New York and DC Attorneys General Investigations

NRA Trial Day 6: The NRA’s Shady Web of Vendor Payments And Luxury Spending

January 16, 2024

Today in Court

The trial resumed after the long weekend with the continuation of testimony from defendant and former NRA CFO, Woody Phillips, who remained on the stand all day. 

Quick Summary of Today’s Testimony

  • Throughout the testimony of Woody Phillips, the New York Attorney General (“NYAG”) established that the NRA’s internal procedures for contract approval – which include a business case analysis, written agreements, and sign-off from multiple board members – were not followed in several significant contractual relationships between the NRA and outside vendors. 
  • Phillips was asked extensively about the NRA’s relationship with its former public relations firm – Ackerman McQueen. This was one of the largest NRA vendor relationships over the years – with the NRA routinely spending between $10 million and $30 million with Ackerman in later years.
    • In one exchange, Phillips acknowledged certain financial records were kept at Ackerman McQueen, and not brought to the NRA, because he was concerned that certain NRA employees could “snoop” and see items that “might cause headlines.”
    • The NYAG showed Phillips and the court multiple examples of “out of pocket” invoices from Ackerman McQueen to the NRA – such as one for $306,000 and another for $77,000. The invoices contained no detail of what work was completed.
      • Phillips acknowledged that submitting the “out of pocket” expenses to Ackerman resulted in NRA employees and executives not having to submit receipts and avoiding the NRA travel policy.  
      • Phillips also testified that he believed Wayne LaPierre knew about the “out of pocket” expenses arrangement with Ackerman because some of LaPierre’s travel expenses were billed as “out of pocket” expenses to Ackerman.
    • With respect to the credit card issued to NRA fundraiser Tyler Schropp, Phillips confirmed that the arrangement was that Schropp’s expenses would be paid by Ackerman initially, and then passed through to the NRA via Ackerman bills.
    • Phillips acknowledged that the NRA spent tens of thousands of dollars at each the restaurant Landini Brothers, which Phillips called a “very nice” restaurant, and the affiliated cigar bar CXIII Rex. 
    • In a 2018 amendment to the NRA’s Service Agreement with Ackerman, the NRA agreed to a “talent and employees” payment to certain individuals, including Dana Loesch and Oliver North.  
  • Phillips was shown his previous testimony about former NRA President Oliver North’s contract with Ackerman McQueen. In that testimony, he admitted knowledge that the arrangement allowed the NRA to pay North through Ackerman while North served as NRA president – a traditionally unpaid role.
    • He acknowledged today that this multi-million contract was not put through a business case review by the NRA, or receive a sign-off by the NRA Board of Directors.
  • Today marked the first time the jury heard about the plan to commit $6.5 million to buy Wayne LaPierre a mansion in Dallas, Texas. The plan, which involved vendor Ackerman McQueen, went so far as to have the NRA cut an initial $70,000 check towards the purchase. While the purchase was eventually scuttled, Phillips acknowledged that neither this check – nor the plan to buy LaPierre the mansion – complied with NRA internal procurement policies.
    • Later in the day, LaPierre’s attorney got Phillips to testify that he doubted LaPierre knew about this $70,000 check.
  • According to Phillips, the NRA did not have a policy requiring CEO Wayne LaPierre to fly by private jet. 
  • The NYAG questioned Phillips about certain “supplemental invoices” to LaPierre’s friend and NRA vendor Tony Makris in 2017 and 2018. Invoices shown to Phillips reflected monthly payments of $97,500 to Makris by the NRA, with the description “supplemental invoices.”
    • Phillips testified that either he or Wayne LaPierre authorized these payments, and that he did not recall a business case analysis or board consultation on these payments. 
  • Phillips testified that he had previously pled the Fifth Amendment in testimony during the bankruptcy litigation because of a good faith concern about potential criminal prosecution.
    • As previously covered on NRA Watch, during the bankruptcy trial, a section of Phillips’ testimony was played in court in which he invoked the Fifth Amendment no fewer than 80 times – including, but not limited to, questions regarding Wayne LaPierre’s travel, fundraising arrangements with NRA vendors, and LaPierre’s relationship with Ackerman McQueen.
    • Phillips’ attorney elicited testimony from Phillips that he didn’t think he’d done anything wrong.
  • Testimony turned to the firing of a former NRA employee who was subsequently given a $1.83 million severance agreement, which was paid out of Wayne LaPierre’s budget. Phillips testified that the employee in question did not perform any consulting or other work for the NRA after his departure. The agreement contained clauses related to confidentiality and non-disparagement by the employee, and that payments would be classified as “agreement payments.”
    • Phillips testified that the NRA did not perform a business case analysis or consult the board with respect to this agreement.  
  • With respect to NRA payments made to board member Marion Hammer, the NYAG showed the defendant and the court a prior deposition of Phillips wherein he  acknowledged that there was no written agreement for certain payments to Hammer, as well as him acknowledging “I didn’t follow the policy.”
  • In a fairly brief examination, counsel for the NRA focused on the presence of outside auditors and Phillips’ reliance on their advice. Counsel also elicited testimony from Philips that the NRA started compliance seminars for all employees in 2018. 
  • Phillips’ own attorney began an examination of him, but did not conclude. In part, he focused on the fact that Phillips’ had not asserted the Fifth Amendment in this litigation.

Analysis

The NYAG is effectively painting a picture of a non-profit spending vast sums of money with friendly vendors and flouting internal procedures.  Phillips acknowledged several contractual relationships that seemingly operated outside of the NRA’s internal procedures for procurement. Many of these relationships involved significant amounts of money, and some involved NRA insiders (such as board members) or key vendors (such as Ackerman McQueen).

What’s Next?

The trial will resume on Wednesday morning at 9:30am with Philips on the stand for the third trial day. While we do not know who the next witness will be, the NYAG told the court today that they intend to call the former NRA-ILA Director Chris Cox, with him potentially appearing before the court as soon as this Thursday or Friday.

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.