New York AG seeks to dissolve NRA in lawsuit accusing leaders of self-dealing, causing $64 million in losses

New York State Attorney General Letitia James makes an announcement regarding U.S. President Trump’s public charge rule during a news conference in New York, August 20, 2019.

Shannon Stapleton | Reuters

New York Attorney General Letitia James was set to announce Thursday that the state is seeking to dissolve the National Rifle Association in a lawsuit that accuses the leadership of the flagging nonprofit of diverting millions of dollars for their own personal use. 

According to the lawsuit, the senior leadership of the NRA squandered millions in donations on personal trips, private jets and expensive meals. The failure to lawfully manage the organization’s funds contributed to losses of $64 million over three years, the suit says. 

James is asking the court to dissolve the NRA and require each of the current and former executives named in the suit to pay full restitution. The suit argues that the four executives, including CEO Wayne LaPierre, shouldn’t be permitted to ever again serve on the board of a New York charity. 

The suit continues a long-running battle between the state and the gun-rights group, which has been chartered in New York since 1871. James, who is a Democrat, threatened to investigate the NRA’s nonprofit status during her campaign for attorney general and likened the group in 2018 to a “terrorist organization.”

The suit comes as the NRA, which boasts 5 million members and exerts tremendous political pressure around the country, suffers from financial hardship that predates the coronavirus pandemic but which was exacerbated by the economic downturn. 

The group, which spent tens of millions of dollars boosting President Donald Trump’s 2016 campaign, has reportedly laid off 200 staffers in 2020 citing declines in revenue. It also announced pay cuts and four-day work weeks in April. 

The lawsuit claims that the group had a $27.8 million surplus in 2015, which declined by about $64 million by 2018, putting the group $36 million under water.

The group’s financial situation was in part driven by lavish personal spending by the group’s leaders, according to the lawsuit, in violation of their fiduciary duties and New York and federal laws. 

LaPierre, a longtime NRA executive and a Trump ally, spent hundreds of thousands of dollars on private trips for himself and his family, the suit alleges. Those trips include eight visits to the Bahamas and all-expense paid safaris in Africa with his wife, Susan, according to the lawsuit. 

The trips to the Bahamas cost $500,000, according to the lawsuit. Over the past two years, LaPierre also spent $3.6 million on travel consultants and several million dollars on private security for himself and his family, the suit alleges. 

The other former and current executives named in the suit are Woody Phillips, the former treasurer and chief financial officer; Joshua Powell, LaPierre’s former chief of staff; and John Frazer, the corporate secretary and general counsel.

Each of the men contributed to a culture of self-dealing that violated state laws governing the management of nonprofits in addition to the NRA’s own bylaws, the suit claims. 

The suit also details what it alleges was a nefarious relationship between the NRA and its former advertising firm, Ackerman McQueen. The two groups acrimoniously parted ways last year, after which the NRA sued Ackerman McQueen over its billing practices and Ackerman McQueen countersued, alleging defamation. 

The suit alleges that Ackerman McQueen participated in a scheme in which it would pay for the expenses of the members of the NRA leadership and pass those expenses through to the gun-rights organization without detailing exactly what it spent the money on. 

According to the lawsuit, in 2017 and 2018, Ackerman McQueen spent $70 million on such “out-of-pocket expenditures” and “public relations and advertising” that concealed entertainment and travel spending by NRA executives, including the personal hair and makeup for Susan LaPierre.  

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