The militia money machine that never was
A scheme by American Patriots III% to stand up a nonprofit as a front to fund its operations and enrich its members included false claims about donation tax benefits.
In the aftermath of the catastrophic train derailment just outside East Palestine, Ohio in early 2023, disaster relief organizations aligned with rightwing causes converged on the area, blaming the Biden administration for abandoning the people of East Palestine. Among them was American Community Outreach Network (ACON), a nonprofit that solicited donations to "help provide safe drinking water and pet supplies" for those impacted by the derailment.
The New Hampshire executive officer (XO) for the American Patriots III% (AP3 or APIII) militia group worked to raise money for ACON. Jim Frederick, a Sullivan County machinist who also served as the APIII East Region commanding officer, reached out to We the People NH, the Christian nationalist group led by activist Terese Bastarache, and posted a message in the group's Telegram chat with a link to the ACON donation page.
We now know ACON was established and managed by APIII and was serving as a front to fund the militia group and enrich its members.
‘I want us all to be fucking rich’
Details of the APIII scheme, first reported by ProPublica, are embedded in the massive dump of chat logs, screenshots, recordings, and videos leaked in an undercover operation by John Williams, a lone wolf operative who infiltrated the group. The leaked data was subsequently published online by Distributed Denial of Secrets.
In a series of voice messages and videos recorded in July 2022, APIII founder Scot Seddon described his plan for the militia group to become “legit” by setting up a nonprofit to provide disaster relief services, one that would fund the group’s operations and make the members a “shit ton of money.”
"We're giving a 20 percent kickback to everyone,” he said. “Anybody that gets money coming through, donated to us, is going to receive 20 percent off the top. So if you raise ten thousand dollars, you're gonna get two grand and that's gonna go directly to you. That's how it's gonna work.”
“There’s so many good things that are going to be coming out of ACON, and each and every one of us are going to be a part of it,” Seddon told the members. First among them was making lots of money. “I wanna be sitting on a yacht in two years with every one of you — with your yachts parked next to mine,” he said. “I want us all to be fucking rich.”
‘We are a legitimate 501(c)(3)’
American Community Outreach Network was registered as a Pennsylvania nonprofit corporation in February 2022 — the first step in obtaining 501(c)(3) tax-exempt status from the IRS — using a mailbox service in Allentown, Pa. for its address. Five months later, in a July 30 voice message, Seddon acknowledged that the group had not yet applied for tax-exempt status with the IRS. “We need some funding to get that done,” he said.
Nevertheless, the next day the group launched an ACON Facebook group and Seddon, Frederick, and others began promoting the ACON website and soliciting donations. The website, which made no mention of a connection to APIII, included a statement in its FAQ asserting that the nonprofit was tax-exempt. "ACON is a 501c3 organization. Donations are tax deductible per the guidelines set by the IRS,” it read.
When Hurricane Ian hit Florida in September, John Valle, then APIII’s third-in-command with the title of National Commander Sgt Major, repeated the claim in messages to the group soliciting donations for the recovery effort. “ACON is our 501(c)(3),” Valle said.
Seddon repeated the claim in a Facebook video, telling members, “We are a legitimate 501(c)(3).”
There is no evidence that American Community Outreach Network ever received 501(c)(3) tax-exempt status from the IRS. The nonprofit does not appear in the IRS Tax Exempt Organization Search, nor is it listed in nonprofit databases maintained by Guidestar and ProPublica.
Granite State appeals
Between the beginning of August and the end of October, Frederick sent at least five messages to APIII chat groups promoting ACON and soliciting donations. These included the Hurricane Water Drive and Operation Turkey Day campaigns in which donors were automatically registered in a raffle to win 1000 rounds of 9mm ammunition.
Frederick joined the We the People NH Telegram group in January 2023 and posted a message recruiting members to join APIII. When he shared the ACON fundraising link with the group in March 2023, he was building on a relationship dating from at least November 2021. That was when he led a group of militia members to a courthouse rally in Concord to support Bastarache and others who had been arrested at an Executive Council meeting the month before.
New Hampshire state law broadly prohibits fraudulent conduct in commercial transactions, including charitable solicitations; intentional violations are class B felonies. False claims about donation tax benefits, even without direct financial harm to donors, could violate the statute.
The scheme unravels
A fundraising report posted in the APIII chat by Valle in October 2022 disclosed that the nonprofit received just $1735 in donations in its first two months of operation. Reporting by ProPublica revealed the nonprofit raised less than $5000 before the ACON website was shuttered in mid-2023. The ProPublica report also indicated that by early 2024, a rumor was circulating among group members that law enforcement was investigating the nonprofit, and state chapters were abandoning the organization over the failed scheme.
The name of the organization revealed its true intent: a con.
Thanks for this, Tuck.