The NRA’s big, bad financial mismanagement crisis, explained

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Photos of NRA Chief Executive and Executive Vice President Wayne LaPierre (L) and former president of the NRA Oliver North (R) are on display during the third day of the National Rifle Association convention being held nearby.

The NRA is low on cash and embroiled in complex lawsuits.

The National Rifle Association is facing a crisis that could put its future at risk.

In April, the NRA lost its president after just a year on the job after he was accused of attempting to extort the organization’s CEO. The group is also dealing with a complex and embarrassing legal battle against its own advertising firm and an investigation of its finances by the New York state attorney general following multiple reports of long-running financial mismanagement.

Now, as more details about alleged financial misdeeds surface, board members are calling for reforms, including former Rep. Allen West (R-FL), who demanded in a May 14 blog post that the current CEO of the NRA step down. “There is a cabal of cronyism operating within the NRA and that exists within the Board of Directors. It must cease, and I do not care if I draw their angst.”

(I’ve reached out to the NRA but did not receive a response.)

These seemingly unrelated threads are all part of a systemic issue: allegations of ongoing financial mismanagement at one of America’s largest single-issue advocacy groups — mismanagement that could cost the NRA its tax-exempt status.

It’s a large fall for the organization: I’ve written before about how the election of Donald Trump was one of the NRA’s greatest victories, costing the organization an estimated $30 million but getting the group (it hoped) a stalwart defender of gun rights in the White House. Now Trump is demanding that the group “get its act together quickly” and “stop the internal fighting.”

Right now, that possibility seems highly unlikely.

The NRA’s fight with its top PR firm triggered an internal power struggle. But that’s just the start of its financial management woes.

Let’s start with why Oliver North (best known for his involvement in the Iran-Contra scandal) stepped down as NRA president in late April after one year in the position. In short, North was accused of attempting to extort NRA CEO and executive vice president Wayne LaPierre in order to get him to leave the organization, using accusations of sexual harassment and financial impropriety. Instead, North himself was involved in some dubious financial decisions — or at least that’s what LaPierre says.

The controversy stems from the NRA’s relationship with a public relations firm called Ackerman McQueen (known as “Ack Mack” to NRA staffers). Ackerman McQueen has worked with the NRA since the 1980s, and has been a part of every public development of the organization, from its “I’m the NRA, and I vote” campaign to current efforts that have relied heavily on culture war tropes.

For example, it helped popularize the messaging former NRA president Charlton Heston used at the 2000 NRA convention that his gun would have to be pried “from my cold dead hands.”

But in recent years, Ackerman McQueen’s efforts have also veered far enough from the NRA’s Second Amendment messaging that some supporters have grown concerned.

The PR firm is responsible for NRA ads like this one and for NRATV, the organization’s online media outfit created in 2016 that even some NRA staff think goes too far in its warnings about race wars. Ackerman also pays the contracts of some of the NRA’s most visible figures, like Dana Loesch and Colion Noir.

Now, the NRA writ large is deeply concerned about Ackerman McQueen, and for good reason: According to a complaint the organization filed in late April, Ackerman McQueen has refused requests to hand over accounting documents and potentially put the NRA afoul of the laws that govern the actions of nonprofit organizations. As the complaint states, “Put simply, the NRA is at the end of its rope.”

The complaint reveals that as of 2017, the NRA had paid Ackerman McQueen and its subsidiary, Mercury, an estimated $40 million. Yet according to the NRA, the advertising firm won’t give over documentation explaining what, exactly, it was spending that money on.

There’s one place the guns rights organization knows the money was going: Ackerman McQueen’s existing contract with Oliver North, which is worth an estimated $1 million according to NRA insiders interviewed by the New Yorker and the Trace (NRA presidents are generally unpaid by the organization). But as for the rest of it? While the contract is purportedly for a 12-episode documentary series titled American Heroes, that series has only resulted in four episodes over the agreed-upon time period.

The fight over that alleged financial mismanagement — and the NRA’s relationship with Ackerman — has pitted North, the organization’s president, against LaPierre, the organization’s long-tenured CEO. In late April, North sent a letter to the organization’s board of directors alleging LaPierre spent more than $200,000 on clothing from a vendor and stating that he was forming a “crisis committee” to fix the organization’s financial problems.

But then LaPierre fired back — in a letter of his own to the board, he said that on April 24, North called one of LaPierre’s staff and said that unless LaPierre resigned, North would send a damaging letter to the NRA board alleging sexual harassment against another staff member and more financial improprieties (like excessive staff travel).

According to LaPierre, the message from North and others was clear: drop the complaint against Ackerman and resign from his post as CEO (North allegedly told LaPierre’s staffer that he could negotiate an “excellent retirement” for him), or risk having damaging information about him made public. In the letter, LaPierre argues that only when Ackerman faced legal scrutiny did it, via North, make these demands. By Saturday, it was North who had resigned.

But on May 11, more details emerged of LaPierre’s spending, including documents published by the Wall Street Journal showing that he had billed Ackerman $39,000 for one day’s shopping at a Beverly Hills boutique and more than $12,000 for a car and driver in Italy.

In a statement to the Wall Street Journal in April, Ackerman said that the complaint North allegedly blackmailed LaPierre over was “frivolous.” But the current bad blood between Ackerman and the NRA is just a part of an overarching story of financial mismanagement, as the organization comes under increased scrutiny by both journalists and the law for the swirl of money moving between the organization, its vendors, and even the spouses and family of staff.

According to reporting by the New Yorker and the Trace, 10 percent of the organization’s money is being spent on gun safety, training, and education, with the rest going to “messaging” efforts, like an Ackerman-produced magazine created to show off wealthy NRA members’ cars and planes. NRA executives are making hundreds of thousands of dollars while the organization itself is allegedly $43 million in debt, no longer supplying free coffee at its Virginia office, and firing dozens of staffers.

According to comments made to the New Yorker by Marc Owens, former head of the IRS’s tax-exempt organizations division, the “red flags” evident in the NRA’s finances could prove costly for the organization: “Those facts, if confirmed, could lead to the revocation of the NRA’s tax-exempt status.” Without that tax-exempt status, Owens said, the NRA might not survive.

This traces back to earlier legal issues faced by the NRA

North and LaPierre’s relationship may not have been pushed to the breaking point if not for the legal action prompted by Carry Guard, the NRA’s self-styled training and insurance program “to cover legal fees and liabilities arising from self-defense shootings.”

According to the New Yorker, Ackerman helped develop and market Carry Guard, partly to bring in badly needed revenue following the massive expenditures of the 2016 presidential election. Alex Yablon, a journalist at the Trace, says a source told him the NRA was “counting on Carry Guard to provide revenue after Donald Trump’s 2016 election win.”

But in New York state, where the NRA was chartered in 1971, the Department of Financial Services found that Carry Guard violated rules on offering insurance for criminal acts and barred it from operating in New York, while also asking financial institutions to think twice about working with the NRA.

So the NRA sued, arguing that New York was infringing on the NRA’s free speech rights and saying that the organization was losing “tens of millions of dollars in damages” because of the ban on Carry Guard. Now the NRA is paying attorney Bill Brewer $1.5 million per month to fight the ban. (Interestingly, Brewer’s father-in-law is Angus McQueen, the McQueen of Ackerman McQueen.)

Because the NRA is chartered in New York, the New York attorney general, Letitia James, has special authority to investigate it — and as the New York Times pointed out, a similar process led to the closing of Trump’s foundation last year. Already, NRA officials have been served with subpoenas stemming from James’s investigation into the NRA’s tax-exempt status.

It’s likely that Ackerman McQueen’s alleged financial mismanagement might never have come to light — and North might never have felt the need to go to bat for it — if the NRA weren’t under incredible pressure to show that it’s abiding by existing laws governing tax-exempt organizations.

Gun control groups see an opportunity — but they’re not alone in their concerns

Opponents of the NRA have certainly noticed the organization’s current problems. Moms Demand Action for Gun Sense in America, a gun control group founded in 2012 after the Sandy Hook shooting, and its parent organization, Everytown for Gun Safety, filed a formal complaint with the IRS specifically calling attention to the NRA’s financial practices earlier this month.

“It’s clear that the NRA is in panic mode,” Shannon Watts, founder of Moms Demand Action, told me. “The organization is in decline, and its leaders are starting to fight among themselves.”

When I asked whether she thought the NRA was in real jeopardy, she said, “What happens to the NRA if it loses its nonprofit status is an open question. As an organization, this is the weakest and most vulnerable it’s been in decades.”

But it’s not just gun control advocates with concerns about the NRA’s actions, both financially and politically. The NRA is also facing scrutiny from its allies — gun rights advocates, including many who share the NRA’s top priorities, have been none too happy with the group’s alleged financial mismanagement.

At the blog AmmoLand, Jeff Knox, a longtime gun rights advocate and son of the late NRA board member Neal Knox, wrote of the NRA’s “dirty laundry”:

Ignoring warnings, blaming critics, covering for friends, and going along to get along, could bring the world’s most powerful organization for defending the right to arms, crashing to the ground. Continuing to deny and circling the wagons to protect against outside assaults, will not save the NRA, because the destroyer is inside the circle. Only decisive action to root out the corruption and return to the core values and principles of the organization can save it.

And some supporters are casting a wider — and more critical — view of the NRA’s recent decisions, even outside of the group’s current issues.

I spoke with Michael Hammond, legislative counsel for Gun Owners of America, who said that particularly after mass shootings like the one in Parkland, Florida, he felt that the NRA was being too flexible, ceding ground to gun control measures to stave off bad press.

Citing Trump’s 2018 executive order banning bump stocks (devices that modify a semiautomatic weapon into one able to fire shots more frequently) and the president’s willingness to raise the minimum age to purchase rifles, Hammond said that the NRA was “willing to concede all of these gun control proposals in order to make the issue go away.”

While Trump received a traditionally warm welcome when he spoke at the NRA convention on Friday, some supporters who spoke with reporters said they wanted to hear less about the border wall and more about gun rights. As I’ve written previously, the NRA’s decision to lean hard on culture issues — and Trump — may have helped Trump win the White House, but it’s also turned off some who might have been interested in the NRA’s message (and in donating):

And the NRA is certainly on Trump’s side, which might be part of the problem. While real threats to gun rights and the Second Amendment still exist, as we saw in the Philando Castile case — one the NRA decided to opt out of — the NRA’s turn toward Trumpian right-wing culture warring has possibly turned off those who might be supportive of the group’s actual messaging on guns. Coupled with the group’s stance on bump stocks — which has turned off many gun owners — one source told me that the NRA’s turn toward culture-warring has given rise to more direct criticism of the NRA even from within the gun rights community.

The NRA board is meeting Monday, and will likely conclude with reforms in mind to fix the financial problems causing the organization so much embarrassment. But with revenue issues, a looming investigation, and infighting at the executive level, the crisis isn’t passing anytime soon.