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Strange Turn In The NY Lawsuit

NRA has been fighting to keep secret the “Frenkel Report,” a document drafted by attorney Jacob Frenkel in 2003 or 2007. It seems that in 2007, every NRA board member had received an anonymous letter informing them of financial misconduct. NRA objected to producing the report in front of the special master handling discovery, lost there, appealed to the judge, lost again, and is now trying again before the judge. That report must be very incriminating. (Clue: Frenkel specializes in white-collar criminal defense and in defending against regulatory actions).

NRA filed, for the judge’s reference, New York’s position filed with the special master. It contains some startling items:

“For example, the general ledgers should demonstrate NRA funds paid to a group of related entities and individuals, through NRA Executive Vice President Wayne LaPierre’s office’s budget, and other budgets centers within the NRA, to a group of related entities and individuals owned by or affiliated with non-party David McKenzie. Evidence indicates that the NRA has paid the McKenzie entities thus far well over $100 million, often with verbal approvals in excess of contracted amounts in violation of NRA policies. The evidence also indicates that payments to the McKenzie entities were internally allocated to various NRA cost centers and dispersed through payments to various affiliated business entities, some located within the same offices within the NRA headquarters, with the same staff, same leadership, and little to no division in their work. This internal accounting obfuscates the magnitude of the amounts paid by the NRA to these businesses. Indeed, there is evidence to suggest that the NRA paid monies to at least one of McKenzie’s businesses, Associated Television Inc. (“ATI”)1, without receiving promised services in return. Witnesses have been unable to testify as to what monies were paid to these entities and insiders and when such payments stopped, if they have. It was only during his testimony at the bankruptcy trial that Defendant LaPierre revealed for the first time his relationship with David McKenzie, including gratis use of McKenzie’s luxury yachts. During his testimony in this action, Mr. LaPierre revealed previously undisclosed information that further establishes a conflict of interest. Mr. LaPierre testified to having received additional expensive gifts and favors from the McKenzies, including paid luxury vacations to numerous exotic locales around the globe for himself and his wife and his wife’s use of McKenzie’s yachts for “girls” and family trips.”

Footnote 1:”Mr. LaPierre testified at his deposition on June 27 and 28, 2022, that ATI produced the Crime Strike television series for the NRA. He claims to have filmed segments of this show while in Monaco, the Bahamas or on board the McKenzie’s yacht, thus making his receipt of such free luxury travel, at least in part, a business expense. Mr. LaPierre had not seen the episodes of Crime Strike he allegedly filmed since 2014 and does not know if they aired. Plaintiff asked for information relating to the Crime Strike show, including videos, from the NRA in Plaintiff’s first request for production, no. 38. None were produced. Plaintiff has narrowed the request to episodes including the video filmed in Monaco, the Bahamas or on board a yacht and any evidence showing that such episodes were actually aired. While producing some correspondence with ATI, the NRA has refused to produce the limited video footage sought or to confirm that it does not have information regarding whether such episodes aired. See Ex. B. Plaintiff also asks for an order directing the NRA to produce the requested episodes and evidence, if it has any, of such episodes ever airing.”

“During the deposition of NRA Vice-President, long time Board member and Audit Committee Vice Chair David Coy on June 15, 2022, Mr. Coy testified that he drafted a document relating to an “anonymous letter that BOD members received prior to the April 2007 NRA Annual Meeting.” . . . . The document indicates that in 2007, a whistleblower raised some of the identical claims of corruption, waste and lack of adequate internal controls to the entire NRA Board that the Plaintiff is alleging has more recently occurred and in some instances is still occurring within the NRA.”

If anyone on the board believes that these are minor matters that will blow over, it’s time they took their head out of the sand. Over $100 million to one vendor alone, whose businesses gave their address as NRA HQ? He bestows expensive gifts on the CEO? Millions for a TV program that never aired? Whistleblowers 15 years back, and the board not bothering to investigate?

Here are references to the Coy testimony:

“According to Mr. Coy’s memorandum, the Whistleblower Letter raised concerns about travel and entertainment spending generally and particularly about amounts billed by an entity known as “II & IS.” Here, Plaintiff asserts claims based upon Defendants’ abuse of travel reimbursement expenses generally and, in particular, regarding Defendant Wayne LaPierre’s use of private charter travel booked, with the aid of Defendant Wilson Phillips, through LaPierre’s private travel consultant. Among the allegations are that the Defendants asked the consultant to invoice her billing through two different entities, including one named “II & IS”. This was part of a scheme to hide millions of dollars of LaPierre’s private travel expenditures.”

“Mr. Coy’s memorandum indicates that the whistleblower raised issues about whether the NRA’s contractual relationship with vendors like Ackerman McQueen and PM Consulting (a predecessor to Membership Marketing Partners or “MMP”) were properly approved, whether expenditures are properly documented, whether the NRA’s internal procurement policy was being followed and whether the transactions are actually “arms length.” NYSCEF 802, ¶ 10. In this action, Plaintiff has pled, and evidence establishes, that the NRA’s relationships with favored vendors like Ackerman McQueen and MMP were not properly approved, documented or overseen and were not arms-length transactions.”

“These are just some examples. The fact that the NRA leadership has long had notice of these issues and failed to cure them undercuts the NRA’s defenses that it was unaware of misconduct and that the allegations outlined in the Complaint herein are untrue, isolated or the product of misconduct by a few executives without the knowledge of NRA leadership.”

“Likewise, the Requested Documents are material and necessary because they plainly rebut the NRA’s defense that its compliance program was initiated and overseen by the “tone from the top,” namely Defendant LaPierre. See, e.g., LaPierre Transcript, June 27, 2022, p. 130 (“it’s in the tone of my attitude towards this whole thing. We are going to get it correct and I don’t care who it offends. I don’t care if it was some of the most-trusted vendors. I don’t care if they were — if I lost every friend that I ever made, we are going to get it right. And this was the tone that I was setting for the whole Association.”). Concerns about LaPierre’s travel expenditures, conflicts of interest, and negotiations with favored vendors were clearly of long duration and continued after the Whistleblower Letter.

6 thoughts on “Strange Turn In The NY Lawsuit

  1. Thank you for doing the lord’s work, getting us these devilish details. May WLP and Wife fall on their proverbial swords, with Millie ready to off their metaphorical heads to preserve their honor. They won’t? Ah well, continue on NYAG.

    Liked by 1 person

  2. How so many board members can continue clinging to this sinking ship is beyond me. I hope Leticia James goes after the personal assets of the board members (with one notable exception) in an attempt to recover the corporate assets.
    Maybe one of the lawyers out there can tell us if the board’s insurance will cover criminal activity.

    Liked by 1 person

  3. This is the first time that I feel like WLP is going to actually spend some serious time in prison. I think that we always knew that he would be leaving the NRA, but that it would be on his terms. The only terms now are likely to be prison terms, for him and those who enabled him.
    I feel like I should gloat or something, but the entire thing instead makes me somehow sad and depressed. Kind of like, when they finally catch the serial killer who has stopped killing, but has been in hiding, and while you breathe a sigh of relief when they catch him, you also feel a let down, like you understand that it doesn’t make thing any better.
    And I also want to add my thanks to Frank Tait, one more time. Your role is an honorable one, and we all both know it and support it, 100%.

    Liked by 1 person

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