New York AG seeks to dissolve NRA in lawsuit accusing leaders of self-dealing, causing $64 million in losses

New York Attorney General Letitia James on Thursday announced that the state is seeking to dissolve the National Rifle Association in a lawsuit that accuses the leadership of the flagging nonprofit of diverting millions of dollars for their own personal use. 

According to the lawsuit, the senior leadership of the NRA squandered millions in donations on personal trips, private jets and expensive meals. The failure to lawfully manage the organization's funds contributed to losses of $64 million over three years, the suit says. 

The suit was filed in New York county in the New York State Supreme Court. At a press conference announcing the suit, James said the NRA was "a breeding ground for greed, abuse, and brazen illegality."

New York State Attorney General, Letitia James, speaks during a news conference, to announce a suit to dissolve the National Rifle Association, In New York, U.S., August 6, 2020.

Brendan McDermid | Reuters

James is asking the court to dissolve the NRA and require each of the current and former executives named in the suit to pay full restitution. The suit argues that the four executives, including CEO Wayne LaPierre, shouldn't be permitted to ever again serve on the board of a New York charity. 

"The NRA's influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets," James said. "The NRA is fraught with fraud and abuse, which is why, today, we seek to dissolve the NRA, because no organization is above the law."

The New York lawsuit involves allegations of civil, not criminal, violations. But James said that the investigation was ongoing and "if we uncover any criminal activity, we will refer it to the Manhattan district attorney."

D.C. Attorney General Karl Racine announced nearly simultaneously on Thursday that the district was suing the NRA Foundation, alleging that the foundation allowed its funds "to be diverted from charitable purposes and wasted to prop up the NRA in impermissible ways."

NRA president Carolyn Meadows said in a statement that the suit is "a baseless, premeditated attack on our organization and the Second Amendment freedoms it fights to defend."

"You could have set your watch by it:  the investigation was going to reach its crescendo as we move into the 2020 election cycle," Meadows said. "It's a transparent attempt to score political points and attack the leading voice in opposition to the leftist agenda."

The suit continues a long-running battle between the state and the gun-rights group, which has been chartered in New York since 1871.

James, who is a Democrat, threatened to investigate the NRA's nonprofit status during her campaign for attorney general and likened the group in 2018 to a "terrorist organization." 

James said on Thursday that the suit was unrelated to her personal views on gun violence, but Meadows countered that it was a "a power grab by a political opportunist – a desperate move that is part of a rank political vendetta." The NRA cited James's comments about the NRA being a terrorist organization in a countersuit seeking to end the AG's case. 

New York's lawsuit comes as the NRA, which boasts 5 million members and exerts tremendous political pressure around the country, suffers from financial hardship that predates the coronavirus pandemic but which was exacerbated by the economic downturn. 

The group, which spent tens of millions of dollars boosting President Donald Trump's 2016 campaign, has reportedly laid off 200 staffers in 2020 citing declines in revenue. It also announced pay cuts and four-day work weeks in April. 

The lawsuit claims that the group had a $27.8 million surplus in 2015, which declined by about $64 million by 2018, putting the group $36 million under water.

The group's financial situation was in part driven by lavish personal spending by the group's leaders, according to the lawsuit, in violation of their fiduciary duties and New York and federal laws. 

Wayne LaPierre, executive vice president and CEO of the National Rifle Association (NRA).

Lucas Jackson | Reuters

LaPierre, a longtime NRA executive and a Trump ally, spent hundreds of thousands of dollars on private trips for himself and his family, the suit alleges. Those trips include eight visits to the Bahamas and all-expense paid safaris in Africa with his wife, Susan, according to the lawsuit. 

The trips to the Bahamas cost $500,000, according to the lawsuit. Over the past two years, LaPierre also spent $3.6 million on travel consultants and several million dollars on private security for himself and his family, the suit alleges. 

In a statement, LaPierre defended his stewardship of the NRA, and said the suit was "an affront to democracy and freedom."

"We're ready for the fight. Bring it on," he said. 

The other former and current executives named in the suit are Woody Phillips, the former treasurer and chief financial officer; Joshua Powell, LaPierre's former chief of staff; and John Frazer, the corporate secretary and general counsel.

Each of the men contributed to a culture of self-dealing that violated state laws governing the management of nonprofits in addition to the NRA's own bylaws, the suit claims. None of the executives immediately responded to a request for comment submitted to the NRA. 

The suit also details what it alleges was a nefarious relationship between the NRA and its former advertising firm, Ackerman McQueen. The two groups acrimoniously parted ways last year, after which the NRA sued Ackerman McQueen over its billing practices and Ackerman McQueen countersued, alleging defamation. 

The suit alleges that Ackerman McQueen participated in a scheme in which it would pay for the expenses of the members of the NRA leadership and pass those expenses through to the gun-rights organization without detailing exactly what it spent the money on. 

According to the lawsuit, in 2017 and 2018, Ackerman McQueen spent $70 million on such "out-of-pocket expenditures" and "public relations and advertising" that concealed entertainment and travel spending by NRA executives, including the personal hair and makeup for Susan LaPierre.  

Asked about the case, Trump said on Thursday that the NRA should move to Texas, where it could lead a "beautiful life." He said the lawsuit was a "terrible thing." 

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