New York and DC Attorneys General Investigations

NRA Trial Day 18: The NYAG Rests its Case

February 5, 2024

Today in Court

The New York Attorney General’s Office (NYAG)’s final witness, financial expert Eric Hines, finished his testimony, and the NYAG concluded its case-in-chief. In the afternoon, the defendants asked the court for a directed verdict on several claims. The judge heard oral argument from the parties, but deferred ruling on these motions. Thereafter, the NRA called its first witnesses, former Congressman and current NRA First Vice President Bob Barr and expert witness, economist Ryan Sullivan.

Summary of Today’s Testimony

  • The trial day started with a short sidebar among counsel and the judge. In a comment about the volume of letters being filed on the court docket, Judge Cohen told the attorneys “we’re not pen pals here” and encouraged the parties to streamline disputes.
    • Judge Cohen reiterated the schedule of the trial, with closing arguments scheduled for February 15, and the jury beginning deliberations on February 16. If they did not reach a verdict on February 16th, deliberations would continue after the long weekend, on February 20th.
  • The NYAG finished the direct examination of expert Eric Hines (a summary of whose previous testimony can be found here).
    • Hines testified to “internal control failures” and the “presence of risk fraud indicators” when he examined various NRA transactions. In concluding his testimony, Hines said that he found internal control failures at every NRA vendor arrangement he reviewed, and that he found fraud risk indicators in every arrangement he reviewed.  
    • In particular, he detailed his findings with respect to the NRA’s longtime travel consultant, Gayle Sanford.
      • Between 2015 – 2020, Hines found that Sanford billed the NRA around $2.7 million in fees to book NRA travel (NB: just inclusive of fees; does not count the actual costs of flights). This came out to annual compensation, for booking travel, of approximately $534,000.
    • Hines said there were several fraud risk indicators with respect to the NRA – Sanford relationship, including altered bills, the lack of a contract, the lack of supporting information for invoices, and that Sanford would split up invoices to avoid triggering the NRA threshold of $50,000 (after which additional invoice signatures were required).
    • Hines testified that he examined $13 million in flight related costs at the NRA billed from Sanford, and an additional $4.6 million in black car and other miscellaneous travel expenses.
    • On redirect from the NYAG, Hines testified that whether the NRA received the fair-market value of the services provided by MMP does not change his findings, because he was looking for internal controls violations – which he found. 
  • Defendants’ cross examination of the forensic accountant (Hines) largely focused on establishing items that Hines was not opining on (i.e., the intent of individuals; legal conclusions etc.) and that Hines’s review did not include interviews with NRA witnesses.
    • Hines acknowledged that his findings of “fraud risk indicators” are not the same as actual findings of fraud.
    • He further testified that his analysis did not attempt to ascertain whether the NRA got fair market value under a given vendor arrangement.
    • Counsel attempted to ask Hines about various steps the NRA purportedly took after compliance efforts surfaced, to which counsel for the NYAG objected to the introduction of “post hoc remedial measures” as being incapable of curing violations of law. 
    • Counsel for Wayne LaPierre focused on Hines’s examination of LaPierre’s charter flights to Nebraska (a state where his family lived). In questions that may preview LaPierre’s defense to these flights, counsel asked Hines if he was aware that LaPierre met with the Governor of Nebraska, attended Friends of NRA dinners, and met with “Larry the Cable Guy” while visiting Nebraska. 
    • Hines testified that his firm expected to bill between $1.2-$1.3 million for his expert engagement in this case. A fact that defense counsel raised repeatedly in the preface of questions (i.e., “In your one million worth of work, did you…”).  
  • After the NYAG rested its case, the NRA began its case, calling longtime NRA board member Bob Barr.
    • Barr has been on the NRA board since 1997, and was elected as NRA First Vice President in 2023. Barr largely heaped praise on the operation of the board, and board committees (in particular the Audit Committee).
    • Among other NRA committees, Barr is on the Audit Committee, the Special Litigation Committee (SLC), and the Legal Affairs Committee. The SLC approves invoices from Brewer on a monthly basis. 
    • Barr denied allegations that the NRA spends too much money on lawyers, stating that such claims are “wrong.” He also praised the Brewer firm as highly-respected, professional and necessary for the NRA to face “existential threats” such as the threat posed by the NYAG investigation. 
    • Barr testified that LaPierre was dedicated and acted in good faith, but when asked if he performed his duties with care, Barr responded “yes”, but added that “like all of us… he made mistakes.” He then testified that LaPierre remedied those mistakes and is “all square” with the NRA.
    • Barr further testified that the NRA has hired a compliance director that if approved, will report to the Board of Directors, not the Executive Vice President. 
    • The NYAG elicited testimony that Barr has only been on the Audit Committee since 2023, and that prior to last year, the NRA has not had a compliance director. 
  • The NRA then called its expert witness economist Ryan Sullivan. He briefly began his testimony at the end of the day.

Analysis

In a day where the NRA started its case, the jury heard from longtime NRA board member Bob Barr. Given the testimony the jury had heard for the last four weeks of insider payments and internal controls being ignored, the purported culture of compliance and care that Barr attested to seemed like an alternate reality.  Barr’s insight into the Audit Committee and the inner workings of NRA management is undoubtedly limited, as his tenure as First Vice President and membership on the Audit Committee only began last year.    

The defendants’ questioning of Eric Hines further elucidated what will appear to be the defendants explanations to the jury about the various transactions at issue. In what NRA Watch found particularly interesting, NRA counsel Sarah Rogers repeatedly referred to a graphic she had created that sorted the transactions at issue into four categories: (1) MMP relationship; (2) Ackerman/Under Wild Skies relationship; (3) various payments/contracts to board members, and (4) the travel consultant. 

On MMP, the NRA and counsel for the individual defendants appear to be arguing that MMP was worth every penny, regardless of the fact that contract was not competitively bid, that evidence has been presented that the NRA paid over what was owed on the contract, and the clear conflict in MMP paying for yacht trips to the Bahamas for NRA CEO Wayne LaPierre. To this end, counsel for LaPierre tried to ask a question today, which was struck for lack of foundation, that asserted that the MMP relationship generated $1.7 billion. Likewise, counsel for the NRA repeatedly made the point in her questioning that expert Eric Hines had not looked at how much money the NRA received from the MMP relationship (NB: this was outside of his scope as a forensic accounting expert that was looking at whether NRA internal controls were followed).  

With respect to the second and fourth categories, counsel for the NRA have positioned their client as having been duped by unscrupulous contractors who over-billed the NRA. In their telling of the story, once the NRA found out about these over-billings, they terminated the relationship and moved on. Albeit retroactively, the NRA’s position with respect to the board payments seems to be that the audit committee did approve them, and that the NRA received real value from services from board members such as Marion Hammer, Sandy Froman, David Keene, and others.  

Whether the jury will buy any of this is a whole other question, but the NRA’s legal strategy is appearing more clear.   

What’s Next?

The NRA will continue its case with testimony from expert Ryan Sullivan tomorrow morning.  Following Sullivan’s testimony, the NRA has indicated the next witnesses will be NRA board member Tom King and NRA CFO Sonya Rowling.

Disclaimer: The following summaries and analysis are prepared by individuals at the courthouse listening to the testimony being offered in the New York Attorney General’s case against the NRA. These summaries do not purport to cover every fact or occurrence discussed during the trial. The posts may be updated as soon as transcripts are available from the court, including to cross-reference specific testimony.