NRA Foundation

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NRA Foundation Enters Into Consent Decree With DC

April 18, 2024 by 3 Comments

The NRA Foundation which had been accused of diverting donations to the NRA entered into a consent decree today to settle a lawsuit brought by the Attorney General of the District of Columbia. The lawsuit was initially filed in 2020 by then-AG Karl Racine. Interestingly, this lawsuit was filed on the same day that New York Attorney General Letitia James had filed suit against the NRA itself.

According to the New York Times’ Danny Hakim, the NRA and its attorneys are portraying the consent decree as a win for the NRA.

The N.R.A., in a statement, portrayed the settlement as a victory, saying it had “proved that all funds” taken from its foundation “were applied exclusively in furtherance of its charitable programs and that there was no misuse” of resources.

Charles Cotton, the N.R.A.’s president, called the lawsuit a “political attack” and said his group had been vindicated, while the group’s lead outside lawyer, William A. Brewer III, called it a “politically motivated action.”

DC Attorney General Brian Schwalb obviously disagrees. In his own characterization of the consent decree, he said in his release:

“Donors are entitled to know that their charitable contributions will be used in furtherance of a nonprofit organization’s stated charitable mission. The NRA Foundation—the charitable arm of the NRA—violated this sacred public trust, allowing the NRA to use them as an unchecked piggy bank,” said Attorney General Schwalb. “Caving to pressure from the NRA, the Foundation diverted millions of dollars to the NRA in grants and risky loans that were repaid only after OAG filed its lawsuit. Tax-exempt nonprofits are a form of public trust—abusing that trust as the NRA did violates both the public interest and District law. Today’s outcome builds on our longstanding commitment to safeguarding nonprofit donors’ money and ensuring that all nonprofits operating in the District of Columbia follow the law.” 

His release notes that DC’s non-profit law doesn’t authorize the collection of penalties but rather seeks to bring the offending non-profit into compliance. The initial lawsuit included a demand for a constructive trust be placed over the assets loaned to the NRA, a modification of the Foundation’s governance policies, non-profit training for all of the Foundation’s board members, and a court-appointed monitor.

The consent decree, while not providing for a constructive trust or a court-appointed monitor, does include the other items.

Under the terms of the settlement, the NRA Foundation must:

  • Adhere to its articles of incorporation and bylaws in all decision-making processes, in and outside of formal Board meetings.
     
  • Conduct annual nonprofit compliance training for every Board member or officer.
     
  • Form an Audit Committee to ensure Foundation’s financial affairs are in order and work with an external auditor.
     
  • Establish a new conflict-of-interest policy.
     
  • Adopt new policies governing grantmaking, loans, shared services, and other activity with the NRA to ensure transparency, Foundation independence, and adherence to the Foundation’s nonprofit mission.
     
  • Report any Foundation policy changes to OAG within 30 days of approval for the duration of the agreement.

The consent decree (embedded below) also provides that any loan to the NRA above $250,000 must adhere to a conflict of interest policy that must be adopted within six months of today. Moreover, any grants to the NRA for program purposes require a written grant application, the grant must be used only for 501c3 permissible purposes, a post-grant accounting, and a return of any grant monies not used in accordance with the grant application. The Foundation must send copies of all the mandated policies to the DC Attorney General and failure to live up to any part of the consent decree will result in the case being reopened.

I really don’t see this as a win for the Foundation or the NRA as the DC Attorney General got most of what he wanted. The only win for the NRA came from avoiding the imposition of a court-ordered monitor. It seems the constructive trust would not be in play as the loans were repaid after the lawsuit was filed. If I had to hazard a guess, the NRA and Bill Brewer wanted this case off their plate so that they could focus on the second stage of the New York trial. I do wonder just how much money had been wasted on legal fees paid to Brewer, Attorneys and Counselors just to end up with a consent decree.

H/T NRA In Danger

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Court Rules Donors’ Fraud Suit Against NRA Has Standing

October 1, 2020 by 2 Comments

Judge William Campbell, Jr. of the US District Court for the Middle District of Tennessee ruled yesterday that David Dell’Aquila’s class action suit against the NRA has standing to proceed. The NRA, the NRA Foundation, and Wayne LaPierre had argued that the lawsuit failed to meeting the requirements of Rule 9b of the Federal Rules of Civil Procedure.

Rule 9(b) states: In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.

In his ruling yesterday, Judge Campbell found that this standard had not been met with regard to both the NRA Foundation and Wayne LaPierre. However, it had been met with regard to the NRA itself.

David Dell’Aquila and the other plaintiffs had alleged that monies that they had donated to advance the mission of the NRA had been used for, among other things, to buy suits for Wayne LaPierre, to pay for private travel for LaPierre and his family, to pay for a luxury apartment for intern Megan Allen, and to pay for makeup and hairstyling for Susan LaPierre.

Judge Campbell wrote, with regard to the NRA,

The NRA next argues that Plaintiffs did not allege “in more than a passing conclusory assertion that the NRA knew of and intended the falsity of its statements.” (Id. at 12). The NRA argues that because the statements regarding the use of funds relate to the promise of some future action, Plaintiffs must allege that the NRA had no present intent to carry out the promise. The NRA further argues that Plaintiffs cannot plead the element of intent for “any future expenditures that were not in contemplation at the time of the Solicitation.” In other words, the NRA argues that if, at the time of the solicitation, it did not specifically plan to spend money on, for example personal expenses of Wayne LaPierre, there can be no plausible allegation of intent with regard to that expenditure.


The Court declines to read the intent requirement so narrowly. First, Plaintiffs allege that the funds were spent on things that were not in furtherance of the mission of the NRA. It was not necessary that the NRA know at the time what the extraneous expenditures would be, only that they knew that money would be spent outside the mission.Moreover, Rule 9(b) allows the element of intent to be alleged generally. See Fed. R. Civ. P. 9(b). Given the extent of the alleged misspent funds – in both duration and volume – the Court finds Plaintiffs’ allegation that the NRA knew donated funds would not be used to advance the mission of the NRA sufficiently plausible to state a claim.

He goes on to say:

At this juncture in the litigation, making all inferences in the light most favorable to the Plaintiffs, the Court finds Plaintiffs have sufficiently alleged a claim for fraud against the NRA. Although the Court will not engage in a statement by statement review of the allegations, it bears noting that many of the statements cited by Plaintiffs do not make any representations regarding the use of donor funds. However, because some of them do, and Plaintiffs have alleged the remaining elements of the claim, the Court will deny the NRA’s motion to dismiss the claim for fraud.

Judge Campbell goes on to dismiss the RICO claims against the NRA noting that it cannot be both an enterprise and a person for purposes of the RICO statute. He also dismissed the RICO claims against the NRA Foundation and LaPierre as the plaintiffs didn’t adequately argue claims of fraud against them.

The bottom line is that the Foundation and LaPierre are both off the hook and the lawsuit against the NRA itself has enough standing to proceed. In retrospect, I’m sure the NRA will eventually find that it would have been cheaper to give the plaintiffs their money back with a non-disclosure settlement than to keep using the services of William Brewer. Indeed, Brewer’s fees were part of the argument that donor money had been misused.

One last note – to anyone thinking that this is a Democrat-appointed judge coming down on the NRA, think again. Judge Campbell was appointed by President Trump in 2018.

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NRA Foundation Accused Of Misuse Of Funds

August 6, 2020 by 6 Comments

On the same day that New York Attorney General Letitia James filed suit to dissolve the NRA, DC Attorney General Karl Racine filed suit against the NRA Foundation and the NRA accusing them of the misuse of funds. The suit is filed in Superior Court, Civil Division, for the District of Columbia.

According to the complaint, Racine is alleging that the Foundation allowed its funds to be used to support wasteful spending at the NRA itself. Further, he alleges that the Foundation put the NRA’s interests ahead of its own, did not operate independently of the NRA, and allowed itself to be exploited through multi-million dollar loans to the NRA which have never been repaid.

From Attorney General Racine’s press release:

“Charitable organizations function as public trusts—and District law requires them to use their funds to benefit the public, not to support political campaigns, lobbying, or private interests,” said AG Racine. “With this lawsuit, we aim to recover donated funds that the NRA Foundation wasted. District nonprofits should be on notice that the Office of the Attorney General will file suit if we find evidence of illegal behavior.” 

The suit makes the following claims.

  • The Foundation allowed charitable donations to be used for non-charitable purposes
  • The Board failed to uphold their fiduciary duty
  • Abandoning it charitable purpose through loans to the NRA
  • Placing the interests of the NRA above that of the Foundation

The suit asks that a constructive trust, for the benefit of the Foundation, be placed over the Foundation’s assets loaned to the NRA so as to protect them. It goes on to ask that the Foundation’s governance policies be modified to insure its independence from the NRA, that a court-ordered monitor be appointed to oversee and monitor all of the Foundation’s finances and transactions, and that the Board of Trustees and Officers be required to take nonprofit charitable governance training.

While no acknowledgement is made of it, I would be highly surprised if officials in both the New York and District of Columbia’s Attorneys General offices didn’t cooperate and share information back and forth from their respective investigations.

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Another AG Gets Into The Act (Against The NRA)

July 12, 2019 by 2 Comments

First it was NY Attorney General Letitia James who issued subpoenas to the National Rifle Association as part of an investigation to see whether they are violating New York’s non-profit organization laws. Now it seems that Karl Racine, Attorney General for the District of Columbia, wants to get into the action.

From the Washington Post which first reported it:

The office of Attorney General Karl A. Racine is seeking financial documents from the NRA and its foundation. The NRA Foundation is chartered in the District and the NRA is registered as a nonprofit and does business there.

“The Office of the Attorney General for the District of Columbia has issued subpoenas to the National Rifle Association of America (NRA) and the NRA Foundation, Inc., as part of an investigation into whether these entities violated the District’s Nonprofit Act,” Racine said in a statement.

He continued: “We are seeking documents from these two nonprofits detailing, among other things, their financial records, payments to vendors, and payments to officers and directors.”

The Code of the District of Columbia gives the Attorney General significant powers when it comes to non-profit corporations. The Attorney General can seek the dissolution of a non-profit, can impose “a constructive trust” on compensation for directors, officers, and managers, and can seek other equitable or injunctive relief as the courts deem necessary. The language of the code gives him great leeway in bringing such actions. For example, if he deems that the corporation has “continued to act contrary to its nonprofit purposes”, this give his office grounds to bring actions in court. That language is so wide open that virtually any non-profit could be taken to court if the Attorney General has an axe to grind. Racine has used these laws against the Trump inaugural committee and the Catholic Church.

How many more of these type actions will it take for the Wayne LaPierre loyalists on the NRA Board of Directors to realize that they have a serious problem on their hands? I fear that unfortunately all we will get is another “ignore the man behind the curtain, all is OK” statement from the Meadows-Cotton-Lee cabal as opposed to the concrete actions needed to shore up the NRA.

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NRA Foundation Helps North Carolina Students

December 30, 2015 by 3 Comments

Catching up on emails that arrived while I was out of town, I came across this one from the NRA. It discusses the substantial donations made by the NRA Foundation to Montgomery Community College to fund scholarships for gunsmithing students.

NRA Foundation Funds Montgomery Community College Scholarships

TROY, N.C. – Nearly $100,000 in NRA Foundation grants have funded Montgomery Community College scholarships for its gunsmithing program since 1994. These merit-based scholarships help spur high academic achievement and pristine attendance records while providing students with the freedom and flexibility to undertake notably challenging projects.

Throughout their time in MCC’s gunsmithing program, students develop skills tooling and blueprinting, metal finishing, firearm diagnostics and repair, and custom firearms manufacturing. More than two-thirds of class time is spent hands-on in the college’s 5,400 square feet of shop workspace.

“Friends of NRA and the NRA Foundation are both great proponents of Montgomery Community College’s gunsmithing program,” said Mark Dye, gunsmithing program director at Montgomery Community College. “In their biggest show of support yet, the NRA Foundation granted us funds to award 12 gunsmithing scholarships this year. We are truly grateful for the NRA’s unwavering commitment to our focus on this great American tradition.”

Both the East and West Friends of NRA State Fund Committees in North Carolina award grants to the program each year. In 2014, nearly half of all scholarships awarded to MCC gunsmithing students came from The NRA Foundation.

I am especially gratified by these donations as my family connections to Montgomery County go back to before the Civil War. My father was born in Troy and I still have cousins living there.

If you need a tax deduction for 2015, a donation to the NRA Foundation is tax deductible. You have until midnight tomorrow to make one if you use a credit card.