This article was published February 22, 2024 and updated on February 26, 2024. CBS News covers the jury's verdict (link opens in YouTube): "Jury finds Wayne LaPierre, NRA liable in corruption civil case."
“The longtime head [Wayne LaPierre] of National Rifle Association operated as the ‘King of the NRA,’ spending lavishly on himself, punishing dissent and showering allies with country club memberships and no-show contracts, a lawyer for the New York Attorney General’s Office told jurors…” according to the Associated Press.
Fiscal 2022 CharityWatch Rating for NRA
CharityWatch has issued a "?" rating to the
National Rifle Association for its fiscal 2022 reporting year due to concerns
related to its governance practices, which may impact the reliability of the
NRA’s financial reporting. CharityWatch has also issued a Governance Exception
to the NRA due to the legal action brought by the New York State Attorney
General.
CharityWatch issues a separate rating for the National
Rifle Association (NRA) Foundation, a 501(c)(3) public charity.
Please read Related CharityWatch Articles for additional information.
According to the National Rifle Association's audit for fiscal year ended December 31, 2022: (Audit Note 15, Commitments and Contingencies - Litigation and claims):
"Litigation and claims"
"The NRA and some of its affiliates are
involved in several lawsuits. These lawsuits include, but are not limited to,
People of the State of New York, by Letitia James, Attorney General of the
State of New York v. NRA et al., No. 451625/2020 (N.Y. Supreme Court, New York
County, Commercial Division), District of Columbia v. NRA Foundation, Inc. et
al., No. 2020 CA 003454 B (D.C. Super. Ct.), and Dell'Aquila et al. v. NRA et
al., No. 3:19-cv-00679 (M.D. Tenn.). The NRA is vigorously defending against
these lawsuits. The outcomes of legal proceedings and regulatory matters are
often difficult to predict. A determination that the NRA's or Affiliates'
operations or activities are not, or were not, in compliance with applicable
laws or regulations could result in monetary damages or injunctive relief. When
making determinations about recording liabilities or disclosures related to
legal proceedings, the NRA complies with the requirements of ASC 450,
Contingencies, and related guidance, and therefore, the NRA discloses
significant legal proceedings even where liability is not probable or the
amount of the liability is not estimable, or both."
"The three aforementioned lawsuits are summarized
below:"
"People of the State of New York, by
Letitia James, Attorney General of the State of New York v. NRA et al., No.
451621/2020 (N.Y. Supreme Court, New York County, Commercial Division)"
"On August 6, 2020, the Attorney General of the
State of New York instituted an action against the NRA and four individuals,
which consisted of eighteen causes of action, including six causes of action
against the NRA. In March 2022, the Court dismissed three of the NYAG's six
causes of action against the NRA, including the two claims in which the NYAG
sought the NRA's judicial dissolution. On May 2, 2022, the NYAG asserted a new
claim against the NRA pursuant to which she seeks the appointment of independent
compliance monitor and other injunctive relief she asserts is necessary to
ensure proper administration of assets the NRA holds and administers for
charitable purposes."
"The claims against the NRA are for alleged (i)
failure to properly administer assets held and administered for charitable
purposes; (ii) improper related party transactions; (iii) violations of
whistleblower statutes and policy; and (iv) false regulatory filings."
"The NRA's co-defendants are the NRA's Executive Vice President and CEO Wayne LaPierre, the NRA's Secretary and General Counsel
John C. Frazer, the NRA's former Treasurer and CFO Wilson Philips, and the
NRA's former Chief of Staff, Executive Director of General Operations, and
Senior Strategist Joshua Powell. The NYAG claims that these individuals have,
among other things, violated their duties, including under N.Y. N-PCL 717, to
the NRA."
"The NYAG seeks, among other things, (i)
appointment of an independent compliance monitor and an independent governance
expert; (ii) an injunction against solicitation; and (ii) an order enjoining
individual defendants from serving as officers, directors, or trustees of any
not-for-profit or charitable organization incorporated or authorized to conduct
business or solicit charitable donations in the State of New York."
"The NYAG filed a Note of Issue on December
20, 2022. The NYAG represented that, with the exception of certain discovery,
the case is ready for trial. The NYAG requested a trial by jury on certain
issues. The NRA demanded a trial by jury on all factual issues related to any
claim or defense. No trial date has been set."
"At this stage, it is not possible to evaluate the
likelihood of any particular outcome or estimate the amount or range of any
potential recovery or loss with any reasonable degree of certainty."
"District of Columbia v. NRA; and NRA Foundation,
Inc., No. 2020 CA 003454 B (D.C. Super. Ct.)"
"On August 6, 2020, the District of
Columbia Attorney General (the "DCAG") filed an action against the
NRA and the NRA Foundation alleging that the NRA improperly diverted funds from
the NRA Foundation and that the NRA Foundation failed to act independently from
the NRA. The DCAG also alleged that the NRA Foundation failed to implement
appropriate controls and protocols in relation to the funds."
"At the outset, the DCAG asserted two fault
causes of action against the NRA for a "constructive trust"—a device
that exists only as a remedy, but not a cause of action. As a result, the two
original causes of action against the NRA were dismissed on that basis in
December 2020."
"On July 16, 2021, however, the DCAG
amended his complaint to name the NRA as a defendant in the claims previously
asserted against the NRA Foundation. The two statutory claims are for alleged:
(i) exceeding or abusing the authority conferred by law in violation of the
District's Nonprofit Corporation Act, D.C. Code§ 29-412.20(a)(1)(B); and (ii)
continuing to act contrary to nonprofit purposes in violation of the District's
Nonprofit Corporation Act, D.C. Code § 29-412.20(a)(1)(C). The complaint
also asserts a common law claim for alleged violation of nonprofit
purposes."
"The DCAG continues to seek a constructive
trust over funds in the NRA's possession that the DCAG alleges belong to the
NRA Foundation. The relief the DCAG seeks against the NRA Foundation includes:
(i) modifying the NRA Foundation's governance policies to ensure independence
from the NRA; (ii)appointing a court-supervised independent receiver to oversee
the modification of the NRA Foundation's governance policies and monitor all
the NRA Foundation's financial decisions and transactions; and (iii) requiring
the NRA Foundation's Board of Trustees and officers to undergo charitable
nonprofit corporate governance training."
"Fact discovery was completed in May 2022.
Expert discovery was completed in October 2022. Discovery was reopened for a
limited purpose (pertaining to the NRA Foundation's records related to grants
to the NRA) until April 30, 2023. A mediation, which is mandatory under the
applicable rules, is scheduled for September 13, 2023. A two-week bench trial
is scheduled for January 16, 2024. At this stage, it is not possible to
evaluate the likelihood of any particular outcome or estimate the amount or range
of any potential loss with any reasonable degree of certainty."
"Dell'Aquila et al. v. NRA et al., No. 3:19-cv-00679
(M.D. Tenn.)"
"On August 6, 2019, NRA donor David
Dell'Aquila filed a putative class action against the NRA on behalf of all
United States donors to the NRA. The complaint alleged fraud and violations of
the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961 et seq.,
("RICO") based on alleged misuse of NRA funds. After two amendments
of the original complaint, as well as the addition of three named plaintiffs,
on February 19, 2020, the NRA moved to dismiss the lawsuit in its entirety
pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of jurisdiction, Rule 12(b)(6) for failure to state a claim upon which relief can be
granted, and Rule 9(b) for failure to comply with the heightened pleading
requirement applicable to fraud claims. On September 30, 2020, the court
granted in part and denied in part the NRA's motion. Specifically, the court
sustained the fraud claim but dismissed the RICO claim. At the same time, the
court also dismissed all claims asserted by the putative plaintiffs against the
NRA's Executive Vice President and CEO Wayne LaPierre and the NRA Foundation."
"The parties are currently engaged in
discovery. The deadline for Plaintiffs' class certification is March 27, 2023.
At this stage, it is not possible to evaluate the likelihood of any particular
outcome or estimate the amount of range of any potential recovery or loss with
any reasonable degree of certainty."
"During
2021 and 2022, the NRA was involved in ongoing litigation with its former
advertising agency, Ackerman McQueen, Inc. The matter was settled in March 2022
and is included in legal settlement costs on the statement of activities."
NOTE: Legal Settlement Costs are reported in the Statement of Activities as amounting to $12,370,166
According to the National Rifle Association's audit for
fiscal year ended December 31, 2022: (Audit Note 16, RELATED PARTIES):
"The NRA and the NRA Foundation are
financially interrelated entities as the NRA is able to influence the
Foundation's operating and financial decisions as well as the NRA having
ongoing economic interest in the net assets of the Foundation. The NRA is
affiliated with CRDF [NRA Civil Rights Defense Fund], SCF [NRA Special Contribution Fund], and the FAF [NRA Freedom Action Foundation] by virtue of the control vested with the
NRA's Board of Directors to appoint the Board of Trustees of each affiliate.
The PVF [NRA Political Victory Fund] is a separately unincorporated political action committee of the NRA
whose five officers are NRA employees. The VF [NRA Victory Fund] is a separately incorporated super political action committee of the NRA whose three officers are NRA employees. The NRA provides certain benefits to
the affiliates at no cost, among which are the use of office space and other
administrative and support services. Management has determined that the fair
value of these benefits is minimal, and accordingly, no amounts are reflected
in these financial statements."
"The Foundation reimburses the NRA for
certain expenses, such as salaries, benefits, and general operating expenses,
paid by the NRA on the Foundation's behalf. These expenses totaled $9,694,495
and $8,621,074 for the years ended December 31, 2022 and 2021, respectively. As
of December 31, 2022 and 2021, $29,877,390 and $36,411,266 respectively, was
owed to the NRA and included in due from affiliates for reimbursements and the
NRA's beneficial interest in the net assets of the Foundation. The net (loss) gain on the NRA's beneficial interest in the net assets of the Foundation totaled ($5,929,313)
and $3,391,869 for the years ended December 31, 2022 and 2021, respectively. In
addition, certain qualified NRA programs were funded by Foundation grants
totaling $6,367,910 and $4,883,739 for the years ended December 31, 2022 and
2021, respectively."
"The CRDF reimburses the NRA for general
operating expenses paid by the NRA on the CRDF's behalf. These expenses totaled
$16,723 and $3,306 for years ended December 31, 2022 and 2021, respectively. As
of December 31, 2022 and 2021, $4,089 and $371, respectively, was owed to the
NRA for general operating expenses and included in due from affiliates. The
CRDF reimburses the NRA for qualified legal costs totaling $176,628 and
$407,072 for the years ended December 31, 2022 and 2021, respectively. The CRDF
owes NRA $176,628 and $49,785 for promised grant funding for the years ended
December 31, 2022 and 2021, respectively."
"All permanent employees of the SCF are
maintained as employees of the NRA and the SCF reimburses the NRA for the total
employee costs including benefits. The SCF reimburses the NRA for certain other
expenses paid by the NRA on the SCF's behalf. These expenses totaled $1,851,421
and $1,585,483 for the years ended December 31, 2022 and 2021, respectively. As
of December 31, 2022 and 2021, $175,301 and $184,322, respectively, was owed to
the NRA for salaries, insurance and benefits net of certain other expenses owed
by the NRA to the SCF and included in due from affiliates..."
"The FAF reimburses the NRA for qualified
legal costs totaling $465,000 and $218,097 for the years ended December 31,
2022 and 2021, respectively. The FAF owes NRA $465,000 and $100,000 for
promised grant funding as of December 31, 2022 and 2021, respectively."
"The NRA paid administrative and
fundraising expenses of $2,743,324 and $2,729,360 for the years ended December
31, 2022 and 2021, respectively, on behalf of the PVF. The PVF reimburses the
NRA for salary expenses that totaled $177,173 and $88,586 for the years ended
December 31, 2022 and 2021, respectively."
"The NRA paid administrative and
fundraising expenses of $97,386 and $128,062 for the years ended December 31,
2022 and 2021, respectively, on behalf of the VF. In addition, the NRA made
grants of $0 and $5,000,000 to the VF for the years ended December 31, 2022 and
2021, respectively. The VF owes NRA $0 and $17,000 for audit fees for the years ended December 31, 2022 and 2021, respectively."
"While members of the NRA Board of
Directors serve as uncompensated volunteers, some directors receive
compensation from the NRA, either directly or through business organizations,
for other professional services provided to the NRA. Other directors receive
membership recruitment commissions (personally or through other entities) on
the same terms as available to any other recruiter and in amounts that are not
material for the purposes of these statements."
"To ensure that individuals are adequately represented in connection with investigations or litigation arising from their service to the NRA, the NRA from time to time advances or reimburses legal expenses to certain officers, directors, or employees."
According to the National Rifle Association's audit for
fiscal year ended December 31, 2022: (Audit Note 17, BANKRUPTCY FILING):
"In
January 2021, the NRA and a wholly owned subsidiary, Sea Girt LLC, filed for
bankruptcy protection in the U.S. District Court for the Northern District of
Texas. The case was dismissed without prejudice in May 2021 and the NRA is no
longer under the supervision of the bankruptcy court. In anticipation of the
litigation, the NRA deposited fees in a trust account with Brewer, Attorneys
and Counselors; some of those funds were used to pay fees during the bankruptcy
litigation, and the unspent balance was returned after the dismissal."
Fiscal 2022 CharityWatch Rating for NRA Foundation
CharityWatch
has issued a "?" rating for the National
Rifle Association (NRA) Foundation for its fiscal 2022 reporting year due
to concerns related to its governance practices, which may impact the
reliability of the NRA Foundation's financial reporting. CharityWatch has
also issued a Governance Exception to the NRA Foundation due to the legal action brought by the Office of the Attorney
General for the District of Columbia, as well as the ongoing legal action
against the NRA, a related organization, by the New York State Attorney
General.
CharityWatch issues a separate rating for
the National Rifle Association (NRA), a 501(c)(4) tax-exempt
social welfare organization.
Please read Related CharityWatch Articles for additional information.
According to the NRA Foundation's Audited Financial
Statements for the fiscal year ended December 31, 2022 (Note 8, Commitments And
Contingencies):
"On August 6, 2020, the District of
Columbia Attorney General (the "DCAG") filed an action against the
NRA and the NRA Foundation alleging that the NRA improperly diverted funds from
the NRA Foundation and that the NRA Foundation failed to act independently from
the NRA. The DCAG also alleged that the NRA Foundation failed to implement
appropriate controls and protocols in relation to the funds."
"At
the outset the DCAG asserted two faulty causes of action against the NRA for a
'constructive trust' -- a device that exists only as a remedy, but not a cause
of action. As a result, the two original causes of action against the NRA were
dismissed on that basis in December 2020."
"On
July 16, 2021, however, the DCAG amended his complaint to name the NRA as a
defendant in the claims previously asserted against the NRA Foundation. The two
statutory claims are for alleged (i) exceeding or abusing the authority
conferred by law in violation of the District's Nonprofit Corporation Act, D.C.
Code...29-412.20(a)(1)(B); and (ii) continuing to act contrary to nonprofit
purposes in violation of the District's Nonprofit Corporation Act, D.C.
Code...29-412.20(a)(1)(C). The complaint also asserts a common law claim for
alleged violation of nonprofit purposes."
"The
DCAG continues to seek a constructive trust over funds in the NRA's possession
that the DCAG alleges belong to the NRA Foundation. The relief the DCAG seeks
against the NRA Foundation includes: (i) modifying the NRA Foundation's
governance policies to ensure independence from the NRA; (ii) appointing a
court-supervised independent receiver to oversee the modification of the NRA
Foundation's governance policies and monitor all the NRA Foundation's financial
decisions and transactions; and (iii) requiring the NRA Foundation's Board of
Trustees and officers to undergo charitable nonprofit corporate governance
training."
"Fact discovery was completed in May 2022. Expert discovery was completed in October 2022. Discovery was reopened for a limited purpose (pertaining to the NRA Foundation's records related to grants to the NRA) until April 30, 2023. A mediation, which is mandatory under applicable rules, is scheduled for September 13, 2023. A two-week bench trial is scheduled for January 16, 2024. At this stage it is not possible to evaluate the likelihood of any particular outcome or estimate the amount or range of any potential loss with any reasonable degree of certainty."
According to the NRA Foundation's Audited Financial
Statements for the fiscal year ended December 31, 2022 (Note 9, Related
Parties):
"The Foundation is affiliated with the NRA by virtue of the control vested with the NRA's Board of Directors to appoint the Trustees of the Foundation. The Foundation has received certain benefits from this affiliation at no cost, among which are various administrative and support services. Management has determined that the fair value of these benefits is minimal, and accordingly, no amounts are reflected in these financial statements."
"The Foundation reimburses the NRA for certain expenses, such as salaries, benefits, and general operating expenses, paid by the NRA on the Foundation's behalf. These expenses totaled $9,694,495 and $8,621,074 for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, and 2021, $1,158,701 and $1,373,052, respectively, was owed to the NRA and included in due to affiliates for reimbursements and pass through funds still held by the Foundation. $28,718,687 and $35,249,029 of funds that are designated for the NRA as beneficiary are included in investments and net assets with donor restrictions as of December 31, 2022 and 2021."
"The Foundation funded certain qualified NRA programs with grants totaling $6,367,910 and $4,819,586 for the years ended December 31, 2022 and 2021, respectively..."