Unsealed Court Documents Reveal NGP Hunt for Profits From Republican-Friendly Groups

Firm dupes Democrats: Through Secret Partnership, "Democrat-only" Software and Data Conversion for Big Donors to GOP

NGP website drops claims of serving "only Democrats and their allies"

Aristotle to NGP: "Tell the whole truth, and give refunds to any deceived clients"

WASHINGTON, July 8 /PRNewswire-USNewswire/ -- Last week, a federal court released hundreds of pages of previously sealed documents showing NGP Software, Inc.'s five-year "secret" partnership with Capitol Advantage ("CapAd", a subsidiary of CQ-Roll Call), under which CapAd could sell NGP's software to "corporations, trade associations and right-leaning 527s" without disclosing that NGP was the source.  NGP had spent untold sums and several years attempting to keep this information under seal in a lawsuit filed against it by non-partisan rival Aristotle International, Inc.

The newly released documents contain revelations that may cause some Democrats who have been loyal to the company to question NGP's forthrightness about its supposed exclusive devotion to Democrats, and its willingness to help right-leaning groups. For example, the documents show that:

• NGP has provided software through CapAd and has converted the data for political organizations that have financially supported Republicans over Democrats -- in some cases by margins of 3-1, 4-1, and 9-1.
• NGP charged its own Democratic clients far more than what NGP was paid for software provided via the partnership to groups that give most of their financial support to Republicans. The unsealed portion of the agreement reveals that NGP was to be paid as little as $200/month, or 20 percent of the fee charged by CapAd, for NGP software through the partnership.
• Most of the partnership agreement itself and other details about the deal that NGP does not want the public to know remain under seal.
• For years, NGP repeated its advertising mantra that it serves "only Democrats and their allies." Yet NGP's director of marketing, Chris Massicotte, admitted under oath that organizations donating more to Republicans than Democrats are not "Democratic allies."
• Contradicting Massicotte, NGP officers attempted to justify NGP's willingness to provide software and data conversion for political groups that greatly favor Republicans by admitting under oath that:
  • NGP defines the term Democratic "allies" (as used on NGP's website) to include an organization that might contribute only a single dollar to Democrats and $100 million to Republicans.
  • NGP is willing to provide its software for those who contribute far more heavily to Republicans than Democrats.
  • NGP is "similarly-minded" to groups that make 80 percent of their donations to Republicans and 20 percent to Democrats.
  • NGP's "corporate philosophy" is consistent with selling to right-leaning political organizations.
  • NGP would provide its software to groups such as those making 90 percent of their contributions to Republicans.
• NGP officers also attempt to justify NGP's hunt for profits from right-leaning groups by defining "Democratic allies" to include literally all "who work with or associate with Democrats," which could include virtually any heavily Republican-leaning person or group with even an infinitesimal association with Democrats.
• NGP founder Nathaniel Pearlman claimed under oath that he "didn't notice" the "right-leaning" language in the partnership agreement until Aristotle filed the lawsuit, although he "may have been aware of it" when he was working on the document. (The unsealed portion of the partnership agreement, which Pearlman negotiated, also reveals the procedure for deciding if a 527 group was "right-leaning" or "left leaning", for purposes of determining whether NGP or CapAd  would provide NGP's software to that group.)
• Pearlman misled the Wall Street Journal by touting NGP's partisanship without divulging that less than three months earlier he had signed the secret partnership deal to allow the sale of NGP's software to right-leaning groups through CapAd. The Journal then published an article--which NGP widely circulated – noting that NGP was founded "with a mission to help only Democrats."
• Together with public records, the documents show that groups using NGP's software had already donated more than $8.8 million to GOP campaigns and committees as of January 2009.
• Several GOP congressional candidates who defeated Democrats by less than 1,000 votes received last-minute contributions from groups using NGP software.
• NGP claims to have had veto power over sales of its software through the partnership, but nevertheless provided its software through the partnership, converted the customer's data, and kept the royalties even when the customer contributed heavily to Republicans.

NGP has taken quiet steps to minimize its newly-revealed interest in profits from right-leaning groups, trying not to undercut a decade of NGP advertising about its exclusive devotion to Democratic interests. For example, without explanation NGP apparently removed from its website its ten-year marketing mantra that it serves "only Democrats and their allies." In 2008, NGP sent an email to clients that contained the phrase "a small number of non-partisan PACs use a version of our software". The email did not disclose that some of these "non-partisan" PACs were heavily Republican-leaning, even to the point of favoring Republicans by 9 to 1. Nor did NGP inform its clients that NGP's corporate philosophy permits selling to right-leaning political organizations.

Presumably NGP's incomplete disclosure, with such stunning omissions, and buried in a phrase in an email, was made in order to claim later that this seemingly innocuous characterization was the full story on NGP's secret deal-making, such that NGP need not come clean about any further details. NGP even recently added a parenthetical reference about the CapAd deal in small print on its website, but not until after the court ordered documents about the relationship to be disclosed.

NGP Clients Interested in Refunds

Aristotle's CEO, John Aristotle Phillips, believes that some NGP customers might reasonably want their money back as a result of the revelations. "It has been our contention in the lawsuit that NGP's marketing as to the purity of its partisanship can be a material element in decisions by some to go with a particular vendor. Several former NGP clients have informed Aristotle that they felt deceived by NGP's marketing and further believed they are entitled to some reparation, either in the form of refunds or discounts. The question is: Will Democratic Party groups insist that any candidates who were misled by NGP receive a refund if they request one?"

Aristotle has previously released the results of a telephone survey in which current and former NGP clients were asked the following question:

"If your campaign software vendor claimed only to be serving your party's interests, but this proved not to be the case, do you believe you would be entitled to a full refund, a partial refund or a discount on future services?"

Seventy one percent of those who were asked answered in the affirmative. Phillips suggested that if NGP hasn't done right by its customers, they should look to openly non-partisan Aristotle, which has successfully made inroads against NGP in the Democratic software market in the last several years through the Aristotle 360 and Complete Campaigns BackOffice products.

NGP to Continue Keeping Secrets, Working Against Democratic Interests

As the Court noted in its decision to unseal the documents, NGP and Capitol Advantage have "renewed their arrangement for another term ending on January 13, 2013," Phillips said that the continuation of the deal shows that NGP's arguments "amount to nothing more than an unapologetic rationalization for working against Democrats' interests for another four years, because the lure of potentially large profits is too great to resist."

He added, "It is extraordinary how much time, effort and money NGP has devoted to trying to keep this all secret. But even with these partial revelations, it is easy to see why NGP has apparently been petrified that even some of the documents showing its assistance to big donors to Republicans would become public. Aristotle has persevered in getting out the facts and will continue to do so." He added, "This could have all been over long ago if NGP would have come clean, unsealed the rest of the documents and given refunds to any deceived customer. But I'm sure NGP will instead try to persuade its customers that there is nothing 'un-Democratic' about NGP providing software and data conversion for heavily Republican-leaning PACs because they are technically non-partisan, or aren't 527s."

Aristotle is not seeking compensatory or punitive damages from the lawsuit. It is asking the court for a ruling that prevents NGP from falsely advertising itself as serving only Democratic interests and requires NGP to make honest, full and prominent disclosure of the ways it has acted inconsistently with its marketing and has not exclusively served Democratic interests.

"NGP's advertising has gone far beyond the claim that they don't sell to Republicans. They've claimed exclusive Democratic allegiance. This claim may have been true at one time in NGP's corporate history, but no more. NGP is no longer on 'a mission to help only Democrats'. Most sophisticated people in politics know that even technically 'non-partisan' corporate PACs' contributions often greatly favor Republicans and that they can and do tilt elections. But with the possibility of hundreds of thousands of dollars in royalties at stake, NGP's management feigns an inability to see any conflict between its conduct and NGP's long-avowed "mission to help only Democrats," Phillips said.

He added, "NGP's advertising that has pretended to be devoted to serving only Democratic interests, while concealing NGP's new-found affection for right-leaning groups, has been false, misleading, and fundamentally dishonest. Other documents in this case remain under seal. The questions every customer should be asking NGP right now are 'Why are you providing software and data conversion for right-leaning PACs, what else aren't you telling us, and what else is in the sealed documents that you don't want revealed?'"

"An additional benefit of the court's granting our request to unseal documents is that Aristotle now can defend itself against NGP's accusations that we have been lying about them. Before, NGP could say everything was just allegations. Now we have the documents. Now we can show them to people. Now we can prove we have been telling the truth. And if the remaining sealed documents become unsealed, we will be able to prove even more," Phillips said.

About Aristotle

Aristotle is recognized as a global pioneer in political technology, providing indispensable tools to those who seek to use the democratic process to influence decisions at the ballot box.  Every occupant of the White House -- Democrat and Republican -- for more than 25 years has been an Aristotle customer, as are most U.S. Senators, most members of the U.S. House of Representatives, and Democratic and Republican state party organizations. For information about career opportunities or for client inquiries, go to www.aristotle.com.

SOURCE Aristotle