Attorney General Files Amended Complaint

The Attorney General has filed an amended complaint, 187 pages long. The original complaint was brutal, this is beyond that. Staff and some directors are looting the corporation for millions or tens of millions. The Audit Committee (Charles Cotton, chair and soon to be NRA president) ignore their duties and rubber-stamp the looting. The board is rubber-stamping everything, even handing LaPierre loot that he didn’t ask for. LaPierre diverts NRA resources into influencing board elections. Tax forms have been falsified. When the treasurer refused to sign the IRS Form 990, LaPierre fired him. He refused to sign because he asked for documentation, it was refused, and he asked other officials to at least vouch for its contents, and they refused. The supposed reforms are a not even a good sham, the looting continues and the board could care less so long as it gets its dinner and drinks. Here is a skim of the amended complaint.

Paras 150 on, private leased jets used for LaPierre’s relatives’ convenience, at NRA cost of $8,000-107,000 per trip. Women’s Leadership Forum used as Susan LaPierre’s slush fund. “From May 2015 to April 2019, the NRA incurred over one million dollars in expenses for private flights when LaPierre was not a passenger.” That is, for his relatives, and when his security cannot be claimed as a justification.

His “travel consultant” for the leased jets got fortunes to arrange trips for him and maybe two other employees. “The then-Treasurer testified that, in the fall of 2018, the NRA eliminated “all non- mission-critical travel” to reduce the NRA’s expenses. Following the elimination of non-mission critical travel, payments to LaPierre’s Travel Consultant dropped by nearly 50%—from $2.9 million in 2017 to $1.5 million in 2019. “

“In its annual filings with the Attorney General for 2014 to 2018, the NRA asserted that it required substantiation prior to reimbursing these expenses. The Attorney General has not found any evidence that the private flights and related business uses were substantiated prior to reimbursement.”

Para 166 onward, LaPierre yacht trips and Bahamas vacations. Private jet trips there eight times, on most trips after picking up his niece in Nebraska. Cost to NRA over half a million. Celebrity retreats hosted by NRA vendors who have received over $100 million from NRA. 20 private jet flights to Los Angeles to meet with them, while staying at 5 star hotels.

Para 199 onward, LaPierre’s personal expenses billed to NRA. Big Christmas present bills. $1,340 per night hotel rooms for LaPierre’s niece. $37,000 for safari expenses. $100,000 for his golf club membership.

         Para 217 onward. LaPierre’s security budget. Several million dollars per year. Armored vehicle procured without complying with NRA purchasing policy. The Texas mansion. Treasurer Phillips ordered $70,000 earnest money check to be sent to shell company without IRS W-9 or complying with NRA policies.

         Para 230 onward, former treasurer Woody Phillips. Had “personal relationship” with a vendor whose CEO got $1.4 million from NRA. Received yacht uses from vendors. When he retired, got a big consulting contract. President and 2nd VP authorized it without asking board, as is required. $360,000 per year for five years. Took Fifth Amendment when questioned.

         Para 252 onwards, Josh Powell. Salary $250,000, one month after hiring increased to $500,000 retroactively. Then to $800,000, plus expenses paid in violation of NRA policy. He and Phillips authorized verbal contracts with vendors for millions.

         Para 286 onward, John Frazer. Legal experience a year and a half, none in corporate or non profit law or New York law. Paid about $400,000. Failed to comply with NY law. False certifications to NY. 

         Para 297 onward, “LaPierre’s Senior Assistant,” which fits Millie Hallow. “LaPierre’s Senior Assistant joined the NRA with a criminal record of embezzling from a non-profit where she had worked in the 1980s.”

“At some point in the 2000s, LaPierre’s Senior Assistant was accused of diverting money from the NRA to use for personal expenses. This prompted an investigation by the NRA Board and an external auditor, which resulted in LaPierre’s Senior Assistant’s NRA credit card being taken away. However, even though her corporate credit card was taken away, she continued to have access to and use of other NRA employees’ corporate credit cards, including the CFO’s.” She had NRA pay $18,000 for her son’s wedding costs. Routinely hired “black cars” to take her to airport, etc., at costs of over a thousand per day. Other employees didn’t question it because they were so accustomed to her using NRA money for her own purposes. Audit Committee was informed of abuses, and retroactively approved them. NRA tax form admits she diverted $41,000 of NRA money, yet she remains employed at full salary.

         Para 311 onward. “LaPierre’s Improper Use of NRA Funds to Influence Board Elections.at LaPierre’s direction, the NRA hired employees to organize and oversee a grassroots network of volunteers to promote LaPierre’s favored candidates. Upon information and belief, the NRA paid the travel expenses of these volunteers to, among other things, hand out promotional materials for LaPierre’s favored candidates at NRA annual meetings.”

            Para 314 onward, the PR firm Ackerman. Used as pass-through for money to avoid IRS reporting. “Under the umbrella of “Pass-through Expenses,” the NRA paid for millions of dollars in entertainment and travel expenses incurred by NRA executives and associates— including LaPierre and Powell—without scrutiny from within the organization.”  So much here, can’t list it all.

            “LaPierre also used the pass-through arrangement to conceal private travel and trips that were primarily personal in nature. Upon information and belief, LaPierre directed Ackerman to pay for expenses related to NASCAR events, country music events, and even medical visits, and bill those through to the NRA.” Lodging on one personal trip nearly $10,000. When LaPierre travelled, Ackerman would send a person to escort him, often advanced several thousand for meals and tips.

            NRA’s director of advancement (a former Ackerman executive) did the same. “He routinely stayed in suites costing over $1,500 a night.” 

            “LaPierre’s wife would incur thousands of dollars of expenses per event for hair and makeup services, which were billed through Ackerman as out of pocket expenses. For example, between May 2016 and May 2017, the NRA paid one artist $16,359 for three events for LaPierre’s wife. Upon information and belief, both LaPierre and his wife were aware of the cost of these makeup services.”

            Para 344 onward, “Under Wild Skies.” Paid $18 million by NRA. “LaPierre also directed the president of Mercury Group and UWS to pay for various NRA board members and officers and their spouses—including the former Executive Director of NRA-ILA and his spouse, current board members, and the Executive Director of Advancement— to participate in big game hunts around the world. Upon information and belief, these trips were not authorized by resolution of the NRA Board or an authorized committee.” Head of UWS was paid millions “on the side.”

            Para 355 onward. Consulting agreements with former employees. Milllions. Head of General Operations was fired, but paid $1.8 million. Not approved by president and a VP as required.

            Former NRA Foundation director. Paid a fortune as a fundraising consultant through a shell company he owned. Not disclosed on tax forms, and he did not register as a fundraising consultant.

            Former director of affinity and licensing. Retired in January but paid the full year’s salary of $630,000, then a consulting contract for $400-500,000 per year. Consulting contract required him to work “not to exceed 7.5 hours a month.” External auditors flagged.

            Para 382 onward, related party transactions with board members. 

            Para 413 onward, excessive compensation to executives. NRA certified on its IRS tax report that compensation was set via compensation experts and surveys. This was untrue. The official compensation committee at one point hired an expert, but recommended salaries without receiving his report. More often, it had and asked for nothing, just did as it pleased, making the tax form false. The board routinely approved with little debate. The Committee did not consider all the free travel, leased jets, etc. that LaPierre was receiving. LaPierre’s “retirement contract” never considered by board. “the NRA was obligated to continue to pay LaPierre for years after he lost re- election or retired and at a higher rate than his compensation as Executive Vice President. LaPierre testified that he was aware of this feature of the contract: “I noticed that and kind of shook my head at it when I saw it,” LaPierre recalled, “I didn’t ask for this contract. It’s what was presented to me and I signed it and it never went into effect because I stayed on as EVP.”” In 2018 it was modified, to pay a total of over $10 million. This makes it look as if the board was shoveling more money at LaPierre than he wanted.

            IRS reports mis-reported compensation year after year, leaving off millions.

            Para 462 onward, retaliation against dissidents on the board. Brewer law firm was paid $19 million in 12 months, Audit Committee finds its contract did not comply with NRA policy. Frazer, who signed it, admits was error. “From March 2018 to December 2020, the NRA paid the Brewer firm nearly $75 million in legal fees.”

            Dissident directors were “stonewalled, accused of disloyalty, stripped of committee assignments, and denied effective counsel necessary to properly discharge [their] responsibilities as board members.” Any board member who dissents from the looting is being purged.

            Para 495 onward, “The NRA Board’s Failures Resulting in Violations of Law

Audit Committee totally failed its obligations. Its chair, Charles Cotton, did not even read its charter. Failed to do things charter required, did not know was part of its duties. Failed to respond to whistleblowers, as law requires. Their arguments were concealed from outside auditor. Whistleblower felt threatened, Audit did nothing. It ignored related party transactions in violation of NY law. Then it began approving them retroactively, without looking into them. Some of the retroactive approvals spanned over ten years of contract that had never been revealed to Audit Committee.

“Examples of the related party transactions and conflicts of interest that were improperly approved by the Audit Committee include: 

  1. On April 28, 2019, the Committee retroactively approved approximately $3,692,000 paid by the NRA to Unified Sportsmen of Florida over a nineteen-year period. Board Member No. 5 (meaning Marion Hammer) is the Executive Director of Unified Sportsmen of Florida. At the same meeting, the Committee also prospectively approved future payments by the NRA to Unified Sportsmen of Florida. 
  2. On April 28, 2019, the Committee retroactively approved approximately $326,000 in grants from the NRA to the New Jersey Rifle and Pistol Clubs, Inc. over a fourteen- year period. The president of the New Jersey Rifle and Pistol Clubs, Inc. is a board member of the NRA. At the same meeting, the Committee also prospectively approved new transactions between the New Jersey Rifle and Pistol Clubs, Inc. and the NRA. 
  3. On April 28, 2019, the Audit Committee retroactively approved transactions between SpiritWild Productions and the NRA amounting to approximately $120,000 over a two- year period. The President and Director of SpiritWild Productions is the wife of a board member of the NRA. On May 30, 2019, and again on January 9, 2020, the Audit Committee prospectively approved new transactions with SpiritWild Productions.”

More screw-ups. Outside auditor was told LaPierre is just a lobbyist who is not involved with NRA’s operations and finances. “the Vice Chair of the Audit Committee testified that he did not feel the need to ask RSM for external oversight of LaPierre’s expenses because he “personally [had] a great deal of trust in Wayne LaPierre” and he didn’t believe that LaPierre “expends money unnecessarily.”” Audit Committee indemnified directors and officers for legal fees, but it had no power to do so. Legal fees were “in connection with an investigation being conducted by the US Department of Justice.”

Para 553 onward, NRA has failed to institute an effective compliance program. This is an attack on leadership’s claims that it has. It doesn’t have a dedicated compliance officer. LaPierre tasked Powell with that, and then suspended Powell for his own noncompliance. Total efforts consisted of creating one presentation. Chair of Audit had no idea what was being done here. LaPierre failed in duties and so did Audit Committee. False regulatory filings year after year. Para. 568 onward details the false filings. Omitted payments to officers and directors. Claimed there were no related party transactions, reported as “independent directors” people who were not, failed to report vendors who gave things to LaPierre, Phillips, and Powell and others, failed to report payments to Crow Shooting, which was owned by a former president, failed to disclose all that was being paid to Ackerman and Mercury Group, said it had not become aware of diversions of its fund even though whistleblowers had made their report of this, failed to report LaPierre’s wife’s used of leased jets billed to NRA, failed to disclose a vender (given millions) as a fundraiser who wasn’t licensed as such. List goes on and on.

Para 570 onward, failure to comply with NY law. It imposes many duties on a board and fund managers. NRA failed to comply.

“It has permitted unrestricted net assets on its balance sheet to decrease from a surplus (unrestricted assets less liabilities) of $27,802,714 at year-end 2015, to a net deficit at year-end 2016 of $14 million, to a net deficit at year-end 2017 of $31,779,599, to a net deficit at year-end 2018 of $36,276,779.to a net deficit of $49,641,823 at year end 2019. The total reduction in unrestricted assets over the four -year period exceeds $77 million. The Board minutes of the NRA do not reflect any consideration of this precipitous decline, or consideration of the factors set forth in NYPMIFA, with respect to this use of institutional funds. The Attorney General, upon information and belief, alleges that this decline in unrestricted assets continues to the present time.” The board is simply blind to even the greatest of corporate crises.

NRA leadership and board has imprudently paid Brewer $54 million, broken agreements with its lenders, pledged capital assets to get loans to pay daily expenses, borrowed from its Foundation by pledging the same assets twice over, hired “faithless fiduciaries,” made “no show” consulting contracts with officers, 

Para 580 onward, Continuing breaches by NRA since first complaint was filed. More attacks on LaPierre’s supposed reforms.

NRA’s outside auditor fired NRA as a client. Audit Committee hired a new firm with no expertise in big nonprofits. 

Preparation of NRA’s 2019 IRS 990, the tax return for a nonprofit. Its outside auditor stopped signing it. NRA’s treasurer refused to sign. Treasurer had found false statements on it, including directors travelling first-class (which must be reported, but was not). He was refused evidence. “In a final effort to get comfort on the accuracy of the information contained in the Form 990, the then-Treasurer requested that those with knowledge of the contents of the Form 990—including several senior NRA executives and directors—certify as to the truth and accuracy of its contents. Several of the individuals to whom he made this request, including the NRA President and Vice Presidents, declined to provide the requested certification.”

LaPierre then fired him and had him immediately cut off from NRA computers, and falsely told the board he had resigned for health reasons.

2019 990 disclosed excess benefits transactions for leadership of millions. It omitted vast sums beyond this.

Para 605 and beyond, continuing violations of NRA policies. Millions to vendors. One was paid $28 million more than its contract required. Another had a 2019 contract signed by LaPierre but not the president and a VP. 2019 is, of course, long after the claimed reforms went into effect, showing they are meaningless.

Para 615 and beyond. NRA files for bankruptcy to escape the AG’s regulatory authority, and gets dismissed. SLC created and approved by board. Week before bankruptcy filing, in 2021, the board approved a new employment contract for LaPierre. Board misinformed.  LaPierre filed without telling board or even his own staff. Wired $5 million to Brewer firm first. 

Para 637 and onward. Remember, we predicted this would happen: “The  NRA Admits it Filed for Bankruptcy to “Dump New York” and Evade the Regulatory Authority of the New York Attorney General.

Quotes LaPierre press release and messages to members. Quotes bankruptcy judge, lack of good faith, “cringworthy” actions. Firing of treasurer.

What the AG is asking the court for. “this Court should dissolve the NRA pursuant to N-PCL § 1109(b)(1) and distribute its remaining and future assets to be applied to charitable uses consistent with the mission set forth in the NRA’s certificate of incorporation, pursuant to N-PCL §§ 1115(a) and 1008(a)(15).” And much more.

“The Attorney General seeks removal for cause of each officer, director, and trustee who violated the whistleblower policy required by N-PCL § 715-b and EPTL § 8-1.9.” Sounds like the Audit Committee, and others.

For the first time, a call for a receiver. Para 729 asks for an order to secure proper administration of NRA funds and to order an accounting by NRA officers and directors for them.

Not one of us thinks NRA can survive this. Even if the board reacts at its next meeting, it cannot possibly do enough. “Dump LaPierre” wouldn’t save things now, and the board is unable even to think of that. They’d have to dump the Audit and Officer Compensation Committees, replace them with competents who knew their duties, have the board awaken and act like a real board of directors. where they have real oversight instead of meeting for dinners and drinks and applauding the officers’ speeches and then going home. NRA would have to change from being run like a small gun club and switch to being run professionally like a $300 million corporation. It’d take an ENORMOUS change in the entire corporate culture, which not going to happen.

13 thoughts on “Attorney General Files Amended Complaint

  1. “Women’s Leadership Forum used as Susan LaPierre’s slush fund.”

    Reminds me a post a few articles back by someone about all the great things she and Susan Howard did in that forum.

    LOL

    Like

  2. You don’t get too many comments here but I assure you that I, at least, read every word and I don’t like what I read. It’s time to clean house and try to retrieve what we can from the wreckage. The clown car has crashed. Even the NY AG’s remedy would be better than keeping this operation in business.

    Liked by 1 person

  3. Receivership does not necessarily mean the end of the NRA. Depending upon how its administered and WHO is in charge of it, (the judge? AG Letitia James?) some remnants of the NRA may be saved. There is no way any NRA member should want the current NRA to survive these decades long rampant corruptions and criminalities of Lapierre & fellow suspects.

    My eye is on the ‘intervenor motion’ made by Frank Tait and Mario Aguirre. After years of speechifying, whining, empty headed bombasts & worthless rants someone is finally taking an action that may have consequence. On 9 September next Justice Joel Cohen, the presiding jurist, will rule if the plaintiffs have merit and standing in the ongoing proceedings regarding the NRA’s fate.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Create your website with WordPress.com
Get started
%d bloggers like this: