Special Litigation Committee - Thoughts from the NRA Trial Part 4
Are the NRA "Gang of 4" protecting themselves, or the NRA members?
Thanks to the shout out from NRA in Danger Blog for my previous post. The NRA in Danger Blog is very helpful by filling in details for when I am unable to watch the testimony live. This blog is a must read for any following the NRA trial.
Reading the filings in the NY AG suit and the related depositions and listening to the testimony in this trial raises the question, Are NRA EVP LaPierre, and the Officers of the NRA Board, President Meadows, 1st VP Cotton and 2nd VP Lee protecting themselves, or the members of the NRA?
Meadows, Cotton and Lee comprise the Special Litigation Committee (SLC). They claimed to be empowered by the Board to manage all of the litigation, including the power to restructure the NRA and even declare bankruptcy. The NRA Bylaws reserve those powers for the full board and they cannot be delegated.
Article XI, Sec 5 of the Bylaws clearly states, "No standing or special committee of the Board or Association shall exercise any powers prohibited to the Executive Committee." Despite this Cotton testified that the creation of the Special Litigation Committee was required because the Executive Committee did not have the power to declare bankruptcy. Apparently the attorneys for Akerman McQueen know more about the NRA bylaws than Cotton. Attorney Christina Carroll impeached Cotton's claim by reading the Bylaw to him.
The depositions and the testimony raise troubling patterns. EVP LaPierre used a surrogate to make credit card charges, never submitted receipts or documented business purposes and when CFO Spray put in appropriate management controls, never took the required compliance training. LaPierre claimed legal privilege and refused to provide CFO Spray with the details of the excess benefit calculation used in the IRS 990 filing and he subsequently fired CFO Spray. The Officers apparently support this action.
Michael Ursling, NRA Director of budget, and one of the whistleblowers that brought the financial improprieties to the attention of the Audit committee back in 2018, testified that he had not seen Cotton attend any of the compliance training sessions. How can the head of the Audit committee ensure the EVP’s compliance with policies if he isn’t aware of them? Ursling also testified that Cotton left the Audit committee meeting when the whistleblowers were making their whistleblower presentation. The Audit committee had ample opportunities to address the improprieties before it exploded into lawsuits. Cotton has a clear conflict of interest as the financial improprieties should have been addressed by the Audit committee under his leadership.
President Meadows testified by deposition that she did not know the amount of the NRA budget. She also testified that she does not review Brewer invoices. CFO Rowley testified that the Brewer invoice submitted the day the bankruptcy was filed, was for in excess of $1 million, and had no supporting detail, yet the SLC approved it in under 4 hours. This is a clear violation of the standing financial controls for invoices of that amount.
2nd VP Lee testified that the SLC has unanimously approved the Brewer invoices (see Meadows testimony above that is contrary). Lee also testified that members should trust him to clean up the governance issues because he was elected 2nd VP by the Board which was elected by the members. Well Mr. Lee, you’ve been in office for several years, we’re still waiting for you to take action.
The SLC negotiated a restructuring agreement with the Ankura company for a Chief Restructuring Officer (CRO) and related services, without any input from the CFO. Art V, Sec 1(b) of the Bylaws state clearly "The Board may not abolish said offices nor create any other offices. The contract calls for the Ankura work to report to the SLC. The CRO would only be responsible for administrative areas, finance, HR, IT - core operations, membership, marketing, ILA, fundraising, communications would remain under EVP LaPierre. How is this restructuring?
No-one testified to the potential cost or a budget for the CRO. This is a repeat of the pattern under CFO Phillips and Josh Powell for unplanned and unbudgeted spending. This CRO is no more than a fig leaf that keeps the Gang of 4 in power and the SLC continuing to enable EVP LaPierre without any oversight or accountability.
Hopefully the Court will see through this CRO sham and appoint an Examiner as Judge Journey has petitioned “to bring to light the veracity of the alleged fraud, dishonesty, incompetence, and gross mismanagement that has plagued the NRA’s reputation caused significant alienation of the Association’s members and supporters, and hampered its ability to fulfill its core organizational purpose.”
I’ve been a vocal critic of NRA EVP Wayne Lapierre for his leadership style, and the Board leadership in not properly exercising their fiduciary responsibilities by submitting petitions calling for EVP Lapierre’s resignation as well as the resignation of the Board Officers and members of the executive, audit and finance committees at the 2019 and 2020 NRA Annual meetings. If they have not been removed by the 2021 meeting in Houston, I will do so again.
The 2021 Board election is where the members can have a say and change the culture of the NRA Board and get long overdue new leadership. The only director up for re-election that deserves support is Owen “Buz” Mills as he is publicly supporting Judge Journey’s efforts to reform the NRA. The remaining board candidates deserve no vote.
I ask that you please write me in on the ballot for the 2021 board of directors election when you get you ballot in the next couple of weeks. It will be out in the June/July issue of your NRA magazine.
Write In’s MUST have the information as depicted below. Thank you for your support.
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