State of New York v. NRA et all

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Dueling Letters On LaPierre Resignation

January 8, 2024 by 1 Comment

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.

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Josh Powell Gets His Deal From NY AG

January 6, 2024 by 2 Comments

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

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Josh Replies

January 5, 2024 by 1 Comment

Josh Powell replied to the court’s inquiry yesterday by email. The reply confirmed one thing that is in the works. Powell is trying to work a deal with the New York Attorney General’s Office. If you look at the third item in his response, you see he hopes that by the end of this week that a “stipulation of settlement” and an “order of dismissal” will be entered.

As I noted with regard to the New York Times article, Powell is the most vulnerable of the defendants in the case. Thus, it is not surprising that he is seeking a settlement with the Attorney General’s Office.

Powell states he is not able to retain counsel. He goes on to say that he was informed that the NRA’s D&O (Directors and Officers) insurance coverage will not cover his legal bills and that any leftover monies will go to pay the NRA’s fees. What this tells me is that given Powell has crossed the NRA with his tell-all book they are hanging him out to dry. It is also a not so subtle warning to anyone else such as former First VP Willes Lee they better stick to the NRA’s party line as promulgated by Bill Brewer or else they will suffer the consequences.

Powell-response

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Josh, You There?

January 4, 2024 by 1 Comment

Judge Joel Cohen issued a court notice yesterday asking, in essence, if Josh Powell or his attorneys intended to show up for jury selection and the trial. Given jury selection started on Tuesday, January 2nd, I take it that neither Powell nor an attorney representing him showed up for it.

You may remember that his prior attorneys, Akin Gump, dropped him for what appeared to be a failure to pay his legal bills. Indications at that time were that Powell was then going to act pro se or as his own attorney.

Now I have to wonder if he will just default by not showing up for the trial. It would be foolish to do so especially if he had been trying to cut a deal with the New York Attorney General’s Office. Oh, well, more than one former director has told me that Powell was not the sharpest knife in the drawer.

451625_2020_People_of_the_State_of_v_People_of_the_State_of_COURT_NOTICE_2642

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NY Times On NRA Trial

January 2, 2024 by

Danny Hakim has been the lead New York Times reporter covering the NRA and its problems. He has a story out today on the trial entitled, “LaPierre, Longtime N.R.A. Leader, Faces Trial That Could End His Reign.”

The article is primarily an overview of the lawsuit from the beginning with nothing new revealed that readers here don’t already know. That is, except for this little tidbit buried in the story.

The attorney general’s office has had settlement talks with Mr. Powell, a person with knowledge of the case said, but no deal has been announced.

That news should not be surprising. Powell has appeared throughout his entire business career to be a survivor despite his many failed business ventures. If his tell-all book was any indication, he will say or do anything in order to survive. Given he is now acting pro se or as his own attorney in this case due to an inability to pay or afford his legal bills, he is the most vulnerable of the defendants in the case. Besides, how much money does the NY Attorney General’s Office realistically expect to reclaim from him. As the old saying goes, you can’t squeeze blood from a turnip.

H/T A.M.

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Jury Selection In NRA Trial Starts Today

January 2, 2024 by

In just a few minutes jury selection in People of New York v. National Rifle Association of America et al will commence. It has been almost three and half years since the New York Attorney General’s Office and its Charity Bureau filed suit against the NRA, Wayne LaPierre, Woody Phillips, John Frazer, and Josh Powell.

As of this morning, 2,641 motions, exhibits, letters, witness lists, transcripts, court notices, and other documents have been filed with the Clerk of the Supreme Court for New York County. This includes 65 documents that were filed with the court over the weekend and through this morning from both sides. I anticipate we will see more motions and letters to Judge Cohen filed as the day progresses.

This leads to an interesting question. Do the attorneys for the NRA and the four defendants charge extra for working over the weekend or does it just run up the number of billable hours?

Further, while the attorney fees for Wayne LaPierre and John Frazer will probably be covered under indemnification agreements with the NRA for their actions while serving as officers, what about Woody Phillips and Josh Powell? Will they be reimbursed? They are being sued for actions they took while working either directly or indirectly for the NRA. We know Powell is now acting as his own attorney as he can’t afford the attorney fees out of pocket. Regardless of how many will get their attorney fees reimbursed, it is still all member’s money down the drain after the D&O policy pays their little bit.

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Judge To NRA’s Attorneys – Knock It Off!

December 28, 2023 by 5 Comments

I think Judge Joel Cohen is getting a little bit aggravated by NRA’s attorneys attempts to delay the trial before it starts.

The attorneys for the NRA, primarily Noah Peters, are trying to argue that the term “properly administered” is unconstitutionally vague. The term is used in New York’s Estates, Powers
and Trusts Law (“EPTL”) § 8-1.4(m) which provides the basis for the First Cause of Action against the NRA in the NY Attorney General’s amended complaint. In my layman’s opinion, properly administered means you don’t buy suits for Wayne, pay for hair and makeup for Susan, or take free trips from major vendors.

Reading the letters to the judge from both the NYAG and Peters, it appears that this motion to dismiss the First Cause of Action is the fourth such attempt. New York wants to respond to this motion 30 days after the jury delivers a verdict while Peters and the NRA want it ASAP. Both of these letters were sent yesterday.

You may remember that on the Friday before Christmas Judge Cohen had given the NRA a lump of coal when he told them to stop screwing around. He told them then that they could have made this motion months earlier and that he didn’t anticipate delaying trial preparation to give it any attention. Nonetheless, attorneys for the NRA as shown above have continued on their quest to delay.

Today, Judge Cohen issued another notice with regard to the aforementioned letters that the briefing and hearing schedule on the NRA’s motion is stayed until further notice.

From the Court Notice:

The Court has reviewed the NRA and OAG letters regarding the briefing schedule for the NRA’s recently filed motion to dismiss (NYSCEF 2569, 2570). The NRA’s concerns about the timing for briefing this belated and procedurally questionable motion ring hollow, as it is a circumstance entirely of its own making. The Court remains far more concerned about the motion interfering with the trial rather than the other way around. Until further order of the Court, the briefing and hearing schedule on this motion is stayed. The Court will discuss the schedule with the parties during a break in jury selection the week of January 2, 2024.

As I said, I’m just a mere layman when it comes to the law. However, when a judge calls your motion “procedurally questionable” and that your concerns “ring hollow”, he is telling you to knock it off. To continually ignore his plainly given signals as the NRA’s attorneys have done is both arrogant and stupid. This case is finally coming to trial almost 3 1/2 years after it began and Judge Cohen is not going to let anything that could have been done months ago delay it further. Bill Brewer and his group of lawyers need to recognize that and move on.

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NY Courts Give NRA Two Lumps Of Coal

December 24, 2023 by 2 Comments

The first lump of coal comes from the Appellate Division, First Division. As NRA In Danger reported, the Appellate Division affirmed Judge Joel Cohen’s ruling in which he refused the dismiss the New York AG’s first cause of action in their complaint.

The court said in an unanimous decison:

Plaintiff alleged in detail that the NRA failed to properly administer charitable assets, resulting in improper administration and diminution of property held for charitable purposes; engaged in waste and diversion of charitable assets; and retaliated against whistleblowers. These allegations are sufficient to state a claim under EPTL 8-1.4, which enhances New York Attorney General’s enforcement powers and authorizes it to institute proceedings against trustees who fail to properly administer charitable assets.

As NRA In Danger notes, the court considered the remaining arguments posed by the NRA and found them “unavailing”.

The NRA’s motion from August 15, 2022 is here while Judge Cohen’s denial of the motion to dismiss is here.

The second lump of coal comes from Judge Cohen in a Court Notice issued on December 22nd. The notice states that Judge Cohen has reviewed letters from the NRA with a proposed motion to dismiss the First Cause of Action on the grounds that the statue is “unconstitutionally vague”. He notes that while the AG’s office argues such a motion is procedurally barred, he disagrees given the Commercial Division Rules. He then throws a bone to the NRA’s attorney by saying motions that represent their client’s best interests are not limited. Judge Cohen then lowers the boom.

In any event, given that the parties have undertaken the effort, the Court will provide the following comments. The NRA has had multiple opportunities to present dispositive motions, and each has been dealt with at great length and with extraordinary expenditure of time and effort by the parties and the Court. The newly proposed motion (which would be, at least, the eighty-sixth motion filed in this case) is not based on new facts or a change in the law, and the NRAs arguments clearly could have been asserted in one of its earlier (timely) motions to dismiss or for summary judgment, but was not. Instead, it is being proposed on the eve of trial, with the attendant distraction and potential for delay at a critical period for the parties and the Court as we all prepare for trial. The Court believes this is precisely the type of motion the single motion rule was designed to prohibit. Moreover, the Court is not persuaded that the proposed motion is a challenge to the Courts subject matter jurisdiction, which as the NRA notes is typically an argument that the Court can (and should) consider at any time. All that said, as noted above, the NRA does not need the Courts permission to file its proposed motion. However, the Court does not anticipate interrupting trial preparation or the trial itself (thereby extending the service time of jurors) to devote substantive attention to a motion that could have been brought months or years ago.

I think Judge Cohen’s legal response could be translated to say what Mom’s everywhere have told kids forever- just because you can doesn’t mean you should. A Dad’s response might be more to the point – quit fucking around and get to work.

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Who Is Not On The Witness Lists

December 12, 2023 by 2 Comments

NRA In Danger had a post yesterday on the pre-trial disclosure, witness lists, and exhibits in the NRA’s trial in New York. It appears that all parties with the exception of Josh Powell have produced witness lists and exhibits. Some such as Woody Phillips and John Frazer have relatively short witness lists. For example, Mr. Phillips only lists himself as a witness. By contrast, the witness lists for both the State of New York and the NRA are quite extensive. I have embedded the State of New York’s list as it includes both their witnesses as well as those of the defendants along with estimated time for cross-examination.

People_of_the_State_of_PRE_TRIAL_DOCUMENT__2487

I will leave it to NRA In Danger to go into more detail on the pretrial disclosures. What I’d like to point out is who is not on the list.

First, there is Joe DeBergalis who has served for a number of more recent years as the Executive Director of General Operations. One of the issues brought up in the New York Attorney General’s case against the NRA is how “troublesome” people are pushed out. Given he was replaced just this past week, I would have thought he would be an obvious person from who to require testimony. However, both his replacement Andrew Arulanandam and his executive assistant Lisa Supernaugh are on the list for a combined 3.5 hours of questioning plus another 45 minutes of cross-examination.

Next, I am surprised that former NRA Managing Director of Tax and Risk Management Emily Cummins is not on the witness list. She spent over 12 years at the NRA dealing with tax, compliance, and risk management issues. She had raised questions regarding billing by Brewer, Attorneys and Counselors, which became public in 2019. She resigned under pressure from Bill Brewer and his alleged “burn books”. Ms. Cummins has a reputation as an ethical person who actually believed in the mission of the NRA and was greatly concerned over questionable expenditures.

Finally, how can you talk about dysfunction in the Board, sweetheart deals, and friends of Wayne without including Marion Hammer. A friend pointed out to me last night Marion would have been an incredibly hostile witness if called by the New York AG. Heck, she is hostile even on her good days! I can see Bill Brewer making the decision to keep Marion under wraps as she knew too much, helped Wayne too much, and got too much. It is obviously a case of letting sleeping dogs lie or in Marion’s case, cat ladies.

I know New York does not televise court proceedings. That is a shame as watching this trial would have been interesting. Indeed, New York could have made it a pay per view and I’m sure they would been able to offset some of their budget deficits.

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NRA Trial Date Set (Updated)

November 28, 2023 by 2 Comments

Because last week was Thanksgiving Week and it was devoted to family I missed seeing a court notice in the New York AG’s lawsuit against the NRA. It dealt with jury selection and the trial start date.

Judge Joel Cohen has ordered that jury selection begin on Tuesday, January 2nd, 2024 in the late morning. Jury selection will continue day to day until a jury is selected. It will take place in Room 300 of the New York State Supreme Court Building located at 60 Centre Street in Manhattan.

The trial itself will start at 9:30am on January 8th, 2024 in the same courtroom.

Oh, to have the free time (and money) to fly to New York and stay throughout the trial. I don’t know if the trial will be televised but will check on it.

UPDATE: I probably should have checked on this first before originally posting the above. However, I just assumed New York, like most states, had some provision for the audio-visual coverage of most court cases.

As what often happens when you make an assumption, I was wrong.

From Politico:

Trump’s case again highlights how New York has among the most restrictive laws in the nation banning cameras and broadcasts inside the courtroom in most proceedings, a law that dates back to the 1930s. The state Legislature has barely tinkered with it since then. Only Washington D.C. is more stringent on media coverage inside the court, according a report last year by the The Fund for Modern Courts, a nonpartisan nonprofit.

The Village Sun adds that the law banning cameras and recording devices in the courtroom stemmed from the Lindbergh kidnapping trial case in the 1930s.

While there is a bill pending in the New York Senate and Assembly that would allow televising of court proceedings, it has been referred to committee where it remains. Interestingly, the bill is opposed by the NY chapter of the ACLU on the grounds that there is no provision for a defendant to preclude televising a trial. They contend this could impair a criminal defendant’s right to a fair trial.

I guess we will have to rely upon news reports, sketchy as they will be, to know what is going on in the trial day to day.

UPDATE II: NRA In Danger has more on what to expect in the trial now that a date has been set. If what was quoted from a motion transcript carries over to the trial, and there is no reason to expect it won’t, this is not going to be pretty. Even the most ardent backers of Wayne should be cringing over all the dirty laundry of his that will be aired. The old excuse of “well, Wayne told me it isn’t true” just won’t cut it anymore. Those who listened to it and excused his actions should be hanging their heads in shame as they must accept some responsibility for the perilous state of the organization.