NRA Loses Corruption Case, LaPierre Liable for Millions

Manhattan, New York — The National Rifle Association failed to safeguard its donor’s funds while Wayne LaPierre diverted millions toward lavish personal expenses.

That’s the finding a six-person jury handed down on Friday after a week of deliberations. They sided with New York Attorney General Letitia James (D.) against the NRA and its leadership. In addition to the group and its former CEO Lapierre, the jury also ruled against former Treasurer Woody Phillips and General Counsel John Frazer.

The six-member jury in the civil case found LaPierre did $5.4 million worth of harm to the NRA by using its charitable funds to pay for things like private jet travel. They determined he’d already paid back about a million dollars of that harm, but also that there was enough evidence to bar him from being the group’s CEO in the future.

They found Phillips had violated his duty to work in good faith for the NRA, and that his briefly-lived post-employment contract was an unauthorized related-party transaction. However, they found it didn’t do any monetary harm to the organization. Similarly, the jurors found Frazer had violated his duty to the group and authorized “materially false” statements the NRA made on a government disclosure about related party transactions, but they also found his actions didn’t cause the group monetary harm and there wasn’t cause to remove him.

The jury also found a series of payments made to board members or people related to NRA employees were not properly approved ahead of time, but all but two–hair and makeup for Wayne LaPierre’s wife and speaking fees for former NRA president David Keene–were properly approved after the fact. However, they also found the NRA did not have a proper whistle-blower policy for years and did nothing to prevent retaliation against eight whistle-blowers identified in the case.

Judge Joel Cohen is now tasked with deciding what remedies are appropriate for the damages the jury has identified. What he decides will determine the future of the nation’s largest gun-rights group. In addition to barring LaPierre from working with the NRA or other non-profits, he could force the former CEO to pay the organization back for expenses the jury found were unlawful. But he could also appoint a monitor to oversee the NRA’s operations, which might completely transform the group’s leadership and internal operations.

A significant overhaul of the most prominent gun group in America will have a substantial impact on gun politics throughout the nation, especially since it’s far from clear the group can recover.

Of course, the corruption allegations and legal ordeal have already made a tremendous mark on the NRA. Since news of the illicit spending broke in 2018, the group has experienced an unprecedented exodus of members. Millions of people have abandoned the organization, with nobody quite sure how many remain. That’s led directly to a funding shortfall that has forced the group to slash spending on key programs, such as gun safety training and political campaigns, while pouring an unprecedented amount into controversial legal bills.

The group has continued to see declines in fundraising and will likely only be a shadow of its former self in the upcoming 2024 presidential election.

LaPierre, who resigned in the middle of the trial, and the NRA have argued that downfall was AG James’s goal from the beginning. They noted she had promised to investigate the group during her campaign, which she said wasn’t a charity but a “terrorist organization.” Her initial complaint sought the total shutdown of the NRA.

“The fact is, Letitia James set out to destroy the NRA, and the best way to do that was to destroy Wayne LaPierre,” P. Kent Correll, who represents the former CEO, said in closing arguments.

However, Judge Cohen and an appellate court rejected the argument that the case was solely a political attack when the NRA sought to have it dismissed. However, Judge Cohen also removed dissolution as a potential remedy because he argued it would be detrimental to NRA members–the people James is tasked with protecting in the suit.

“In short, the Complaint does not allege the type of public harm that is the legal linchpin for imposing the ‘corporate death penalty,’” he wrote in his opinion. “Moreover, dissolving the NRA could impinge, at least indirectly, on the free speech and assembly rights of its millions of members.”

But he let the case proceed because the allegations “tell a grim story of greed, self-dealing, and lax financial oversight at the highest levels of the National Rifle Association.”

In addition to the argument about James’s political motivations, the NRA focused much of its defense on the claim it had already instituted enough reforms to self-correct. It argued that many of the illicit expenses at issue in the case did happen, but the NRA had since fired some of those involved and established internal controls to address the problems. It also attacked as unreliable former insiders, including board members and executives, who testified against those claims in court.

“The NRA Board of Directors, which is the seat of the NRA’s corporate governance, acted in good faith and with ordinary care,” the NRA’s lawyer argued.

“Ladies and gentlemen, when you’re caught in the act, saying you’re sorry now, saying that you’ll do better, doesn’t mean you didn’t take the cookie,” the AG’s lawyer responded.

As has been the case with some current NRA insiders, the group’s current leadership failed to convince the jury they resolved the issues.

Neither the NRA nor the AG responded to requests for comment.

Judge Cohen will now schedule the next trial phase, where he will be responsible for determining the final settlement of the case.