WASHINGTON—Internal documents obtained by The Daily Wire reveal the extent of the deficit spending that occurred at The Kennedy Center under the Biden administration — a scheme that left the performing arts center deep in debt and could open leaders up to potential legal action.

Kennedy Center President Richard Grenell this week told the organization’s board of directors that, under the direction of recently departed president Debra Rutter, the group “found $26 million in phantom revenue, fake revenue.”

“It’s criminal,” Grenell said, adding that “We’re going to refer this to the U.S. attorney’s office.”

Rutter denied the allegations, telling the Washington Post that she and her leadership team prepared a budget each year that was approved by the board of directors. But in a letter to Grenell obtained by The Daily Wire, Kennedy Center Chief Financial Officer Donna Arduin says that Rutter’s budget claim is irrelevant.

“Budgets and audits are on vastly different timetables and audits do not review the budgeting process,” Arduin wrote. “Audits are released up to a half year after the conclusion of the fiscal year, whereas budgets are approved well in advance of the fiscal year.”

Arduin, known as one of the nation’s leading budget experts, came to the Kennedy Center after stints in top roles across the country. She’s been brought in to right the budgets of California under Arnold Schwarzenegger, New York under George Pataki, and Florida under Jeb Bush.

In her months at the Kennedy Center, she determined that Kennedy Center leadership “veiled the fiscal year 2025 budget with $26 million in fictitious revenue and did not properly disclose such to the Board,” according to a letter to Grenell. In short, Arduin writes in the letter, “the Board believed that they were in good faith passing a balanced budget.”

Additionally, Arduin notes in her letter to Grenell that “under Rutter’s watch, the Center’s leadership team changed the name of the debt reserve fund that held $54 million of donor contributions for the retirement of our bank loan to the ‘sustainability fund,’ apparently to appear that new funds had been raised for budget sustainability, and spent it to mask deficits.”

This is the latest revelation of trouble at the Kennedy Center, which has become a flashpoint in the second Trump administration. Trump has pledged to make serious improvements to the performing arts center, repairing its outdated facilities and purging its repertoire of drag shows and other “woke” programming.

Program offerings under former Kennedy Center leadership may have contributed to its dire financial straits. Sources with knowledge of the Center’s financial situation tell The Daily Wire that its programming has a net margin of negative $72 million. Under Grenell, The Kennedy Center is focusing on shows that will sell tickets and appeal to a wider audience.

The Kennedy Center operates on a $230 million annual budget. A portion of its revenue, allocated by Congress, is earmarked for capital costs and facilities maintenance. The remainder of the Center’s money comes from donors.

Sources with knowledge of the Center’s financial situation tell The Daily Wire that, under Rutter’s leadership, the organization raised $250 million and took out a $72 million loan to construct The REACH, a multipurpose space that includes rehearsal rooms, studios, and more.  President Donald Trump has criticized the project, which sources described as the “passion project” of Rutter and former Kennedy Center Chairman David Rubenstein, whose portrait adorns the front door of the REACH.

That the Kennedy Center raised and borrowed more than $300 million and did not use it to pay down its debt suggests that previous leadership teams were misguided in their financial priorities.

“The former leadership built a broken budget with an operating deficit of 100 million dollars and a bottom-line deficit of $26 million,” Arduin told The Daily Wire. “We have now truly balanced the budget.”

In March, The Daily Wire reported that Arduin informed staff the Kennedy Center had “no cash to pay our bills.” At the time, Grenell announced that he planned to make staff reductions and slash executive salaries.

Iranian-backed groups and pro-Hamas Islamists celebrated the horrific murder of two Israeli embassy staff at a D.C. Jewish museum on Wednesday, hailing it as “a moment of courage” and a “heroic attack” against “the Zionist entity.”

Yaron Lischinsky, 30, and Sarah Milgrim, 26, were exiting an event for young Jewish professionals, where they were shot at close range by 30-year-old Elias Rodriguez of Chicago, who is now in custody.

The suspected attacker is reportedly not Muslim, but carried out the attack in support of Hamas, reportedly yelling “Free, free Palestine,” while shooting at the couple.

“I did it for Palestine, I did it for Gaza, I am unarmed,” Rodriguez told police after the shooting, according to an FBI affidavit.

The Middle East Media Research Institute (MEMRI) reports that the pro-Hamas Gaza Now media outlet glorified Rodriguez on Telegram, claiming that “in a moment of courage, he decided to make his voice heard and boldly confront the killers.”

“He opened fire, killing an Israeli employee, and stood defiantly, handcuffed, to raise the banner of justice in the face of injustice,” the group said.

The Iranian-backed Palestinian Mujahideen Movement, a terrorist organization separate from Hamas that has claimed responsibility for rocket attacks against Israel, said in a statement that the attack reflected “growing global anger” toward Israel for its supposed “barbaric crimes” in Gaza and declared that Israel’s “ongoing impunity” is a “threat to international stability and peace,” MEMRI reported.

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A Telegram channel called “Unit 10000,” affiliated with Iran-backed militias in Iraq, shared a video showing the arrest of the suspect and praised the shooting as a “heroic attack” against “the Zionist entity.”

Syrian jihadi cleric Abu Yahya Al-Shami published a post on Telegram praising the shooter and urging Muslims to follow his example.

The cleric expressed fury at Muslim “indolence” in waging jihad, indignant that “infidels” such as Rodriguez are murdering Israelis while Muslims remain “inactive.”

Federal authorities are investigating the shooting as a domestic terrorism incident with possible international connections.

Rodriguez is being charged with murder of foreign officials, causing the death of a person through the use of a firearm, discharge of a firearm during a crime of violence, and two counts of first-degree murder, according to an FBI affidavit.

The FBI is currently investigating Rodriguez’s online activities and potential ties to extremist groups, though initial reports suggest he was radicalized primarily through social media content related to the Gaza conflict.

The suspect had no prior criminal record, but had reportedly become increasingly vocal about pro-Palestinian causes on various social media platforms in recent months.

FBI Deputy Director Dan Bongino said on X, “The FBI is aware of certain writings allegedly authored by the suspect, and we hope to have updates as to the authenticity very soon.”

Interim U.S. Attorney for the District of Washington Jeanine Pirro clarified that domestic terrorism charges could likely be added to Rodriguez’s case following the conclusion of the FBI investigation into the suspect.

“Violence against anyone based on their religion is an act of cowardice. It is not the act of a hero. It is the kind of case that we will vigorously pursue,” Pirro said at a Thursday press conference. “Antisemitism will not be tolerated, especially in the nation’s capital. We are going to continue to investigate this as a hate crime and a crime of terrorism and we will add additional charges as the evidence warrants.”