State of New York v. NRA et all

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New York Trial Ends With A Whimper And Not A Bang

July 30, 2024 by 2 Comments

First, here is the verdict:

Judge Cohen goes on to add that he wants some “targeted relief”.

Frankly, I’m still digesting this and am more than angry. I’m angry that the NRA wasted $182 million just to avoid a monitor when a settlement could have been reached years ago. I’m angry that a monitor wasn’t imposed on the NRA as I really believe that was the only way to restore trust. I’m angry that John Frazer walked away with no punishment even though the jury found he breached his fiduciary duties.

As to Wayne’s punishment, a 10-year ban is in all reality the equivalent of a lifetime ban. Meh!

Going over the list for “targeted relief”, number two is not clear. I think it means that the 5-year Life Member requirement for Board candidacy will be waived or reduced. Numbers 4 and 6 are the real meat of what he wants in targeted relief. It could mean that Charles Cotton will be bounced from the Audit Committee. The question on that remains will it be done by court order or by the Board. If the Board, I’ll believe it when I see it. Reducing the size of the Board has always been a good idea and I think most members will be in favor of it.

I’ve read the post-trial statements of both the NYAG’s Office and the NRA. They both are posturing statements and both are claiming victory. Yeah, whatever.

I just hope that there will not be an appeal and that the Special Litigation Committee whose only rationale for being was this trial is dissolved. Then maybe we can cut the tentacles from Brewer choking the financial life out of the NRA.

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Still In Denial

July 28, 2024 by 3 Comments

NRA President Bob Barr sent out an email to the Board of Directors this afternoon. It noted that the bench portion of the New York trial was coming to a close on Monday, July 29th. The gist of the email which is below is that there is no need for a special monitor, it is invasive and detrimental to the NRA, and that since 2018 the NRA has cleaned up its act. Barr went on to say he was not fully quoted with regard to recouping the $4 million plus owed to the NRA by Wayne LaPierre. In that, he may be correct.

I said in late May that Barr had the ability to regain the trust of members and to reassure the court that a special monitor was not needed through his committee appointments. I said it needed to be transparent and that Mssrs. Cotton and Coy must never be allowed to remain on the Audit and Finance Committees. I also suggested that members of the Four for Reform ought to be considered for important committee assignments.

Disappointingly, Barr all but assured that Judge Cohen will feel that he has no option but to appoint a special monitor with his committee assignments. First, not only was Charles Cotton allowed to remain as chair of the Audit Committee but was added to the Ethics Committee as the chair. Second, David Coy remains as chair of the Finance Committee. Third, the anti-reform Cabal holds all the chair and vice-chair positions on the major committees for whom appointments have been made public. Only Rocky Marshall of the Four for Reform was given a major committee assignment and “Gang of 12” reformers are in a minority on all the committees. Barr had a chance but in my opinion he blew it.

Barr and, by extension, the Board are still in denial. They can say they have made changes and point to the hiring of a Chief Compliance Officer among other things. They can say their expert witnesses all testified to improvements, to not needing a special compliance monitor, and that this is the “new” NRA. The NRA publications can write about the NRA’s “new direction” and run headlines saying “the future of the NRA is bright.”

What they fail to understand is that the rank and file members of the NRA don’t trust them. Trust, once lost, is hard to regain. Hopes were raised at the last Board meeting with the election of ostensible reformers to major positions and then the committee assignments dashed that hope. We see that the people that allowed Wayne and his pack of grifters to get away with it for years are still running things. We read that the NRA has paid at least $182 million in legal fees to Bill Brewer and his minions all the while thinking what that money could have done for the Second Amendment. We know the members voted for a Chief Compliance Officer but then hear it whispered about how he has blown off serious whistleblower complaints. And the list goes on.

I could go on but I think I’ll just post the email and let you, the reader, come to your own conclusion.

From Bob Barr as sent out by John Frazer:

Dear Board of Directors,

As you know, the NRA is nearing the end of “phase two” of the trial proceedings versus the New York Attorney General (NYAG). The bench trial began on July 15, and will conclude on Monday, July 29. As reported to the board on July 4, a focal point of the proceedings is the NYAG’s pursuit of a court-appointed monitor with sweeping powers. On behalf of the Special Litigation Committee (SLC), please note that the NYAG’s court filing, Exhibit O, reflects an invasive measure that we believe is absolutely detrimental to the Association and its mission.

Of course, it is no surprise that the NYAG, who filed suit to dissolve the NRA, is peddling its “version” of the story. However, the trial testimony has shown that, beginning in 2018, the NRA undertook to prevent any override of its financial controls. Extensive testimony has clearly established the NRA’s commitment to good governance. Importantly, there has been no evidence that the NRA is not appropriately managing its assets; and there is no ongoing or persistent violation of its internal controls – all alleged by the NYAG.

Our senior staff members, board members, and experts offered powerful testimony regarding our heightened commitment to compliance training, and the important role played by our Chief Compliance Officer and our Internal Auditor. As such, we believe there is no need for the court to impose invasive equitable relief. Doing so would have a chilling effect on our organization’s ability to fulfill its mission and cultivate grassroots support, donations, and public goodwill. For these many reasons, I am optimistic we will achieve a positive outcome for the NRA and its millions of members.

On Thursday, the court heard testimony from Daniel Kurtz, the former New York State Assistant Attorney General-in-Charge of the Charities Bureau. He testified that he sees “New York State both persecuting and prosecuting the NRA,” and noted the NYAG’s pursuit of a monitor is “crazy, unprecedented.” He added, “There’s never been a situation, to my knowledge, in which a monitor has been appointed to reform the nonprofit governance of an organization” – equating New York’s pursuit of the NRA to McCarthyism and the Second Red Scare of the 1940s and 1950s.

In closing, know that no board officer, including myself, has ever suggested the NRA would not seek to recover any final awards owed to the NRA by individual defendants. At trial, I testified that I assumed the NRA was still finalizing its plans in this regard. My full testimony (conveniently not publicized via “X” and other social media platforms) explained this is because no final awards have yet been confirmed, and the NYAG bears the responsibility to pursue the recoveries in question. The NYAG is responsible for securing the awards because of her standing as the plaintiff in these proceedings. The NRA, of course, is committed to holding the NYAG’s feet to the fire and pursuing every dollar to which it is entitled, period. 

The bottom line is, I remain optimistic that despite attempts to distort the NRA’s commitment to good governance, the court appreciates and understands our record. The NRA and its many witnesses have presented a true picture of the Association – one that is dedicated now and in the future to achieving the best interests of our members in all we do.

Thanks,

Bob Barr, President 

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What Do You Mean, You Don’t Know

July 19, 2024 by 2 Comments

John Frazer served as NRA General Counsel from January 2015 until May 21st of this year. That is when Doug Hamlin separated the positions of General Counsel and Secretary and appointed Michael Blaz as the new General Counsel. Frazer retained his position as Secretary.

Frazer was on the stand today in the remedial phase of the New York Attorney General’s lawsuit. He was asked about how much money the NRA had paid Brewer, Attorneys and Counselors, since 2018. Additionally, he was asked how much the NRA had paid for the defense of Wayne LaPierre and himself.

As reported by Erik Uebelacker of Courthouse News who has been following the trial:

While I might give Frazer a pass on how much has been paid to Brewer, Attorneys and Counselors, for their work on the NYAG’s case, it is only because the Special Litigation Committee was formed to make decisions on that case – and only that case – due to Frazer and Wayne being named defendants. However, William Brewer and his firm have done plenty of other legal work for the NRA ranging from the multiple lawsuits against AckMac to the Vullo case that went before the Supreme Court. Brewer’s firm even handled the lawsuit against former NRA President Oliver North which is currently on hold pending the outcome of the NYAG’s case.

He certainly ought to have an idea how many billable hours have been spent on his defense by William Fleming of Gage Spencer and Fleming LLP. How hard is it to multiply hours billed times a per hour fee? Moreover, to say he has no idea how much has been paid to Brewer is ludicrous. He might not know the exact figure but he certainly has to know a ballpark figure.

If he doesn’t, then what was he doing as General Counsel all these years? Unless I’m greatly mistaken, doesn’t the Office of General Counsel have to approve bills submitted for NRA legal work before it is passed on to the Accounting Department for payment?

Frazer was never a grifter like Wayne. I will give him that. However, I do expect a certain level of responsibility from an officer of an organization when he is being paid a substantial 6-figure salary. That responsibility includes making sure the members’ dues spent on outside lawyers is well spent. It is impossible to do this if, as Frazer testified, he didn’t know how much was being spent on his defense, on Wayne’s defense, and on the myriad of legal issues being handled by Brewer, Attorneys and Counselors.

To all those who have insisted that membership and revenues are down because Tish James initiated a lawsuit against the NRA, think again. It is down because members, both Life and annual, have had the blinders pulled off their eyes and don’t want to waste their hard earned cash on an organization that seems intent on just pissing it away. Can you blame them when the former General Counsel says he has no idea how much has been spent on legal expenses?

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Forge Of Freedom Podcast With Alex Ooley

July 17, 2024 by

I was a guest last night on attorney Alex Ooley‘s Forge of Freedom Podcast. It was Episode 144: The NRA’s Fall from Grace Corruption, Trial, and Declining Influence. As you can guess by that title we discussed the New York Attorney General’s suit against the NRA.

Alex and I discussed what led to it the lawsuit, how it evolved, the jury phase, and now the remedial phase. We also discussed the impact the trial has had on the advancement of Second Amendment rights.

The podcast went for about an hour and 15 minutes. You can watch and listen to the whole podcast below.

The show notes for this episode are here. It also gives you time breaks if you want to skip to certain sections.

If YouTube is not your thing, the podcast can be found on Rumble and on Spotify.

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Sorry Charles – Doug Hamlin Is Not A Placeholder

July 17, 2024 by 1 Comment

My good friend Todd called me this morning asking if I had seen this report from the New York trial. It was from The Trace’s Daily Bulletin. The report was a one paragraph blurb about Charles Cotton’s testimony.

From The Trace’s Daily Bulletin for July 17th:

The National Rifle Association’s new chief executive Doug Hamlin is a placeholder, according to the testimony of former NRA president Charles Cotton that points to fault lines in the gun group’s leadership. In May, board members chose Hamlin, who led the NRA’s publications arm, as Wayne LaPierre’s replacement. Hamlin is allied to a small, self-described reform bloc at the group. “The intent is to try to get, frankly, some high-powered person to take it over,” testified Cotton, a LaPierre defender whom the reformers consider part of an old guard. Cotton made his remarks in a New York courtroom where the final phase of New York Attorney General Letitia James’s lawsuit against the NRA is underway. —Will Van Sant 

Say what you will about The Trace and reporter Will Van Sant but they don’t get stuff like this wrong. I’m sure Cotton actually said that in his testimony in court. That said, I don’t think anyone who participated in the NRA Board of Directors meeting in May thought the election of Doug Hamlin to be the new CEO and Executive VP was to be as a placeholder. Moreover, I don’t think Hamlin would have stuck his neck out if he himself thought he was only destined to be a placeholder.

If you are talking placeholders then you are talking about people like then-Interim EVP Andrew Arulanandam. You could even include Cotton in this category as he was pitching himself as the EVP to settle thing down for a few years and then ride off into the sunset. I don’t know where Cotton got the idea that Doug Hamlin was a placeholder unless that is how the Cabal would like to see it.

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NRA Hasn’t Decided Yet To Collect The Money Wayne Owes?

July 16, 2024 by 5 Comments

NRA President Bob Barr was on the stand today in the second day of the remedial phase of the New York trial. According to Erik Uebelacker of Courthouse News, Barr just said moments ago that the NRA has not yet decided if they will actually try to collect the $4.4 million the jury said Wayne owes.

What do you mean you haven’t decided to try and collect the money Wayne looted from the NRA?

WTF, Bob! That’s the members’ hard-earned dues and contributions we are talking about.

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What Goes Around, Comes Around

July 16, 2024 by 1 Comment

The bench phase of the NRA’s trial in New York City opened today. The first witness to take the stand was former NRA President Charles Cotton who now chairs both the Audit and Ethics Committees. Among the things he included in his testimony was the following regarding succession planning according to AP reports.

Charles Cotton, an NRA board member, was the first witness to take the stand. He revealed that the organization did not have a succession plan in place when LaPierre announced his retirement in January, just before the start of the trial’s first phase — suggesting his exit was hasty and not expected.

If only they had listened to one of their members who offered a resolution asking the Board of Directors to draft and adopt a formal succession plan. That resolution was offered at the NRA Meeting of Members held in Tucson, Arizona in October 2020. Mind you that this was in the midst of the Covid-19 pandemic and the most vulnerable population included senior citizens like LaPierre. That meeting was being run by 1st VP Charles Cotton as then-President Carolyn Meadows was absent due to health concerns.

As you can probably guess by now that resolution was soundly defeated. One of the arguments offered against it was that the NRA Bylaws provided a succession plan in that the Executive Director of General Operations would take over as the Interim EVP and CEO. This is exactly what happened when LaPierre resigned. Another argument was that the NRA was not the same as a for-profit corporation where succession planning is a best practice.

Among those testifying against the resolution in favor of succession planning was Joel Friedman who now sits as Vice-Chair of the Ethics Committee. Friedman is also a member along with Charles Cotton on both the Bylaws and Resolutions Committee and the Finance Committee. He is only on the Board now because Carl Rowen, Jr. was convinced to resign in order to allow Friedman to ascend to a directorship.

This truly is a case of what goes around, comes around.

As to the Endowment Life member who offered that serious resolution of succession planning, it was me. Perhaps if the Board had listened to the members instead of kowtowing to the Cabal, the NRA wouldn’t be in the position it is now.

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The NRA, LaPierre, And Frazer Appeal

July 8, 2024 by 6 Comments

Attorneys for the NRA, Wayne LaPierre, and John Frazer all filed appeals in People of New York v. National Rifle Association of America et al on Friday. They are appealing Judge Cohen’s decision and “order on motion” in which he denies their motions to set aside the jury’s verdict and enter a judgment for them as a matter of law. Frazer’s motion was to only set aside part of the jury’s verdict but that was also denied. Attorneys for Wilson “Woody” Phillips had filed a similar motion to set aside the verdict but are not appealing. As noted earlier, it appears he has settled with the New York Attorney General’s Office.

The appeals will go to the Appellate Division of the Supreme Court of the State of New York, First
Judicial Department. That same court has denied all previous appeals made by any of the defendants and have upheld all of Judge Cohen’s rulings in this case. The Appellate Division is the intermediate appellate level in New York State with the Court of Appeals being akin to Supreme Courts in other states.

Noah Peters of Brewer, Attorneys and Counselors, is arguing on behalf of the NRA. His argument centers around whether there enough evidence to find that the NRA payments for Susan LaPierre’s hair and makeup, to David Keene, and to Woody Phillips were anything other than “de minimis”. He goes on to question whether people like Phil Journey, Craig Spray, Rocky Marshall, Ollie North, and others should really be considered “whistleblowers”. Finally, he questions whether the jury had sufficient cause under New York’s Executive Law to find the NRA submitted false filings.

The attorney for Wayne, Kent Correll, is arguing that the Attorney General lacked the “power, authority, capacity or standing to seek or procure a judgment” under New York law to seek monetary damages against an officer of a not-for-profit, to seek the removal of such officer, and to bar the re-election of a person who is no longer employed by the non-for-profit. He also attacks the sufficiency of the evidence against Wayne.

John Frazer’s appeal argues that since the jury did not find grounds for either monetary damages or removal from office, it erred in finding he failed in his fiduciary responsibilities. Moreover, since no claim of false statements were made against the NRA’s accountants, they should not have found he knowingly signed off on a false filing.

Given the past history of appeals in this trial, I really don’t seeing any of these defendants winning their appeals. Moreover, with the exception of Frazer who is essentially fighting to stay employed, I think the other appeals are going through the motions because a) they will generate more billable hours and b) for the public relations aspect of it. Wayne is fighting to say he really wasn’t a grifter and the NRA is trying to assert that the jury should never have agreed with the Attorney General because, you know, she hates us and wants us gone.

Vendetta or no vendetta, the attorneys for New York had a strong case against the NRA and the individual defendants. Josh Powell and Woody Phillips have realized it and settled. That the NRA has not settled like that did with the Attorney General for the District of Columbia is a shame. I think what they will get now in terms of punishment is going to be worse than if they had settled. The only winners are the attorneys who will rake in even more fees that are being paid out of members’ dues or, at least, that is the case for sure with regard to the NRA. Who is paying the fees for Wayne and Frazer and whether it will ultimately be the NRA is up in the air.

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Unprofessional? Hardly

July 3, 2024 by

I wrote back in March about the promotion that Colleen Sterner received in the NRA’s Office of Advancement. As a refresher, she is the niece of disgraced former NRA CEO and EVP Wayne LaPierre who mere days after he retired was appointed to Director of Events for Advancement with a six-figure salary. That post stirred some angst within the NRA’s PR department.

There have been a number of filings in recent days in the bench phase of the New York Attorney General’s suit against the NRA. These filings include both witness lists and exhibits that the parties want to bring to the attention of Judge Joel Cohen. One that caught my eye was by Noah Peters of Brewer, Attorneys and Counselors, on behalf of the NRA. Exhibit 38 was a string of emails involving Sterner, NRA CFO Sonya Rowling, and Bob Mensinger who at the time had not yet been named the NRA’s Chief Compliance Officer.

NRA Exhibit 38 by jpr9954 on Scribd

If you read through the string of emails starting on the last page and going to the top, you see it involves a review of a contract for an event to be held at the 2024 NRA Annual Meeting. Sterner was pushing to get a contract approved quickly by Sonya Rowling. Unfortunately for her, it appears Sterner did an incomplete job that was not in compliance with the NRA’s Procurement Policy for which Rowling called her out.

Like a spoiled child who finally gets disciplined, Sterner threw a fit and complained about the response to both then Interim EVP Andrew Arulanandam and Mensinger as head of compliance.

Andrew and Bob,
See Sonya Rowling’s unprofessional email below. I can’t believe I am being viciously retaliated against based on who my uncle is and Sonya’s disdain for him. Financial Services Division, under the leadership of Rowling, has constantly moved the goal post for NRA’s contract processes.
Colleen Sterner

I would hardly call Rowling’s email “unprofessional”. I see it as the response of someone who knows the loose ways of the past are over and is perhaps a little frustrated over having to continuously correct the errors of those who have not realized this yet. I will say that Mensinger’s response was quite diplomatic as he politely says in so many words “not my problem”.

Of course, Sterner is not satisfied with that. It ends with a huffy statement about how she is working on “12 events”, the contract review is “old and entirely vague”, and they are moving the goal posts on her.

I would say that this is a prime example of the Peter Principle in action except that Sterner’s promotion to Director of Events for Advancement happened long after she had reached her level of incompetence. That may sound harsh but members of the NRA have a right to expect that people are hired and promoted based upon their competency and not their family ties.

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Looks Like Woody Phillips Settled With NYAG

May 25, 2024 by 2 Comments

Based upon a document filed yesterday by attorneys for the New York Attorney General’s Office and Wilson “Woody” Phillips, it appears that Phillips and the Attorney General’s Office have come to a settlement agreement. They mutually agreed to adjourn the briefing schedule with “respect to equitable relief applicable to Mr. Phillips.” This is pending a stipulation of settlement. Judge Joel Cohen has signed off on this stipulation and proposed order regarding the briefing.

Going back to the jury trial, Phillips was found liable for breach of fiduciary duty along with damages of $2 million. He was also found to have engaged in a related party transaction. It will be interesting to see if the stipulation of settlement will be for the full $2 million in damages as found by the jury.

Along these same lines, it would probably be in Wayne LaPierre’s best interest, though expensive, to execute a similar settlement. The jury said he must repay $5.4 million of which he had already repaid $1 million. I believe the Attorney General’s Office set the amount of damages at a much higher level and could be asking Judge Cohen to approve the higher amount.

Now that the Board of Directors has elected three out of four candidates for leadership positions, has named a Chief Compliance Officer, and voted to give the reformers five out of nine positions on the Nominating Committee, it may have a good case for reaching a settlement with the Attorney General’s Office without the imposition of a special monitor. The settlement of the NRA Foundation with the DC Attorney General certainly has set a precedent to do this. More importantly, a settlement before the next phase of the trial would allow the NRA to finally be free from the greedy grip of Brewer, Attorneys and Counselors. Personally, I can’t see any advantage to the NRA of actually going to the next phase of the trial if a settlement can be made that allows them to move forward without a special monitor. The only one who wins would be Bill Brewer as his pocket would be even more padded than it already is.

You can see the court document embedded below or linked here.