Guns at a Dick’s Sporting Goods store in Pennsylvania in 2019, before it decided to stop selling guns after another US mass shooting. Picture: REUTERS
Guns at a Dick’s Sporting Goods store in Pennsylvania in 2019, before it decided to stop selling guns after another US mass shooting. Picture: REUTERS

New York — New York is seeking to dissolve the National Rifle Association (NRA) as the state attorney-general accuses the gun rights group and four senior officials of engaging in a huge fraud against donors.

A sprawling lawsuit filed on Thursday in state court in Manhattan alleges the NRA diverted charitable donations for years to enrich the organisation’s top executives in violation of laws governing non-profits, New York attorney-general Letitia James said in a statement. The state is also demanding millions of dollars in restitution and penalties.

The case may pose one of the biggest legal threats the NRA has faced since its founding in New York in 1871. The turmoil began with a power struggle last year between former NRA president Oliver North and longtime leader Wayne LaPierre, which led to allegations of self dealing.

A subsequent state probe found wrongdoing blamed for more than $64m in losses in the past three years alone, James said.

“The NRA’s influence has been so powerful that the organisation went unchecked for decades while top executives funneled millions into their own pockets,” James, a Democrat, said in the statement. “The NRA is fraught with fraud and abuse.”

This isn’t the first high-profile charity James has targeted. US President Donald Trump paid $2m in damages last year after his charitable foundation reached a settlement with the attorney-general, who accused the president and his children of rampantly violating non-profit rules.

Their alleged infractions included using foundation money to buy sports memorabilia, Champagne and a portrait of Trump. The president shuttered the charity and denied wrongdoing.

In the NRA case, the state investigation uncovered an array of wrongdoing, including the awarding of lucrative deals to family members and close associates and the awarding of “no show” contracts to former employees to “buy their silence and continued loyalty”, according to the statement.

North, who was interviewed by state investigators, had accused LaPierre of using the NRA to enrich himself. LaPierre denied the accusation, and North was ousted as the organisation’s president.

‘The waste and loss of millions’

The NRA has previously claimed that North plotted with its former ad agency, Ackerman McQueen, to smear LaPierre by leaking details of his spending. North and Ackerman denied the claims. The NRA has also accused James of trying to circumvent the organisation’s legal rights by demanding information about its members as part of a “political witch-hunt”.

North’s claims weren’t just sour grapes, according to James. LaPierre, the group’s executive vice-president, is accused in the lawsuit of exploiting the organisation for years, squandering donations on extravagant personal expenses.

James alleges LaPierre spent hundreds of thousands of dollars of NRA funds for private plane trips for himself and his family, visiting the Bahamas eight times in the past three years at a cost of nearly half a million dollars. He spent millions more on “unwarranted travel expenses” such as luxury black-car services, racking up more than $3m in the last two years, James says.

The suit also names the NRA’s treasurer and CFO, Wilson “Woody” Phillips; the former chief of staff and executive director of general operations, Joshua Powell; and corporate secretary and general counsel John Frazer. They’re all accused of failing to manage the NRA’s funds properly.

Their actions “fostered a culture of non-compliance and disregard for internal controls that led to the waste and loss of millions in assets and contributed to the NRA reaching its current deteriorated financial state”, James said in her statement. The men created a culture of self-dealing “that was illegal, oppressive and fraudulent”. 

In addition to dissolving the NRA, James said she’ll seek a court order for LaPierre and the others to pay penalties and make full restitution for unlawful profits and salaries. She also wants LaPierre and Frazer removed from the NRA’s leadership and, according to the statement, to “ensure none of the four defendants can ever again serve on the board of a charity in New York”.

Bloomberg

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