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New York Attorney General Sues N.R.A. and Seeks Its Closure

2020-08-06 16:52:13
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The New York attorney general, Letitia James, filed a lawsuit Thursday seeking to dissolve the National Rifle Association, alleging that years of corruption and misspending had irreparably undermined its ability to operate as a nonprofit.

The lawsuit sets up a legal confrontation that could take years to play out and will leave the 148-year-old N.R.A. — long the nation’s most influential gun-rights lobby but recently hobbled by financial woes and infighting — fighting for its survival. The attorney general’s office previously presided over the dissolution of President Trump’s scandal-marred charitable foundation, but the N.R.A., with more than five million members, is a far larger organization that is expected to put up a more prolonged fight.

Ms. James also sued four current or former top N.R.A. leaders, seeking tens of millions of dollars in restitution, including Wayne LaPierre, the longtime chief executive. The others named in the suit are John Frazer, the organization’s general counsel; Josh Powell, a former top lieutenant of Mr. LaPierre’s; and Woody Phillips, a former chief financial officer.

The suit accuses the N.R.A. and the executives of “violating numerous state and federal laws” by enriching themselves, as well as their friends, families and allies, and taking improper actions that cost the organization $64 million over three years. The attorney general has regulatory authority over the N.R.A. because it is chartered as a nonprofit in New York. She is also seeking to oust Mr. LaPierre and Mr. Frazer, and to bar all four men from ever serving on nonprofit boards in New York again.

The lawsuit, which was filed in State Supreme Court in Manhattan, is a civil action, and outlined a number of alleged tax violations. Ms. James said during a news conference that she was referring the matter to the Internal Revenue Service in addition to taking her own action, and did not rule out making a future criminal referral.

“It’s an ongoing investigation,” she said Thursday. “If we uncover any criminal activity, we will refer it to the Manhattan district attorney. At this point in time we’re moving forward, again, with civil enforcement.”

N.R.A. officials have denounced Ms. James, a Democrat, since she referred to the group as a “terrorist organization” during her 2018 campaign and vowed to investigate it.

“It seemed unprofessional and inappropriate for someone who is a candidate for that type of high office to prejudge any private citizen with no facts, no evidence,” William A. Brewer III, the association’s lead outside lawyer, once said in an interview. “You target your enemies and then you figure out a way to use the power that you have to destroy them. That’s not right.”

The N.R.A. is a stalwart ally of Mr. Trump and has long wielded immense power in the nation’s politics. But amid its deepening troubles, it has taken an unusually low profile during this election season. Its finances have been strained by internecine warfare costing tens of millions of dollars in legal fees, including a messy divorce from Ackerman McQueen, the advertising and strategy firm that was its most important contractor for decades. Its finances have also been badly damaged by the pandemic, which forced it to cancel its annual convention and a number of fund-raising events. And it has faced a revolt from some donors, who disagree with Ms. James’s politics but would also like to oust Mr. LaPierre and his team.

Ms. James’s lawsuit is the culmination of an inquiry that began in February 2019 and played out amid revelations in the news media regarding the organization’s spending and governance practices.

The lawsuit alleges Mr. LaPierre spent hundreds of thousands of the organization’s dollars on private plane trips, visiting the Bahamas “by private air charter at least eight times” in three years, according to a summary of the suit. He and his family were often allegedly “gifted the use of a 107-foot yacht” by an N.R.A. vendor and he spent more than $3.6 million on travel consultants, including luxury black cars, over two years. He also is said to have secured a post-employment contract without board approval worth more than $17 million.

Among the numerous alleged violations laid out by Ms. James’s office, some related to false reporting of annual filings both to the state and the I.R.S. Her office also cited “improper expense documentation, improper wage reporting, improper income tax withholding” and failing to make required excise tax reporting and payment, among other issues.

The lawsuit also claims that testimony by the chairman of the N.R.A.’s audit committee indicated that he had little awareness of its governance role, no knowledge of state law concerned such committees and was unfamiliar with the committee’s own charter, which states that it oversees the organization’s financial integrity.

N.R.A. officials have conducted their own internal audit and defended many of their practices, though several top officials have been forced out amid an internal dispute over how it is run, including Oliver North, its former president, and Christopher Cox, the former top lobbyist.

The organization’s leadership believes Ms. James is part of a politically motived effort by New York officials to destroy the organization.

“Everybody knows we were singled out,” Mr. LaPierre said in an interview last year. “Everybody knows that it’s politics. Everybody knows why it’s really happening. And it’s wrong.”

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