NRA Trial – Phase 2 Conference

Judge Joel Cohen issued a notice today that a pretrial conference will be held next Wednesday, March 6th, in preparation for Phase 2 of the People of the State of New York v National Rifle Association of America et al. The meeting is to discuss the schedule, logistics, and scope of Phase 2 as well as any post-trial motions related to jury phase of the trial.. This is the part of the trial where Judge Cohen will assess penalties and remedies based upon the jury’s findings of liability.

From the notice:

The parties are asked to confer in advance, with the goal of finding common ground on schedule and logistics issues. The parties may, but are not required to, submit letters in advance of the conference if they believe that would assist in focusing the discussion. Such letters should not include legal argument on the merits of any claims or proposed relief. That will come later.

For attorneys that cannot attend in person, he will be using Microsoft Teams to facilitate their participation. Interestingly, there will be a public “view-only” link available for those who request it through the court’s website. I will add any link to that if I can find it.

The Jury Has Returned With A Guilty Verdict

According to posts by court watchers, the jury in the NRA’s New York trial have returned with a verdict. The jurors reportedly are coming down to the court room.

From ABC News:

After five days of deliberations, a jury in New York on Friday held the National Rifle Association liable for financial mismanagement and found that Wayne LaPierre, the group’s former CEO, corruptly ran the nation’s most prominent gun rights group.

The jury determined that LaPierre’s violation of his duties cost the NRA $5,400,000, though he already repaid roughly $1.5 million to the organization.

LaPierre, staring forward with his hands clasped in his lap, sat in the first row of the gallery while the jury read the verdict.

I will be adding to this post as more info becomes available.

UPDATE I: More from Erik Uebelacker on Twitter.

UPDATE II: It looks like Woody Phillips is on the hook for $2 million.

From Rachel Scharf of Law360:

UPDATE III: I am getting mixed messages regarding John Frazer. According to Scharf, the jury did not ban him unlike Wayne LaPierre. However, another report reports they found Frazer acted “inappropriately” but did not cause financial harm.

The AP by way of The Hour is reporting that “NRA omitted or misrepresented information in its tax filings and violated New York law by failing to adopt a whistleblower policy.” There is no word yet on whether they were found guilty of retaliation against the whistleblowers. (They were)

Reportedly, LaPierre plans to appeal according to his attorney Kent Correll.

UPDATE IV: Rachel Scharf gives a bit more clarity with these charts:

The trial will now move to the bench phase where Judge Joel Cohen will implement remedies. I tend to agree with NRA In Danger that a court-appointed monitor is almost certain. I do know that Rocky Marshall deliberately made that suggestion in his first-day testimony which caused quite some consternation among the lawyers.

Day Five And No Verdict In NRA Trial Yet

According to posts by Erik Uebelacker and Rachel Scharf, the jurors in the NRA’s New York trial have requested the transcript of Woody Phillips’ testimony. They still have not rendered a verdict as earlier this afternoon.

We do know however what they had for lunch!

One person asked what is taking so long. Uebelacker responded that this is a complicated case and I would agree. As he notes, it is like four trials in one. You have the NRA plus the three individual defendants.

As my friend Danny the Mac humorously noted, if the jurors are getting paid by their employers plus the court stipend plus lunch, why not wait until after lunch on Friday to render a verdict. He’s got a point.

UPDATE: Rachel Scharf has this on jurors’ request for more info.

UPDATE II: According to a tweet by Erik Uebelacker, the three witnesses that Rachel Scharf references above are Charles Cotton, David Coy, and Sonja Rowling. Presumably, the attorneys for both sides will need to examine these transcripts before Judge Cohen releases them to the jurors.

That said, I find it very interesting that the jurors want to re-examine the testimony of the chair and vice-chair of the Audit Committee (Cotton and Coy respectively). Moreover, I understand that Coy is chair of the Finance Committee. With the addition of Rowling to the mix it would seem they are interested in improper expenditures and who approved them.

Tomorrow May Be The Day When The Jury Returns

Since I’m not in New York and since the state refuses to televise trials, I have been relying upon the reports of others with regard to some aspects of the NRA trial. Documents that have been filed I can access but I can’t see what is happening in the courtroom.

For the day to day reports on witnesses and the arguments from both sides, I have been depending upon NRA Watch. I do realize that it is a tool of Bloomberg’s Everytown but it has fairly reported courtroom proceedings. Other sources such as Courthouse News Service, NRA In Danger, and Stephen Gutowski’s The Reload have been very good but not quite as up to date.

Twitter or X has been very helpful in following the trial since the closing arguments and the case has been sent to the jury. Erik Uebelacker (@Uebey) has been very good. A new source I discovered today, Rachel Scharf of Law360, has been even better.

Here are a couple of her posts from earlier today:

Given this tweet by Erik Uebelacker, I think we are getting close to the end of the jury’s deliberations. They may have skipped around but my gut tells me that they have been taking each item in order.

I also received a text from Judge Phil Journey who also expects a decision as soon as tomorrow. Given his experience as a trial judge, I’d say he has a good feel for how juries behave.

I’m not making any bets on what the jury will return. They have asked for all the exhibits, have sent multiple notes to Judge Cohen including one that asks the meaning of “monetary harm to the NRA”, and a computer with trial transcripts. With the exception of the last item, I believe that have gotten what they have requested. This leads me to believe that they are doing their due diligence, examining every charge carefully, and are working hard to reach the various verdicts fairly. I don’t think anyone will be able to say that they didn’t do their jobs.

So, with any luck, we will see the jury return with their verdicts sometime tomorrow. I plan to keep checking Twitter throughout the day and will report if I hear anything.

NRA Trial – It Is Now In The Hands Of The Jury

The trial began on January 8th with the attorneys for the New York Attorney General’s Office making their case against the NRA, Wayne LaPierre, Woody Phillips, and John Frazer for breaches of the Estates Powers & Trust Law, breaches of fiduciary duties under the Not-for-Profit Corporation Law, related party transactions, violation of New York’s whistleblower law, and false filings. Josh Powell had earlier entered into a plea agreement in which he pleaded guilty and agreed to pay $100,000 in restitution. The state’s case was concluded on February 5th and then the attorneys for the NRA and the individual defendants began to make their cases for acquittal. Finally, today both sides gave their closing arguments and the jury will begin deliberation tomorrow.

In the interim, Wayne LaPierre’s reign over the NRA ended on January 31st. He announced his resignation on January 5th. One thing I did notice almost immediately after LaPierre’s announcement is that the attorneys from Brewer, Attorneys and Counselors, went from “keeping Wayne out of jail” to saying it was “all Wayne’s fault”. They have argued that Wayne, Woody, and company kept the NRA Board of Directors in the dark and, as such, the NRA can’t be held responsible for their actions.

The New York Attorney General’s Office’s Second Amended Complaint listed 15 causes of action against the NRA and the individual defendants. At the conclusion of the state’s case, attorneys for the NRA asking for a directed verdict saying, in effect, the Attorney General’s Office had not proved their case. Likewise, attorneys for the individual defendants argued that they were not liable under some of the causes of action. This past Monday, February 13th, Judge Cohen ruled on these motions. He rejected the NRA’s argument that the 1st Cause of Action – Breach of the Estates Powers & Trustees Law be dismissed over “vagueness”. He dismiss similar causes of action (6, 7, and 8) against the individual defendants holding that they could not be classified as “trustees” under the EPTL. With the exception of the related party transaction involving LaPierre which he dismissed today, all the other charges against the individual defendants remain.

One thing that has been often overlooked is that the victims in this case are those of us that are members of the NRA. Beyond paying for the private planes, suits, and trips for LaPierre, it has been our dues and contributions that have been used to pay the legal bills for both the NRA and the individual defendants. While I can’t speak for Woody Phillips, I am sure that both LaPierre and Frazer will submit bills to the NRA for their legal expenses to be reimbursed under the Directors and Officers insurance policy. This would be over and above what is being spent with Brewer, Attorneys and Counselors where it takes approximately the dues from 22 annual members to pay for one hour of legal representation.

I will cover the closing arguments in a separate post in order to keep this post from being too long.

A Friday Roundup

This week started with us in Saint Louis where my older daughter had scheduled surgery on Monday. What was expected to be a 1.5-2 hour standard procedure ended up being a five hour surgery. The surgeon found an unexpected tumor hidden behind other organs. While it was cancerous, it is at an early stage with an excellent long term prognosis. The major downside is that she will need a second surgery to complete the original procedure. Please keep Wendy in your prayers.

The news this weeks seems to be coming faster than I can keep up with so I’ll just go with a roundup with links to more indepth coverage.

The New York Attorney General’s Office rested its case against the NRA and the individual defendants on Monday. Their final witness was Eric Hines who is a forensic accountant who found the NRA had a number of internal control failures. The attorneys for the NRA and the individual defendants then asked for a directed verdict saying the state had not proved its case and that certain laws do not pertain to them.

The Reload has a good analysis of this argument by Joseph Brucker. The crux of the NRA’s argument is as follows:

The defendants’ arguments centered largely on the applicability of New York’s Estates Powers and Trusts Law (EPTL) to nonprofit corporations and their executives. The statute contains a provision that subjects any nonprofit corporation organized for “charitable purposes” to certain registration and reporting requirements. However, “charitable purposes” are defined using language that echoes the IRS’s federal 501(c)(3) classification. The NRA, a 501(c)(4), admitted that the law governs some of its funds and activities. But it argued that the statute’s provisions relating to the “administration” of charitable property should only apply to its restricted charitable donations, not to general funds used for noncharitable activities such as lobbying.

The individual defendants, meanwhile, say the statute does not apply to them at all: an accountant or lawyer who accepts a position at a New York nonprofit, they argue, does not sign up for the same responsibilities as the “trustee” of a charitable foundation or bequest. The “trustee” designation set off a round of frenzied discussion in the courtroom on Monday.

If Judge Cohen accepts this interpretation, it could prove problematic for the state to force reform on the NRA.

Erik Uebelacker has been following the case for Courthouse News Service. He has a good synopsis of the testimony of former NRA 1st VP Willes Lee who had gone nuclear on Facebook, Twitter, and Instagram. What I found most interesting was Lee’s response as to why he had written those posts.

Lee was far more reserved in court than he was on Facebook. During his testimony, he was hesitant to critique the NRA at all, despite his willingness to do so frequently online last year. 

“I don’t know why I was posting those now,” he said Wednesday. “But I must have felt that way.”

He didn’t deny the validity of the content in any of the posts, however.

“I don’t know why I was posting those now”? Jeez! Talk about wimping out when put on the stand.

The two best ways to follow the NRA trial day by day are to follow NRA Watch and to follow the tweets of Uebelacker. I hate to admit our enemies have done an excellent job in covering the testimony in the case in an above board and fair way. NRA Watch is a project of Bloomberg’s Everytown.

Moving on in the Spirit of Aloha, the Supreme Court of Hawaii doesn’t like Heller, McDonald, or Bruen nor do they think it applies in Hawaii.

The court said:

“The spirit of Aloha clashes with a federally-mandated lifestyle that lets citizens walk around with deadly weapons during day-to-day activities,” the court wrote. “The history of the Hawaiian Islands does not include a society where armed people move about the community to possibly combat the deadly aims of others.”

Christopher Wilson had legally purchased his firearm in Florida back in 2013. He had been charged with possessing an unregistered firearm. His first challenge under the Second Amendment was denied but his second challenge after the Bruen decision was successful. A Hawaii district court had dismissed the charges based upon Bruen but the state appealed.

If ever a case cried out for the grant of a writ of certiorari it is this one. I can’t see how the SCOTUS can ignore such an in-your-face challenge to the supremacy of national law. As gun rights attorney Alan Beck notes, “The use of pop culture references to attempt to rebuke the Supreme Court’s detailed historical analysis is evidence this is not a well-reasoned opinion.”

In other 2A news, a group of Second Amendment organizations including the Second Amendment Foundation, CCRKBA, and theFirearms Policy Coalition are asking the US Supreme Court to grant certiorari in Bianchi v. Brown. The SCOTUS had vacated and remanded the case then known as Bianchi v Frosh back to the 4th Circuit for a ruling consistent with Bruen. Since then, the case was argued before a 3-judge 4th Circuit panel and its has been over a year since the argument without a decision. For some reason, the 4th Circuit has now decided to hear the case en banc. The case is a challenge to Maryland’s ban on so-called “assault weapons” (sic).

Adam Kraut, SAF Executive Director, notes in their release:

“The Fourth Circuit’s decision to hear this case en banc, over a year after it was argued before a panel and with no published opinion, seems to imply the court desired to take this case from a panel with which it disagreed,” noted SAF Executive Director Adam Kraut. “The unconstitutionality of Maryland’s Assault Weapons Ban has been apparent since it was passed into law, as Heller already provided the proper analysis, which the Fourth Circuit previously ignored to shield the law from a swift death. Intervention from the Supreme Court is necessary to restore order and force the lower courts to properly address this issue in a timely manner, as each day the Plaintiffs rights are being infringed upon.”

Finally, I would like to note that Early, One-Stop Voting begins for the North Carolina March Primary next Thursday, February 15th. Grass Roots North Carolina has issued their Remember in November ratings of the candidates based upon both their voting history (if any) and a survey. Likewise, GRNC-Political Victory Fund has issued their recommendations regarding pro-rights candidates in contested races. Today is the last day to be registered to vote for the primary. This will be the first election in which a photo ID will be required since North Carolina voters approved a constitutional amendment requiring it in 2018.

Quote Of The Day

While I have been following the NRA’s trial in New York, I have been holding off writing about it until the New York Attorney General’s Office has rested their case. Based upon what I have read, that appears to be this coming Monday, February 5th. There is a lot there and I want to make sense of it all before tendering my complete opinion.

That said, the quote of the day comes from Stephen Gutowski of The Reload. It involves the testimony of NRA Secretary and General Counsel John Frazer.

Stephen wrote:

In it, the NRA’s top lawyer defended his integrity. When asked if LaPierre had breached his trust when he failed to disclose his now-admitted use of NRA funds for personal expenses, Frazer said he wouldn’t characterize it that way.

“I think Mr. LaPierre has always been very open and honest with me in terms of communications that we would have and then trying to rectify the issues,” he said.

But, when asked if LaPierre breached the trust of NRA members, he took an agonized pause before responding.

“I’d have to say probably yes,” Frazer testified.

LaPierre walked slowly out of the courtroom–and the NRA–on that note.

While I am glad that Mr. Frazer is finally recognizing that Wayne LaPierre breached the trust of the NRA members, it is sad that Frazer is only now coming out and saying it. His fiduciary duty which included a duty of loyalty was to the organization which means the members and not to Wayne LaPierre. He is not alone in that breach of fiduciary duty. There are many members of the Board of Directors who likewise breached their duty in their loyalty to Wayne instead of the members. Whether it was due to ignorance or a willful choice, it really doesn’t matter.

The victim in this trial has never been the state of New York. It has always been the members of the NRA who paid their dues and donated what they could to the organization because they believed in the mission. In return, they were used as the personal piggy banks to support the avaricious lifestyles of the Millies, the Waynes, the Susans, and those of their ilk.

The State’s Opening Arguments In NRA Trial (Updated)

I am not in New York City for the NRA trial. Given the law in New York forbids any audio-visual broadcast of trials, I will have to rely on reports from the mainstream media and other observers such as Jim Shepherd of the Outdoor Wires.

Monica Connell, Assistant Attorney General of New York, is the lead attorney for the NY Charities Bureau in this case. Her opening statement was made today in court which reportedly lasted for more than an hour.

From the Gothamist which is a news feed from WNYC – New York Public Radio on the opening statement:

Assistant Attorney General Monica Connell said in the state’s opening arguments that executives at the NRA violated both state laws and internal policies by spending excessive amounts of money and then covering up their expenditures. She said the organization’s leaders also “breached the trust” of the donors who “took money out of their pocket” to advance the NRA’s cause.

“They should be able to trust that their hard-earned money they donated will not be used for luxury travel,” Connell said.

Connell’s opening statement detailed some of the steep price tags the NRA’s executives charged to the organization in recent years, including millions of dollars on private flights. She also told jurors about the safeguards that are supposed to prevent nonprofits in New York from mismanaging funds. The assistant attorney general argued the NRA’s leaders worked to undermine those safeguards by lying, retaliating against whistleblowers and hiring high-ranking employees who would be more loyal to corrupt executives than to the mission of the organization.

They also reported that Wayne LaPierre watched on from the gallery which was filled with attorneys, observers, and reporters.

Photo of Wayne arriving at the courthouse – by Brendan McDermid/Reuters

The Guardian has more of Connell’s opening statement to the jury.

“The NRA allowed Wayne LaPierre and his group of insiders … to operate the NRA as ‘Wayne’s World’ for decades,” Connell told a six-member jury that was sworn in earlier in the day, referencing the 1992 comedy movie starring Mike Myers and Dana Carvey.

“Wayne LaPierre and his friends effectively suppressed the voice of anyone who challenged his leadership.

“This case is about corruption in a charity. It’s about breaches of trust, it’s about power. People take their hard-earned money and donate it to charities they believe in. It doesn’t matter what the cause is. They should be able to trust that the hard-earned money they donate is going to advance the mission of that charity.”

Earlier today, the jury was seated. It consists of six jurors and six alternates. All 12 will be in the courtroom for the trial but only six will actually deliberate the charges. Moreover, under NY civil law and practice, a verdict can be delivered if five out of six agree on the verdict. It need not be unanimous.

UPDATE: Jim Shepherd of the Outdoor Wires was in the courtroom yesterday. He gives his impression of the start of the trial here.

From the firing of Lt. Col. Oliver North as NRA President at the now-infamous 2019 Annual Meetings in Indianapolis, to the harassment and retaliation charges of former NRA Board Members Esther Schneider and Phillip Journey, LaPierre was characterized as a man who broached no threats to his authority.

He was also characterized as a man who used the system to his advantage.

With a rudimentary knowledge of accounting and how the NRA’s internal structure operates, specifically in regards to the distinct lines between the National Rifle Association and the NRA-ILA (Institute for Legislative Action), I was confused by the details and accounting practices outlined by the prosecution. One can only imagine the confusion it caused jurors.

But the case appeared effective in one respect: despite occasionally digging deeply into details, it always wound its way back to a pair of key names: Wayne LaPierre and Woody Phillips. Throughout their joint tenure, the NRA coffers were allegedly used as “private piggy banks” for the duo, their chosen subordinates and enabling Board Members.

Dueling Letters On LaPierre Resignation

The resignation of Wayne LaPierre on the eve of the trial in New York has generated letters to Judge Joel Cohen from both sides. In addition, the pre-trial memorandum containing the NRA’s trial brief seems to throw Wayne under the bus after three plus years of defending him.

First, the letter from Assistant Attorney General Monica Connell asserts that Wayne’s resignation has no impact on the viability of the complaint against the NRA and Wayne. She goes on to argue that the NRA should not be allowed to use Wayne’s resignation as evidence that the NRA is cleaning up its act. As to whether his resignation has any relevance, she asserts it should only come up at the remedial part of the case after the jury has decided.

In response, Noah Peters of Brewer, Attorneys and Counselors, asserts, “As the NRA stated in its trial brief, Mr. LaPierre’s resignation undermines the NYAG’s request for forward-looking injunctive relief.” He goes on to imply that the NYAG must now show that the transgressions of the LaPierre era will continue with him gone which is unlikely.

Connell states, in fairness, that the NRA must give answers to some questions regarding Wayne’s resignation before the trial begins. The NRA through Peters does answer those questions. I have put the questions and answers in a point-counterpoint format below with the question in bold and the answer in italics.

What arrangements or agreements Mr. LaPierre has with the NRA or its affiliates regarding his resignation, severance, licensing, consulting or payments directly or indirectly to LaPierre and amounts of such payments;

Mr. LaPierre has no arrangements or agreements with the NRA or its affiliates regarding his resignation, severance, licensing, or consulting;

Any other position Mr. LaPierre holds or will hold within the NRA;

Mr. LaPierre holds no other position with the NRA, nor will he hold a position after his final day;

The NRA’s succession plan following Mr. LaPierre’s resignation;

The NRA’s Head of General Operations Andrew Arulanandam will become the interim CEO & EVP of the NRA until the NRA hires permanent successor;

Confirmation as to whether Mr. LaPierre’s January 2021 employment agreement is still in effect, is being honored by the NRA and whether and what payments Mr. LaPierre will receive thereunder;

After January 31, 2024, payments under the 2021 Employment Agreement will cease. There are no superseding employment or post-employment agreements with Mr. LaPierre;

Any employment, independent contracting, consulting or other work Mr. LaPierre will undertake following his resignation for the NRA or any affiliate, vendor or contractor of the NRA;

Mr. LaPierre will not undertake any other employment, independent contracting, consulting or other work for the NRA or any affiliate, vendor or contractor;

To the extent Mr. LaPierre intends to testify at trial that his resignation was due to a health problem, the nature of the health problem.

The NRA is informed that Mr. LaPierre has chronic lyme disease. The NYAG’s suggestion that Mr. LaPierre’s health condition is not the cause of his departure is false.

I would note that the NYAG never suggested Wayne’s health condition was not the cause of his departure. They merely questioned the timing of his resignation on the eve of the trial. As to chronic lyme disease, the National Institute of Allergy and Infectious Diseases has this on it. They note that many health experts do not like to even use the term. Another NIH article states, ““Chronic Lyme disease,” however, has no clinical definition and is not characterized by any objective clinical findings.”

According to Wayne’s 2021 Employment Agreement that was introduced into evidence back in December 2021, Sec. 4 (e) seems to preclude Wayne from contracting with current NRA vendors or contractors for his services.

Sec. 5 of the 2021 Employment Agreement gives the NRA the option of licensing Wayne’s name, likeness, and signature for up to two years after departure for fundraising, PR, or membership purposes at the rate of $500,000 per year. This option is the NRA’s alone and does not compel them to exercise the option. This section also says they will pay Wayne for in-person public appearances at the rate of $750 per hour.

There has been much speculation about a $17 million “golden parachute” for Wayne. From what I can tell, this came up during a deposition in the bankruptcy trial regarding his 2018 Employment Agreement. Sec. 8 (c) of the 2021 Employment Agreement says it supersedes any prior agreements or contracts. Thus, it would seem to me that there is no $17 million “golden parachute”. Any post-employment monies due Wayne probably would be coming from a 457(f) non-qualified deferred compensation plan which was funded by salary deferrals by Wayne himself and for which he is now eligible to collect.

Josh Powell Gets His Deal From NY AG

Josh Powell came to terms with the New York Attorney General’s Office and will be dismissed with prejudice from the case once the deal is approved by Judge Joel Cohen.

Under the terms of Stipulation of Settlement, Powell will:

  • Admit he breached his fiduciary duties of care, loyalty, and obedience by using charitable assets for his own benefit or that of his family;
  • Admit he failed to administer charitable assets entrusted to his care properly;
  • Will pay restitution of $100,000 to be held in escrow for the NRA;
  • Be permanently barred from serving as a director, officer, trustee, or in any role with fiduciary duties for any non-profit or charitable organization incorporated, registered, operating, or soliciting donations in New York State;
  • Agrees to accept service of a subpoena for appearance at the trial;
  • And will be responsible for fees and expenses associated with his testimony at the trial.

Provided that Powell keeps to the terms of the stipulations, the Attorney General’s Office will dismiss him from the lawsuit with prejudice. They will also consider it a resolution of all claims against him. The agreement then goes into great detail of what would be considered a breach or voiding of the agreement including denying that the case is without factual basis. If the agreement if breached or voided by Powell, he can expect the AG’s Office to come after him with a vengeance.

We have been expecting this for a few days. The only surprise to me is that Powell now resides in San Juan, Puerto Rico. Using Google Maps street view, it appears to be in a building with a wine shop on the first floor next to a Wendy’s.

I have embedded the full Statement of Stipulation and Order of Dismissal below.

Powell-Stipulation-and-Dismissal