More NY Subpoenas For The NRA

Danny Hakim of The New York Times is reporting that NY Attorney General Letitia James (D-NY) issued new subpoenas to the National Rifle Association last week. While I have been keeping up with issues related to the NRA, I missed this.

The subpoena, which was described to The New York Times, was issued last week and covers at least four areas, including campaign finance, payments made to board members and tax compliance. Because the N.R.A. is chartered in New York and the office of the attorney general, Letitia James, has a range of enforcement options, the investigation has alarmed N.R.A. officials already grappling with infighting and litigation. The same office brought a case last year that led to the shuttering of President Trump’s foundation.

Among the documents sought by the subpoena are records related to transfers among N.R.A.-controlled entities, including the N.R.A. Foundation, an affiliated charity. Recent tax filings show that the N.R.A. diverted $36 million last year from the foundation in various ways, far more than ever before, raising concerns among tax experts. The transfers came as the N.R.A. experienced financial strains and challenges from gun-control groups, which outspent the organization in the 2018 midterm elections. An earlier analysis by The Times found that the foundation had transferred more than $200 million to the N.R.A. between 2010 and 2017.

The NRA Foundation, you may remember, is now under an investigation by District of Columbia Attorney General Karl Racine (D-DC). The NRA Foundation is chartered in the District of Columbia.

The New York investigation also is seeking internal documents related to the NRA’s filings with the Federal Election Commission as well as to communication with two political consulting firms. Those firms, Starboard Strategic and OnMessage, are somewhat intertwined. The Cult of Personality known as Giffords has sued the FEC alleging that the NRA paid money to Starboard Strategic as a means to funnel money to Republicans using OnMessage.

The New York Attorney General’s Office had no comments on the subpoenas.

However, NBC reports this response from the NRA outside counsel William Brewer III.

“Of course, the financial records of the NRA and affiliates were audited and reported in tax filings, in accordance with state and federal regulations — a fact that underscores the Association’s commitment to good governance,” Brewer said. “It is easy to understand why the NRA believes that the NYAG’s zeal with respect to this inquiry reflects the investigation’s partisan purpose — not an actual concern that the NRA is not effectively using its assets to pursue its members interests.”

“Regrettably, the NYAG seems to credit hollow rants by a handful of actors who are no longer associated with the NRA,” Brewer continued.

While Brewer seems to dismiss the actions of the NY Attorney General and her office saying it has “a partisan purpose”, she does have extraordinary powers when it comes to non-profit organizations chartered in the state. This includes substantial fines and even the possible dissolution of the NRA. If any of the current or former member of the Board are just sloughing this off as a partisan witch hunt, they are doing so at their peril.

This is serious business. I can’t say that it would not have come up if the Board had been doing their due diligence and taking their fiduciary responsibilities seriously. However, it would have been easier to dismiss as having a “partisan purpose.”

Wayne Needs A Better Attorney

The New York Daily News is not a fan of the NRA. They have made that very clear over the years. They make that very clear when they refer to the NRA’s defunct CarryGuard insurance program as “murder insurance”.

The context was that investigators with the New York Department of Financial Services served a subpoena upon NRA Executive VP Wayne LaPierre. They want to know what Wayne knows or knew about the marketing of CarryGuard. It should come as no surprise that New York officials would want to put Wayne on the record with a sworn deposition.

I can think of a number of reasons that they would do this. They would include harassment, payback for the Federal suit against Gov. Cuomo and former DFS head Maria Vullo, an opportunity to catch Wayne in a lie, and the list goes on.

What struck me about this article was this:

The gun-rights group’s top lawyer said it was “surprised” by the subpoena and noted that LaPierre has “virtually no information” beyond what others have already told investigators.

“The NRA believes the ‘investigation’ was blatantly political in its motivation,” said William A. Brewer III, lead counsel to the NRA, in a statement. “Nonetheless, the NRA has attempted to cooperate with reasonable requests by (New York).”

Any competent attorney should have expected this subpoena. To be surprised by what should have been a foregone conclusion indicates either Brewer is incompetent or that he is trying to create a smokescreen. I know which way I’m leaning but for the moment I’ll reserve judgement.

More Subpoenas Served On The NRA

Danny Hakim in the New York Times is reporting that New York Attorney General Letitia James and her office have served a subpoena on the NRA seeking financial records from over 90 current and former members of the Board of Directors. The subpoena was served yesterday evening.

The subpoena is an escalation of a continuing investigation into the tax-exempt status of the N.R.A., which is chartered in New York, and engulfs the organization’s board of directors in the inquiry. The subpoena seeks financial records and other documents that would shed light on spending decisions made by the board.

While James’ office is not commenting on the subpoena, the NRA’s outside counsel William Brewer III had this to say.

William A. Brewer III, the N.R.A.’s outside counsel, said in a statement: “As we understand it, counsel to the N.R.A. board accepted service of a subpoena to the board that relates to the production of documents and information.”

He added: “Such a request was expected and, as we have said many times, the N.R.A. will cooperate with any reasonable, good faith request for information given the organization’s commitment to good governance.”

This is making the decision by Tim Knight, Sean Maloney, and Esther Schneider to resign from the board and the decision by Adam Kraut to turn down an appointment to the board seem all that much more wiser.

I’ve heard numerous reports that the NRA’s Directors and Officers liability insurance was either dropped by their current carrier due to its issues or that the premium was so high that it was decided it wasn’t economically feasible. This has been denied. I tend to agree with what Dan Zimmerman of TTAG had to say about it.

The Times report says the NRA denied that their D&O coverage has been cancelled. That’s what the NRA’s Andrew Arulanandam told TTAG over the weekend, too. With the latest news of the NY AG’s widening fishing expedition, that coverage is more important than ever.

I would not be surprised to see a number of resignations by the celebrities – singers, actors, former athletes – from the board on the advice of their personal attorneys. They have deep pockets and if there is any suggestion of the absence of D&O liability insurance it would be risk management 101 to head for the doors.

Another AG Gets Into The Act (Against The NRA)

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.

The Pincus Deposition – Video Excerpt

As was mentioned in yesterday’s post on the Rob Pincus’ deposition in the NRA v Ackerman McQueen case, it was explicitly acknowledged that Rob was not properly served and that he appeared voluntarily. In the video below you can hear the objections of the attorneys for AckMac to the deposition including the fact that it was delivered to a location in New Jersey where he had not lived for years. You will also hear the fact that Rob explicitly acknowledges he is appearing voluntarily when asked by the attorney from the Brewer firm Michael Collins.

Thanks to Rob for providing this video excerpt of the deposition.

UPDATE: Rob has released a second video excerpt of his deposition. In the video below, he explains how he first came across the documents that purportedly were “leaked”. It was on Facebook on a page where he didn’t even know who managed the page. You can’t get any more public domain than that!

Save the Second has a long post on their website with more details on how Rob spent Friday.

The Pincus Deposition

Earlier in June, it was revealed that a number of people had been subpoenaed in the NRA’s lawsuit against Ackerman McQueen. While most of those who received a subpoena were NRA Board of Director members, trainer and activist Rob Pincus was also served. Ostensibly, the subpoenas were to find out who leaked information such as the bills from Ackerman McQueen regarding Wayne LaPierre’s clothing purchases, Oliver North and Richard Childress’ letter regarding outside counsel William Brewer III, and other such information.

Yesterday, Rob gave his deposition in the case to attorneys representing both the NRA and Ackerman McQueen.

He noted this on Facebook about his testimony in the deposition yesterday.

As I’ve said many times, I wasn’t involved in any “leaks” and I don’t know who was. Now that is part of the court record… officially. After consider time, effort and expense.

The NRA sent a team of lawyers from VA & TX and hired a local videographer and court reporter.
They sent them to one of the most remote locations in the Continental US and rented the town hall for the proceedings.
I walked over with my daughter and she hung out with the local pre-schoolers and a friend while the deposition took place.

I had offered to provide the documents that revealed pretty clearly when I first encountered the (already public) documents and save everyone a lot of time and money. The NRA Attorney’s wanted to do this today. Ackerman’s attorneys attended via phone line and video feed.

The location was Silverton, population 630, which is the county seat of San Juan County, Colorado. In other words, it was a long way from the big city. Or even any city.

Rob was gracious enough this morning to spend 20 minutes on the phone with me providing an after-action report. We discussed a number of things in the conversation including the why of the subpoena, what he thought they were trying to find, the cost to him, the monetary costs incurred by the NRA ‘s lawyers, and more.

The deposition took five hours, two attorneys for the NRA, a court reporter who had to travel from Denver, a videographer from Durango, and an expensive video conference hook-up so that the Ackerman McQueen attorneys could participate. Rob estimated that the costs ran upwards of $20,000 before you begin to figure in the attorneys’ billable hours. It was also very needless as Rob had made a good faith offer to provide all documentation and a sworn statement on what he knew. This offer was rejected by the lawyers representing the NRA.

As Rob travels often, the date could have been adjusted so that the deposition could have taken place in a more convenient and more cost effective location for the NRA and AckMac. The attorneys for AckMac noted in the meeting for the deposition that there was no reason to rush the process as it was early in discovery and no trial date had been set. Nonetheless, the lawyers for the NRA were insistent that the deposition be taken on June 28th as it appears they were more interested in speed. Rob believes that they were more interested in finding “the leak” than they were in the case itself.

The attorneys for the NRA, Robert Cox of Briglia Hundley and Michael J. Collins of Brewer Attorneys, admitted that Rob had not been properly served with the subpoena. As such, he appeared voluntarily at this deposition. In his opinion, the subpoena itself was an abuse of the discovery process meant as a fishing expedition and was meant to intimidate Rob as he has been a vocal critic of Wayne and the “Old Guard”.

I asked Rob about the costs to him both financially and emotionally. The financial costs were the distraction from his training and other businesses plus the lost productivity. The emotional costs were much higher. He had heard horror stories from friends about what to expect so he was very wary going into the deposition. Rob found that a number of people who had been talking with him before the subpoena suddenly stopped post-subpoena. Fortunately, he found the deposition “went far better than it could have with the lawyers” as they were professional, polite, and focused on the issues.

Rob wanted the following things highlighted.

  1. The deposition established nothing was leaked to Rob, nothing was stolen, and that everything he as received was in the public domain.
  2. He appeared voluntarily. As noted above, he was not properly served.
  3. He had nothing to hide.
  4. While subpoenaed by the attorneys for the NRA, he was critical of both sides in the case. 
Rob has told me that he will have video excerpts on the deposition available later today. I will post them as they become available.
I want to thank Rob again for taking the time out of his morning and out of his time with Baby Pincus to talk with me about the deposition.

A Heavy Artillery Salvo Has Been Fired On The NRA

Much of what has been said by politicians about the NRA and everything negative that has appeared recently in the media of any sort should be considered the equivalent of sniping. It might take out one or two people but not the whole organization. That was then.

The office of New York Attorney General Letitia James (D-NY) has now fired what I would consider the preparatory barrage in the effort to dissolve the NRA. As someone noted to me, James is under pressure to act and she did on Friday.

From NPR reporting on the NRA Annual Meeting:

Even as the NRA struggled to handle its internal divisions, an external threat emerged this weekend in the form of a new investigation by New York Attorney General Letitia James.

“The Office of New York State Attorney General Letitia James has launched an investigation related to the National Rifle Association (NRA),” a spokesperson for the attorney general told NPR. “As part of this investigation, the Attorney General has issued subpoenas. We will not have further comment at this time.”

The NRA has received a document preservation notice in connection with the investigation being undertaken by the New York attorney general, according to a source familiar with the matter.

The NRA responded to the announcement of the investigation by pledging its cooperation.

“The NRA will fully cooperate with any inquiry into its finances,” said William A. Brewer III, an outside lawyer for the NRA. “The NRA is prepared for this, and has full confidence in its accounting practices and commitment to good governance.”

 This is serious.

It is even more serious because as evidenced by the NRA Meeting of the Members today too many people think just ignoring it will make it go away. The matter is NOT going away.

Compounding this is the NRA’s outside counsel who has a checkered past in terms of legal ethics. He was sanctioned in Texas and his appeal of it was upheld by the Texas Appeals Court last year.

If the NRA is going to use an outside counsel, I might suggest getting the very best – and cleanest – New York non-profit law specialist and let him or her handle it. However, given Brewer’s apparent hold on the attention of certain NRA executives, I doubt this will happen.