual contract for this event required sponsorship money to be deposited with the city. I suppose that would have been confusing.)

Whatever the arrangement, it is pretty obvious that the sponsorship money did in fact begin to go to the Foundation for Social Impact and that Think Rubix is using that money to pay for things without oversight from the city.

For instance, when Ashanti was booked to play at Robinson Center for $32,500, Durwin Lairy emailed Tra’Jhan Wilkerson at the foundation and directed Wilkerson to pay Ashanti’s management company.3

Wilkerson responded, not to say that the foundation–like a real non-profit charity–would have to run this by the board and get approval, but to explain that the $32,500 would have to be sent in two parts.

By now, you may have many of the same questions that I did. What other artists have been paid out of this fund? How much money has come in? How much has gone out? What oversight is there for spending the money?

These are all great questions. Unfortunately, the answers are unknown at this point. I requested all proof of deposits of LITfest sponsorship funds in city accounts on Monday; the city has still yet to acknowledge that request at all, let alone provide any records.4 I have asked the city and Mac Norton at WLJ to provide any agreement or MOU with the Foundation for Social Impact; the city has not responded, and Norton disingenuously said he would try to find it before not following up any further. I’ve requested every sponsorship agreement and proof of every payment received from the sponsors; none have been provided, despite emails from Think Rubix that refers to sponsors that have been signed up.

I suppose it’s possible that all of these documents are in the 1,000 or so responsive documents that the city deleted rather than providing them to me.5 Thankfully, City Attorney Tom Carpenter realized what happened, recovered the deleted documents, and will be providing them shortly.6

But even without the additional records, the picture painted here is bad. Taken as a whole, we have:

  • A Delware LLC that isn’t registered to do business in Arkansas (Think Rubix) and an Arkansas LLC that isn’t registered as a charity with the state of Arkansas (Foundation for Social Impact) that are both owned and managed by the same group of people;
  • A negotiated contract between the City of Little Rock and Think Rubix that plainly requires Think Rubix to ensure that “funds that have been pledged” are promptly deposited with the City and that Think Rubix follows all fiscal rules and regulations of the City;
  • An undocumented agreement between the city, the unregistered Delaware company, and the unregistered charity, allowing all of the sponsorship funds to run through the charity rather than complying with the actual contract for this event;
  • An undocumented arrangement whereby the unregistered charity gets to pocket some percentage of the sponsorship funds that come in, which is not something that the Little Rock Board of Directors has been made aware of in any way;
  • A city administration that has been embarrassed multiple times by the facts surrounding this entire event and the hiring of Think Rubix, to such an extent that they would rather criminally destroy 1,000 or so documents than turn those over.

Viewed in that light, it is difficult to conceive how the optics will be better after we receive records that were so concerning to the city that they literally deleted them.

You may recall, of course, that Think Rubix got this contract for $45,000, which was an amount they could get without having to get Board of Directors approval. Part of that contract was for Think Rubix to fundraise and give the money to the city. Think Rubix has done some amount of fundraising; they have not provided the money to the city as required. But it should go without saying that they can’t override the terms of a city contract with a little backroom handshake deal on behalf of a different company that they own, no matter how many people might be super excited about the prospect of getting 5-10% of the sponsorship funds as free money.

I suppose this last part is worth mentioning, if only to get ahead of the predictable response. Tristan Wilkerson recently said to the Arkansas Times, “The level of scrutiny put on this particular contract between the city and a minority business demonstrates why it is so important to continue to advance cultural and racial equity in Little Rock and across the state.” In other words, in his mind, it is only racist motivations that could lead to someone scrutinizing this contract. That is, of course, patently absurd.

This isn’t about race in the least. It is about the city hiding and destroying documents, and money not flowing where the city contracted for it to flow. All of this came to light only because the mayor’s former chief of staff’s involvement with the company looked very sketchy (at best) on the surface. We ultimately found that they had lied about that as well, and we’ve continued digging because every shovelful of information seems to turn up multiple questionable actions (or inactions, as the case may be). All we have done is what we’ve done for over a decade in this little corner of the internet–follow the money, show the receipts, and write about what we found.

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  1. If you can be one thing, be efficient.

  2. We won’t know if they have done work on his 2022 campaign until he files his 7-day pre-election report, because Arkansas law is stupid and allows municipal candidates to wait until then to disclose any money.

  3. I made the redactions on this. That Wright Lindsey & Jennings sent the email without redacting the bank account or routing number absolutely blows my mind.

  4. They’ll be getting sued over it come tomorrow, though. So that should be fun.

  5. Because nothing says “I’m a mayor who believes in transparency like turning a blind eye to criminal destruction of public records.

  6. Alex Betton responded to a screenshot of this email on Twitter, acting like the fact that Tom was responding to him somehow proves something. It doesn’t. The email was sent to the city’s main FOIA email, and Betton is the head of that division. He forwarded my email to Tom and asked if Tom knew what I was talking about. Tom replied and added me back into the recipients. So I have no idea what point Alex Betton thinks he’s making, but I am really starting to wonder why so many people in the mayor’s inner circle are so bad at literally everything their jobs entail.

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