A Special Meeting of the NRA Board of Directors has been scheduled for Dallas, TX for March 28th. As the Complementary Spouse pointed out to me, it is exactly 14 days after the previously scheduled meeting and is the length of time that the CDC formerly recommended for quarantine after COVID exposure. While I doubt that was the actual reason for the original cancellation, they are sticking with appearances.
March 18, 2021
OFFICIAL NOTICE: SPECIAL MEETING OF THE BOARD OF DIRECTORS
TO: Board of Directors and Executive Council
The NRA President has requested a special meeting of the Board of Directors to take place on Sunday, March 28, 2021, at 10:00 a.m. in Dallas, Texas. The purpose of the meeting is to provide a legal briefing to the Board regarding the NRA’s plan of reorganization and other pending matters.
The NRA Board of Directors and Executive Council will meet at the Sheraton Dallas Hotel, 400 North Olive Street, Dallas, Texas 75201, (214) 922-8000. The date, time and location of all meetings are on the attached schedule of meetings and meals.
The sole purpose of the meeting is to provide a briefing to the Board regarding the NRA’s reorganization plan and the legal matters overseen by the Special Litigation Committee, and to take any necessary action directly related to those matters.
Any mention of the Special Litigation Committee is deleted. Moreover, it does not have a mention of “any necessary action.”
Speculation is that an 1129 Reorganization Plan will be presented to the Board. These reorganization plans be presented by the debtor (NRA), the unsecured creditors committee, or a trustee if one is appointed. However, the bankruptcy judge, as I understand it, cannot present a reorganization plan and must only rule on the merits of those presented.
By presenting an 1129 reorganization plan, it is speculated that Brewer, Attorneys and Counselors, will have their fingers all over it and will use it to keep themselves attached to the NRA like barnacles on a rock. A friend pointed out to me today that in the course of proceedings that the bankruptcy judge could not only disallow Brewer to serve as a special counsel but cut off all payments to him given his role in draining the NRA’s finances through legal billings. We can only hope!
In the last week and half there have been a number of updates in the NRA’s Chapter 11 bankruptcy case. I will take them in order.
First, there was a debtor’s motion (the NRA) to allow Brewer, Attorneys and Counselors, to serve as special debtor’s counsel in the case. While the entire filing is 53 pages long, here are some excerpts. It should be kept in mind that the NRA has retained Patrick Neligan of Neligan LLP as its bankruptcy specialist attorney. Mr. Neligan has been practicing high-level bankruptcy law for over 35 years.
BAC and its attorneys are well-positioned to handle these matters for the Debtors because BAC has accumulated a reservoir of knowledge that could not be efficiently offloaded to, or replicated by, substitute counsel.
One way of looking at Brewer’s statement is that they know where the bodies are buried. I don’t think that is their intention but it could be read that way and they are needed to keep them buried.
In 2020 and in 2021, BAC’s standard hourly rates were as follows: Professionals 2020 Hourly Rates Founding Partner, William A. Brewer III $1,400 Partner $700-$900 Associate $275-$600 Consultant/Analyst $250-$725 Investigator $250-$350 Public Affairs $375-$800
Are their fees capped?
Did you agree to any variations, or alternatives to, your standard or customary billing arrangements for this engagement? Response: Yes. For one of the matters, BAC agreed not to seek fees for its professionals’ time inexcess of $100,000.10 In addition, BAC represents the NRA in another matter pro bono. Otherwise, BAC has not agreed to any variations or alternatives to BAC’s standard or customary billing arrangements. BAC’s engagement by the Debtors in connection with the Debtors’ bankruptcy cases is to serve as special counsel to the Debtors in the litigation that began PrePetition and other related matters BAC has been handling for the Debtors, as well as to assist Neligan LLP (lead counsel to the Debtors) during a transition period after the filing of the chapter 11 cases in order to facilitate the quick, efficient handling of matters drawing on BAC’s institutional knowledge.
In other words, with regard to one aspect of the case they will limit their fees as per agreement to $100,000 but after that the sky is the limit.
Remember that the bankruptcy filing has put many of the NRA’s other cases on hold so Brewer, Attorneys and Counselors has got to make their money somehow.
The Special Litigation Committee of Carolyn Meadows, Charles Cotton, and Willes Lee think having Bill Brewer involved is just dandy and they are all for it. Then again, they pretty much do as they are told by Wayne LaPierre.
Moving on, a mailing list of all additional creditors of the NRA was filed with the court on Monday, February 1st. Included in that 247-page list was the NRA Foundation. It should be remembered that most of the firearms in the National Firearms Museum and the National Sporting Arms Museum are not property of the NRA. Rather, they are on loan from primarily the NRA Foundation as that was to whom they were gifted by donors.
In a February 2nd report by Reuters on the latest hearing in the case before Bankruptcy Judge Harlin D. Hale, attorney Patrick Neligan denied the Chapter 11 filing was in bad faith.
“This is not a bad faith filing and we look forward to using Chapter 11 to resolve litigation and to move forward to emerge out of this bankruptcy as a company domiciled here in Texas,” Neligan said during Wednesday’s hearing.
The question of whether the NRA filed the bankruptcy in good faith could arise if the judge is asked to dismiss the case.
Judge Hale did ask both the NRA and the NY Attorney General’s Office to scale back the rhetoric and treat this as “a regular bankruptcy case.”
The US Trustee in the case appointed an Official Unsecured Creditors Committee consisting of five members. The Pension Benefit Guaranty Corp. was appointed the interim chair of the committee. As seen in the screen shot below, two of the committee appointees will probably cause a bit of consternation in Fairfax as well as in the offices of Bill Brewer.
I sincerely doubt that either AckMac or David Dell’Aquila are going to roll over and play dead for Wayne and the NRA.
“We’re going to definitely do a motion for a trustee,” Dell’Aquila said. “I would not be surprised if the majority of the other creditors don’t join or do a similar thing.”
The article goes on to note that the court could appoint a trustee and that such a trustee would have broad powers. That trustee could “displace” the current leadership and the board. Moreover, the trustee would have the fiduciary duty to act in the best interests of the creditors and could go after Wayne and others for misuse of the NRA’s money for personal expenses.
“It’s in everybody’s best interest to get a trustee in there, certainly from the creditors’ point of view, and, I would argue, even for the five million members because every dime that they waste in frivolous litigation is a dime less that could go to the core mission,” Dell’Aquila said.
As might be expected, attorney Bill Brewer who had previously dismissed the idea of a trustee back in January expressed his disappointment that Dell’Aquila was on the committee.
“The NRA is disappointed that a disgruntled individual who has filed frivolous claims against the Association is appointed to the committee,” Brewer told the Free Beacon.
Dell’Aquila’s attorney Elliott Schuchardt said that even with some of the defendants dismissed in Dell’Aquila’s class-action suit, the remaining claim against the NRA is worth $64 million potentially making it the largest creditor.
“We think there’s enough evidence of fraud here that we can make a good faith argument to the bankruptcy court judge that somebody else should be running the NRA,” Schuchardt said.
I have always held that this bankruptcy filing was a gamble. Wayne and Brewer are too clever by half and I think the result will not be to their liking.
There is another hearing scheduled in the case for Wednesday, February 10th by WebEx. I’m sure we will hear something more then.
Attorney Sarah Rogers of Brewer, Attorneys and Counselors, filed a “Notice of Suggestion” before the US Judicial Panel on Multidistrict Litigation yesterday. It was in regard to the NRA and Sea Girt LLC’s filing for Chapter 11 bankruptcy in the US Bankruptcy Court for the Northern District of Texas.
Section 362(a) (Automatic Stay) of the Bankruptcy Code automatically prohibits, inter alia, the following: * the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; * the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title; * any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.
I think that tells you exactly what the legal strategy formulated by William Brewer III is for the NRA. It is to use bankruptcy as a means to stop or put a hold on the cases involving Ackerman McQueen, David Dell’Aquila, and the State of New York. That is, at least in Federal court.
Federal law allows the removal of civil actions from state court to federal district court if jurisdiction exists under 28 U.S.C. §1334 (the federal jurisdictional provision that creates a bankruptcy case). The petition for removal must be filed in the district court to which the matter is removed. Removal is to the federal district court for the jurisdiction in which the state court matter is pending, not to the district in which the bankruptcy case is pending. Consequently, if the bankruptcy case is in a different federal district, a motion for change of venue to that district may be filed after the matter is removed.
The book goes on to say that this applies to all courts, state and Federal. However, if you examine the case against the NRA by the Attorney General of New York Letitia James, it probably is might be stayed against the NRA but not against Wayne LaPierre, Woody Phillips, John Frazer, or Josh Powell. That is because a §362 stay applies to the property of the estate, property of the debtor, and the debtor. The individuals named by James in the dissolution lawsuit are not debtors in a bankruptcy filing.
However, there is an exception to a §362 that I’m sure the State of New York will seek to use:
The commencement or continuation of an action or proceeding by a governmental unit to enforce its police or regulatory power. Examples would be prosecution under a rubbish ordinance, an action to close a restaurant for health code violations, or litigation to determine the debtor’s liability for consumer protection violations and liquidation of the amounts owed for those violations. The exception extends to enforcement of a judgment, other than a money judgment, obtained by a governmental unit to enforce its police or regulatory power. Section 362(b)(4)
The regulatory power involving the NRA would be that of New York’s ability to regulate charities which is the basis of the dissolution suit. It will be up to the judge hearing the dissolution lawsuit to decide whether the stay resulting from the bankruptcy filings apply. I’m sure that New York will argue that it doesn’t just as the NRA’s lawyers will argue that it does.
I should remind the reader that I’m not a lawyer and that case law usually is of greater importance than the how the law is written. In other words, how a law is interpreted by the courts trumps how the legislature wrote the law.
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.
All the filings for the lawsuit brought by the Attorney General of New York seeking dissolution of the NRA are online. You can see when the individual defendants were served and in what manner.
Both Josh Powell and Wilson “Woody” Phillips had their attorneys file a “stipulation of service” which also granted them time to respond. This was done two weeks ago. Interestingly, they each have hired attorneys with big name firms. Powell’s attorney is Mark MacDougall who is a partner with Akin Gump in DC and was formerly a Federal prosecutor. Likewise, Phillips’ attorney Seth Farber, a partner with Winston Strawn in New York, was also a former Federal prosecutor.
John Frazer was personally served at home in Virginia two weeks ago. The description of the person accepting the service fits that of John Frazer himself.
Here is where it gets interesting. It seems Wayne LaPierre and/or his security guards not only refused service at both the office and his home in Great Falls, Virginia, but is not being represented by Bill Brewer.
Stephen Gutowski of the Free Beacon noticed that in this filing that was done this past Saturday. He posted about it on Twitter earlier this evening. If you double-click on the embedded tweet you can see the filing. Look at paragraph 2.
This filing from the New York AG says Bill Brewer is still representing the NRA but not Wayne LaPierre which is interesting. https://t.co/dxEcsXfltd
Regardless of who is or will be Wayne’s attorney, I really don’t think the judge presiding over the case will look too kindly on the petulant manner in which Wayne and his henchmen treated the process server. The other three individual defendants accepted service politely or had their attorneys reach out to accept it.
I could almost hear Wayne LaPierre saying, “Will no one rid me of this meddlesome president.” To which, William Brewer III replied, “I will, my liege!”
The complaint, much of which is redacted, seeks to have Oliver North removed from the NRA Board of Directors. According to a footnote, they redacted much of the complaint because it might contain information that Col. North might argue should be kept under seal.
The complaint alleges that Col. North has an “irreconcilable conflict” due to his employment with Ackerman McQueen and his membership on the Board of Directors. The Audit Committee, which had approved the arrangement, later rescinded their approval in May 2019 after the conflict between Wayne LaPierre and Col. North had come to a head.
The attorneys bringing he lawsuit on behalf are Svetlana Eisenberg and William Brewer III of Brewer, Attorneys and Counselors.
When Pete Brownell resigned as President of the NRA in 2018, a great effort was made to get Col. North to be President. At the time, he was under contract to Fox News and would have to resign that in order to become NRA President. I have been told by multiple insiders as well as have seen in court filings that Wayne LaPierre actually negotiated Col. North’s contract with Ackerman McQueen. The whole “they won’t give us the contract” so we can know what conflicts Ollie has is a charade as is the declaration by the Audit Committee.
In reality, the conflict is between Wayne LaPierre, his cronies on the Board, and his attorney who is sucking the NRA dry and those who wanted to return the NRA to effectiveness and to see Brewer gone.
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 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.
“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 LaPierre’s compensation reflects his enormous contributions to our members and the freedoms for which they fight,” NRA President Carolyn Meadows said in a statement. “His contributions to the NRA have been transformative.”
The statement from Mrs. Meadows come in response to reports in the Wall Street Journal, the New York Times, and the Washington Post about Wayne LaPierre’s reported compensation in 2018. This comes from the not-yet public Form 990. That form is a financial report that all not-for-profits must file with the Internal Revenue Service annually.
According to the filings, known as 990s, longtime NRA CEO Wayne LaPierre’s total compensation rose to more than $2 million. His base salary went from $1.17 million to $1.27 million, he received a bonus of about $455,000, and he got about $366,000 from a deferred compensation plan, according to the documents cited in media reports.
The story from the Wall Street Journal notes that revenues rose 13% while expenses rose 7% for the year. It also noted that Brewer, Attorneys and Counselors, was paid $13.8 million in legal fees making it that third-largest NRA vendor. The largest vendor for 2018 was, as may be expected, Ackerman McQueen.
Ackerman was the largest outside vendor, having been paid $32 million, plus $6.3 million for out-of-pocket expenses, including media buys and “reimbursement of travel and business expenses.”
Given past reports regarding LaPierre’s use of AckMac to disguise his actual spending, I wonder how much of the reimbursement was for his personal expenses.
In addition to the reports on LaPierre’s compensation was this note in the Washington Post on the monies spent by NRA-ILA.
Spending by the political arm of the NRA dropped from $47.1 million in 2014 to $32.51 million in 2018, the filings show. That was the midterm election in which Democrats took over the House and gun-control groups outspent the gun lobby for the first time.
That is very concerning. The monies spent – or in my opinion, wasted – on Brewer, Attorneys and Counselors, could have been used to support the campaigns of pro-gun candidates.
I will be requesting a copy of the 2018 Form 990 from the NRA Secretary’s Office. I have a feeling that it will contain many more unwelcome revelations.
As to the comment from Mrs. Meadows with which I started this post, I agree with her last sentence. LaPierre has been transformative for the NRA. However, if the last few years are any indication, it is not in the way that Meadows means or that you and I would want.
NOTE: If any of my readers has a copy of the 2018 Form 990 or a link to it, please send to me at jpr9954 AT gmail DOT com.
The NRA officially dropped their lawsuit against the City and County of San Francisco yesterday. The lawsuit was brought due to a resolution approved by the Board of Supervisors branding the NRA a “domestic terrorist organization”.
NOTICE IS HEREBY GIVEN that pursuant to Federal Rule of Civil Procedure 41(a)(1)(i), Plaintiff the National Rifle Association of America voluntarily dismisses without prejudice the above-entitled action against all Defendants. This notice of dismissal is being filed with the Court before service by Defendants of either an answer or a motion for summary judgment.
San Francisco, in their reply to the original complaint, contended their resolution was a “statement of policy” and “non-binding”.
Mayor London Breed had already told city staff that the measure did not limit the city’s dealings with any vendors doing business with the NRA. Stefani said her resolution was a legitimate public denunciation with no binding consequences.
At the time Mayor Breed made her statement that the resolution would not impact dealings with vendors, NRA outside counsel William Brewer III indicated that the lawsuit would continue until the the resolution was formally revoked. As of yesterday, the resolution had not been revoked but nonetheless the case was dismissed.
Both sides are now claiming victory in the lawsuit.
“We’re pleased the NRA backed down on its frivolous lawsuit. This was a baseless attempt to silence San Francisco’s valid criticisms of the NRA and distract from the gun violence epidemic facing our country. San Francisco will never be intimidated by the NRA. If the NRA doesn’t want to be publicly condemned for its actions, it should stop sabotaging common sense gun safety regulations that would protect untold numbers of Americans every year, like universal background checks, an assault weapons ban, and restrictions on high-capacity magazines.”
The NRA and its attorney proclaimed victory in a multipart Twitter post:
Today the NRA withdrew its lawsuit in SF – and now celebrates the important victory it obtained on behalf of its members. As has been widely reported, after the Association challenged the unconstitutional resolution, the City beat a hasty retreat and backed down from its wildly illegal blacklisting scheme. The censors are on notice. The NRA will always fight for the Constitution, and will re-file if the City tries anything like this in the future.
So it appears that each side got a participation trophy allowing both sides to claim victory. The NRA got San Francisco to declare that the resolution was non-binding and San Francisco got the lawsuit dismissed without officially revoking the resolution.
I don’t think anyone can question that the NRA had to sue San Francisco in this case. However, I did find it interesting that the NRA didn’t use attorney Chuck Michel and his firm to handle the lawsuit. Michel and Associates has traditionally been the NRA’s go-to law firm for California related cases. Instead they used Las Vegas based Garman Turner Gordon as their attorney on the ground and Brewer, Attorneys and Counselors, as “of counsel”.
I don’t know which side is telling the truth in the divorce between the NRA and AckMac. It could be neither of them. It could be both sides depending upon their perception of the issues.
I will note that the AckMac description of the influence on Wayne LaPierre by William Brewer III does strongly correlate with what insiders have told me. Brewer was described to have isolated LaPierre from long time friends and associates and fed his paranoia.
That said, the narrative in Ackerman McQueen’s reply and counter-claim filed on October 1st makes for interesting reading. Of particular interest are pages 19 through 42. The rest is mostly legalese. I have embedded it below. If you click on the heading, you can also download it to read later.