Virginia AG quiet on potential probe of Jerry Falwell Jr.’s Liberty U. after bombshell report

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U.S. President Donald Trump (L) and Jerry Falwell (R), President of Liberty University, on stage during a commencement at Liberty University May 13, 2017 in Lynchburg, Virginia. President Trump is the first sitting president to speak at Liberty’s commencement since George H.W. Bush spoke in 1990.

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Virginia Attorney General Mark Herring’s office will not say whether he will investigate Liberty University in light of a recent bombshell Politico article detailing alleged self-dealing and other controversial actions by the college’s president, Jerry Falwell Jr., at the nonprofit university.

A spokesman for Herring told CNBC, when asked whether the attorney general was probing Liberty’s practices, “We generally do not comment on pending investigations, even to confirm whether or not one is ongoing.”

A senior Liberty University official said that the school has “absolutely not” been notified that it is the subject of an investigation from Herring’s office, the FBI, or any other government authority.

An Internal Revenue Service spokesman declined to comment whether it will investigate Liberty University, citing department policy. Virginia’s Department of Education did not respond to a request for comment.

Experts in nonprofit law who were interviewed for the Politico article told CNBC this week that the allegations involving Falwell, a prominent supporter of President Donald Trump, were more than than enough to warrant a probe by Herring and his office into Liberty University’s business practices.

“The allegations in the Politco exposé of Liberty University and its management are serious and likely merit investigation from state and federal regulators,” said Ciara Torres-Spelliscy, a professor at Stetson University College of Law.

Ellen Aprill, a professor of tax law at Loyola Law School, said, “I think the self-dealing transactions are violations of tax law and probably the state nonprofit law.”

“I do think they merit both AG and IRS investigation,” Aprill said.

Virginia’s attorney general has not been shy about taking action against charities and nonprofits that have violated state law.

Herring’s office filed lawsuits against sham cancer charities, deceptive veterans’ charities and a service dog nonprofit between 2016 and 2018.

Falwell Jr., whose late father, the Southern Baptist preacher Jerry Falwell Sr., founded Liberty University, has repeatedly used his office as school president to give favorable contracts and loans from the university to family and friends, according to Politico.

The article detailed “a culture of fear and self-dealing” at the school under the leadership of Falwell Jr.

Falwell spoke at the 2016 Republican National Convention that nominated Trump for the White House. Trump’s first commencement speech as president was at Liberty University.

Politico’s report detailed how, when Trump visited the university in 2017, Liberty University printed and sold Trump-branded T-shirts and hats, emblazoned with the university logo and Trump’s signature campaign slogan, “Make America Great Again.

Federal law and Virginia state law prohibit nonprofits from using their resources to support, donate to, or endorse political candidates or campaigns.

“Nonprofits like Liberty University are not allowed to intervene in U.S. elections, full stop,” Torres-Spelliscy said.

The Wall Street Journal reported in January that Trump’s then-personal lawyer and fixer, Michael Cohen, hired a technology company operated by Liberty University’s chief information officer to “try to rig online polls in” Trump’s favor in 2014 and 2015.

One such poll, conducted by CNBC, ranked the nation’s top business leaders, while the other, a Drudge Report poll, ranked potential Republican candidates for president.

Politico’s recent article added to that account, citing a half-dozen Liberty University sources who said when the information officer, John Gauger, went to New York to collect payment from Cohen, “he was joined by Trey Falwell,” who is both a vice president at Liberty and the son of Falwell Jr.

“During that trip, Trey posted a now-deleted photo to Instagram of around $12,000 in cash spread on a hotel bed, raising questions about his knowledge of Gauger’s poll-rigging work,” Politico reported.

One tax expert said Herring might be reluctant to launch an investigation into Falwell Jr.’s conduct at Liberty because of of a lack of manpower — or fear by a Democratic attorney general that he will be accused of acting for partisan reasons against the backer of a Republican president.

“State attorney generals normally don’t have the type of resources to deal with those sort of things, and they can get generally political, which might make them very hesitant to step in,” said Philip Hackney, an associate professor of law at the University of Pittsburgh.

But Hackney said that if Herring does not probe Falwell’s actions, “The more immediate answer is the [Liberty University’s] board needs to look into these things.”

“I think individuals taking advantage of a non-profit to their benefit raises real questions that should be answered ideally by the board, and, if not them, then by the government,” Hackney said.

On the heels of Poltico’s report, Falwell Jr. claimed Tuesday that he is the target of a “criminal conspiracy” by former board members and current employees seeking to oust him.

Falwell told The Hill.com news site that he is sharing information with the FBI and expects agents from the bureau to visit Liberty University to review documents in connection with his claims that former colleague at the school have stolen university emails and shared them with reporters to smear him.

The FBI declined to comment on whether it is investigating Falwell’s allegations, or any allegations about him.

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