New York Attorney General Letitia James has entered a proverbial David v. Goliath battle, filing suit that seeks to dissolve the powerful National Rifle Association (NRA).
In a news conference Thursday, James announced she’d filed charges against the organization.
The filing alleges illegal conduct and cites “their diversion of millions of dollars away from the charitable mission of the organization for personal use by senior leadership, awarding contracts to the financial gain of close associates and family, and appearing to dole out lucrative no-show contracts to former employees to buy their silence and continued loyalty.”
Specifically, James charged that the most influential pro-gun organization in America is corrupt.
She alleges that the organization, CEO Wayne LaPierre, former CFO Wilson Phillips, former Chief of Staff and Executive Director of General Operations Joshua Powell, and Corporate Secretary and General Counsel John Frazer failed to manage the NRA’s funds and failed to follow numerous state and federal laws, contributing to the loss of more than $64 million in just three years for the NRA.
“The NRA’s influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets,” James said. “The NRA is fraught with fraud and abuse, which is why, today, we seek to dissolve the NRA, because no organization is above the law.”
James cited numerous examples where the four individual defendants listed in the complaint had “failed to fulfill their fiduciary duty to the NRA.”
She alleged that they used millions upon millions from NRA reserves for personal use, including trips for them and their families to the Bahamas, private jets, expensive meals and other private travel.”
In addition to shuttering the NRA’s doors, James said she’s seeking to recoup millions in lost assets and stop the four individual defendants from serving on the board of any not-for-profit charitable organization in the state of New York again.
According to the attorney general’s filing, the four individuals “instituted a culture of self-dealing, mismanagement and negligent oversight at the NRA that was illegal, oppressive and fraudulent.”
“They overrode and evaded internal controls to allow themselves, their families, favored board members, employees and vendors to benefit through reimbursed expenses, related party transactions, excess compensation, side deals, and waste of charitable assets without regard to the NRA’s best interests,” James said.
When board members challenged LaPierre and others over their financial governance and leadership of the NRA, it’s alleged that LaPierre retaliated and turned the board against those who attempted to challenge the illegal behavior.
LaPierre, Phillips, Powell, Frazer and other executives and board members at the NRA allegedly abused their power and illegally diverted or facilitated the diversion of tens of millions of dollars from the NRA, James said.
“These funds were in addition to millions of dollars that the four individual defendants were already receiving in grossly excessive salaries and bonuses that were not in line with the best practices and prudent standards for evaluating and determining compensation,” she said.
Leadership at the NRA also failed to assure standard fiscal controls, failed to respond adequately to whistleblowers, affirmatively took steps to conceal the nature and scope of whistleblower concerns from external auditors, and failed to review potential conflicts of interest for employees, according to the complaint.
James said the NRA violated various laws, including the laws governing the NRA’s charitable status, false reporting on annual filings with the IRS, and the OAG’s Charities Bureau.
She further alleged improper expense documentation, improper wage reporting, improper income tax withholding, failure to make required excise tax reporting and payments, payments above reasonable compensation to disqualified persons, and waste of NRA assets; in direct violation of New York’s Estates, Powers & Trusts Laws; New York’s Not-for-Profit Corporation Law; the New York Prudent Management of Institutional Funds Act; and New York’s Executive Law.
“The illegal nature of the four individual defendants’ action also violated multiple rules of the NRA’s bylaws, the NRA’s employee handbook, and the NRA’s policy manual,” James said.
The NRA’s failure to comply with multiple fiduciary responsibilities and state and federal laws resulted in the NRA’s seeing substantial losses on its balance sheet, the complaint said.
The organization went from enjoying a surplus of more than $27.8 million in 2015 to a net deficit of more than $36.2 million in 2018 — contributing to a total loss of more than $64 million in just three years.
James said she began looking into the NRA in February 2019 and now seeks to dissolve the organization.
She’s asking a federal court judge to order LaPierre, Phillips, Powell and Frazer to make full restitution for funds they unlawfully profited and salaries earned while employees; pay penalties; recover illegal and unauthorized payments to the four individuals. James also called for the removal LaPierre and Frazer from the NRA’s leadership — the NRA no longer employs Phillips and Powell — and for assurances that none of the four individual defendants ever again serve on the board of a charity in New York.