New York Attorney General Letitia James on Thursday announced the filing of a lawsuit seeking to dissolve the National Rifle Association (NRA) following an investigation into alleged fraud at the nonprofit.
Central to the lawsuit are allegations that the 149-year-old group’s “culture of noncompliance” allowed NRA Executive Vice President Wayne LaPierre and three other officers to steal $64 million from the organization over three years.
“The NRA is alleged to have fostered a culture of noncompliance and disregard for internal controls that led to the waste and loss of millions in assets and contributed to the NRA reaching its current deteriorated financial state. The NRA’s internal policies were repeatedly not followed and were even blatantly ignored by senior leaders.”
New York Attorney General Letitia James
The charges reflect decades of fraud and waste within the NRA, James said, abuses that went unchecked due to the NRA’s non-existent compliance program and an audit committee that repeatedly rubber-stamped the illegal actions of NRA executives, according to the New York Attorney General (NYAG).
The lawsuit, filed in the New York Supreme Court, seeks to dissolve the NRA, a nonprofit organization headquartered in Virginia but registered with the NYAG’s Charities Bureau. The lawsuit also seeks to recoup the some of the misspent funds.
The lawsuit charges LaPierre, former Treasurer and Chief Financial Officer Wilson “Woody” Phillips, former Chief of Staff and Executive Director of Operations Joshua Powell, and Corporate Secretary and General Counsel John Frazer with failing to manage the NRA’s funds and failing to follow numerous state and federal laws.
The NYAG claimed in a press release the four men “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.” They also allegedly hired friends and relatives for jobs and steered contracts to friends and associates, all while seeking to avoid scrutiny of such deals by the NRA’s board of directors or audit committee.
For its part, the NRA called the NYAG’s lawsuit “a baseless, premeditated attack on our organization and the Second Amendment freedoms it fights to defend” and “a transparent attempt to score political points and attack the leading voice in opposition to the leftist agenda.”
“Our members won’t be intimidated or bullied in their defense of political and constitutional freedom,” said NRA President Carolyn Meadows in an emailed statement. The NRA filed a countersuit against the NYAG, she said.
LaPierre, the main subject of the suit, called the allegations ”an affront to democracy and freedom.”
“This is an unconstitutional, premeditated attack aiming to dismantle and destroy the NRA – the fiercest defender of America’s freedom at the ballot box for decades,” he continued. “The NRA is well governed, financially solvent, and committed to good governance. We’re ready for the fight. Bring it on.”
In the countersuit, the NRA alleges the NYAG’s lawsuit is nothing more than a “sham prosecution of a political enemy” by Democrats upset by the organization’s support of President Donald Trump in 2016.
In preparation for the NYAG’s lawsuit, the NRA said in its countersuit that it spent a year conducting a “top-to-bottom compliance review of its operations and governance” to “fend off a political attack from the NYAG if one came.”
The NYAG lawsuit is the latest blow to the NRA, which had turned a nearly $28 million surplus in 2015 to a $36 million deficit in 2018, according to The Associated Press. It has also been sued by the New York State Department of Financial Services and has filed its own lawsuit against its largest vendor, ad agency Ackerman McQueen.
“The NRA is alleged to have fostered a culture of noncompliance and disregard for internal controls that led to the waste and loss of millions in assets and contributed to the NRA reaching its current deteriorated financial state,” the NYAG said in the press release. “The NRA’s internal policies were repeatedly not followed and were even blatantly ignored by senior leaders.”
In the lawsuit, the NYAG alleges that since 2014, the NRA failed to have an adequate compliance program and never had a dedicated compliance officer. In late 2018, the lawsuit said LaPierre tasked Powell with handling “compliance issues,” but Powell’s role lasted only until Oct. 2019, when he was suspended from the NRA pending an investigation into improper use of NRA money. In the lawsuit, the NRA’s current treasurer told investigators that Powell “certainly … was not a good choice for compliance.”
The lack of action by the NRA’s audit committee also drew the NYAG’s ire.
“The committee failed to serve as an independent check on LaPierre, his senior staff, and the NRA as a whole, and basically served as a rubber stamp for the organization’s illicit behavior, when it did review finances,” the NYAG said.
In the lawsuit, the NYAG alleges neither the chair nor the vice chair of the NRA’s audit committee knew who was in charge of compliance within the organization. The audit chair identified Frazer as being responsible for “regulatory compliance.”
From 2014 to 2018, Frazer, who was the NRA’s general counsel, “repeatedly failed to comply with board governance procedures, make necessary changes, or advise others that governance changes needed to be made,” the NYAG said. Frazer also failed to ensure the NRA was in compliance with financial transaction and whistleblower laws, as well as its own stated conflict-of-interest policy.
“Additionally, Frazer repeatedly certified false or misleading annual statements,” the NYAG said.