Highlights from The New Yorker and The Trace

New Report Uncovers Self-Dealing Among NRA Executives, Contractors

Another New Yorker/The Trace investigation has uncovered more examples of self-dealing among NRA insiders and NRA vendors than have been previously reported. According to reporter Mike Spies, a memo written by half a dozen NRA accountants and presented to the organization’s audit committee “details a range of questionable transactions and business arrangements involving several top N.R.A. venders and executives.”

Among the new revelations:

  • According to the memo, the NRA made “payments” to the “significant other” of Woody Phillips, who served as the NRA’s treasurer and chief financial officer for twenty-six years. The article quotes an NRA attorney denying that the person hired was “any ‘significant other’ of the N.R.A.’s former C.F.O.” but acknowledging “[t]he NRA hired an I.T. consulting firm with links to a social friend of Mr. Phillips.”
  • From 1998 to 2014, a firm called A.T.I. produced a crime-reenactment show called “Crime Strike,” featuring NRA Executive Vice President Wayne LaPierre. According to the memo, the NRA paid $1.8 million to rent a home belonging to A.T.I. President David McKenzie in a seemingly odd arrangement that the NRA’s own attorney acknowledges the organization’s Audit Committee is “addressing.”
  • The memo alleges “senior management override of internal controls,” which, according to the New Yorker/The Trace, “led to violations of ‘accounts payable procedures and ‘HR policy’”.
  • The memo also states that four NRA executives received “reimbursement of expenses relating to apartments and living expenses beyond HR Policy Manual stipulations and on a permanent basis.” The four executives “include Doug Hamlin, the N.R.A.’s executive director of publications; Eric Frohardt, the director of education and training; Joe DeBergalis, the executive director of general operations; and Josh Powell, LaPierre’s chief of staff,” according to the New Yorker/The Trace.
  • The memo highlights Powell’s purported conflicts of interests, but does not mention that around the period that NRA accountants completed the memo, “in July 2018, Powell was appointed acting C.F.O. for about three weeks, placing him in charge of the accountants who documented his conflicts of interest,” according to the New Yorker/The Trace.

Philip Hackney, a five-year veteran of the IRS chief counsel’s office, told the New Yorker/The Trace, “This is norm-breaking across the lines—deeply problematic and definitely not best practices. … If all of these allegations are true, you’re talking about nonprofit governance gone bad, with choices resulting in possible theft, which is not in anyone’s interest.”

The article also reflects that the NRA and some of its vendors have denied and/or disputed these allegations and whether they reflect improprieties.

The report is the latest in a spate of bad news for the NRA, and raises new questions about whether the organization has violated rules surrounding its non-profit status amid reports of financial mismanagement, self dealing, and a newly opened investigation led by New York’s Attorney General.

Last week, the Wall Street Journal reported that NRA executive vice president Wayne LaPierre charged the organization’s ad agency, Ackerman McQueen more than $240,000 for expenses “related to international trips he took without providing adequate documentation.” Among the trips were lavish stays in the Bahamas, Italy, and Reno, Nevada.

Also last week, members of the Senate Committee on Finance including Senators Ron Wyden (D-OR), Sheldon Whitehouse (D-RI) and Robert Menendez (D-NJ) sent letters to LaPierre, former NRA president Oliver North and Ackerman McQueen to turn over “letters, third-party audits, memos and other materials as they look into allegations of self-dealing and examine the NRA’s nonprofit status,” according to the Washington Post.

Last month, a previous New Yorker/Trace report detailed how “a small group of N.R.A. executives, contractors, and vendors has extracted hundreds of millions of dollars from the nonprofit’s budget.” In response to the report, Everytown has called on Congress and state charities regulators to investigate the NRA, its officers and board members to identify any violations of laws governing charities and has lodged a formal complaint with the IRS.

During last month’s NRA convention, reports surfaced that LaPierre had claimed North was extorting him to force him to resign. Shortly after, North announced he wouldn’t be running for reelection after serving just one of the customary two one-year terms, warning board members that the organization could lose its nonprofit status.