New York Attorney General Investigation

NY Attorney General Complaint Against the NRA

August 6, 2020

Filing Summary

As the regulator of charities in New York State, the New York Attorney General (“NYAG”) filed a complaint against the NRA in New York State Supreme Court (New York County) on August 6, 2020.  The AG’s complaint charges 18 causes of action against the NRA and four executives (CEO Wayne LaPierre, General Counsel John Frazer, former Chief of Staff Josh Powell, and former CFO Woody Phillips). These causes of action are brought pursuant to Article 7 of the New York Not-for-Profit Law, Article 7A of the New York Executive Law, New York Estates, Powers and Trusts Law, among other state laws.

While the complaint contains nearly 700 paragraphs, the factual allegations largely center around widespread looting of the NRA as a charity, with CEO LaPierre as the ringleader of that activity. The complaint alleges improper personal benefits for senior NRA executives, including that NRA leaders used vendors and contractors to hide improper expenditures, self-dealing, and related party transactions. According to the complaint, “LaPierre effectively dominates and controls the NRA Board as a whole through his control of business, patronage and special payment opportunities for board members, and his public allegations to the NRA membership of a ‘criminal conspiracy’ against board members and officers who question his activities” (para. 412).

General Counsel John Frazer, former Chief of Staff Josh Powell, and former CFO Woody Phillips enabled, and in some cases benefited from, the impropriety according to the complaint. The AG made sure to note that the looting of the NRA by top executives diverted “millions of dollars away from the charitable mission, imposing substantial reductions in its expenditures for core program services, including gun safety, education, training, member services and public affairs.” (para 2)

NYAG’s complaint alleges the NRA acted with a “pattern of conducting its business in a persistently fraudulent or illegal manner.”  Due to these persistent violations of law by the NRA and by the individual defendants, the AG is seeking dissolution of the NRA. This is the most drastic remedy the NYAG can seek under New York law.

Other requested remedies include: (1) removing and permanently barring Wayne LaPierre and John Frazer from the NRA, (2) permanently barring all individual defendants from serving as an officer or director of any charity that does business in New York, (3) an order directing the individual defendants to pay full restitution “for the waste and misuse of its charitable assets, including the return of salary received while breaching their fiduciary duties to the NRA”, plus interest and additional damages, (4) an order directing the individual defendants to “pay the NRA an amount up to double the value” of each improper related party transaction approved since July 2014, (5) an order directing the individual defendants to pay restitution for all excessive benefits paid to them.

While Everytown previously wrote extensively about the NRA’s shady financial transactions and wasteful spending in Everytown’s NRA in Crisis 2020 Report, the NYAG’s Complaint includes new and explosive allegations, bulleted out below.

  • Wayne LaPierre’s Special Department Fund: LaPierre “had access to, and abused” an internal budget that totaled $16 million in 2018 alone. The complaint says LaPierre used the budget to “fund personal expenses and consulting contracts for NRA insiders,” including supposedly “unpaid” board members (para.142, 203).
  • Big Fees for Personal Travel Consultant: The complaint alleges that, instead of using the “NRA’s official travel agent” to make travel arrangements, LaPierre retained a private travel consultant to make his travel arrangements, who the NRA paid more than $13.5 million between 2014 and 2020 (para. 188).
  • NRA Executives Used Ackerman McQueen as a “Pass-Through” To Conceal Questionable Payments: The complaint corroborates public reporting that for decades (para 310), the NRA used Ackerman McQueen to “conceal expenditures by NRA executives” like LaPierre, “many of which were personal” (para 309), by instructing Ackerman to submit vague out-of-pocket invoices to the NRA for expenditures made by NRA executives (para 311). According to the complaint, the NRA’s budget with Ackerman “included an aggregate line-item for ‘Pass-through Expenses’” that reached $950,000 in 2018 (para 313). The NRA paid “millions of dollars in entertainment and travel expenses incurred by NRA executives and associates— including LaPierre and Powell—without scrutiny from within the organization” through this arrangement (para 315). 
  • NRA Executive Use of 100-Foot Yacht: While Everytown has previously publicly highlighted issues surrounding a massive yacht used by NRA executives and owned by a key business partner, the complaint further informs that Wayne LaPierre would stay on the 108-foot yacht while in the Bahamas with his family (para. 169). LaPierre also stayed on the yacht during two European trips with the purported “purpose of recruiting celebrities for the NRA.” (para. 174) LaPierre never disclosed this benefit. (para. 170). Remarkably, Wilson Phillips while still the NRA Treasurer organized a trip on a different yacht owned by the same NRA business partner in 2018 (para.228-230).
  • LaPierre Couldn’t Even Explain His Own Golden Parachute: While Everytown raised the issue of golden parachutes at the NRA in its April 2019 IRS Complaint (at page 2), the NYAG’s complaint reveals Wayne LaPierre couldn’t even explain his very generous retirement package.  When confronted about the arrangement, LaPierre told the AG “I noticed that and kind of shook my head at it when I saw it… I didn’t ask for this contract.” (para. 420)
  • NRA Spends “Several Million Dollars Each Year” for LaPierre’s Security, Including an Armored Vehicle: The complaint alleges that LaPierre’s office budget “allocated several million dollars each year to LaPierre’s personal and home security” (para 206). This spending allegedly included “an armored vehicle for LaPierre,” purchased without proper authorization (para 206).
  • New Details on a Failed Purchase of a Mansion for the LaPierres: Previous public reporting and legal filings highlighted on NRA WATCH revealed that the NRA sought to buy a mansion in Dallas for the LaPierres’ use. The complaint’s allegations appear to corroborate that reporting. In April 2018, the couple and an Ackerman executive looked at homes and settled on a $6.5 million mansion (para. 209). Woody Phillips and an Ackerman executive formed “WBB Investments, LLC” to make the home purchase, and the complaint reveals that the NRA agreed to invest $6.5 million in the LLC (para. 210). As has been reported, the NRA cut a $70,000 check for the venture before it was ended, and the complaint reveals that members of the NRA Finance Department were pushed by Philips and his successor to approve the check against NRA policy (para. 214). An email from an Ackerman executive cited in the complaint also corroborates reporting that the LaPierres were requesting closet and bathroom improvements to the mansion, and adds that “[t]wo vehicles will need to be purchased prior to move in.” (para 211)
  • Staff in the NRA’s Finance Department Allege They Were Pressured to Process Payments Without Proper Documentation: The complaint alleges that members of the NRA’s internal finance department felt pressure to follow the executives’ lead to process payments in contravention of NRA policy (para 219). One staffer told her supervisor she feared being fired for requesting missing receipts for reimbursements after being told things like, “We don’t want this to reach Wayne [LaPierre]” (para 218). Several members of Phillips’ staff would eventually blow the whistle to the NRA Audit Committee in the summer of 2018 (para 220).
  • Hidden Consulting Arrangements: LaPierre’s office had its own budget for consulting arrangements, directed by LaPierre and Phillips, recently worth $2 million to $3 million (para. 199). Consulting contracts through this budget were not shared with the NRA’s Finance Department, meaning staff were forced to approve invoices without access to the terms of the underlying contract. When the staff requested the contracts, CFO Phillips often refused (para. 201). These consultants allegedly included LaPierre’s travel consultant, several board members, and others (para 203).
  • NRA Board Members and Related Party Transactions: Adding to previous public reporting, the AG found that the NRA “routinely entered into agreements with board members without adhering to applicable requirements under NRA policy and New York law…” (para. 365). At paragraphs 366-395, the compliant walks through five unnamed board members who received such compensation.  While the complaint does not use the names of the board members, it can be deduced from the facts provided that Board Member No. 1 is former NFL football player Dave Butz, Board Member No. 2 is Lance Olson, Board Member No. 3 is David Keene, Board Member No. 4 is Sandra Froman, and Board Member No. 5 is Marion Hammer.
  • LaPierre Has Received $1.2 Million in Reimbursements for Personal Expenses like Christmas Gifts and Travel with His Wife: Between 2013 and 2017, the NRA reimbursed $1.2 million in expenses made by LaPierre (para 190). That sum included “$65,000 for Christmas gifts for his staff, various donors, and friends” (para 191). In addition, after LaPierre’s wife was appointed to the board of the National Park Service Foundation (“NPSF”), he spent more than $150,000 in NRA funds for private flights and submitted expense reports for $13,874.46 in travel costs for trips to NPSF events (para. 193). LaPierre also received reimbursements for travel expenses to film shoots in Africa and Europe, including more than $37,000 for a trip with his wife to Botswana and Mozambique (para 195).
  • NRA Leadership Awards Woody Phillips a Huge Post-Retirement Consulting Contract Without Board Approval: In 2017, CFO Phillips was preparing to retire. Any post-retirement salary would require approval from the board. The complaint alleges that instead, leadership gave Phillips a consulting agreement without authorization from the board (para. 231), under which the organization would pay him $30,000 per month for five years after his retirement (para. 232). Despite the fact that “Phillips has provided no consulting services to the NRA under this agreement” (para. 234), the NRA paid him more than $170,000 between January and July 2019.
  • Massive Pay Raises for Failed NRA Leader Josh Powell: Despite Powell’s troubled time at the NRA, the complaint alleges that LaPierre and Phillips gave him tremendous pay raises during his tenure. Powell’s salary at the NRA started at $250,000 in June 2016 (para. 243). LaPierre and Phillips gave him three raises (para 243, 245) such that by March 2018, his salary was $800,000 per year (para 246). Some of those raises were retroactive to months prior.
  • LaPierre Didn’t Even Try to Defend Executive’s Side Income: The NRA partnered on Carry Guard with insurance broker Lockton Affinity. According to the complaint, an NRA executive previously “responsible for overseeing the NRA’s relationship with Lockton” received compensation from both the NRA and Lockton simultaneously (including over $900,000 from Lockton). When LaPierre was asked whether he thought it was prudent for the NRA to have an executive negotiate with a vendor while also being paid by that vendor, LaPierre admitted, “there are serious questions surrounding that type of situation”; further testifying “I think there were problems” with that arrangement (para. 356-362).
  • NRA Board Failed To Do Due Diligence on Executive Salaries: The complaint alleges that for years, the NRA board set executive salaries for LaPierre and others “without relying upon or properly consulting a compensation consultant, considering reliable compensation surveys or obtaining appropriate comparability data,” (para 401) despite claiming to do so on official filings (para 400). For instance, in 2017, the board committee responsible for executive compensation hired an expert to consult on pay raises, but went ahead to recommend large raises for LaPierre, Phillips, and others without a report or even data from the expert it had hired (paras 402, 405). In fact, the committee instead consulted data provided by Phillips himself, which did not even include data on nonprofit executives (para 403), and accepted talking points from Phillips for the full board which falsely claimed the committee had consulted expert reports (para 404).
  • Some of LaPierre Expenses Were Routed Through the NRA-ILA, Raising Potential Questions of Chris Cox’s Involvement: According to the complaint, LaPierre’s expense reimbursements, many of which the complaint alleges were improper, “were historically handled by” a lower level employee in the NRA-ILA, “regardless of whether they related to the activities of that division” (para. 197).
  • Wayne LaPierre Ousts Oliver North Over His Attempts at Oversight: The complaint corroborates public reports about how, after personally recruiting him to serve as president of the NRA, Wayne LaPierre repeatedly stymied Oliver North’s attempts to investigate the NRA’s financial issues—in particular, investigating large payments to an outside law firm (paras. 464-467). 
  • NRA Board Members Who Attempted Oversight Were Allegedly Retaliated Against: According to the complaint, after North’s departure, multiple board members attempted to secure an independent audit of the NRA but were “rebuffed” (paras. 472-473). When they and others spoke out, they were allegedly denied their committee assignments, leading several board members to resign (paras. 474-475).
  • NRA Audit Committee Allegedly Failed to Heed or Protect Whistleblowers: The complaint alleges that the NRA audit committee failed its obligation to respond to whistleblower complaints (para. 486-487). In 2018, a group of staff in the CFO’s office conducted a review of questionable transactions and prepared to present their findings to the audit committee (para. 488). In their presentation, one of the staff members explicitly named herself as a whistleblower and said the meeting was “being manipulated in a way as to try to explain away our issues or try to claim the items on the list are ‘fixed’ before we can present them as whistleblowing.” (para 491) The report out from the meeting, which the chair of the committee left before the whistleblower presentation, made no mention of the whistleblowers’ presentation (paras 490, 492). The committee made no effort to ensure that none of the whistleblowers faced reprisal, even though the vice-chair of the committee was aware that at least one employee felt threatened (paras 497).