New York AG seeks to shut down NRA in lawsuit alleging financial crimes
New York Attorney General Letitia James filed a lawsuit on Thursday seeking to disband the National Rifle Association (NRA), claiming its top officials diverted millions of dollars from the influential gun group for their personal use and enriched their families and close associates by awarding lucrative contracts.
The lawsuit from James, filed in New York state court, alleges the NRA and four of its top executives mismanaged funds and violated state and federal laws, resulting in the loss of more than $64 million for the organization in a span of three years. The senior leaders, James claims, used millions from the NRA’s coffers on trips to the Bahamas, private jets, luxury hotels and fine dining.
“It’s clear that the NRA has been failing to carry out its stated mission for many, many years and instead has operated as a breeding ground for greed, abuse and brazen illegality,” James said during a news conference. “In this state, we have a set of laws that every individual and entity must be held accountable to regardless of who you are, regardless of your power, size, influence, wealth or station in life, one set of laws. And today, we send a strong and loud message that no one is above the law, not even the NRA.”
District of Columbia Attorney General Karl Racine also filed a lawsuit against the NRA and the NRA Foundation, which is incorporated in D.C., in the superior court alleging misuse of charitable funds.
NRA President Carolyn Meadows vowed in a statement that the organization will prevail in the dispute.
“This was a baseless, premeditated attack on our organization and the Second Amendment freedoms it fights to defend,” she said. “You could have set your watch by it: the investigation was going to reach its crescendo as we move into the 2020 election cycle. It’s a transparent attempt to score political points and attack the leading voice in opposition to the leftist agenda. This has been a power grab by a political opportunist – a desperate move that is part of a rank political vendetta. Our members won’t be intimidated or bullied in their defense of political and constitutional freedom.”
James’ lawsuit seeking to shutter the NRA, which is chartered in New York, is the latest in a series of woes that has left the nation’s largest and most powerful gun group reeling. Its existing financial issues have been exacerbated by the coronavirus crisis, which forced the group in May to lay off dozens of employees, cancel its national convention — which in the past has been attended by President Trump — and call off fundraising and membership events. The NRA also has come under scrutiny from state investigators and regulators, and NRA leaders, namely Executive Vice President Wayne LaPierre, have faced backlash for their hefty compensation and spending habits.
The suit is the culmination of an investigation James’ office launched in early 2019. In addition to dissolving the NRA, James is seeking to recoup the millions of dollars in lost assets and remove LaPierre from his long-held post. The complaint will also be forwarded to the IRS, James said.
The executives named in the complaint are LaPierre, former chief financial officer and treasurer Wilson Phillips, former chief of staff and executive director of general operations Joshua Powell and corporate secretary and general counsel John Frazer.
As one of the NRA’s most well-known faces, LaPierre often appears on television and at conferences to advocate for gun rights, emerging as one of the most vocal advocates of the Second Amendment among growing calls at the national and state level for more stringent gun laws.
But according to James’ lawsuit, LaPierre has “exploited” the NRA, where he has worked for nearly 30 years, for his personal gain. He and his family allegedly traveled to the Bahamas by private jet at least eight times in three years, costing the NRA more than $500,000. On those visits, a NRA vendor gave LaPierre and his family use of a 107-foot yacht, James claims.
He and his wife also traveled to Africa for all-expense paid safaris given to him by an NRA vendor and allegedly spent more than $3.6 million in the last two years on travel consultants, the suit states. James claims LaPierre secured a post-employment contract for himself with the NRA worth more than $17 million, but did not receive approval from the group’s board of directors, and spent millions of dollars in NRA funds on private security costs.
The complaint also alleges LaPierre was reimbursed more than $1.2 million in a four-year period for gifts for friends and vendors, travel costs for him and his family, and membership fees at golf clubs and other private clubs.
LaPierre hired Phillip, Powell and Frazer, according to the lawsuit.
Phillips, who oversaw the NRA’s financial operations and retired in 2018, allegedly lied on financial disclosure forms, violated NRA policy and secured himself a $1.8 million contract for consulting services to the group’s incoming treasurer. The lawsuit also claims Phillips allowed NRA executives to fraudulently bill millions of dollars in entertainment and travel costs through a scheme involving Ackerman McQueen, the gun organization’s longtime public relations and advertising firm.
The NRA and Ackerman McQueen, its largest vendor, are currently embroiled in a legal battle, with the gun group claiming the Oklahoma-based firm refuses to turn over financial records to account for its billing.
The lawsuit from New York’s attorney general also claims Powell, LaPierre’s chief of staff, misappropriated NRA funds during the more than three years he worked for the gun group. Over that span, James claims Powell saw his salary increase substantially from $250,000 when he was hired to $800,000 despite complaints of abusive behavior and claims of illegal conduct and inappropriate spending.
Powell allegedly kept more than $100,000 through the NRA’s housing and relocation reimbursements. During his tenure, Powell was involved in the hiring of McKenna & Associates, a fundraising consultant, which was paid more than $5 million over five years, according to the lawsuit. The complaint states Powell’s wife was hired as a consultant for the firm in 2018, and her $30,000 monthly fee was passed through the NRA.
James also claims Powell’s father was hired by an NRA vendor as a photographer at his request and ultimately made more than $90,000, which was funneled through to the NRA.
Frazer, meanwhile, is accused of failing to ensure compliance with board procedures, NRA policy and the law. The complaint claims he repeatedly certified false or misleading annual statements.
James’s lawsuit also details a pass-through arrangement between the NRA and Ackerman McQueen, through which the public relations firm covered expenses for LaPierre and other NRA leaders and then billed the gun group for them using descriptions on invoices such as “out-of-pocket expenses.”
The complaint states Ackerman McQueen received more than $70 million in 2017 and 2018 for “public relations and advertising” services and “out-of-pocket expenditures,” which New York prosecutors say were entertainment and travel costs incurred by NRA executives.
Among the laws James claims the NRA violated are those governing its charitable status, false reporting on IRS and state filings, and improper income tax withholding.
At the White House, Mr. Trump called the lawsuit a “very terrible thing” and suggested to reporters that the gun rights and political juggernaut “move to Texas and lead a very good and beautiful life.”