The NRA’s tenth day on trial in bankruptcy court today featured two NRA witnesses: NRA board member Sandra Froman, and acting NRA CFO Sonya Rowling. The trial will resume next week on Thursday.  

Prior testimony elicited by the New York Attorney General and former NRA vendor Ackerman McQueen in the first half of the trial established several shocking details illustrating the severity  of the NRA’s mismanagement — from millions in private jet travel by executives, to testimony demonstrating CEO Wayne LaPierre hid the NRA’s bankruptcy filing from board members, to NRA President Carolyn Meadows admitting to burning and shredding documents ahead of a subpoena.

While the NRA offered these witnesses to support their legal positions, the testimony exposed additional contradictions in the NRA’s case, as detailed below:

KEY CONTRADICTIONS

1. NRA Claims No Outside Oversight is Necessary Because of the Strength and Independence of the NRA Board of Directors, But Testimony Shows Board Is Not Consulted on Major Decisions by NRA Management. Board member Sandra Froman testified today that the NRA had a “very active board” and the NRA has attempted to argue that its more than 70-member board of directors is conducting robust oversight at the NRA.
   • IN FACT: Under cross examination, Froman acknowledged several former NRA board presidents received compensation from the NRA while they continue to serve on the board. Froman herself acknowledged payments of nearly $50,000 a year from the NRA for years. Froman described those payments as “reimbursements,” a claim seemingly undermined by her admission that she received an IRS form 1099 along with the payments — classifying the payments as income. Previous reporting revealed that 18 members of the NRA’s board of directors collected money from the NRA in some form in a recent three-year period. Froman also confirmed the testimony of several other NRA witnesses that management did not inform, much less consult, the full board of directors ahead of filing for Chapter 11. Testimony from the trial also indicates that the full NRA board was not consulted about the 2019 departure of Chris Cox, who was viewed as a  potential successor to Wayne LaPierre.  
2. NRA Claims No Outside Oversight is Necessary Because It Hired a New Outside Auditing Firm, But That’s Because its Old Auditor Won’t Work with the NRA. Acting CFO Rowling testified at length today about the NRA’s recent retention of the Aronson auditing firm, who conducted an audit of the NRA’s 2019 financials. The NRA’s counsel has attempted to paint this retention as the capstone of the NRA’s purported “self-correction.”
   • IN FACT: Previous testimony raises the question whether the new auditor was a move of necessity, rather than evidence of a commitment to compliance. Former NRA CFO Craig Spray indicated the NRA had to hire a new auditor, because its previous outside auditor, RSM, had “effectively” fired the NRA as a client. 
3. NRA Claims No Outside Oversight is Necessary Because It Will Hire a Chief Restructuring Officer (“CRO”), But the CRO’s Contract Indicates Most Authority at the NRA Will Remain with Mr. LaPierre. The NRA has offered the hiring of a CRO as a reason the Court should leave the current management team in place at the NRA. Acting CFO Rowling testified at length today about the proposed CRO.
   • IN FACT: Testimony elicited by counsel for Ackerman McQueen showed the contract with the proposed CRO left Mr. LaPierre responsible for the bulk of the NRA’s operations, including fundraising, membership, programs, political/legislative affairs, and litigation matters. Given the NRA’s contention that its Chapter 11 filing is solely due to the lawsuit it faces by the New York Attorney General’s Office, the litigation carve out begs the question: What’s the point of a Chief Restructuring Officer if someone from existing management retains control over the purported cause of the bankruptcy? 
   • Details about the proposed CRO’s financial compensation were revealed in Court today, with his billing rate as high as $1,155 an hour, and a $1 million bonus payable to the CRO if a Restructuring Plan is approved by the NRA Board of Directors.
4. NRA Claims No Outside Oversight is Necessary Because It Has Fired Wrongdoers, But Omits All These Individuals Were Hired by Current CEO Wayne LaPierre. Counsel for the NRA today elicited testimony from CFO Sonya Rowling that the NRA had fired its former CFO Woody Phillips and former Chief of Staff Josh Powell. In other parts of the trial, the NRA has pointed to the departure of vendor Ackerman McQueen, former chief lobbyist Chris Cox, and former board president Oliver North as evidence of its purported commitment to compliance.
   • IN FACT:  LaPierre has admitted responsibility for the NRA’s hiring of numerous people and firms that the NRA now blames for circumventing internal controls. LaPierre admitted that:
     1. It was his “sole decision” to hire Josh Powell as his chief of staff, who he says he later fired for allegedly receiving nearly $55,000 in excess benefits. 
     2. He was involved in the hiring of former longtime NRA CFO and Treasurer Woody Phillips, whom LaPierre said reported to him in his capacity as CFO for more than two decades. After Phillips left the NRA, he received a consulting contract, of which LaPierre claimed he was unaware, which paid him $360,000 per year after his employment. Philips has pleaded the Fifth to various questions posed in this case.
     3. He hired and promoted former Director of General Operations Kyle Weaver, whom he later fired. LaPierre admitted to approving a post-employment consulting contract that would pay Weaver $1.2 million in the three years after he left the organization. 
     4. Oliver North had been his choice for president of the NRA.
     5. After inheriting Ackerman McQueen’s relationship with the NRA, LaPierre kept them on board for decades. 
     6. He had chosen Chris Cox to lead the NRA’s Institute for Legislative Action.