|CRISIS AT THE NRA
NEW from THE TRACE: New York Attorney General Letitia James sues to dissolve the NRA. In a civil complaint filed yesterday in state court, the office details an array of financial misconduct by its CEO Wayne LaPierre, its general counsel John Frazer, former COO Joshua Powell, and former treasurer Woody Phillips. CNN notes that her office began investigating the gun organization in 2019, “after reporting by The Trace alleged that a small group of executives, contractors and vendors affiliated with the group extracted hundreds of millions from the nonprofit’s budget.” Will Van Sant wraps up the news here.
The allegations: “The NRA, at the direction of the individual defendants and with a series of failures of required oversight by its board, has persistently engaged in illegal and unauthorized activities in the conduct and transaction of its business,” the 164-page complaint states. It cites arrangements first uncovered by The Trace’s reporting, in which tens of millions of dollars in expenses by NRA execs were passed through the group’s former marketing agency, Ackerman McQueen. The agency would cover the out of pocket expenses of LaPierre and other executives, then bill the gun group, which would pay the costs “without written approvals, receipts, or supporting business purpose documentation.” James added that LaPierre and others should have reported those expenses as taxable income and that her complaint was being given to the IRS. She pointed to several examples of LaPierre’s misuse of NRA money, including millions on luxury personal travel and securing a retirement contract with the NRA without approval from the nonprofit’s board.
The stakes: Besides the dissolution of the NRA, the suit seeks the removal of LaPierre from his CEO post and millions in restitution from the four defendants. James said her investigation is ongoing and that the AG would refer to the Manhattan DA any evidence of criminal acts uncovered by the probe.
Double trouble: The D.C. AG’s office announced its own action against the NRA Foundation, claiming that it used funds to cover wasteful spending by NRA executives. “Charitable organizations function as public trusts — and District law requires them to use their funds to benefit the public, not to support political campaigns, lobbying, or private interests,” said AG Karl Racine.
The NRA’s response. The gun group quickly filed a countersuit, arguing in federal court that the NY AG’s action was a violation of its First Amendment rights and part of a coordinated effort by New York officials to destroy the NRA. LaPierre called the suit against his group “an unconstitutional, premeditated attack” and insisted that the “NRA is well governed, financially solvent, and committed to good governance.”
Opening the war chest. The head of NRA’s lobbying arm, Jason Ouimet, told The Washington Free Beacon that the NRA is planning to pour “tens of millions of dollars” into battleground states during the home stretch of the 2020 elections. The NRA spent more than $50 million in 2016 to help elect Trump, but gun reform groups pulled far ahead during the 2018 midterms. Ouimet said that the NRA lost between $10 and $15 million after canceling its annual convention and other fundraising events, but has added over 60,000 new members since June.
🗣️Expert reactions🗣️ What legal observers are saying:
- “If the allegations are proven correct, it’s probably the worst example of nonprofit mismanagement that anyone has ever seen. What I thought was a reach before [the AG pursuing dissolution], I think now would really be the only viable option. Under the circumstances, I don’t know how you could not pursue dissolution. It’s not a situation that’s capable of being corrected.”—Michael West, senior attorney for the New York Council of Nonprofits, to the Trace.
- “The AG’s complaint alleges substantial and disturbing financial wrongdoing by the NRA’s officers, but corporate dissolution is the most extreme remedy in a case of this kind. It remains to be seen whether that bold prayer for relief can be justified by the extent of the self-dealing and misappropriation.” —Sean Delany, a former director of the charities bureau in the attorney general’s office, to the Trace.
- “There are still a lot of single-issue pro-gun voters who will make their voices heard on Election Day. But it seems likely that the NRA will have neither the money nor the focus to lead them. Instead of fighting for its expansive vision of the Second Amendment, it will be too busy trying to save itself.” —Adam Winkler, professor of law at UCLA, writing in The New Republic.