New York and DC Attorneys General Investigations

NRA Trial Day 21: The NRA’s Parade of Experts Continues

February 8, 2024

Today in Court

On Thursday, February 8th, the NRA called two additional experts (adding to the multiple experts that have already testified). First, the jury heard testimony from Amish Mehta, an accountant and auditor. Mehta was followed by accountant and consultant Bruce Blacker. After the conclusion of Blacker’s testimony, the NRA called NRA Director of Finance Michael Erstling back to the stand. Erstling’s testimony was followed by testimony from NRA board member and former president, Sandra Froman.

Summary of Today’s Testimony

  • The NRA offered an additional expert witness, Amish Mehta, to start testimony today. He was on the stand for approximately an hour. Mehta is a CPA and auditor that specializes in non-profit organizations.
    • The NRA elicited fairly narrow testimony from the witness concerning his views of NRA policies – and Mehta only reviewed NRA policies in effect in 2019 and 2020. 
    • Mehta testified that he believes that the NRA’s whistleblower policies were “robust” compared to other nonprofits. He said the NRA had established protocols to handle whistleblowing that encourage individuals with good faith concerns to come forward and report.
    • He further offered his opinion that the NRA had demonstrated a commitment to corporate governance and strong internal controls. When asked by counsel for the NRA to rank where the NRA’s controls rank among the experts other clients in his practice, he indicated that the NRA was in the top 10% of his clients in 2020.
    • On a brief cross examination, the NYAG established Mehta (1) was offering no opinions on the policies and controls in place at the NRA prior to 2019; (2) performed no testing to see if the NRA’s IRS 990s were accurate; (3) never attended an audit committee meeting, and in his 2022 deposition could not name a single member of the audit committee; and (4) was not offering an opinion as to whether any NRA policies were actually violated. 
    • In Mehta’s opinion, the NYAG expert witness erred in not sufficiently considering materiality when reaching various conclusions. On cross, Mehta acknowledged that he was not saying diverting charitable assets is okay if it’s below a certain dollar amount. 
  • The NRA then offered expert testimony from Bruce Blacker. He is a CPA at the firm Secretariat.
    • Blacker testified that the existence of fraud risk indicators, such as noted by the NYAG’s expert Eric Hines, is not the same as a finding that fraud actually occurred. 
    • Blacker also criticized Hines’ analysis for not considering whether the NRA received value from some of the vendor relationships at question in the case.
    • On cross examination, Blacker also acknowledged that he did not make judgments on the accuracy of any allegations in the case, and that his firm was hired by the Brewer law firm.
  • The NRA then called long-time NRA employee and current Director of Finance, Michael Erstling. Erstling was previously called by NYAG earlier in the trial.
    • Counsel for the NRA elicited testimony from Erstling regarding the differences between defendant Woody Phillips and Craig Spray, two recent CFOs and treasurers at the NRA.
      • Erstling testified that when Spray began to work for the NRA in 2018, it was “180 degree turn” from his experience with Phillips.  
      • When asked about what changed, Erstling stated that Spray was “much more engaged” and began to hold monthly meetings; whereas, Erstling had not seen Phillips in years. 
      • Around the time Spray was hired, Erstling felt frustrated after seeing “large invoices. . . with very little detail.”  He described seeing invoices for $300,000 and $500,000 that contained little information as to their purpose. 
      • Erstling further testified that at these monthly meetings, the group realized that there were “significant problems” at the NRA and that the “scope was getting larger every time we met.”
    • Counsel from the NRA reviewed the so-called Top Concerns Memo with Erstling, which was drafted by individuals in the Finance Department of the NRA in 2018.  Erstling previously testified about this document at some length.
      • Throughout this portion of Erstling’s testimony, NRA counsel repeatedly elicited testimony that it was LaPierre and Phillips who: (1) overrode internal controls with respect to payment of invoices; (2) overrode internal controls with respect to travel expenses; and (3) subordinated their judgment to that of NRA vendors.   
      • Erstling testified with respect to the Top Concerns Memo, that “when you look at the totality of what was happening, it was bad.”
  • NRA board member and former president Sandra Froman testified next. Froman discussed her history at the NRA and the roles and responsibilities of NRA board members.
    • Froman testified that she voted to place NRA board members on committees based on who she thought were the best candidates, not based on who Wayne LaPierre supported. During the NYAG’s cross examination, Froman was shown a text exchange she had with one of LaPierre’s closest aides in which Froman noted that “no one has given me a ‘cheat sheet’ list for the nominating committee election.” The aide responded with a list of nine names. Minutes from the committee hearing showed that the entire list of nine names sent by LaPierre’s aide in response were then nominated.
    • Froman claimed that LaPierre’s compensation was in the middle of the range for similarly-sized nonprofits. 
    • Froman also testified regarding the compensation she received from the NRA while serving on the board, which she stated was negotiated with LaPierre and had no written agreement. Froman claimed that under current policy, a contract would be required. Froman claimed that this compensation was for “expenses” even though she received a flat annual fee.

Analysis

The NRA’s direct examination of Michael Erstling was the largest fracture at the defense table to date, with the NRA eliciting testimony directly pointing the finger at individual defendants LaPierre and Phillips. With LaPierre apparently poised to take the stand again next week, it will be interesting to see if the NRA’s lawyers go hard at him on cross-examination. As it relates to the parade of expert witnesses the NRA has put on, NRA Watch would like to directly quote a reporter in the courthouse: “Too many experts. I’m beginning to feel unwell.” It is a lot to ask the jury to sit through hours of testimony about the principles of accounting, especially when the scope of these purported experts is incredibly narrow. In many cases, their testimony amounts to, in essence, “the rules the NRA eventually put in place were solid, but I don’t know – and didn’t look – if they followed them.” Of course, there is extensive evidence in the trial record of massive overrides of internal controls, conflicts of interest, and inappropriate vendor arrangements. And the trial record seems to support the notion that the board of directors of the NRA either was asleep at the switch, or simply deferred to management on these transactions.  

What’s Next?

There will be no testimony on Friday, February 9 or Monday, February 12. The NRA will continue its defense Tuesday morning at 9:30am, with closing arguments from all parties currently scheduled for Thursday, February 15. Of note, counsel today indicated that they expected former NRA CEO Wayne LaPierre to be back on the stand on Tuesday.

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.