The company behind NRATV was paying for National Rifle Association chief Wayne LaPierre’s expensive Italian suits and foreign travel, before charging at least some of those costs back to the NRA itself.
Sound like a puzzling arrangement? You’re not alone.
New York state non-profit attorneys told TPM that the setup raised serious questions about whether LaPierre was using an NRA vendor to conceal costs for his luxury purchases from the organization’s books, and could be fodder for an ongoing investigation into the non-profit by New York Attorney General Letitia James.
These allegations come from documents that were leaked anonymously online on May 10 and subsequently verified by the Wall Street Journal and Daily Beast amid a very public falling out between the NRA and its longtime advertising firm, Ackerman McQueen, which produced NRATV.
Specifically, the documents raise questions over whether the NRA’s board was aware of the luxury expenses and approved them as required under New York state statutes governing non-profits.
“This is a goldmine for the attorney general. This is like having the investigation handed to you on a silver platter,” Sean Delany, a former chief of the New York Attorney General’s charities bureau, told TPM, referring to the documents.
New York requires that non-profits be operated in the interests of the organization’s stated mission and not to benefit its leadership; if the expenses were concealed from the board, regulators may see it as an attempt to circumvent statutory requirements or as an unreported form of compensation, raising potentially troubling questions for the IRS.
New York also defines related party dealing as any arrangement where an insider has a financial stake and the non-profit participates. In this case, the NRA has had numerous contracts with Ackerman, while the vendor appears to have agreed to pay LaPierre not in cash, but in suits and foreign travel.
Related party transactions trigger a requirement for the non-profit’s board to conduct a review.
The NRA and Ackerman did not reply to requests for comment. But the gun rights group said in comments to the Wall Street Journal that the board was aware of the transactions.
However, that is now in dispute. NRA board members Allen West and Timothy Knight — two out of the group’s board of 76 — denied that the the board was aware of the expenses as they were incurred, and called on Tuesday for LaPierre to resign over the allegations.
The NRA sued the Oklahoma City-based image-maker back in April. The NRA filed the lawsuit in a bid to force Ackerman to supply it with documents to audit the pair’s relationship, amid suspicions that the ad firm was over-billing the NRA.
The history of the two entities’ decades-long relationship suggests that the ongoing battle is only the latest — and arguably most dramatic — episode in a story long been marred by allegations of overly cozy relations between top NRA and Ackerman execs.
The leaked documents reveal Ackerman’s behind-the-scenes response to the lawsuit. The company appears to have waged a pressure campaign against LaPierre, with an assistant from the NRA’s then-president Oliver North.
Ten days after the lawsuit was filed, Ackerman sent LaPierre two letters. One is titled “RE: Clothing purchases by Ackerman McQueen (AMc) on your behalf” while the other is titled “RE: Documentation of expenses incurred by Ackerman McQueen (AMc) and billed to the National Rifle Association (NRA).”
The first letter purports “to address your wardrobe you required us to provide, specifically, purchases at the Zegna store in Beverly Hills, CA.” Ackerman goes on to demand that LaPierre either provide receipts for $274,695 in suits — bought from luxury Italian retailer Ermenegildo Zegna between 2004 and 2017 — or “a complete, itemized list of the items purchased.”
The second letter accuses LaPierre of “fail[ing] to provide written approvals, receipts, and other support for expenses related to your travel” under an American Express card that Ackerman issued the NRA leader.
Ackerman goes on to document what LaPierre charged to that credit card. Expenses include stays at the Budapest Four Seasons, a $12,900 “Car & Driver” in Italy, and the rent for an NRA intern’s apartment.
Ackerman says in the letter that these expenses were “billed to the NRA.”
Both New York state and federal non-profit regulations prohibit so-called “excess benefit transactions,” that is, a case where a tax-exempt organization begins to compensate board members, donors, and other related parties for more than the value of their services.
Delany said that billing luxurious expenses like travel to Europe to the NRA through Ackerman could be a way to conceal the payments.
“We’re talking about expenses that wouldn’t have been legitimate expenses if they had been paid directly by the NRA in reimbursing LaPierre,” he said.
Marcus Owens, a former IRS nonprofit monitoring unit chief, told TPM that it sounded like a way to route extra compensation for LaPierre through one of its closest vendors.
“It suggests that items were intended to compensate him and they were not treated as compensation on the books and records of the organization,” Owens said.
The problems have the potential to go further. According to Delany, if excess expenses are found to be unrelated to the NRA’s business operations, that could qualify it as “taxable income.”
That could raise questions over whether LaPierre has accurately reported the totality of his income to the IRS.
There’s also a separate question over whether the setup adds up to an inside deal, or something else. LaPierre was granting Ackerman business through the NRA while using the ad firm’s American Express card, creating a conflict of interest.
“It’s certainly something that I would want to know more about if I were on the board,” Daniel Kurtz, a former New York charities bureau attorney, told TPM.
But the lawsuit and its ensuing spillover into the public sphere have left some NRA members mystified. Allegations of self-dealing between the NRA and Ackerman have long circulated, raising the question of why the NRA would file a lawsuit that could expose its own financial mismanagement.
Jeff Knox, the son of an NRA officer who raised concerns about the group’s relationship with Ackerman in the 1990s, told TPM in an email that “it all seems way over the top.”
“Too many moving parts, and too little solid information,” Knox wrote. “When in doubt… Follow the money.”