this appeared on a local site, similar in nature to the campfire.
I found it interesting to say the least:
Anonymous paper, but written by somebody with initials MJP who professes to have been a high-powered lawyer for 50 years (making him at least 75 years old). No doubt his identity will be revealed soon.
White Paper on NRA: 4 May 2019
Many of my friends are calling me wanting to know what the hell is going on with NRA, as if I ought to know. But all I know is from past observation and from what I’m reading almost daily in newspapers or internet blogs. Mind you, I’m on the outside: I am not, and never have been, on the NRA Board of Directors. But to try to answer them I wrote this encapsulation. Here’s how the situation looks to me. If what follows is not substantially true or seems unfair, I hope somebody on the inside hastens to correct me. Because it’s depressing.
It’s been an open secret for more than 20 years (since at least the 1990s) that an outside public relations firm, Ackerman McQueen Inc. (around NRA headquarters, commonly called “Ack-Mac”) enjoyed a favored and protected, if not inviolate, relationship with NRA. The owners of Ack-Mac were close friends and associates of NRA Executive Vice President Wayne LaPierre. He handed them major roles formulating, directing and performing many NRA operations for which Ack-Mac and its associated companies bill NRA millions of dollars annually — in 2017 alone, over $40 million. To ensure their position by enhancing his, Ack-Mac created a personna for LaPierre as NRA’s public face; his strident, increasingly right-wing rhetoric espoused in NRA’s name was shaped and scripted by Ack-Mac. In turn he fended off sporadic calls to reduce Ack-Mac’s penetration of NRA. LaPierre and Ack-Mac became practically indistinguishable.
This special relationship and its financial intertwining were largely opaque, fully appreciated only within inner circles of the 76-member Board of Directors. Though payments to Ack-Mac accounted for a large chunk of NRA’s budget, until recently Ack-Mac was unmentioned in annual reports or minutes of the Board’s meetings. It was as if Ack-Mac didn’t exist. The full extent of Ack-Mac’s influence, participation and responsibility for NRA’s high-level management decisions remains, to this day, obscure.
But this symbiotic—some viewed it parasitic—liaison recently came unglued. The exact cause is still unclear. A new NRA Treasurer took office in 2018, and may have been reluctant to sign off on required tax filings without proper documentation for the sums paid to Ack-Mac. The dramatic shortfall of NRA income in the past three years may also have precipitated a closer examination of the spending attributable to Ack-Mac. The facile movement of personnel from Ack-Mac and other vendors to and from NRA’s payroll, and the subsequent dispensation of lucrative contracts, had long generated unwelcome suggestions of apparent conflicts of interest and self-dealing. Further, it was rumored that Ack-Mac billed NRA huge sums that were vastly inflated or not properly substantiated. Whatever the cause, LaPierre found himself in the position of asking Ack-Mac to verify its charges. When such accounting was not provided, NRA filed a lawsuit against LaPierre’s former pals. That seemed totally out of character; what triggered his action after so many years of coziness and laissez-faire remains murky. It seems to have escaped the Board’s notice that if this litigation is justified, it is foremost an affirmation of LaPierre’s own mismanagement.
To pursue this claim and litigation against the Lockton Affinity LLC —NRA’s insurance contractor— arising from the wreckage of the ill-fated Carry Guard program (which was supposed to rescue NRA from its plummeting cash flow), LaPierre hired a Texas lawyer named William Brewer, previously almost unknown in NRA circles. Brewer’s bills for legal services swiftly displaced Ack-Mac’s as an initiator for cardiac arrest. Brewer’s charges total more than $24 million over the past year, and apparently continue at a breathtaking if not larcenous rate, about $1.8 million per month. It is credibly alleged that Brewer’s retention by NRA was, like Ack-Mac’s, devoid of proper oversight, controls and accounting. Brewer himself seems an odd choice. He is said to have close family connections to Ack-Mac, being the brother-in-law of one partner and the son-in-law of another. Moreover he has been sanctioned for ethical issues by two different courts —most recently by a federal court in Virginia, where he was ejected from representing NRA in court.
Enter Oliver North, a central figure in the Iran-Contra affair in the 1980s, more recently a pundit on Fox News. North has served on the NRA board of directors for some years. Last year LaPierre recruited him to fill an unexpected vacancy in the NRA presidency. Reportedly he was to resign his salaried position at Fox, and go on Ack-Mac’s payroll at more than $1 million to produce NRA-TV programs that presumably would be billed back to NRA. According to North, LaPierre helped negotiate the contract. Last December, owing to NRA’s financial straits —revenues in 2018 fell by more than $50 million— and because NRA-TV was being curtailed, North voluntarily accepted a lower salary from Ack-Mac, reportedly reduced to $800K. Nonetheless, the NRA presidency traditionally has been an unpaid position; the rationale for any highly-paid celebrity to occupy this office was never explained.
North’s allegiance in the events that followed is unclear. What is clear, however, is that Brewer’s astronomical legal bills in pursuit of Ack-Mac became a focus of North’s attention.
Declaring Brewer’s fees “an existential threat to the financial stability of NRA”, North demanded the production of the legal bills and supporting documents for review, and was joined by First Vice President Richard Childress, whose financial independence and integrity are unquestioned. When these demands were rebuffed, North circulated a letter to the Board, calling for an independent inquiry into Brewer’s billing. By this time it leaked out that LaPierre had charged to Ack-Mac over $274,000 of expenses for travel and wardrobe that evidently were then billed back to NRA. North maladroitly threatened disclosure unless LaPierre resigned. LaPierre counter-attacked, publicly charging North with “extortion”. More significantly, LaPierre also said “others informed me that I needed to withdraw the NRA lawsuit against [Ackerman McQueen] or be smeared.” While the latter accusation might be true, no document verifying such a demand has surfaced.
All this came to a boil at NRA’s annual convention in Indianapolis. In a behind-the-scenes showdown, North failed to persuade the Board to back him, and instead he was ousted; his chair on the podium at the plenary Members Meeting was conspicuously empty. A letter from North was read aloud, stating that he had not been renominated for a second term as NRA president.
Two days later the Board of Directors convened its own meeting behind closed doors. Emerging a few hours later, the Board astonishingly made no announcement of any change. Instead, now-president Carolyn Meadows declared that the board has “full confidence in Wayne LaPierre”. In other words, everything’s under control, nothing to worry about. The unintended message: the individual ultimately responsible for the present mess is still in charge.
As Executive VP, LaPierre’s annual salary is $1.4 million. It’s hard to identify the value a non-profit association receives for that kind of money. The President of the United States is paid less than one-third of that; the Secretary of Defense gets only $210,700, and the base salary of a U.S. Senator is $172,000. Also still on the NRA’s payroll is Joshua Powell, recently removed as director of General Operations (drawing nearly $800K) after being exposed in national media as a serial deadbeat. The most cursory vetting before he was hired would have disclosed his trail of failed businesses and bad debts. The architect of the crashed Carry Guard program, Powell is now a “senior strategist” and still LaPierre’s “chief of staff”.
More perplexing, perhaps, was the statement attributed to Charles Cotton, now the 1st VP and also chairman of the Audit Committee: “The board supports the work the (Brewer) firm is doing, the results achieved, and the value of its services. Importantly, this relationship has been reviewed, vetted, and approved.”
Such utterances are hard to accept at face value. The only charitable explanation is that the board apparently thinks it can keep a lid on the scandal by denying its existence while it struggles to rectify it. But it’s a myopic delusion: allegations of corruption at NRA already are receiving in-depth exposure inThe Wall Street Journal, The New York Times and other national newspapers, as well as on internet blogs where some stories have logged over a million hits. The most lurid and detailed piece appeared April 17 in The New Yorker magazine under the title “Secrecy, Self-Dealing and Greed at the N.R.A.”
https://www.newyorker.com/news/news-des ... at-the-nra. Though written by an investigative reporter employed by Michael Bloomberg’s anti-gun website The Trace, it was not so easy to dismiss as propaganda. Much of it is confirmed by NRA’s 2017 IRS Form 990 required by law for non-profit entities, also filed in New York because that’s where NRA is incorporated.
This 100-page document, released by NRA only last November, was unusual; it contains unprecedented disclosures of where the money categorized as expenditures for “fund-raising” and “public relations” actually went. For example, it was revealed for the first time the Mercury Group, an Ack-Mac subsidiary run by LaPierre’s closest confidant, Tony Makris, received $5.8 million from NRA in that year; another Makris-run company, Under Wild Skies, got $2.6 million. Meanwhile NRA has nearly exhausted its $25 million credit line (secured by a mortgage on its headquarters building), liquidated $2 million from an investment fund, borrowed close to $4 million from its officers’ life insurance policy and extracted about $5 million in office rent and overhead from the NRA Foundation. This, in the same year that NRA’s 10 highest-paid executives received compensation aggregating over $8 million.
The leakage of NRA documents and internal memoranda continues, gleefully trumpeted by Trace, while NRA’s byzantine machinations provide a target-rich environment. Given the ongoing litigation against Ack-Mac and against N.Y. Governor Andrew Cuomo for pressuring banks and insurance companies to dump NRA, plus an impending investigation by the N.Y. Attorney General threatening not only NRA’s tax exemption but its corporate existence, the Board’s impulse to close ranks and avoid displaying NRA’s dirty laundry is understandable, but the unnatural silence is neither timely nor reassuring.
If indeed, as Mrs. Meadows claims, “the entire board is fully aware of these issues” the issue of managerial dereliction takes on a new dimension. To claim that these controversial contracts, transactions and expenses were “reviewed, vetted and approved” by the board is to ratify and accept liability for them. It begs the next question: Is the Board doing anything to stop the financial hemorrhage? Does it even have a coherent plan? So far the membership has heard nothing but bland reassurances suggesting that “everything is on track”, coupled with whining about leaks to the press.
Can directors with fiduciary duty to a non-profit membership association justify sports-star salaries, uncontrolled and unaccountable vendors and $100,000-a-day lawyers? The membership deserves credible explanations and plain answers. If these are not forthcoming, who could blame it for throwing out the entire board and starting over?
NRA’s Institute for Legislative Action somehow seems insulated from much of Ack-Mac’s influence. Executive Director Chris Cox has kept ILA at arm’s length from most of the hard-right sturm und drang of Ack-Mac agitprop, and by all accounts runs ILA in an efficient, professional manner with a modest staff and limited resources. He might actually be worth what he’s paid. But ILA’s lobbying task is vastly complicated by the current scandal. Will legislators welcome linkage to a parent organization plagued by chronic mismanagement or tainted by cronyism and corruption? Will ILA lobbyists still be able to approach Congress with confidence and self-respect?
Judging from the mammoth sums paid to fund-raising vendors, the proponents of Ack-Mac’s strategy regard the membership primarily as a fertile garden for harvesting money. Programs designed to generate cash have a voracious appetite for money to run them. Eventually they become not just a means but a consuming end for those who gain from them. While fund-raising vendors may generate high gross revenues, in 2017 the largest contractor, InfoCision Management Corporation, yielded back to NRA less than half of the $10 million it raised. The rest —enticed not from an amorphous general public but from the wallets of hard-core, loyal NRA members— evaporated in solicitation expenses and vendor profits.
It’s much the same for NRA’s glossy, high-profile public relations. Do they really translate to expanded membership and enhanced political power for NRA? Or is the tail wagging the dog? Marketing NRA as a “brand” —as if it were an entertainment commodity like the NFL— has proved politically divisive, legally dangerous, and a magnet for wholesale abuse. Worse, it has brought NRA to the brink of insolvency. Would not the money dissipated in fueling a publicity engine, nurturing personality cults, and recovering from affinity-program debacles be more effectively redirected to NRA’s core legislative and electoral missions?
Let’s remember that NRA is, above all, a non-profit grass-roots congregation of more than 5 million members. NRA’s greatest strength is that it represents a full cross-section of American society: men and women from all income levels, professions and occupations, liberals and conservatives, Republicans, Democrats and independents, management and labor — people of every race, age, religion and ethnicity. They are united by a single issue: a shared belief in the Second Amendment. At bottom they did not join NRA to receive a monthly magazine or buy insurance or watch safaris on television; they are members because they believe NRA is their best hope to save their firearms rights.
Unlike the followers of anti-gun front groups created and funded by Bloomberg or Soros, NRA members pay to belong. They are not just noisily parading for some trendy cause du jour. NRA members actually have a palpable right at stake. NRA will live or die on its members’ support, both monetary and—equally important-- in-kind participation. If they lose faith in NRA, they will stop contributing their money, and their blood, sweat and tears. And the effect will spread beyond the membership. The NRA is America’s only strong bulwark against repressive gun controls; without NRA, our country will surely follow the precipitous tumble of New Zealand. If NRA fails, every decent, gun-owning citizen in the nation will pay the price.
NRA cannot survive as a business to be exploited by insiders, or as a convenient vehicle to harness to a right-wing agenda. As matters stand, based on what I know—which is limited by what I don’t know—I could not in good conscience advise anyone to send money to NRA today. Instead my inclination is to suggest, “Why not wait and see?” But I don’t think there’s a lot of time left. An avalanche of new legislation against our 2d Amendment rights is about to tumble down upon us. Is NRA going to take decisive steps to restore our confidence, or indecisively preside over a full catastrophe?
MJP
19 June 2019: A postscript: I put this “White Paper” side for more than a month to see if any new developments would alter my appraisal of this situation. I have concluded that nothing much has changed. I have seen no proof one way or the other to conclusively establish North’s motives in trying to remove LaPierre; for me, his loyalties remain ambiguous. Despite some circumstantial evidence, I am not yet persuaded that he was conspiring with Ack-Mac in an attempted coup d’etat to preserve its grip on NRA. Maybe so, maybe not.
Meanwhile I read the pleadings in the NRA’s litigation. Over many years I have analyzed and answered dozens of civil complaints and written some as well. The two that were filed by NRA are unique in my experience; I’ve never seen anything quite like them. They lack a sharp legal focus and ramble on excessively, sounding more like an overwrought lament than a justiciable claim. They present a real mystery to me; I cannot imagine competent lawyers writing such things.
Ack-Mac has now filed a countersuit in response to NRA’s second suit; the issues between them are now —as they were sure to eventually become— primarily financial. The “relationship” is over. The possibility has not escaped me that NRA’s first lawsuit may have been instigated not by Wayne but by others on the Board who forced its commencement in order to provoke a breach with Ack-Mac, but that seems too Machiavellian even for NRA. The overriding and unanswered question in my mind is how and why Wayne is still there.
MJP
25 June 2019: Another postscript: Developments last week already have obsoleted my postscript above.
First we have the spectacle of NRA suing Ollie North to deny him indemnification and advancement for his legal defense (to which a corporate officer and director might be entitled) on the ground that as NRA president he acted in bad faith in seeking to unseat Wayne LaPierre. The complaint contends that North was serving the interests of his employer Ack-Mac in disregard of his fiduciary duty to NRA.
Remarkably, NRA’s lawyer is this new action is the same William Brewer whose elephantine legal bills, it is unmentioned, were the initial subject of North’s clash with LaPierre. North is sued in his individual capacity, not as an NRA director, and oddly in New York —not Virginia where North resides. It is far from certain that the New York court has in personam jurisdiction over North the private citizen, but the explanation for this choice of venue may be that Brewer is embargoed from practice in Virginia. Further, it seems inconceivable that Brewer, in the course of trying to prove North’s alleged perfidy, can escape being called as a witness himself. The propriety of Brewer’s appearance in such a case raises still another ethical question, in addition to those stemming from a jury-tampering episode in Texas where he is now appealing a court-imposed fine of $177,000.
Lest readers conclude that I am overly critical of Brewer: for 16 years I hired, fired, and supervised lawyers all over the United States in dozens of cases, some of them involving millions of dollars. We litigated cases up to the supreme courts of Kentucky, Alabama, Texas, Maryland, Illinois, Virginia and others I can’t immediately recall. I always tried to retain the very best lawyers I could find for the case at hand. Sometimes I picked an expensive top-tier firm in Washington, Philadelphia or Houston, but often not, if another lawyer was better suited for that particular litigation. I have seen nothing in any of NRA’s pleadings to suggest that they required any special expertise that only Brewer could provide. In over 50 years as a practicing attorney I have never encountered a lawyer, or even an entire firm, whose services were worth $1.8 million in a single month — much less for ten consecutive months. Not even in Texas. What on earth was the Audit Committee thinking?
The complaint in this newest suit, lathered with righteous indignation, preaches a 17-page sermon. It was transparently styled to embed a self-serving narrative in the media rather than state a cause of action in court. The media is unlikely to swallow it unparsed, nor in any event to NRA’s credit. One needs no sympathy for North to recognize the irony in many of its allegations. Curiously asserted “on information and belief” are articles from The New York Times and The Washington Post, as if their contents were a substitute for pleading facts. Much is made in the complaint of North’s status as an employee of Ack-Mac, but that red herring merely voices a distinction without a difference. Even if North were a third-party contractor simultaneously serving as NRA president and Board member, an obvious conflict would remain. Directly or indirectly his livelihood would be tied to the preservation of Ack-Mac’s position with NRA. What realistic safeguard could the Audit Committee impose on such a dependency that would slide it past a smell test? In contrast nobody apparently considers it improper for LaPierre to accept $274,000 worth of personal luxuries from Ack-Mac --so long as he’s not the contractor’s employee. Did Wayne imagine that these were gifts? If so, in return for what? Or that they would not ultimately be tucked into a bill to be paid by NRA? Either way, and in both cases, it stinks.
Also overlooked in equating only North’s behavior with bad faith: North’s demands to review Brewer’s legal bills, going back to February and March 2019, were joined by Richard Childress and Carolyn Meadows, then 1st and 2d Vice-Presidents. On their face these demands, made by NRA’s top three officers who also are members of the Board of Directors, could not legitimately be refused. Yet they were rebuffed by LaPierre well before North’s attempt to force him out on the eve of the Board meeting of April 29.
Whoever conceived this latest lawsuit gave scant thought to the legal reality that a suit alleging conflicts of interest, breach of fiduciary duty and actions “contrary to the best interests of NRA” is not a one-way street. Putting such concepts at issue kicks open the door to exposure of NRA’s own conduct which the defendant can freely explore in depositions, interrogatories and requests for production of documents that can be judicially compelled. Predictably the media will enjoy a feeding frenzy, and the Board better hope that its director liability insurance policy is still in place following NRA’s rupture with Lockton Affinity after Carry Guard capsized.
It must be at least a little embarrassing that, even as NRA seeks a declaratory judgment affirming that North was disloyal to NRA, the results just announced of the most recent election of 27 NRA directors show him as the top vote-getter. No experienced observer of NRA elections would read into this anything more than an expected consequence of name recognition, but it makes it awkward to explain to the membership North’s abrupt disappearance from the Politburo. Unsurprisingly there is no mention of it in the “Official Journal” sections of NRA’s monthly magazines. Officially, it never happened. Rank-and-file NRA members who want to learn how and why North became a “unperson” have to read The Wall Street Journal.
Then we have Chris Cox and his chief-of-staff, Scott Christman, suspended on suspicion of being “implicated” in the alleged coup d’etat. If criticism of LaPierre is synonymous with disloyalty to NRA, the Cult of the Personality now has found its most sublime expression. This could not have come at a more critical time for NRA. Since the last national election, ILA needs its full strength to fight the impending battle in Congress—not decapitated in a vengeful internecine “cleansing”. Are Childress and Mrs. Meadows “implicated” too? Who will pay their legal bills when they are subpoenaed?
Finally there’s the revelation that Woody Phillips, the NRA’s just-retired Treasurer for 26 years, broadened the now-all-too-familiar profile of NRA’s salaried executives. The prior norm seemed to be enrichment through extraordinary salaries, conflicts of interest, double-dipping, sweetheart deals, and extravagant retirement schemes. Woody has added the word “embezzlement”. According to a June 19 article on The New Yorker website, his former employer asserts that before Woody came to NRA, he was caught stealing more than a million dollars by generating and paying fake invoices. Unless this story is a complete fabrication the evidence seems incontrovertible: when he was confronted, the story discloses, Woody immediately returned $500,000 of it and started paying interest on the balance. This comes on the heels of separate reports of questionable payments made by NRA to Woody’s “significant other”. Was his earlier modus operandi revived with a slight twist?
One might reasonably expect that the Board will immediately initiate a fresh forensic audit of disbursements to outside contractors during Woody’s tenure. But the Board’s recent responses to discoveries of impropriety are not encouraging. It would hardly be surprising if there is simply an angry denunciation of the New Yorker article —which indeed was written by the same nefarious Bloomberg reporter as before— coupled with another tight-lipped announcement that nothing is wrong because everything has been “reviewed, vetted and approved”.
Get a tight grip: while Carolyn Meadows insists “everything is on track”, NRA looks headed for derailment. I feel sick.
MJP
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