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

Details on Secret Partnership, “Democrat-only" Software and Data Conversion for Big Donors to GOP

NGP website drops claims of serving “only Democrats and their allies”

Washington, DC — 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 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 considerable time, effort and expense for several years attempting to keep the information under seal in a lawsuit filed against it by non-partisan rival Aristotle International.

Aristotle is a non-partisan vendor that for 25 years has served all parties equally without regard to party affiliation or political views.  Aristotle contends that it is a deceptive marketing practice for a competitor, in this case NGP, to claim to be serving only Democrats and their allies, when in fact it has a secret arrangement to also help groups that greatly favor the other side.

The newly released documents contain revelations that may cause some Democrats who have touted the company to question NGP’s integrity and suitability as a vendor, especially one entrusted with sensitive political contact data. For example, the documents show that:

• NGP 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.
• 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.”
• Unlike 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”, for purposes of someone NGP could provide its software to, 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 for groups such as those making 90 percent of their contributions to Republicans.
• NGP officers also attempted to justify NGP’s non-ideological hunt for profits 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 testified that one of the reasons he entered the arrangement with CapAd was “for money” and not for any “ideological reasons”.
• 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.
• Most of the partnership agreement itself, and other details about the deal that NGP does not want revealed, remain under seal.

Without explanation, NGP also apparently dropped from its website its ten-year marketing mantra that it serves “only Democrats and their allies.” In 2008, as word of Aristotle’s allegations began to spread, 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 fails to disclose that these “non-partisan” PACs include those that are heavily Republican-leaning, even to the point of favoring Republicans with $9 in contributions to every $1 given to a Democrat.

Presumably, NGP slipped this inconspicuous phrase into an email, without any disclosure about the heavily Republican-leaning PACs, in order to try to mislead others that this seemingly innocent characterization was consistent with NGP’s “Democrats and their allies” mantra. NGP even recently added a parenthetical reference in small print on its website about selling to corporations and trade associations through CapAd, but not until after the court ordered documents about the relationship to be disclosed, and again, without ever letting on that NGP permits such clients to include Republican-leaning PACs.

NGP Clients Interested in Refunds

“Would most people look at NGP’s advertising and think that it means NGP would ever be willing to help PACs that contribute far more heavily to Republicans? Of course not,” said Aristotle’s CEO, John Aristotle Phillips. He believes that some NGP customers might reasonably want their money back as a result of the revelations. “Our lawsuit contends 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 consideration, either in the form of refunds or discounts. Any Democratic Party groups or consultants that may have been deceived into helping NGP prosper may now insist that if candidates were misled by NGP, they should get 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 stated 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

The Court noted in its decision to unseal the documents that NGP and Capitol Advantage have “renewed their arrangement for another term ending on January 13, 2013.” Phillips said, “It is extraordinary how much time, effort and money NGP has devoted to trying to keep this all secret. Now they will have to concoct some rationalization for customers to persuade them 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 full and prominent disclosure by NGP of the ways it has violated the core message of its decade-long marketing campaign.

“Most sophisticated people in politics know that even technically "non-partisan" corporate PACs' contributions can greatly favor Republicans, and that they can and do tilt elections, said Phillips. “But NGP, with year after year of claiming to serve “only Democrats and their allies”, and its partial “disclosure” about the CapAd arrangement, deceitfully suggests that this is not what is happening here. In the context of this NGP advertising, I believe that most people would naturally assume that these “non-partisan” corporate PACs that NGP allowed to use its software would not favor Republicans. It is incredible that, five years after the lawsuit was filed, not once has NGP ever acknowledged  publicly that many of  the so-called "non-partisan" PACs using its software were heavily Republican-leaning."

He added, “NGP’s advertising has been false, misleading, and fundamentally dishonest. The court denied NGP’s motion for summary judgment, meaning that we have a provable case for trial. Other documents in this case still 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, why have you charged us more, and what else is in the sealed documents that you don’t want revealed? And why did your website drop the claim that you “only serve Democrats and their allies?’ These questions will be answered at the trial scheduled for November. NGP might as well answer them now.”

Phillips also said, “One 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. When almost everything was under seal, NGP could say everything was simply Aristotle’s allegations. Now we can show the actual documents to people. Now we can prove we have been telling the truth.” He then concluded, “Aristotle has been proudly and openly providing technology on a non-partisan basis for 25 years. Our customers appreciate that we strive to provide the best technology and service without appeals to partisanship. We’ll continue to do so.”

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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.