Posts Tagged ‘Carry Guard’

More NRA Troubles: Wayne LaPierre And The Iron Law of Bureaucracy

Wednesday, June 26th, 2019

Lots more NRA turmoil has bubbled up since my previous piece, including the NRA filing two lawsuits against PR firm Ackerman McQueen and leaks of internal NRA letters expressing alarm over profligate spending. In addition to spending by Ackerman McQueen, a great deal of concern has been expressed over NRA’s outside attorney record Brewer Attorneys & Counselors, headed by William Brewer III. Then this week, NRA-ILA head Chris Cox was suspended and put on administrative leave and NRA-TV shut down production on new content.

Lets tackle these in chronological order.

As he was being shoved out the door, now-Ex NRA President Oliver North and NRA First Vice President Richard Childress penned a letter expressing deep concern about how much of NRA’s money was going to Mr. Brewer:

As indicated in previous correspondence, we and others continue to be deeply concerned about the extraordinary legal fees the NRA has incurred with Brewer Attorneys & Counselors. The amount appears to be approximately $24 million over a 13-month period, $5 million of which apparently has been reimbursed in connection with the Lockton settlement.

The Lockton settlement was the Lockton insurance company reaching an out-of-court settlement to the NRA over breaching a contract to underwrite the ill-fated Carry Guard program discussed last post.

North and Childress complained about “lax management” of Brewer invoices in the past, and pushed for “an independent, outside expert to review the Brewer invoices immediately.”

From April 2018 through February 2019, Brewer was billing the NRA $1 million to $2 million a month. North and Childress stated that “Invoices of this size for 12 months of work appear to be excessive and pose an existential threat to the financial stability of the NRA.”

John Richardson of No Lawyers – Only Guns and Money suggests that Brewer was attempting to become a one-stop shop featuring legal services, public relations and communications, all in one big, expensive, billable bundle. One wonders whether the NRA authorized him to do anything beyond the legal work and, if so, why were they paying him to do some of the tasks they were already paying Ackerman McQueen so handsomely to perform. Richardson also wonders what the attorney of record for the NRA is doing sending political donations to such notable “pro-gun” luminaries as Beto O’Rourke, Patrick Kennedy and Hillary Clinton.

North and Childress aren’t the only ones dissatisfied with NRA leadership. Boards member Lt. Col. Allen West has called on LaPierre to resign. Says West:

I do not support Wayne LaPierre continuing as the EVP/CEO of the NRA. The vote in Indianapolis was by acclamation, not roll call vote. 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. My duty and responsibility is to the Members of the National Rifle Association, and my oath, since July 31, 1982, has been to the Constitution of the United States, not to any political party, person, or cabal.

The NRA Board of 76 is too large and needs to be reduced to 30 or less. We need term limits of four (4) terms on the Board. We need to focus the NRA, the nation’s oldest civil rights organization on its original charter, mission, training and education in marksmanship, shooting sports, and the defense of the Second Amendment.

I will dedicate all my efforts to the reformation of the National Rifle Association and its members, of whom I am proud to serve.

Rangemaster and attorney Tiffany Johnson’s letter to the board.

I attended the NRA Annual Meeting of Members on Saturday morning, and I am writing about a contentious resolution that came to the floor. The resolution decried recent reports of fiscal mismanagement centered around one of the NRA’s primary vendors, Ackerman McQueen. Among other things, the resolution called for the resignation of members of the Audit Committee as well as the NRA’s Executive Vice President, Mr. Wayne LaPierre. In light of the pending litigation between Ackerman McQueen and the NRA, Secretary Frazer successfully moved that the resolution be referred to the Board of Directors for consideration in consultation with legal counsel.

As a practicing attorney, I fully understand the NRA’s interest in limiting public discussion of sensitive matters that are currently being litigated. I agree that the Association is best served by addressing the resolution internally rather than in the public sphere. However, I also understand the arguments raised against referring the motion to the Board. The resolution cited allegations of financial misconduct, self-dealing, and conflicts of interest within the Board of Directors, the Audit Committee, and other parts of the NRA’s leadership team, based on their alleged mishandling of vendor contracts and other business relationships with Ackerman McQueen. In other words, referring the resolution to the Board would be, in effect, asking the Board to adjudicate allegations against itself.

I want the National Rifle Association to succeed. At Saturday morning’s meeting, Mr. LaPierre himself warned of the mounting existential threats we now face, both in the courtroom and in the court of public opinion. Given the intensified scrutiny facing the Association right now, I fear that yet another maneuver of impropriety (whether real or perceived) could be a proverbial death knell. It would serve as perfect fodder for the media to publish yet another scathing exposé that paints the NRA as roiled in unsavory scandal. It would also incite even more resentment from within the organization and sow more division among our ranks. Although Mr. Frazer’s motion to refer the resolution did ultimately succeed, the fierce opposition voiced by many in attendance shows that members want this issue to be addressed in a more transparent fashion.

I have a humble suggestion to help avoid public airing of private business while also quelling further cries of impropriety. When the Board addresses this resolution, I request that any Board member, officer, or staff member who has a personal, financial, or fiduciary interest in, or fidelity to, Ackerman McQueen (or its subsidiary and affiliate companies) — as an employee, contractor, paid consultant, vendor, client, etc. — be required to recuse himself/herself from discussing and voting on this resolution. That way, regardless of how the Board ultimately disposes of the resolution, at least the result will be less vulnerable to accusations of ethically dubious entanglements.

Fast forwarding to the present, the removal of Chris Cox from NRA-ILA was quite unexpected, at least by me. ILA is generally considered not only among the most effective of NRA’s programs, but one of the most effective (if not the most effective) lobbying groups on Capitol Hill.

The news yesterday regarding the National Rifle Association was headlined by a story in the New York Times that said Chris Cox, head of the NRA-ILA, was suspended and put on administrative leave. This followed a late Wednesday filing in New York Supreme Court (the trial level courts in that state) in which the NRA sought a declaratory judgment that Ollie North was not entitled to his legal expenses as a director of the NRA. Also suspended was Scott Christman who served as Cox’s deputy chief of staff at the NRA-ILA.

Both Cox and Christman are accused along with NRA Board member and former Congressman Dan Boren of participating in a failed “coup” attempt orchestrated by Ackerman McQueen and Ollie North. Cox vehemently denies this.

“The allegations against me are offensive and patently false,” Cox said. “For over 24 years I have been a loyal and effective leader in this organization. My efforts have always been focused on serving the members of the National Rifle Association, and I will continue to focus all of my energy on carrying out our core mission of defending the Second Amendment.”

PA Gun blog wonders just just who can suspend Cox, since he reports directly to the NRA board of directors. Say Uncle wonders if LaPierre even has a plan. “Is this some sort of scorched-earth move?”

Stopping production on NRA-TV is much less of a surprise, given that was yet another thing run out of Ackerman McQueen. I asked NRA-TV personalities Dana Loesch and Colion Noir on Twitter if they had been informed of the moves and have not received a reply. According to LaPierre the issue was one of “focus”:

“Many members expressed concern about the messaging on NRATV becoming too far removed from our core mission: defending the Second Amendment,” Wayne LaPierre, the N.R.A.’s longtime chief executive, wrote in a message to members that was expected to be sent out by Wednesday. “So, after careful consideration, I am announcing that starting today, we are undergoing a significant change in our communications strategy. We are no longer airing ‘live TV’ programming.”

Unlike some of LaPierre’s other flailing moves, this one can largely be written off as a straight-forward cost-saving measure and an inevitably byproduct of the Ackerman McQueen lawsuit. There’s also probably some truth to the “focus” angle as well, though from a self-interested “free blogging content good” perspective, I liked a good deal of what they were doing, such as Noir’s look at the astounding rate of homeless crime in Seattle.

Ammoland is not impressed with the moves:

Enough is enough. The National Rifle Association’s Board of Directors needs to act to get things under control and to focus the organization’s energy and activities against major threats to our right to keep and bear arms instead of internal squabbles. The current legal fight and internal chaos have to be resolved immediately.

Virginia-specific paragraphs snipped.

I have already been on record as suggesting that Wayne LaPierre leaves as Executive Vice President after the 2020 election. But recent developments, including the suspension of NRA-ILA Executive Director Chris Cox, now make some changes more necessary than ever. While LaPierre and Cox have past successes, the current drama, and the failure to see the new threats from corporations and social stigmatization that were part of the other side’s long game, including Andrew Cuomo’s abuses of power rank as significant failures on their part, and in combination with the internal drama, and Wayne’s lack of proper basic business management all warrant their replacement.

Who should replace Cox, who obviously no longer has the complete confidence of his superiors at NRA? Whoever it is should not be a lobbyist, but instead should probably have close ties to grassroots activists. With Cuomo’s attacks tying up financial resources, having the activists on the ground will be more important than ever.

LaPierre’s replacement will also need to come sooner, rather than later.

At this point, this replacement should come from outside the NRA so as to have no connection with the current drama.

Richardson agrees: “Wayne LaPierre’s scorched earth approach to maintaining power may be good for Wayne but is horrible for the NRA as an organization. I acknowledge there are many good people on the Board of Directors. Some want Wayne gone and some still support him.”

I have to concur. The Ackerman McQueen separation and lawsuit was a necessary corrective given a large vendor whose financial drain endangered the organization. The NRA-TV move is quite defensible as a necessary cost-cutting measure. But the Cox suspension, absent any additional information about why the move had to be made, reeks of circling the wagons and sheer vindictiveness on LaPierre’s part. Ironically, it is his out-sized overreaction to an alleged “coup” that proves why a move against LaPierre is both justified and, at this point, probably sadly necessary.

Jerry Pournelle’s Iron Law of Bureaucracy states that in any bureaucratic organization there are two kinds of people: Those devoted to the goals of the organization, and those dedicated to the organization itself. “The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.” LaPierre’s NRA is clearly been captured by the second group. Or to put it another way: “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.” LaPierre’s NRA has become a racket. The NRA exists to serve its members and protect the Second Amendment, not to serve and protect Wayne LaPierre.

As I said about the NRA previously:

There are some that claim cleaning up the NRA would offer too much succor to the gun-grabbers. But the organizational dysfunction and self-dealing is already out in the open, and is already hurting the NRA’s effectiveness (and has been for several years). If not now, when? Better to do it now, the year before a Presidential election, with Republicans holding the White House and the Senate able to block gun-grabbing initiatives, than during it.

Other than being a member, I am very far indeed from the center of NRA power. For all the grumbling over the NRA caving over bump-stocks, there’s no other organization with the size, scope and political power of the NRA to protect Second Amendment rights in America. But to do that, the NRA has to be on solid organizational and financial footing, and right now it does not appear to be on either. The NRA has to get its own house in order, this year, or expect forces hostile to it and its goals to do it for them.

At this point, getting the NRA’s house in order necessitates Wayne LaPierre’s exit as Executive Vice President. This is not going to be easy, as (to quote Archer) “He’s dug in there like a tick!”

But enough is enough.

Update: Chris Cox has resigned. There’s also mention of NRA-ILA making a “substaintial” loan to the NRA, and refusing to do it again, followed immediately by Cox and Christman’s suspension. This is probably a good time to reiterate my call for a forensic audit of NRA finances…

Turmoil In The NRA

Thursday, May 9th, 2019

A great deal of institutional turmoil has been roiling the National Rifle Association as of late:

A long-simmering dispute between NRA executive vice president Wayne LaPierre and now-departing NRA president Oliver North exploded into the open Friday night, as the NRA’s Board of Directors suddenly forced to confront public accusations and counter-accusations of financial mismanagement, attempts at extortion, and unjustifiable expenditures by their primary public relations firm. By Saturday morning, it was clear who won.

This morning, at the NRA’s public meeting of members, member Richard Childress read a letter from North announcing he would not seek another term as the NRA’s president. His term ends Monday.

The NRA is currently suing their public relations firm, Ackerman McQueen, over access to documents detailing how the firm spent the NRA’s money. In recent years, NRA board members grew increasingly concerned about whether they were getting their money’s worth from their long time advertising and PR firm; according to financial documents cited in The New Yorker, the NRA paid Ackerman McQueen just under $41 million in 2017.

Further complicating the matter is that North has a contract with Ackerman McQueen to produce a television series “Oliver North’s American Heroes.” LaPierre accuses North of attempting to oust him in order to protect Ackerman McQueen.

The New Yorker piece displays an obvious disdain for gun owners and the NRA, but that doesn’t mean their central details about the nature of the relationship between the NRA and Ackerman McQueen are wrong. After noting that it is actually Ackerman McQueen that pays the salaries of high profile spokesmen Dana Loesch and Colion Noir, it goes on:

The N.R.A. and Ackerman have become so intertwined that it is difficult to tell where one ends and the other begins. Top officials and staff move freely between the two organizations; Oliver North, the former Iran-Contra operative, who now serves as the N.R.A.’s president, is paid roughly a million dollars a year through Ackerman, according to two N.R.A. sources. But this relationship, which in many ways has built the contemporary N.R.A., seems also to be largely responsible for the N.R.A.’s dire financial state. According to interviews and to documents that I obtained—federal tax forms, charity records, contracts, corporate filings, and internal communications—a small group of N.R.A. executives, contractors, and venders has extracted hundreds of millions of dollars from the nonprofit’s budget, through gratuitous payments, sweetheart deals, and opaque financial arrangements. Memos created by a senior N.R.A. employee describe a workplace distinguished by secrecy, self-dealing, and greed, whose leaders have encouraged disastrous business ventures and questionable partnerships, and have marginalized those who object. “Management has subordinated its judgment to the vendors,” the documents allege. “Trust in the top has eroded.”

One prominent longtime NRA member told me “If keeping Wayne on for another few years is the price we have to pay to get rid of Ack-Mac, it’s worth it. Wayne can be a problem, but Ack-Mac is unsurvivable. They’ve very nearly killed their host organism. Go to their homepage and look at their client list and ask yourself where this podunk ad agency gets off billing the NRA $40M/yr.”

Similar thoughts from Shall Not Be Questioned:

Wayne’s extravagance is the new story in the media after the Board members who had dealings with the PR firm were ousted. I don’t feel sorry for Wayne. He invited this on himself by doing stuff like this in the first place. Why were expenses being funneled through Ack-Mac? I can’t see any legit reason for that other than keeping them off NRA’s books. Lie with dogs and don’t be surprised when you get fleas.

But my overriding goal is getting through New York State’s assault on the NRA and excising the parasite PR firm. Everything else is small potatoes. If Wayne wants to say ten Hail Marys and agree to sin no more that’s fine.

The New Yorker piece also mentions the controversy over Carry Guard:

In 2017, visitors to the N.R.A.’s annual meeting, at a convention center in Atlanta, noted a huge banner that ran nearly the full length of the building. It was there to promote a newly launched program called Carry Guard, for members who wanted to protect themselves with firearms. The program offered military-style training, overseen by former Special Forces members, and liability insurance to cover policyholders who had shot people in self-defense. The banner featured an image of Dana Loesch, holding an insurance card and announcing, “I will never carry a gun without carrying this.” On the showroom floor was a Carry Guard virtual-reality exhibit, where participants, equipped with electronic handguns and V.R. goggles, were encouraged to fire away at an armed robber.

Ackerman had been deeply involved in developing Carry Guard, and it marketed the insurance aggressively, through e-mail campaigns and an NRATV program called “Carry Guard Daily.” The promotional literature included a guide called “Surviving the Aftermath of a Self-Defense Shooting,” which advised prospective buyers that it was important to “establish for police that you were in fear for your life and did what you felt was necessary.”

According to sources familiar with the N.R.A.’s business decisions, Carry Guard was intended to secure the organization’s long-term prosperity. The N.R.A. had spent more than fifty million dollars on the 2016 elections, mostly in support of Donald Trump, and it badly needed revenue. Brian Mittendorf, the chair of the accounting department at Ohio State University’s Fisher College of Business, has analyzed eleven years’ worth of the organization’s public financial statements, starting in 2007. In seven of those years, he told me, “the N.R.A. owed more money to others than it had at its discretion to spend.” A financial audit from 2017 revealed that it had nearly reached the limit of a twenty-five-million-dollar line of credit. Additionally, it had been forced to liquidate more than two million dollars from an investment fund, borrow almost four million from its officers’ life-insurance policies, and tap another five million from its affiliated charitable foundation.

Carry Guard pissed off a lot of longtime NRA trainers, who had gone through all the NRA teaching and certification courses, only to have Carry Guard instituted from outside as a high profile alternate program they had no input into, and which cut them out in favor of newcomers without their experience training civilians in proper gun use techniques. Ordinary members were also miffed that 1911s and revolvers were not allowed in the new Carry Guard classes. In addition, the consensus seems to be that USCCA insurance is better than Carry Guard’s insurance (plus many people were pissed off that, after Carry Guard was introduced, USCCA was disinvited from the annual NRA meeting). (There are also other programs out there; John Daub had insurance through Armed Citizens Legal Defense Network when he had his home invasion.)

Carry Guard was supposed to be a source of revenue for the NRA, but it’s turned into a black hole, and no one if sure if it’s even continuing at this point.

The New Yorker published a new piece on the NRA yesterday:

The N.R.A.’s relationship with Ackerman seems to be the most prominent example of an organizational culture that is marked by secrecy, self-dealing, and greed, and has cost the N.R.A. hundreds of millions of dollars through bloated payments, lavish deals, and opaque financial arrangements. The memo to the audit committee appears to show that the N.R.A.’s troubles stretch beyond its dealings with Ackerman. It suggests new examples of unexplained spending, weak oversight, mismanagement, and conflicts of interest among members of the N.R.A.’s senior management.

Snip.

One of the senior N.R.A. executives mentioned in the audit-committee memo is Woody Phillips, who served as the organization’s treasurer and chief financial officer for twenty-six years before retiring, in 2018. The document states, without explanation, that the N.R.A. had made “payments” to Phillips’s “significant other.” Brewer challenged the accuracy of the assertion. “Payments were not made to any ‘significant other’ of the N.R.A.’s former C.F.O.,” Brewer wrote. “The N.R.A. hired an I.T. consulting firm with links to a social friend of Mr. Phillips. That firm was interviewed and vetted by the N.R. A.’s I.T. department, and its engagement was reviewed and approved by the audit committee.”

The accountants described invoices submitted by several venders [sic] and paid by the N.R.A. as “vague and deceptive.” One questionable arrangement involved Associated Television International, a television-production company. From 1998 to 2014, A.T.I. produced a crime-reënactment [sic] show called “Crime Strike,” which featured the N.R.A.’s executive vice-president and C.E.O., Wayne LaPierre. According to the accountants, the N.R.A. paid A.T.I. “$1.8M for rental of a house” belonging to David McKenzie, A.T.I.’s president. The accountants do not say who rented the home, why the N.R.A. covered the rental at such an enormous cost, nor what, if anything, was “deceptive” about the bill.

Michael Donaldson, A.T.I.’s outside counsel, confirmed that the company sent the N.R.A. “seven invoices” concerning the house, which added up to “almost $1.8 million.” He went on, “The invoices in question were all for refurbishing episodes after completion of the original episodes of ‘Crime Strike,’ ” adding, “the invoiced amounts include not only the house but also various production-related items such as lights, props, and some crew.” Donaldson told me that A.T.I. has “stopped rendering services for the N.R.A. for some time.”

There’s more in that vein, including the people at the center of the controversies:

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.

Says John Richardson at No Lawyers – Only Guns and Money:

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.

The fact that the New Yorker is hostile to gun rights and the NRA shouldn’t blind us to the fact that there are very real financial oversight issues that need to be addressed, and the NRA audit committee isn’t far enough away from those problems to address them. The NRA board should bring an outside audit team from one of the big five accounting forms with expertise in nonprofits to do a full, forensic audit of NRA finances going back at least five years.

There are some that claim cleaning up the NRA would offer too much succor to the gun-grabbers. But the organizational dysfunction and self-dealing is already out in the open, and is already hurting the NRA’s effectiveness (and has been for several years). If not now, when? Better to do it now, the year before a Presidential election, with Republicans holding the White House and the Senate able to block gun-grabbing initiatives, than during it.

Other than being a member, I am very far indeed from the center of NRA power. For all the grumbling over the NRA caving over bump-stocks, there’s no other organization with the size, scope and political power of the NRA to protect Second Amendment rights in America. But to do that, the NRA has to be on solid organizational and financial footing, and right now it does not appear to be on either. The NRA has to get its own house in order, this year, or expect forces hostile to it and its goals to do it for them.

Similar thoughts from Richardson:

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.