New York Attorney General Investigation

Expert Report of Eric Hines (Forensic Accountant)

March 24, 2023

Filing Summary

On March 24, 2023, the Attorney General filed the expert report of Eric Hines, dated September 16, 2022. The report included the following “Summary of Opinions”: 

  • “Based on my professional experience, education, and training, my analyses of the record evidence has led me to conclude that the NRA’s control environment has been ineffective, particularly with respect to processes and controls around expenditures, including purchasing, contract review and approval, and disclosures of conflicts of interest. This ‘ineffectiveness’ has been due, in large part, to poor Tone at the Top (‘TATT’) at the NRA. TATT refers to the attitudes and cultural mindset regarding internal controls pushed down through the organization by senior officers and directors, including the Defendants.
  • My findings show a pattern of the Defendants (those charged with setting TATT), and other NRA personnel, failing to follow established policies, procedures and internal controls, ignoring Board policy directives, circumventing said policies, procedures, and controls, and not disclosing relevant information to interested stakeholders. This report includes numerous examples of such situations, particularly with respect to the company’s expenditure processes and controls involving not only purchasing, contract review and approval, but also disclosures around potential conflicts of interest. All of the findings included in this report regarding failure to follow policies, procedures, and internal controls involved one or more of the individual Defendants directly, and, of course, the NRA broadly.
  • My review of the record evidence indicates that when violations of established policies, procedures, and internal controls were identified or otherwise known, the NRA, including individual Defendants in their roles as officers and executives (again, those charged with TATT), often failed to enforce existing policies, impose disciplinary or other accountability measures, and/or take corrective action and remediate known internal control weaknesses. Where disciplinary or accountability measures were taken, they were inconsistently applied, depending on the individuals involved, and/or did not follow policy standards.
  • In fact, concerns about weaknesses in the control environment, TATT, and related internal controls around specific processes have been raised repeatedly over a number of decades by NRA employees, Board members, and other parties, dating as far back as at least the 1990’s. The concerns raised by NRA insiders at that time were consistent with many of the observed issues regarding TATT more broadly, specific policies, procedures, and internal controls, and arrangements with vendors identified in my analyses.”