How the DNC’s Former Chief Fundraiser Turned a Medicaid Program Into His Personal Money Hose

It’s a health care nonprofit intended as a lifeline to New York City’s poorest and most vulnerable communities—but it’s become a money hose for the former chief fundraiser of the Democratic National Committee.

Henry Muñoz, the San Antonio-born son of an ally to labor legend Cesar Chavez, has held many titles over the years: DNC vice-chair, DNC finance chair, co-creator of the progressive group Latino Victory, head of the board at the Smithsonian’s Museum of the American Latino, even owner of the Will Ferrell-founded production company Funny or Die.

But among his most lucrative gigs yet has been as consultant to SOMOS Community Care. Since 2018, the nonprofit network of physicians’ offices for New York’s most marginalized residents has paid Muñoz more than $30 million.

The group’s financial disclosures show that it has shelled out over $14.3 million to Muñoz directly, and an additional $15.7 million to a limited liability company he owns. But the filings are available only through 2020, and the Democratic operative has maintained his relationship with the group in the years since, meaning he’s likely received even more money.

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These sums are comparable to the salaries of CEOs at New York’s largest and most lucrative hospital networks. But Muñoz has no medical degree and possessed no experience in health administration at the time he joined the group.

Perhaps most alarmingly, the organization’s funds—and Muñoz’s hefty take-home—are entirely underwritten by taxpayers.

Ethics experts told The Daily Beast that the combination of Muñoz’s staggering pay, its source, and the lack of clarity on the “consulting services” he provided are just some of the red flags the arrangement raises.

“The question is why a health network in the Bronx that was 100 percent state-funded paid millions of dollars to a San Antonio businessman to do—what?” demanded John Kaehny, executive director of the good government group Reinvent Albany. “That's a very big question and it should be answered, especially since Muñoz is such a politically involved figure.”

Kaehny urged the New York State comptroller and attorney general to investigate SOMOS’s finances, calling the amount of public money at play “humongous.”

Attorney General Letitia James’s office did not respond to outreach from The Daily Beast, while the comptroller’s office said it would only review the situation upon receiving a formal complaint.

Although he began his career as a Texas-based designer and impresario, Muñoz today is among the best-connected figures in national politics.

President Joe Biden officiated his wedding in 2017, and Muñoz has since hosted fundraisers for the commander-in-chief. His prodigious bundling and activism have won him appointments from the likes of former President Barack Obama and ex-House Speaker Nancy Pelosi.

Since he joined SOMOS, Muñoz and his husband have dramatically increased their giving to Democratic candidates and causes. Scrutiny into the source of Muñoz’s largesse could raise uncomfortable questions for other powerful Democratic figures.

It’s not only Muñoz’s recent political giving that has been lavish. In 2019 and 2020 alone, he and his husband acquired a 20-acre estate in Santa Fe, New Mexico, a full-floor condominium on Manhattan’s Park Avenue, and a seven-bedroom mansion in the ultra-elite suburb of Greenwich, Connecticut—a series of purchases exceeding $10 million in value.

In 2021, Muñoz bought Funny or Die for an undisclosed sum, and in 2022, got into producing Broadway shows. That year, he also endowed a theater at the new Museum of the American Latino in Washington, D.C., with $1 million, realizing a dream he had failed to achieve in his hometown of San Antonio 13 years before.

In a lengthy statement to The Daily Beast, Muñoz’s team maintained that he disbursed roughly two-thirds of the money SOMOS paid him to other contractors, including for television and radio airtime. His spokesman, Eric Soufer, called The Daily Beast’s inquiries “mystifying.”

“Henry R. Muñoz III has spent three decades creating and implementing culturally competent, transformational design across the private and public sector, with a focus on the way public services interface with the Latino, immigrant, and LGBTQ+ communities,” Soufer said. “Henry has done so by developing and producing patient-centered, culturally competent healthcare events, and by developing and producing marketing, advertising, and outreach strategies directed to the patient community.”

But even going by figures Soufer provided, Muñoz and his company were paid almost $11 million, just in the three years for which disclosures are available.

Notably, much of the advertising and multimedia material Soufer shared as proof of expenses dated to 2021 and 2022, when New York State enlisted SOMOS to run a COVID-19 vaccination program. There are no available filings for those years, which came after the group paid Muñoz the first $30 million.

A "salesperson" at heart

Muñoz stepped onto the national stage when he became DNC finance chair in 2013, after fundraising for Obama across two election campaigns. He would hold the role for six years. He again seized the spotlight in 2014, when he and actress Eva Longoria established Latino Victory to boost Latino representation in politics.

But in his home state of Texas, Muñoz was already a well-known player. A 2011 profile in the San Antonio Express-News characterized him as a brash, flashy, self-described “salesperson”: the CEO of an architecture firm who was not an architect; a prolific bundler for politicos and nonprofits; a masterful pursuer of public contracts; and a close associate of former Gov. Ann Richards.

The article also recalled that an audit had accused him of abusing his one-time role as a member of the Texas Transportation Commission, and that he long sought to establish a Smithsonian-affiliated museum with a theater space in San Antonio—even placing a lien against his own home to try and finance the ill-fated endeavor.

A separate Express-News piece from 2013 accused him of mismanaging the $12 million he raised for the museum by expending “large sums on furniture and lavish parties” before departing the project in 2009. That same year, Pelosi appointed him to a commission to study the possible creation of a similar institution in Washington, D.C.

One field where Muñoz had no apparent expertise, however, was health care, outside of once designing a hospital building in San Antonio. And he had no connection to New York City, or to the low-income neighborhoods there that have struggled for decades with chronic diseases and rely on Medicaid for their treatment.

Until very recently, his bio page on the DNC website claimed he “co-founded SOMOS Community Care, a nonprofit health care network focusing on New York City immigrant communities.” (After The Daily Beast reached out to the DNC about Muñoz, his bio changed to say he “serves as a valued partner to SOMOS Community Care.”)

In fact, SOMOS is a coalition of private medical practices spearheaded in 2014 by Dr. Ramon Tallaj and the administration of now-disgraced Gov. Andrew Cuomo. By forming a nonprofit—originally under the name Advocate Community Providers—these dispersed practitioners could take advantage of a new state Medicaid initiative that sought to reduce costly emergency room visits by providing consistent primary care and social services to the state’s poor.

SOMOS ultimately became the second biggest beneficiary of this program after the New York City public hospital network, getting awarded upwards of $700 million in state funds.

Because its revenue comes almost entirely from this single, public source, SOMOS has never engaged in the kind of private fundraising Muñoz excelled at in Texas, nor built the kind of public edifices he spent much of his career designing. And it already had lobbying and communications teams working for six-figure yearly sums.

The only apparent link between SOMOS and Muñoz was a personal, political connection: Tallaj.

A lucrative start

Although the doctor had previously been an active Republican, Tallaj was among Latino Victory’s earliest donors, and a co-host of one of its first fundraisers—along with two other SOMOS physicians.

Luis Miranda, a veteran New York City political guru who chairs Latino Victory’s board, told The Daily Beast he didn’t know how Muñoz and Tallaj’s relationship began except to say he sees them together “all the time” at events. He further maintained that Muñoz is no longer involved in Latino Victory’s day-to-day activities.

For this story, The Daily Beast spoke with multiple figures familiar with Muñoz, SOMOS, and Tallaj, most of whom requested anonymity to protect themselves from reprisals. None could say exactly how or why SOMOS suddenly retained Muñoz’s services, and a spokesperson for Tallaj and the organization declined to discuss the subject on the record.

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What the group’s reports to the Internal Revenue Service show is that, in 2018—his last year as DNC finance chairman—SOMOS paid Muñoz almost $5.7 million for “consulting services.” That sum is five times the amount the organization spent on lobbying and communications firms that year, and more than 10 times the compensation of the the group's CEO. Soufer, Muñoz’s spokesman, maintains that he kept less than $1 million of these funds, with the rest spent on subcontractors.

However, Soufer declined to share a breakdown of vendors that Muñoz would have paid the remaining $4.7 million to, even though he insisted none were firms belonging or paying a salary to his client.

Muñoz’s appearance in New York’s insular political and communications circles surprised and confounded some who encountered him. Sources who worked with SOMOS also expressed confusion over Muñoz’s exact role in the group. At times, he presented himself as a leader at the nonprofit; other times, he was just another consultant. For many meetings, insiders said, he would call or Zoom in from out of town.

SOMOS’s outlay to Muñoz went up by almost two-thirds in 2019, topping $8.6 million, according to the disclosures—again for “consulting services.” Soufer asserted that the consultant held on to only $3.13 million of these funds, but still declined to provide the names of the other payees.

SOMOS’s tax returns listed Muñoz by name as a vendor his first two years, directing payments to his San Antonio office. But in 2020, the organization instead directed its disbursement to a limited liability company lodged at the same Texas address: MSTZO LLC. State business records show Muñoz is the president and sole shareholder in this company.

What also changed was the amount SOMOS paid for Muñoz’s “consulting services”: almost $15.8 million. According to Soufer, $9.4 million of this was left over after MSTZO paid the other—still unnamed—entities that he said did everything from polling to phone app development to ad and web design.

SOMOS refused to answer how it decided that hiring a costly out-of-state consultant represented the best value for the organization and the public funds in its care, and who else it considered for his role. But it maintained that all his seven- and eight-figure deals underwent a gamut of internal approvals, and got the sign-off of the local hospital system that handles the organization's books and serves as its state-appointed fiduciary. The exact steps and degree of scrutiny involved in this process, however, remain unclear.

“Controls, oversight and accountability include background checks, competency checks, and fair market value analysis as necessary prior to board approval, which is required for contracts exceeding $100,000,” SOMOS general counsel Kenneth Larywon said in a statement to The Daily Beast. “All SOMOS Community Care vendor contracts including Henry R. Muñoz III/MSTZO, LLC go through the above noted steps.”

“He was instrumental in developing and executing key marketing, design, and communication strategies to help serve those communities and help SOMOS successfully achieve our mission,” Larywon added.

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During the period for which records are available, SOMOS’s revenues declined markedly: from $182.8 million in 2018 to $104.7 million in 2019 to $33.5 million in 2020, tracking with the tapering-off of the state Medicaid program that the group was founded to capitalize on.

Larywon maintained that only $17 million of the $30 million SOMOS doled out to Muñoz over the first three years came from that initiative, indicating that the remainder derived from payments SOMOS received for providing services to patients. The organization refused to answer whether these fees also came out of Medicaid or another government program, and whether Muñoz or MSTZO received any part of the $25.5 million state contract to run COVID testing sites SOMOS landed in March 2020.

Meanwhile, for Muñoz, the influx of SOMOS cash coincided not just with a series of splashy property acquisitions but a marked increase in his political giving.

In just the period of Jan. 2018 until Jan. 2023—that is, his time working for SOMOS—the total value of his federal contributions exceeded $1.15 million, nearly $400,000 more than he’d donated in the previous 30 years, including during most of his tenure as DNC finance chair. His husband, meanwhile—who alternately lists himself as an employee of Muñoz’s architecture firm and of MSTZO, LLC—contributed nearly $700,000 to federal candidates in the same period, half a million dollars more than he’d previously given his whole life.

Similarly, prior to 2018, Muñoz had made just five political gifts in New York, totaling $38,450, mostly donations to then-Gov. Cuomo. Today, the total value of all campaign contributions he has made in the state stands at almost 10 times that amount: $353,750.

Tallaj, SOMOS’s chairman and Muñoz’s old political pal, also dramatically escalated his political giving during the same period—in which two companies registered in his name received a combined $10.5 million from the nonprofit.

The "General"

When the COVID-19 pandemic struck, the line between Muñoz and SOMOS blurred even further. The Medicaid initiative that funded the organization expired in the earliest weeks of the crisis, but state records show Cuomo’s administration pumped $113.7 million worth of contracts into SOMOS between March 2020 and June 2021 to operate testing and vaccine centers.

Muñoz swaggered through press events in a SOMOS-branded fleece with four stars and the word “General” stitched on the breast. He appears to have been alone in identifying himself by this rank, but multiple publications and politicians described him as a co-founder of the group—including Cuomo himself.

Muñoz and SOMOS soon repaid the governor’s tribute. In July 2021, as Cuomo clung to political life amid a rash of sexual harassment allegations, the New York Post reported that the Texan and 11 SOMOS doctors and staffers administered an infusion of $230,000 into the Democrat’s flagging re-election campaign.

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It was too late to save the governor, who resigned that August. Last year, however, Muñoz and his husband ran a Latino voter mobilization drive on behalf of Cuomo’s embattled replacement, Gov. Kathy Hochul and the New York State Democratic Party.

Hochul, for her part, has sought to revive the sunsetted Medicaid program that funded SOMOS until 2020. And in late February of this year, she awarded just shy of $7.5 million to a SOMOS-tied entity incorporated in Tallaj’s name to construct a substance abuse center, a first-of-a-kind for the group. Neither the governor’s office nor her campaign responded to repeated requests to comment for this story.

The pattern of payments to Muñoz, his company, and the entities tied to Tallaj stunned even longtime observers of New York’s medical system.

“This organization was supposed to be taking care of the needs of Medicaid recipients,” said Bill Hammond, senior fellow for health policy at the Empire Center, a fiscal watchdog group.

“It was entrusted with hundreds of millions of dollars,” Hammond said. “And when you look closely, it turns out a lot of that money went to a doctor who is a board member, which seems like a conflict of interest, and to another outside guy who doesn't seem to have a skillset related to meeting the health care needs of Medicaid recipients.”

Read more at The Daily Beast.

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