With an annual spending budget of roughly $250 million, the National Rifle Association (NRA) is a highly influential force in American politics. Established in 1871, the NRA has developed into one of the most influential advocacy organizations in the U.S. and boasts over five million members. Initially founded as a recreational group, the NRA later entered the lobbying realm in 1934, sending mail advertisements to members regarding potential firearms bills. It transformed into a full-fledged lobbying powerhouse in 1975 when the NRA formed the Institute for Legislative Action. The organization started its own political action committee (PAC) just two years later. Since then, it has steadily grown in both membership and influence. Past and present members include nine U.S. Presidents, well-known celebrities, and other prominent figures.
Given the current limits of direct campaign contributions, it is not easy to track exactly where the majority of NRA spending goes. Of direct campaign contributions, the NRA gave more than $650,000 to Congressional candidates in 2020 alone. The group also gave made significant contributions to President Trump’s reelection campaign. However, the NRA contributed the bulk of its donations to PACs due to the direct campaign limitations. In 2018, NRA paid its Chief Executive Officer $2.15 million in total compensation, a 57% raise in pay from the previous year. The organization awarded this pay raise following the 2017 fiscal year in which the NRA suffered a 12% decrease in annual revenue.
The organization is no stranger to controversy, as gun policy is one of the more contested subjects in American politics, and the NRA has consistently taken a position against gun control measures.
In 2018, the NRA board elected Lieutenant Colonel Oliver North as its president. Lieutenant Colonel North gained a great deal of notoriety for his involvement in the Iran-Contra scandal during the 1980s. Col. North claimed that he was forced to resign following efforts he made as president to expose some possible financial irregularities within the organization. NRA Chief Executive Officer Wayne LaPierre wrote off these efforts as extortion on North’s part.
The most recent allegations came in the form of a lawsuit filed by New York Attorney General Leticia James, which seeks to dissolve the NRA. AG James claims to be acting within her official authority to bring this action, as the NRA is a 501(c)(4) nonprofit organization incorporated under New York law. The complaint alleges that CEO Wayne LaPierre misappropriated association funds and used such funds to pay for luxurious trips, questionable contracts for associates, and other violations of New York’s laws governing nonprofit organizations.
Joshua Powell, one of the named defendants in the suit and former chief of staff to LaPierre, believes that James’ probe into the NRA could be only the beginning of a long legal battle for the organization. In an interview with USA Today, Powell said, “She’s [James] only at the tip of the iceberg. When she sees below the water line, what she’ll find is decades of fraud, corruption, no-bid contracts to the tune of not tens of millions but hundreds of millions of dollars.” He added further, “It’s far worse than, in my opinion, what she has on paper at this point.” Powell has also written a book detailing the wrongs he saw during his time with the NRA and has indicated his desire to cooperate with AG James’ investigation.
The NRA quickly discounted Powell’s statements regarding its mishandling of funds. Andree Arulanandam, a spokesman for the NRA, disregarded Powell’s positions and painted Powell as a disgruntled former employee looking to avenge his termination. Arulanandam said, “This is a fictional account of the NRA, period. Mr. Powell was effusive in his praise of NRA leadership and the Association’s mission – right up until the day he was fired.” Arulanandam also indicated that Powell’s role within the NRA was minimal and that he was fired in January of 2020 for his misappropriation of funds.
As expected, the NRA has relentlessly pushed back against the recent lawsuit. The NRA has answered and moved to dismiss the lawsuit. The organization also filed a federal lawsuit against the office of the attorney general, alleging that James has interfered with the NRA’s First Amendment rights. The NRA is not alone in its position in this matter, as sixteen state attorneys general joined in a brief in support of the NRA. These attorneys general, all GOP members, also maintain the position that James’ suit was a calculated political move against the NRA.
Another tactic the NRA has employed is the filing of Chapter 11 bankruptcy before a federal bankruptcy court in Dallas, Texas. As part of the bankruptcy, the organization stated that it plans to reincorporate in Texas in an attempt to leave behind the “corrupt political and regulatory environment” of New York. In a letter to NRA members, LaPierre wrote, “Texas values the contributions of the NRA, celebrates our law-abiding members, and joins us as a partner in upholding constitutional freedom . . . [w]e seek protection from New York officials who illegally abused and weaponized the powers they wield against the NRA and its members.” Seeing the lawsuit as a political move by AG James, the NRA has brushed off her efforts as a politically motivated move and a violation of its First Amendment rights.
While bankruptcy often hinders litigation proceedings against an organization, it is unclear whether this bankruptcy filing will halt AG James’ case against the NRA. Adam Levitin, a law professor at Georgetown, recently offered in an interview with Financial Times that an automatic stay in proceedings will not generally apply to regulatory actions that do not seek money damages. That is the nature of the case here—AG James is merely seeking the dissolution of a New York nonprofit. Levitin said, “The NRA bankruptcy looks like a play for time and negotiating leverage against the New York attorney-general, but there’s no obvious light at the end of the tunnel for the NRA.”
In addition to the Chapter 11 bankruptcy filing and the Motion to Dismiss James’ case, the NRA has also filed a countersuit against James in New York Supreme Court. This case involves allegations of James’ interference with the NRA’s Second Amendment rights.
Effects of this Action
Given the early stage of the litigation process, it is difficult to predict the outcome of AG James’ efforts to dissolve the NRA. The organization’s bankruptcy and reincorporation efforts may prove to be an effective escape from this lawsuit. There is a current trend of large organizations and executives who have moved to Texas in recent months for various reasons. This has become extremely common amongst technology companies from California who seek to take advantage of Texas’ lower real estate prices, more favorable tax laws, and lesser COVID-19 restrictions. The NRA could possibly escape liability from the current legal action and be another organization on this list.
Should these allegations be proven true, they should not just worry people who favor gun restrictions and have a disdain for the NRA. They should concern NRA members as well. If the allegations are true, it is the money of these members that is being squandered on a billionaire lifestyle for the NRA’s executive officers. This group of people should hold accountable such leaders and ensure that their money is utilized for its intended purposes.