NRA Trial Day 7: NRA CFO and Former CFO Testify on Key Financial Arrangements
Today in Court
The trial resumed with the continuation of testimony from defendant and former NRA CFO, Woody Phillips. Phillips testified previously on Friday, January 12 and Tuesday, January 16. The remainder of the day was spent on testimony from the NRA’s current CFO and Treasurer, Sonya Rowling.
Quick Summary of Today’s Testimony
- Phillips’s counsel elicited further testimony regarding the NRA’s plan to secure a $6.5 million mansion for Wayne LaPierre in Dallas, Texas. Phillips claimed that the NRA cut the initial $70,000 check towards the purchase as earnest money while the involved parties looked for a donor to buy the house.
- Phillips explained that he and others wanted to keep LaPierre’s travel destinations “close” because LaPierre’s safety was important.
- With respect to his prior testimony that certain financial records were housed at Ackerman because of his concern of NRA employees “snoop[ing],” Phillips testified that the NRA is a political organization, and that the group needed to keep such details on a need-to-know basis. Phillips testified that he had heard of some leaks from within the organization.
- Yesterday, Phillips testified that NRA vendor Under Wild Skies had issued “supplemental invoices” to the NRA. Under Wild Skies was owned by a friend of LaPierre, Tony Makris. Two such invoices shown in court were for separate payments of $97,500. Today, Phillips testified that Under Wild Skies produced a television show which featured Makris and others on hunting trips, including in Africa. When asked about the supplemental invoices by his counsel, Phillips testified that the show sometimes took large NRA donors on these trips as a way to cultivate their relationships.
- On redirect, the NYAG got Phllips to admit that these supplemental invoices had nothing to do with the production of the television show.
- When asked for the value of these outings to the NRA, Phillips named a donor, Robert Petersen. After an objection, Phillips said he didn’t need to name anyone and continued to testify about an unnamed magazine publisher that matched Petersen’s description. Phillips said that Makris had cultivated the NRA’s relationship with that donor and that the latter had left the NRA a gun collection worth $50 million in his will.
- Regarding LaPierre’s travel agent Gayle Stanford, Phillips testified that, during his tenure as CFO and Treasurer, it was not his responsibility to review all of the NRA’s bills, and that he had staff who would assist in that effort.
- Counsel for Phillips made a similar point in a line of questions regarding the NRA’s representation letters to outside auditors – with Phillips noting that he was relying on several members of the organization who signed the representation letter.
- On redirect from the NYAG, Phllips acknowledged that the quality of an outside audit could be impacted if the organization withheld information from auditors and/or leadership withheld information from the finance team.
- The NYAG then called current NRA CFO and Treasurer Sonya Rowling as the next witness. Rowling has worked for the NRA for 23 years, and was promoted to CFO after the NRA’s failed bankruptcy in 2021.
- Rowling testified that LaPierre personally asked her to become the CFO, and that she was not aware of any executive search to fill the position after the departure of Craig Spray.
- Rowling acknowledged that the NRA’s internal policies for contract approvals for larger contracts were “not consistently followed.”
- The NYAG then methodically walked the witness through various NRA contracts where these policies – including business case reviews and certain signatures of board members – were not followed. This included various contracts with entities controlled by David McKenzie.
- Rowling admitted that throughout the years the NRA paid McKenzie-controlled companies more than what was contracted for.
- Of note, after years of contracting with various McKenzie-controlled entities, in 2022 (after the NYAG lawsuit was filed) the NRA re-negotiated and consolidated these contracts. Rowling testified that this resulted in a 40 percent reduction in what the NRA had been spending.
- The NYAG got Rowling to acknowledge that in 2022, LaPierre was still signing these contracts and was listed as the “Responsible Officer Approval” in the contract form. Rowling further acknowledged that LaPierre disclosed his relationship with David McKenzie in 2021 – yet was still signing contracts with McKenzie controlled companies in 2022. Rowling later testified that, despite his signature on this form, LaPierre “recused” himself from the 2022 consolidated contract negotiations.
- Rowling testified that certain vendors at the NRA had been “untouchable”, meaning finance staff could not question them directly or question the amounts in their invoices. She testified that Ackerman McQueen was one of these “untouchable” vendors.
- Rowling acknowledged that certain NRA executives were passing expenses through Ackerman McQueen, including LaPierre and Tyler Schropp. Further, she testified that out-of-pocket invoices from Ackerman McQueen that included no details violated NRA policy – yet, the financial services department at the NRA still paid them.
- Rowling testified that she considered leaving the NRA altogether between 2018 and 2021, but she was concerned about securing future employment because of the NRA’s reputation. After accepting the Interim CFO position, along with a sizable salary increase, Rowling stated that she no longer considered leaving the organization.
- Rowling admitted that she did not know about the NRA’s bankruptcy until after the filing. In a new development, Rowling acknowledged that her own financial analysis determined that the NRA’s bankruptcy filing cost the organization between $10 and $12 million.
- In the late afternoon, Rowling testified that, for years, a staffer in the Department of Advancement had a “habitual issue” with appropriately handling expense reports and reimbursements. An internal email claimed that, in a single month, the employee had spent more on rental cars than the car payments for his boss, Tyler Schropp, then NRA-ILA Director Chris Cox, and Wayne LaPierre combined.
- Rowling testified that Tyler Schropp would “discipline” this subordinate, but a text message shown in court indicated that she had told Craig Spray in October 2018 that Schropp was “always” the one “to put a stop” to any action against the employee.
- Rowling testified that so-called “Wayne said” approvals for expenses, in which individuals were directed to approve expenses based on LaPierre’s instructions, were a thing of the past. However, a June 2021 email showed Schropp telling others that LaPierre had approved a raise for the Advancement employee in question. In response, the NRA’s head of human resources wrote, in part, “People have learned nothing.”
- Rowling testified that the Advancement employee was fired the following year, in 2022.
- Questioning of Rowling from lawyers for the defendants largely focused on recent efforts by the NRA to improve compliance. Counsel for the NRA elicited testimony from Rowlings that the NRA Audit Committee was “extremely receptive” to her whistleblower concerns, and that she felt she had been protected as a whistleblower at the NRA.
Both Phillips and Rowling were not necessarily friendly witnesses to the NYAG – Phillips is a named defendant and Rowling is the NRA’s current CFO. However, an interesting dynamic developed over the course of the past few days of testimony, where the NYAG was able to largely keep the witnesses on track and acknowledging key points in their case. When the witnesses resisted certain admissions or attempted to fight the question, they were in many cases confronted with previous testimony. It may be that the NRA’s decisions to engage in scorched earth litigation over the years – whether with state and federal suits against Ackerman McQueen or a bankruptcy trial – is coming back to haunt them in this matter. Indeed, prior to this trial, the NYAG has had access to thousands of pages of deposition and trial testimony from other matters that largely “box in” fact witnesses to their story. The NYAG prosecutors are able to ask unfriendly witnesses questions with full knowledge of their previous answers (or, if they change their answer, they have the ability to impeach with previous testimony).
While the NRA has claimed that it corrected its course years ago, Rowling’s testimony showed that a current executive, Tyler Schropp, was still pushing for approval of expenses based on the word of Wayne LaPierre alone in 2021, particularly the approval of a raise for an employee who Rowling said had a “habitual issue” with circumventing the internal controls the NRA claims are now followed. Even the NRA’s HR director responded that “People have learned nothing.” Similarly, another line of questioning from the NYAG to Rowling brought home the point that many of the same people who were in positions of power at the NRA during the various financial issues at the heart of the trial remained there today.
Additionally, Phillips’ testimony regarding NRA donor Robert Petersen appears to corroborate New York Times reporting from 2019 about $56 million given to the NRA Foundation by Petersen’s family foundation and his late wife.
The trial will resume on Thursday morning at 9:30am with more testimony from Sonya Rowling. Most of Rowling’s cross-examination is finished, although there was no word from counsel about who the next fact witness would be.