NRA Trial Day 3: Nonprofit Expert Takes the Stand
Today in Court
The morning began with former NRA board member Esther Schneider resuming her testimony, facing cross examination from the defendants. The New York Attorney General (“NYAG”) then called the third witness in its case: non-profit expert Jeffrey Tenenbaum. The final thirty minutes of the trial day consisted of initial testimony from NRA Director of Finance Michael Erstling.
Quick Summary of Today’s Testimony
- Former NRA board member Esther Schneider was cross examined by counsel for approximately 45 minutes. Highlights from her testimony under direct examination yesterday can be found here. Schneider previously testified regarding many of the same issues at the NRA’s bankruptcy trial in April 2021, a transcript and partial summary of which can be found on this site.
- In an answer that was ultimately stricken from the record by the Judge, Schneider told counsel for defendant John Frazer that Marion Hammer only attended a single NRA board meeting during Schneider’s tenure on the board.
- The NYAG’s first expert witness was Jeffrey Tenenbaum, who was offered to the jury as an expert in the nonprofit sector. Mr. Tenenbaum walked the jury through a slide deck explaining basic concepts regarding how non-profits operate and the various controls that are typically in place. Of note, Mr. Tenenbaum did not testify specifically to conduct at the NRA, but instead spoke to what is regular and customary in the nonprofit sector.
- Tenenbaum testified he “rarely” has seen private charter jets authorized by nonprofit organizations. He added that the only such example of that he could think of were international “relief and development” organizations who used private flights to access remote parts of the world for relief missions.
- He also testified that he has “never” seen an instance where non-profit executives expenses were paid for by a vendor and then passed through back to the non-profit.
- Tenenbaum testified that it was “very rare” for non-profit organizations to retroactively ratify conflicts of interests involving executives or board members.
- Interestingly, Tenenbaum said that best practices typically dictated an ideal non-profit board size of between 12 and 20 people. He added that “anything more than 30” made the board ineffective and that it “becomes impossible [for individual board members] to fulfill your duties.”
- Sarah Rodgers, counsel for the NRA, focused her cross-examination on various hypotheticals involving whistleblowers and retaliation, along with getting Tenenbaum to acknowledge that “being friends with the CEO” does not destroy the independence of a board member. In a preview of an argument that one might expect to see more during the trial, Rodgers questioned the expert about various non-profit guidance documents provided on the NYAG website (ostensibly attempting to set up the argument that the NRA was following the website guidance).
- Kent Correll, counsel for Wayne LaPierre, crossed the witness by asking if he was aware that the Professional Golf Association (“PGA”) Tour utilized private planes. He then showed the witness the PGA’s 2022 IRS Form 990 tax filing. On redirect, the NYAG elicited testimony that the PGA was a different type of nonprofit organization – a “501(c)(6) professional organization”, which is governed by different standards than a 501(c)(3) or 501(c)(4) like the NRA.
- NRA Director of Finance Michael Erstling only testified for a brief time this afternoon and will continue his testimony tomorrow. His initial testimony focused largely on background issues about the NRA.
- Of note, Mr. Erstling testified extensively at the NRA’s failed bankruptcy in April 2021. In this previous trial, it was revealed that Erstling was one of the NRA staffers who blew the whistle to the audit committee in 2018 about “millions of dollars being paid” to vendors outside of their contracts. Transcripts of that testimony can be found here (April 21 testimony, April 22 testimony).
Analysis
After starting yesterday with the two former NRA board members who attested to the dysfunction within the NRA, today the jury got a primer on the nonprofit sector from expert Jeffrey Tenenbaum. This base of knowledge will be needed to ultimately make determinations about whether the NRA’s conduct violated New York State non-profit law. In a not-so-subtle nod to NRA conduct alleged in the case, Tenenbaum’s testimony about having “never” or “rarely” seen the type of behavior at issue with the NRA was particularly effective.
If the jury finds liability in this case, Tenenbaum’s testimony may also be instructive to the judge (and/or a monitor, if one was appointed) in fashioning potential reform at the NRA. As an example, one could speculate that reducing the size of the NRA’s 76-person board of directors might be attractive to improve board performance and oversight.
What’s Next?
The trial will resume on Thursday morning at 9:30 AM with more testimony from NRA Director of Finance Michael Erstling. For those looking to attend the NRA trial in person, please be advised that the Donald Trump civil trial will be happening at the same time and same New York courthouse, likely making the security line formidable!