Wednesday, May 8, 2019

Don't Shoot The Messenger, Part 2

Just like Chinese water torture, I think we are in for a series of NRA articles from The New Yorker detailing self-dealing, lavish spending, accounting irregularities, nepotism, and sweetheart deals at the National Rifle Association. The latest episode was released yesterday and is entitled, "An Internal Memo Raises New Questions About Self-Dealing At The N.R.A."

The article starts off describing a one and a half page memo from the NRA's accountants to the Audit Committee of the Board of Directors. The memo details a range of "questionable transactions and business arrangement" involving several of the NRA's top vendors and executives. This memo, unlike earlier leaks, does not go into the Ackerman McQueen issues but rather deals with other items that were found to be irregular. These include reportedly payments made to former CFO Woody Phillips' "significant other", cumulative rent of $1.8 million paid for a house to be used by Associated Television International and owned by ATI's president, and to their fund-raising contractor Membership Marketing Partners.

The memo goes on to question management overrides and approval of housing expenses for certain upper executives.
In addition, the memo drew attention to “senior management override of internal controls,” which led to violations of “accounts payable procedures” and “HR policy,” including “hiring of staff without HR knowledge.” It names four executives who, at the time, were receiving “reimbursement of expenses relating to apartments and living expenses beyond HR Policy Manual stipulations and on a permanent basis.” The N.R.A.’s accountants added that there was “no contract to support the reimbursement request,” which the four individuals continued to claim as a “relocation expense.” The executives named include Doug Hamlin, the N.R.A.’s executive director of publications; Eric Frohardt, the director of education and training; Joe DeBergalis, the executive director of general operations; and Josh Powell, LaPierre’s chief of staff.

Andrew Arulanandam, the N.R.A.’s managing director of public affairs, said that the organization “has, at times, made such accommodations for employees who travel extensively for their jobs.” He added, “The practice of providing such accommodations is approved by N.R.A. leadership and is not uncommon for an organization the size of the N.R.A.”
Powell is the person responsible for bringing in CarryGuard while Eric Frohardt is the former Navy SEAL whom Powell installed as director of education and training and director of training for CarryGuard. Frohardt still lives in Colorado where he owns a range and other businesses according to his LinkedIn page. It is my understanding from those who would know that Frohardt is flown in at the NRA's expense to work 3-7 days a month. While I have the utmost respect for Frohardt's service to the nation, 12 years as a Navy SEAL does not make one an expert in training civilians in the legal use of a firearm.

As to Josh Powell, the memo to the Audit Committee mentions his multiple conflicts of interest including the hiring of his dad to do photography for the NRA and his wife, Colleen Gallagher, was hired by a top NRA fund-raising vendor McKenna and Associates. It gets worse.
The N.R.A.’s accountants completed their memo in mid-July. Around this period, the N.R.A.’s new C.F.O., Craig Spray, had to temporarily step away from his role at the organization to deal with a health matter. Someone would need to take his place as the organization’s chief manager of financial activities. According to an internal N.R.A. communication, in July, 2018, Powell was appointed acting C.F.O. for about three weeks, placing him in charge of the accountants who documented his conflicts of interest.
I won't get into the other issues with regard to Powell other than to say his departure from the NRA would help the organization. Placing him as the senior strategist to work with outside counsel William Brewer on New York litigation is a disaster in the making.

I would be remiss if I didn't note that a lot of the research on the NRA's problems come from Bloomberg's The Trace and they did help with The New Yorker articles. I have a theory as to how they are gathering this information. I think Michael Bloomberg and his associates have hired a corps of private investigators whose job it is to find former NRA employees who have left because they were disgusted with the self-dealing and other financial issues. I can't think of any other way that they could be gathering this inside information unless it was being funneled to them by Ack-Mac.

One way or another the NRA will get its house in order. It can be done either by the Board of Directors or it will be done for them by the State of New York, the Internal Revenue Service, and other outside agencies. Far better that the changes come from within than from without. It can be controlled and managed to make the organization stronger, bigger, and more diverse.

My fear is that new officers of the NRA - Carolyn Meadows, Charles Cotton, and Willes Lee - and much of the Board are such stalwart Wayne LaPierre supporters that they will go along with the status quo (ante bellum) to the NRA's detriment. Ignoring it is not going to make it go away and will only make matters worse. That, however, is the most probable outcome as things stand now.


  1. In the military (and really everywhere), there are two types of discipline: Self-discipline, and Other-discipline.

    When the first is not practiced, the second eventually happens.

    It's nearly midnight for the NRA. . . .or maybe it's too late, and the 'other' bell is starting to toll.

  2. Right now, I would surmise that NRA gets hit with a 7-figure fine from the NY AG. It won't kill NRA, but it haunt them for 20 years.

  3. I can't speak regarding the others, but Willes Lee is 100% a LaPierre and status quo supporter.

  4. Sadly, I think that the last chance to save the NRA as we know it has passed. Even if LaPiere and his allies had been removed, it still would have been an up hill battle to save the NRA's political arm. Now, I fear it may be impossible.

    I know a bit about non-profits. When NY regulators look at the organization, one question will be, "Has the organization strayed from the purpose for which it was created?" Given that the NRA was established in 1871, my guess is nothing in its founding documents say anything about political action. (Yes, I know that NRA-ILA is - on paper - a separate organization, but the link is still there.) What I fear is NRA being given an ultimatum by NY regulators: Stop your political activity - which is not mentioned in your incorporation documents - or we will shut you down. That would be a lose - lose choice for the organization. If they agree they save the NRA in its pre-1968 form - safety promotion, instructor certification, the museums, and Whittington Center. If they fight, then they will be distracted from the political activity for a long time and they still could lose everything.

    1. The sad thing is that Joe Olson, a professor of law in Minnesota, was on the BOD from 1991 to 2000. He made the suggestion to move the incorporation out of NY to another state (South Dakota, I think) that was much more gun friendly and much less hardcore about non-profit. A NY lawyer retained by the NRA said he didn't know what he was talking about and the idea was dismissed. If only we had a time machine....