I’ve found myself obsessed over the past few weeks with the finances of the National Rifle Association.
Over that time, the organization has continued to detonate in slow motion. My colleague Matt Shuham wrote about the search for Wayne LaPierre’s Beverly Hills Italian suit vendor, and I wrote today about what LaPierre’s bizarre arrangement to buy those suits might get the NRA in trouble with regulators.
Just one part of this complex story involves the NRA’s longtime advertising firm, Ackerman McQueen, which was buying for LaPierre’s suits for him. It was a pretty sweet deal for LaPierre. We learned about it from letters that Ackerman sent LaPierre ten days after the NRA sued Ackerman, bringing the two groups’ longtime symbiosis to a very public end.
Ackerman even issued LaPierre a credit card, which he then used to buy, among other things, lavish trips to Europe. The NRA has claimed that because Ackerman advised the organization on its public relations, and LaPierre was the organization’s public face, he needed to look nice. So, in theory, that’s what the suits were about. The travel to Europe is harder to explain.
Regardless, the arrangement raises serious questions about conflicts of interest. As an officer of the NRA, he is responsible for guiding the organization. That includes deciding what vendors can best fulfill the NRA’s mission of gun rights advocacy. Ackerman is one such vendor.
During the time that LaPierre was using an American Express card given to him by Ackerman, the firm made $40 million off the NRA in one year, according to a lawsuit. One former Ackerman employee I spoke with told me that around 70 percent of his time at the organization was devoted to handling the NRA, making it a core part of the firm’s business.
Attorneys who practice in the area of New York non-profit law that I spoke with reacted to the above with bemusement, but not necessarily shock.
They raised questions over how to classify the setup. Does LaPierre’s status as an NRA exec, coupled with his separate financial arrangement with a big NRA vendor, make this a related-party transaction? Is it a so-called excess-benefit transaction — that is, an example of the non-profit being used to provide benefit to an insider? Or could this point towards allegations of commercial bribery, a kickback scheme whereby LaPierre gets Italian suits as Ackerman receives lucrative contracts?
Who knows. It could be any one of the above, or all of the above. Or none.
But what really shocked the subject-matter experts that I spoke with was that Ackerman went back and billed the NRA for LaPierre’s expenses.
So, to summarize: Money was supposedly flowing from the NRA to Ackerman, and then back to LaPierre via his Ackerman-issued credit card to cover various luxurious expenses. At the same time as LaPierre allegedly received these benefits, Ackerman was receiving millions from the NRA in the form of lucrative contracts.
This raises a spate of deeper questions relating to LaPierre’s tax obligations to the IRS, whether the intent behind the arrangement was to conceal it from the NRA’s board, whether the NRA’s books and records are correct, and whether the flow of money could be interpreted as a form of embezzlement.
There’s a general mosaic forming here of money sloshing around the NRA and closely related firms without any real control. The New York Times recently highlighted a separate question, over whether $100 million that the NRA Foundation transferred to the NRA circumvented political spending restrictions. The 501(c)3 Foundation is a charity, so donations to it are tax-deductible. The size of the money transfers to the NRA itself — a 501(c)4 that can conduct certain political activities — could raise separate red flags.
It’s a fascinating web of financial arrangements, with huge amounts of cash zipping around as the group continues to fundraise heavily off of the siege mentality of its membership base.
They’ve been doing the same off of Tish James’s investigation, according to one fundraising pitch that an NRA member forwarded to me:
I’d love to know more about where the money to “Save NRA” is ending up. We’ll likely find out answers to some of these questions in the weeks and months ahead.