Expert Witness Report

The NY Attorney General has filed the expert witness report of Jeff Tenenbaum, who’s practiced non-profit law for 26 years, and advised hundreds of non-profits on the law. Here are a few points he makes:

Page 32: (MMP is the company which got millions from NRA, and whose owner gave the LaPierres free vacations to the Bahamas and to Europe) “Based on my experience, it is difficult to overstate how highly unusual LaPierre’s actions were with regard to his conflict of interest with MMP compared with what is standard and expected from officers of nonprofit organizations. The fiduciary duties of care, loyalty, and obedience obligated LaPierre to exercise ordinary and reasonable care in the performance of his duties while exhibiting honesty and good faith, to put the interests of the NRA above his personal interests, and to follow the NRA’s policies and procedures. Instead, LaPierre withheld information from the Audit Committee regarding his receipt of personal benefits from MMP’s principal, and by doing so, he put his personal interests above those of the NRA and violated NRA policy.”

Page 33: “As discussed above, between the years of 2014-20, the MMP Entities have received approximately $100 million from the NRA. Some of these payments were owed to the MMP Entities under the contracts that were signed by LaPierre and Phillips. However, in that same period, the NRA paid at least approximately $48.5 million more than the fee agreed to under the written agreements between the NRA and the McKenzie Entities. . . . To highlight one particular set of amendments as an example, between 2015 and 2017, LaPierre and Phillips amended the MMP agreement twice, extending the contract term until 2026.”

Page 37: “Marion Hammer is a longtime NRA director and a former NRA president. At least since the 1990s, Hammer has been compensated by the NRA for consulting work and in connection with her lobbying work in Florida. Hammer has been a steadfast supporter of LaPierre. 147 LaPierre has been involved in overseeing and authorizing Ms. Hammer’s consulting agreements paid through the EVP and ILA budgets, although he testified that he believed Phillips and Powell were involved in negotiating the ILA portion of the arrangement, which he approved. On December 7, 2017, the NRA’s Audit Committee purported to approve payments to Hammer for the upcoming year from three different sources: (1) $50,000 from the NRA’s Institute for Legislative Action, (2) $84,000 from LaPierre’s personal budget, and (3) $216,000 to be paid in grants to Unified Sportsmen of Florida, an entity that Ms. Hammer heads. This was after Mr. LaPierre alleges that he began the NRA’s “course correction” in the fall of 2017.

A few weeks after the Audit Committee meeting, LaPierre signed a new contract with Ms. Hammer, good through December 31, 2019, increasing her compensation from LaPierre’s EVP budget to $168,000 annually. LaPierre testified that he did not get the approval of the NRA’s Audit Committee prior to entering into the new agreement. . . .”

Page 49-50: “All three individuals who raised questions – Esther Schneider, Sean Maloney, and Timothy Knight – were denied or stripped of their NRA committee assignments following their whistleblower complaints. They were also subject to a letter issued by then-NRA President Carolyn Meadows to the entire board including members of the Audit Committee.222Not long after this action was taken, board member and former president Marion Hammer circulated an email that, in short, acknowledged that the committee assignment actions were a direct result of what she described as their “agitation.” 223 Other board members, including now Second Vice President Willes Lee, acknowledged what is obvious from the timing – that the unfavorable committee actions were in response to the complaints made. For example, Lee stated in an email discussing the topic of committee assignments that” [t]he three [i.e., Schneider, Maloney, and Knight] should get zero committee chair nor VC. Zero… ‘If you shoot at the king, you better kill him.’ Wayne is still the king.” “

Page 50: “The NRA, LaPierre, Frazer, and Powell did not process the above complaints in a manner that would be in line with what is typical and permitted, and even participated in whistleblower retaliation. For example, each was aware of the following facts:

• The complaints regarding financial improprieties came from multiple sources (e.g., North, Childress, Schneider, Maloney, Knight, Spray and Journey, among others);
• Although it was alleged that certain individuals were not motivated by good faith, there was no indication that the substance of the complaints were not made in good faith; 233
• Those that complained of the financial improprieties were subject to adverse consequences (e.g. , withdrawal of support, public censure by NRA management, stripping of committee appointments, unusual investigation, or termination of employment); and
• The above adverse consequences were either implicitly (as a result of their contemporaneous timing) or explicitly234 a result of the complaints each raised.”

“As this report outlines, the evidence I have reviewed supports my conclusion that Defendants did not act in a way consistent with the applicable standards of care with respect to conflicts of interest and related party transactions and addressing whistleblower complaints. In addition, they did not act in a way consistent with the applicable standards of care for properly administering its charitable assets. These failures resulted in:

• Unnecessary waste;
• Excess spending by NRA officers, directors, employees, and others for their own personal benefit and the benefit of insiders;
• The overriding of NRA policies and procedures that were designed to prevent waste, fraud, and improper private inurement and private benefit;
• Improper retaliation in response to whistleblower complaints; and
• Diversion of funds away from the mission of the NRA to Wayne LaPierre, andfavored insiders, vendors, friends, and family members for their own personal benefit.Based on my experience and the evidence before me, the NRA has acted at times as a “cult of personality” under the leadership of LaPierre. Specifically, there seems to exist an intense devotion to LaPierre by NRA directors and executives, resulting divided loyalties. When this happens, in my experience, cronyism flourishes and corporate culture becomes fear-based and toxic at organizations led by individuals who are not committed to ethical conduct.