Danny Hakim in the New York Times is reporting that New York Attorney General Letitia James and her office have served a subpoena on the NRA seeking financial records from over 90 current and former members of the Board of Directors. The subpoena was served yesterday evening.
The subpoena is an escalation of a continuing investigation into the tax-exempt status of the N.R.A., which is chartered in New York, and engulfs the organization’s board of directors in the inquiry. The subpoena seeks financial records and other documents that would shed light on spending decisions made by the board.
While James’ office is not commenting on the subpoena, the NRA’s outside counsel William Brewer III had this to say.
William A. Brewer III, the N.R.A.’s outside counsel, said in a statement: “As we understand it, counsel to the N.R.A. board accepted service of a subpoena to the board that relates to the production of documents and information.”
He added: “Such a request was expected and, as we have said many times, the N.R.A. will cooperate with any reasonable, good faith request for information given the organization’s commitment to good governance.”
This is making the decision by Tim Knight, Sean Maloney, and Esther Schneider to resign from the board and the decision by Adam Kraut to turn down an appointment to the board seem all that much more wiser.
I’ve heard numerous reports that the NRA’s Directors and Officers liability insurance was either dropped by their current carrier due to its issues or that the premium was so high that it was decided it wasn’t economically feasible. This has been denied. I tend to agree with what Dan Zimmerman of TTAG had to say about it.
The Times report says the NRA denied that their D&O coverage has been cancelled. That’s what the NRA’s Andrew Arulanandam told TTAG over the weekend, too. With the latest news of the NY AG’s widening fishing expedition, that coverage is more important than ever.
I would not be surprised to see a number of resignations by the celebrities – singers, actors, former athletes – from the board on the advice of their personal attorneys. They have deep pockets and if there is any suggestion of the absence of D&O liability insurance it would be risk management 101 to head for the doors.