New York and DC Attorneys General Investigations

NRA Trial Day 4: Current NRA Employees Testify to the Depths of the Problem

January 11, 2024

Today in Court

The majority of the trial day was consumed by live testimony from NRA Director of Finance Michael Erstling. The day concluded with the jury being played audio deposition testimony from Rick Tedrick, the NRA’s current Managing Director of Finance.

Quick Summary of Today’s Testimony

  • The New York Attorney General’s (“NYAG”) fourth witness was NRA Director of Finance Michael Erstling, who was one of the NRA staffers that blew the whistle to the audit committee in 2018 about “millions of dollars being paid” to vendors outside of their contracts. He remains employed at the NRA today.
    • Erstling, along with others at the NRA, put together a memo entitled “Top Concerns for the Audit Committee.” That 2018 memo can be found here.  Erstling explained the memo’s origin and his concerns. The memo itself included various statements such as “management has subordinated its judgment to vendors”, “vague and deceptive billing by preferred vendors/contractors some of whom have no current contract or no contract”, and “financial conflict of interest at the senior management and Board of Directors Level”, among others.
    • He walked the jury through Wayne LaPierre’s 2019 department budget, which included a “consultant budget” that included payments to the following NRA board members/executives: Sandra Froman, Marion Hammer, David Keene, and Woody Phillips. For example, testimony indicated that Froman and Keene were each paid $39,180 and $48,000 for “speaking engagements”, respectively.
    • Mr. Erstling was shown an email from 2015 between himself and Rick Tedrick in which he told Tedrick that he and a colleague completed the budget for Wayne LaPierre’s office “in a vacuum” with “no support” from LaPierre’s office.  
    • With respect to the vendor Membership Marketing Partners (“MMP”), for whom the NYAG alleged in their opening provided CEO Wayne LaPierre use of its megayacht at no cost,  Erstling testified that he performed a historical analysis of payments to MMP that showed that by 2018, MMP had been paid $15 million more by the NRA than what was agreed to in their contract.   
    • Erstling spoke positively about the NRA’s hire of Craig Spray, who Erstling said attempted to move the NRA away from “Wayne said” culture. Erstling testified that after this hire, “we started to find things that didn’t look right… we kept digging” and “trying to clean stuff up.” 
    • Despite being the NRA’s Director of Finance, Erstling testified that he found out about the NRA filing for bankruptcy from the NRA’s press release announcing the bankruptcy. He further testified that the NRA was not insolvent at the time of the bankruptcy filing. 
    • Of note, Mr. Erstling testified extensively at the NRA’s failed bankruptcy in April 2021. Transcripts of that testimony can be found here (April 21 testimony, April 22 testimony). 
  • The cross-examination of Erstling by the NRA largely focused on eliciting testimony from the witness that he believed that compliance had recently improved at the NRA, and that internal controls were now enforced.
    • Counsel for Wayne LaPierre got Erstling to acknowledge that he never directly expressed his various concerns about conflicts of interest and overspending to Wayne LaPierre himself. 
  • For the final two hours of the trial day, the jury was then played audio deposition testimony from Rick Tedrick, the NRA’s Managing Director of Finance that was taken in April 2022. Mr. Tedrick is unavailable to testify in person.
    • Tedrick’s testimony included him being shown an email from 2020 that he authored saying that outside accounting firm Aronson did not feel comfortable, at the time, signing the NRA’s 2019 IRS 990 form. Evidence presented at trial indicated the accounting firm’s discomfort involved “unknowns” associated with the filing.
      • Of note, as one can find on NRA Watch, the NRA’s 2019 IRS 990 filed in late-2020 did not bear the signature of the accounting firm, but instead had Wayne LaPierre’s signature. Previous NRA IRS 990 filings included the name and signature of an accountant that reviewed the filing. 
      • During the NRA bankruptcy trial, recently departed CFO Spray testified that he was not comfortable signing NRA tax regulatory filing for 2019 because of “surprises” that were dropped in at the end of the process, including reporting of excess benefit transactions to LaPierre and the NRA’s former chief lobbyist Chris Cox. When Spray asked for information to verify how the excess benefit amounts were determined, he was told he couldn’t have access to it and that it was “privileged.” Spray testified  that after his refusal to sign the filing, NRA officers stopped communicating with him. A few months later, LaPierre told him the NRA had decided to go “in a different direction.”
    • Judge Cohen asked the parties to reconsider extensive use of audio testimony – as he was afraid jurors might get bored. We also learned that former NRA board president Carolyn Meadows’ testimony would also likely come in via audio deposition clips later in the trial.  
  • NRA Watch notes that the 60 Centre Street courthouse in lower Manhattan was a buzz today with the closing arguments in another trial brought by the NYAG: the civil fraud trial against former president Donald Trump. Because of the security line and various things happening at the courthouse, we regret to report that we missed the first 45 minutes of testimony in the NRA trial, but we will supplement this summary when a full transcript is posted on the court’s docket.
    • Speaking of transcripts, Judge Cohen yesterday urged the parties to finalize transcripts so that they may be posted.  He also shared with the court that  admitted trial exhibits would soon be available on the court docket.

Analysis

Erstling is an impactful witness for the NYAG because of his documented attempts to blow the whistle on potential financial improprieties, and also because he’s a current employee of the NRA. The jury had previously heard from former board members who attempted to raise concerns, but were no longer associated with the NRA. Now they have heard from an individual who still collects a paycheck from the NRA. While the NRA was able to establish the witnesses’ view that things were improving, Erstling testified that “change [at the NRA] was slow.” This undercuts the NRA’s purported defense that once it became aware of improprieties that it swiftly took action. 

Wayne LaPierre’s attorney attempted to deflect blame from LaPierre by pointing out that Erstling expressed his concerns to the Audit Committee of the NRA Board of Directors, not LaPierre directly. In reality, by doing so, Erstling was essentially blowing the whistle to LaPierre’s “boss” – the board of directors.

What’s Next?

Audio deposition testimony from Mr. Tedrick will continue on Friday. There will only be half a day of testimony on Friday. The NYAG did not disclose who they planned to call as their next witness.

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.