Woody Phillips

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

February 16, 2024 by 2 Comments

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.

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NRA Still Wants A Jury Trial In Manhattan

July 31, 2023 by 2 Comments

Judge Joel Cohen ordered all the defendants and the New York AG’s Office to give a response on the matter of how the trial should be held. That is, should it be a jury trial or not? The responses from both sides were received this past Friday (July 28th).

Surprisingly, the NRA is sticking to their demands for a jury trial. I am in agreement with NRA In Danger that this is insane. A jury trial for the NRA in Manhattan is the equivalent of a jury trial for Donald Trump in DC meaning a totally unbiased jury pool is virtually impossible to find.

According to the response embedded below, the NRA is asking that a jury trial be held to determine the facts on all the causes of action against the NRA. These would include improper administration of assets, waste, and fiduciary failures. They are claiming they are entitled to this by right. Then, after the jury has determined the facts, the NRA says they would be amenable to having Judge Cohen determine equitable relief. In other words, they want a bifurcated trial with the jury portion coming first.

451625_2020_People_of_the_State_of_v_People_of_the_State_of_LETTER___CORRESPOND_2063

This is also the position of the attorneys for Wayne LaPierre, Woody Phillips, and John Frazer.

The Attorney General’s Office agrees in part and disagrees in part with the call for a jury trial. Whereas the defendants are saying all the facts should be determined by a jury trial, the Attorney General agrees that should be only for causes of action 2 to 5 and 10 to 14. They contend on the first cause of action as well as causes of action 6 through 9 that they are not triable by a jury under New York law. They present a chart breaking this down found here in the appendix starting on page 9. So in one sense, all involved agree that a bifurcated trial – part by judge and part by jury – is called for. The difference is that the defendants want a jury trial to determine the facts in all the causes of action.

You will notice that the discussion above omits Josh Powell. That is because the attorneys for Powell filed a motion on July 13th to withdraw as counsel. Akin Gump Strauss Hauer & Feld LLP has represented Powell since the beginning of the proceedings. Powell in a separate filing gave his consent to this. A few days later Akin Gump filed motions to keep parts of the reasons for withdrawal under seal or non-public. Judge Cohen has temporarily put these under seal until a hearing can be held on August 7th.

On July 25th, the AG’s office filed a response to Akin Gump Strauss Hauer & Feld LLP’s withdrawal as counsel for Josh Powell. They took no position on Akin Gump’s withdrawal, insisted that Powell get a new attorney sooner than later, and that Judge Cohen should deny the motion to keep keep the reasons for withdrawal under seal. They assert that Akin Gump has not met it burden for sealing their submissions.

Reading closely, the reason Akin Gump and Powell are going separate ways is financial. The AG’s response said, “Powell’s Defense Counsel moved to be relieved, citing Powell’s inability to pay its legal fees.” Now that is interesting.

They also say that Powell should have only 14 days to retain a new attorney given how close the case is to going to trial. If he cannot, they say Powell should act as his own attorney or pro se in legal terms.

So to conclude, the NRA et all insist on a jury trial on all facts, the AG says only on some parts, and Josh Powell seems to have run out of money to pay his legal bills.

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NRA Will Not Be Dissolved

March 3, 2022 by 7 Comments

Judge Joel Cohen issued a ruling today in the New York Attorney General’s dissolution suit against the National Rifle Association. He dismissed four of the 18 causes of action in the amended complaint brought by Attorney General Letitia James but allowed the remain 14 to continue. Specifically, Judge Cohen dismissed the first, second, 16th, and 18th causes of actions.

The first and second causes of action sought the dissolution of the NRA. In the first cause of action, the NRA was said to have “conducted its business in a persistently illegal manner and abused its powers contrary to the public policy of the State of New York by operating without effective oversight or control by its officers and directors” which was grounds for dissolution under N-PCL § 1109(b)(1). The second cause alleged that “directors or members in control of the NRA have looted or wasted the corporate assets, have perpetuated the corporation solely for their personal benefit, or have otherwise acted in an illegal, oppressive or fraudulent manner.” This would be grounds for dissolution under N-PCL § 1109(b)(1).

He wrote in dismissing those two causes of action:

In arguing for dissolution, the Attorney General’s allegations fail to delineate between the NRA, on the one hand, and its leaders on the other, who acted “without regard to the NRA’s best interests” (see id. ¶ 143 [“LaPierre, together with his direct reports, including Defendants Phillips, Frazer and Powell, instituted a culture of self-dealing, mismanagement, and negligent oversight at the NRA . . . without regard to the NRA’s best interests.”]; id. ¶ 646 [“Despite a conflict of interest and his lack of authority to do so, LaPierre unilaterally determined to place the NRA into bankruptcy to evade a regulatory action in which he was named as a defendant . . . cost[ing] the NRA tens of millions of dollars”]). Conflating the Individual Defendants with the NRA writ large for purposes of dissolution is inappropriate here for the reasons discussed supra. It also ignores the allegations that the wrongdoers in control of the NRA do not necessarily speak for other NRA members, some of whom have tried to instigate reform within the organization but have been met with resistance from entrenched leadership (see, e.g., id. ¶ 491). (emphasis mine)

The 16th cause of action involved the prudent management of institutional funds. This cause of action was dismissed by Judge Cohen as it didn’t properly distinguish between “program-related funds” and “institutional funds”.

The 18th cause of action was specifically against LaPierre, Frazer, Phillips, and Powell. It accused them of common law “unjust enrichment” and sought to recover monies paid to them that were “excessive, unreasonable, and/or unauthorized.” Judge Cohen based his dismissal of this cause of action as it ran afoul of earlier NY Court of Appeals rulings about unjust enrichment. In other words, this was only dismissed due to a technicality.

While the NRA will not be dissolved, this is not to say that the NRA, Wayne LaPierre, and the others are in the clear. The third and fourth causes of action against LaPierre and John Frazer allege breach of fiduciary duty. This was allowed to proceed onwards. Likewise, Judge Cohen found that the allegations contained in the seventh and eighth causes of action which accuse both LaPierre and Frazer of failing to properly administer charitable assets were sufficient to proceed.

The 11th and 14th causes of action were against LaPierre and the NRA respectively. These accuse LaPierre and the NRA of engaging in “unlawful related party transactions.” Judge Cohen found that both claims were sustained.

The 15th cause of action which was allowed to go forward involved violation of the New York whistleblower protections. Judge Cohen said there was sufficient evidence to show that the NRA, Powell, and LaPierre retaliated against whistleblowers and that Frazer was incompetent in carrying out the whistleblower policy. The retaliation against Oliver North as well as the freezing out of directors such as Tim Knight and Esther Schneider from committee assignments is coming back to haunt the NRA.

The final cause of action sustained against the moves by LaPierre and Frazer to have them dismissed is the 17th. That cause of action stated that the NRA and Frazer “made materially false and misleading statements and omissions in the annual reports the organization filed with the Attorney General.” Judge Cohen said that the NRA didn’t contest the falsity of the filings for now and the allegations against Frazer were specific enough that they should continue.

It should be noted that neither Josh Powell nor Woody Phillips sought to have the specific causes of action against them dismissed.

If after all the court proceedings are finished, it could result in the all four of the individual defendants being being barred from the NRA or other New York non-profits and forced repayment of their ill-gotten gains. Moreover, I can foresee a forced restructuring of the NRA in such a way as to prevent the abuses we have seen and are now seeing.

The bottom line is while the NRA has escaped dissolution this is not the end of things.

You can read the full 42-page opinion by Judge Cohen below. It makes for interesting reading.

451625 2020 People of the State of v People of the State of DECISION ORDER on 611 by jpr9954 on Scribd

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They Can’t Claim Ignorance Any More

April 18, 2021 by 3 Comments

The NRA Board of Directors has long relied upon the word of EVP Wayne LaPierre for virtually everything. If a disturbing matter was brought up to them, they, for the most part, would say something like, “Well, I talked to Wayne and he said blah, blah, blah.” They considered this as doing their duty of care as a Board member.

As I pointed out in my post on fiduciary duties, duty of care means to give “reasonable attention and care to providing oversight.” Under New York public charities law, that includes knowledge of the organization’s finances.

Over the last few days, I have listened intermittently to the hearings held on the NRA’s Chapter 11 bankruptcy. I have also read synopses of these hearings on other sites. Some of the things I heard had me shaking my head while shouting at the computer, “How could you not know?”

For example, Wayne LaPierre testified before the court that he had no knowledge of the consulting contract awarded to former CFO Woody Phillips and that he had only recently learned of it. The contract in question was for $30,000 monthly to run for four full years. The total value of the contract would then be worth $1,440,00. How can a CEO not know that his recently retired CFO just got a contract worth over $1.4 million?

The one thing I do believe that came out of Wayne’s rambling testimony is his acknowledgement that he didn’t inform the Board of his intention to seek bankruptcy before filing it. If he had, I believe more Board members would have reacted at the time like Judge Phil Journey saying “we didn’t authorize that.” Their ex post facto motion saying they authorized filing bankruptcy then and now is frankly nothing more than a cover garment.

On Friday I listened to live testimony from Wayne’s former BFF Tony Makris as well as AckMac CFO Bill Winkler. A deposition of former NRA CFO Woody Phillips was also read into the record with one NYAG attorney reading the questions and another reading Phillips’ response. The key thing that was continually pointed out by Makris and Winkler is that the vague invoices sent by AckMac were at the direct request of Wayne. This continued even after a new agreement was reached that stated the only deviations had to be in writing from Wayne as EVP. Wayne, of course, still continued with his way of not putting his wishes in writing. Greg Garman, one of the NRA’s attorney, pounded on AckMac’s Bill Winkler about ignoring the letter of the contract and going along with how things had been done in the past. I think this was a strategic mistake on his part as it opens the door to questioning similar vague invoices from Brewer, Attorneys and Counselors.

I should note here that Woody Phillips’ testimony primarily consisted of him saying, “I decline to answer based on the privilege accorded me by 5thamendment of the US Constitution.” The one thing I can say about that is that you can’t be accused of perjury if you always take the Fifth.

As I said in the headline, the NRA Board of Directors cannot claim ignorance any longer. The beauty of WebEx is that it does a good job of capturing who is participating or listening in to an event. In this case, I saw reporters such as Danny Hakim of the NY Times, Mark Maremont of the Wall Street Journal, and Stephen Gutowski of the Free Beacon. I also counted at least six Board members listening in. They included Carrie Lightfoot, Anthony Colandro, Joel Friedman, Linda Walker, Howard “Walt” Walters, and Judge Phil Journey (who I expected to listen in). There may have been more as there were people who logged on by phone and not by computer.

My point is that after multiple days of testimony and over 600 documents, pleadings, exhibits, motions, and replies, it is impossible for anyone on the Board to say they don’t know what is going on. If they do, then they need to resign.

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Brewer Represents NRA But Not LaPierre?

September 1, 2020 by 4 Comments

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.

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.

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James Seeks NRA Dissolution

August 6, 2020 by 3 Comments

While there was some speculation earlier today that NY Attorney General Letitia James’ “national announcement” would have to do with President Trump. That was wrong. The original speculation was that it had to do with the NRA was correct.

James has moved to dissolve the NRA in NY Supreme Court for New York County. She has an 18 point, 169 page complaint which includes claims that Wayne LaPierre, Josh Powell, Woody Phillips, and John Frazer have violated their fiduciary duty.

James in her press conference said that she will be forwarding information to the Internal Revenue Service regarding the NRA’s non-profit status. As to freezing assets of both the named individuals and the organization as a whole that is included in the complaint. When asked if she will be seeking criminal charges, James said the investigation is ongoing and any criminal charges will be referred to Manhattan DA Cy Vance Jr. if necessary. James also denied that bringing this dissolution action has anything to do with her personal views on “gun violence” and is only seeking to enforce New York charity law.

James, in her press release, says the resolution she seeks is:

As a result of all the allegations mentioned above, Attorney General James seeks to dissolve the NRA; asks the court to order LaPierre, Phillips, Powell, and Frazer to make full restitution for funds they unlawfully profited and salaries earned while employees; pay penalties; recover illegal and unauthorized payments to the four individuals; remove LaPierre and Frazer from the NRA’s leadership (Phillips and Powell are no longer employed by the NRA); and ensure none of the four individual defendants can ever again serve on the board of a charity in New York.

You can watch the full announcement below. I will be scanning through the court filing in an effort to provide a digest later today.