Greetings, and welcome back to The Stratosphere.

Today, I take a deeper look at a premier Democratic fundraising group I’ve been covering closely for the last several years: Mind the Gap. The group has enjoyed enormous success for the last five years, thanks in part to the leadership of Barbara Fried and her impeccable network across Silicon Valley. But now, Mind the Gap has to deal with the crisis wrought by Barbara’s own son, Sam Bankman-Fried, who has put his mom in a… difficult position.

As always, my inbox remains open for tips and questions.

Teddy

As with many people in Silicon Valley, the Bankman-Frieds were galvanized by Donald Trump’s surprise 2016 victory. They hosted an election night watch party for 50 or so friends at their house, just off the Stanford campus. TVs were blaring results in multiple rooms, the tables laden high with snacks and drinks. Then the mood turned from splendid to somber as the results came in. Faculty and friends shuffled out to their cars in a stupor.

Fried was determined to do something. Over the next year or so, she underwent a midlife reawakening, pivoting from legal scholarship to the arcane study of campaign finance. On January 17, 2018, she sent an email to a small group of Democratic consultants, progressive donors, and university colleagues laying out her modest goals for what she described as a “risk-neutral” donor network.

“I’m fairly confident I can raise a minimum of $1-$2 million in campaign contributions for this purpose, and there is some chance the number could be significantly larger,” Fried wrote in the email, a copy of which I recently obtained. “Given the partisan nature of this effort, it needs to be kept completely separate from our professional roles at Stanford.” She continued: “I propose that we meet at my house rather than the law school. I live on campus, a five-minute walk from Tressider. I’d be delighted to provide lunch or dinner if we end up meeting around those times, and caffeine whenever we meet.”

Two weeks later, a group of Fried’s friends—a half-dozen or so political operatives, academics, and data nerds—gathered to talk through the idea she had been workshopping since that Election Night party. Over drinks and snacks at her dining room table, a source recalled, Fried outlined her plan for what would eventually become Mind the Gap. In the intervening years, Fried and Mind the Gap would indeed raise a “significantly larger” sum of money, totaling hundreds of millions of dollars for Democratic causes and turning Fried herself into a minor political celebrity. Mind the Gap helped propel the Democrats to a landslide in the ’18 midterms and a surprisingly competitive finish in ’22.

That was until everything that Fried had built was threatened not by Republicans or by her Democratic rivals—but by her own son, Sam, one of Mind the Gap’s biggest donors. The collapse of FTX, as I have reported, has wreaked havoc all across the Democratic universe, with dozens of allied groups caught in the blast radius. And yet of all the people ensnared in Sam’s fall from grace, there is no casualty more remarkable than his own mother.

Like Beane finding potential in players who could draw walks, Fried’s thesis was to identify Democratic congressional candidates who were just short of competitive—second-tier candidates who could win but probably wouldn’t, at least not without some calculated risk. They had been left behind by pollsters and donors, and yet a little investment in their election could potentially steal a seat. “The premise of the Mind the Gap (MTG) Initiative is that public prediction models and common trends in political fundraising result in a misallocation of resources that is jeopardizing the effort to flip the House this November,” read the first sentence of the group’s confidential draft proposal, which I later obtained.

The idea caught on. Fried gathered initial goodwill from power brokers connected to local mega-donors like Karla Jurvetson, Reid Hoffman, Dustin Moskovitz, and Amy Rao, the Wendy Schmidt confidante and Silicon Valley fundraising eminence, who hard-pitched Mind the Gap to her unrivaled Rolodex. Fried, assuming the role of president, built a modern bundling operation composed of people like her, heavy on female donors and people affiliated with the tech industry. At the time nothing was trendier in Silicon Valley than political fundraising, but newfound donors lacked any professional help to determine where to send the $100,000 or $200,000 budget that they were prepared to donate. Mind the Gap occupied the white space. The group offered its advisory services and literature for free, and encouraged donors to max out contributions to about 20 Democratic challengers during the historic 2018 cycle, including to Lauren Underwood in Illinois and Xochitl Torres Small in New Mexico, who each took in as much as $640,000 from Mind the Gap members, according to internal fundraising materials I saw at the time.

In her communications to donors, Fried boasted that the group’s 800 members spent $20 million during the 2018 cycle. Mind the Gap held some organized fundraisers, but other recipients were blissfully unaware of the reason they were receiving multiple maxed-out checks on the same day from Californians they had never even met. “The raison d’être is stealth,” one person affiliated with the group told me in early 2020, when I published a series of stories that revealed Mind the Gap’s existence.

Those stories frustrated Mind the Gap, which had not wanted to alert Republicans to the network, but ironically, in the end, they only enhanced the group’s mystique. Fried had intended for the initiative to be a one-cycle deal—after all, she was a legal philosopher who played the cello—but Mind the Gap took on a life of its own as word spread. After the midterm election, Fried began to host even more Democratic finance staff and bundlers at the Palo Alto home that now serves as her son’s jail cell. Incredibly, the quiet, down-to-earth professor had become a veritable power player whose ring needed to be kissed by visiting political operatives, sources say. “It occupied all of her spare time,” one of her friends told me the other month.

By 2020, Mind the Gap was hoping to direct, or at least take credit for, more than $100 million in donations to Democratic-aligned nonprofit groups, according to figures I reported at the time. Mind the Gap also became a fundraising bazooka for groups like the Voter Participation Center, the 501(c)3 that served as the plumbing of the Democrats’ vote-by-mail machine as the pandemic upended the party’s traditional get-out-the-vote infrastructure. “It came as close as anything to solving a perennial problem for outside Democratic groups—which is that there’s a big body of work that’s really boring to do, and always had a hard time raising enough money,” a person once close to Mind the Gap told me.

By 2022, Mind the Gap had become a battle-tested player in the D.C.-Silicon Valley diaspora. The group declined to say how much it moved in the 2022 cycle, but in a memo to donors last week I obtained, executive director Marissa McBride argued that it “played a massive role in the 2022 midterms” by supporting programs that included sending out 23 million pieces of mail that likely produced votes that “ultimately determined” Democratic wins in Arizona and Nevada. (Some Democrats feel that Mind the Gap didn’t live up to its expectations in 2022, which I’m told at one point included a $200 million fundraising goal.)

Not mentioned in the 1,800-word memo was what had happened to Barbara, the group’s founder. Six days before the 2022 election, her son’s cryptocurrency empire had begun to collapse. A run on FTX, which began just before the midterm election, revealed that S.B.F. had somehow misplaced billions of dollars of his customers’ money. Unable to raise the emergency financing necessary to keep FTX solvent, Sam declared bankruptcy on November 11 and was arrested a month later.

Fried, who should have been riding high after helping Democrats hold the Senate, instead found herself flying to the Bahamas to tend to her eldest son, who was erratically tweeting acrostics and furiously mounting a legal response that would require all of Barbara and Joe’s attention and relationships, and ultimately most of their money. Just before Christmas, they helped Sam post bail, allowing him to fly back to California, where he remains under house arrest. They have since entered a new, unexpected phase of their careers: parents of one of the most infamous alleged financial criminals in history.

Nevertheless, Mind the Gap accepts that more scrutiny is inevitably coming its way. Fried herself has been hounded by paparazzi as a bit player in the FTX scandal, and last week a car drove into the barricade outside her family’s home. In recent weeks, Mind the Gap abandoned its typical low-profile strategy and, after consulting with Ron Conway I’m told, eventually hired its first real public-relations consultant, Joshua Karp, to help manage the chaos and inbound attention.

Of course, Ukraine conspiracies aside, there are legitimate questions to be asked about the role that the Bankman-Fried kids played in supporting Mind the Gap. Back in March 2021, when I first interviewed Sam, he told me that he had “consulted with them” after becoming interested in their “quantitative and analytical approach.” It was, he continued, “a script that’s worked in a lot of different areas in the last 30 years in the world, so my prior belief is it would work there too.” He was somewhat more cagey when I asked if he was simply a donor or was more intimately involved.

Even before Sam was arrested, Mind the Gap wasn’t emphasizing Sam’s ties to the group; I know some insiders who didn’t even piece together that Sam was Barbara’s son until recently. In conversations with potential donors this past cycle, Mind the Gap leadership was more likely to name-check the Schmidts as one of their prominent supporters than they were to mention S.B.F., according to a person familiar with the group’s recent outreach. But the kids obviously had a lot of expertise to share: One person who heard an early pitch from Fried recalled a throwaway comment from her claiming that Sam “wrote the algorithm” that Mind the Gap used, although the group doesn’t really have “an algorithm” and now denies that Sam had any involvement in their prediction models. Another source said that they had heard directly from Mind the Gap that Sam was at one point responsible for about one-quarter of the money that the group directed in 2022, a figure that McBride tells me is “completely inaccurate” and a “falsehood.”

“Sam Bankman-Fried has never held any role at Mind the Gap, formally or informally,” McBride, the group’s executive director, told me in their first detailed statement about this. “Bankman-Fried contributed to some of the programs recommended by Mind the Gap, though he was not the Network’s largest individual donor and his contributions accounted for less than 2 percent of the total raised by the organization since its founding.”

Reading between the lines, my best guess is that Sam and Gabe, who knew about assessing donor impact from his brief stint at Civis Analytics, Mind the Gap’s key consultant in 2018, were involved as informal sounding boards and pitchmen to their mom, talking politics within the family as many families do. But Sam, of course, wasn’t just one of the 2,500 donors—he had direct access to the leaders of the organization. The relationship was symbiotic, too: Some Democrats have told me they perceived a blurry line between pitching Mind the Gap and pitching Sam or Gabe or even Nishad Singh, who gave Mind the Gap $1 million.

Mind the Gap, of course, is just one of dozens, if not hundreds, of nonprofits and political groups that were expecting money from S.B.F. and were thrown into crisis by FTX’s collapse. Others have had to answer door-knocks from the Southern District of New York. (Mind the Gap, like other recipients of FTX cash, told me they had been contacted by prosecutors investigating an alleged straw-donor scheme involving S.B.F. and had “complied fully with this request.”) A small number of S.B.F.-funded groups even lost their leaders following Sam’s implosion.

Mind the Gap was one of those, too. In the days after FTX’s collapse, I broke the news that Barbara was leaving the organization—her baby, as some people have called it—in an attempt to isolate the contagion amid the media circus. But the decision, which Fried shared with her staff and with the group’s board, wasn’t announced publicly to all Mind the Gap members. Mind the Gap said they mentioned it on post-election webinars with and in private conversations with donors, but several Mind the Gap members told me they only found out about Fried’s exit by reading Puck.

There is ample speculation among Democrats as to whether Mind the Gap can survive all this crisis. I’ve reported that the group, like many Democratic organizations, has struggled to maintain its energy in the post-Trump era. “I think M.T.G. is dying in its current form,” said one member, arguing that the group is set to become just another donor-advisory group rather than an entity that actually moves substantial money. “I think it was already moving in that direction. But I think this will accelerate that.”

To be sure, Fried has grown the organization far beyond the inner circle who crowded around her kitchen table five years ago. The group now has 2,500 donors who are part of its network, and last week’s memo from McBride said their professional staff is hard at work preparing recommendations for the 2024 presidential race. It’s unclear whether Fried may end up in legal jeopardy herself, but her career in politics is almost certainly over.

One of the most common questions I’ve been getting from Democratic operatives in recent weeks is whether the organization she founded can outlive her. Many people, especially early on, got involved with Mind the Gap because they trusted Barbara, herself. What happens when her reputation is sullied—and she goes away? “She’s so incredibly closely tied to Mind the Gap,” said one other Mind the Gap member. “It’s hard to imagine it without her, to be honest.”