America’s gun lobby is going to war with itself. Again. Or maybe this current skirmish is just a continuation of the previous conflict? Honestly, with so many self-dealing dickheads involved, it’s hard to keep track.
The National Rifle Association and its former charitable arm, the 1791 Foundation (f/k/a the NRA Foundation), are currently suing each other in two different federal courts, with a third lawsuit filed Wednesday in DC Superior Court. The NRA claims the Foundation was hijacked by a dissident faction loyal to disgraced former CEO Wayne LaPierre. The Foundation says the NRA used it as a “piggy bank” for decades and is now fudging its numbers with the charity’s cash to hide a looming insolvency crisis. ¿Por qué no los dos?
The NRA’s operatic implosion in 2019 revealed a truly comical level of corruption, as LaPierre and his cronies passed donor money to themselves through the non-profit’s advertising firm Ackerman McQueen. The firm produced NRATV, a streaming channel of culture war content, such as photoshopping Klan hoods onto Thomas the Tank Engine characters to protest the addition of a Black, female train from Kenya. On-air talent included various NRA officers, including Oliver North, who quit his job as a Fox commentator when he was named president of the NRA board, only to be awarded a $1 million contract to produce NRATV content by Ackerman McQueen. The advertising firm, which pocketed $40 million a year from the Foundation, also paid various personal expenses for LaPierre and his family.
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North was ousted by LaPierre’s allies after threatening to blow the whistle. But a lawsuit by New York Attorney General Letitia James upended the entire organization. A jury found LaPierre liable for breach of fiduciary duty in February 2024, after which he was banned from serving as an NRA officer or director for ten years and ordered to pay $4.35 million in damages. It’s the position of the current NRA leadership that all the prior unpleasantness was LaPierre’s doing, and ended with his departure.
Meanwhile, DC Attorney General Karl Racine filed his own lawsuit in 2020 targeting the Foundation. As a 501(c)(4) that engages in political lobbying, the NRA can’t accept tax-deductible contributions. But the Foundation is a 501(c)(3), so donors can take a tax deduction on gifts. Racine alleged that members of the Foundation’s board of trustees, many of whom were NRA directors and officers, had breached their fiduciary duty by letting the NRA use the Foundation’s $200 million in assets as a virtual piggy bank.
“The Board approved multi-million-dollar loans to the NRA with the knowledge that the NRA had financial problems, and the Foundation might not be repaid,” he said. “The Board also agreed to pay millions more in fees to the NRA without any apparent benefit to the Foundation.”
In April 2024, on the eve of trial, the Foundation entered a consent judgment requiring it to implement a raft of governance reforms aimed at ensuring that the charity acted in the best interest of its donors, rather than the NRA. In accordance with the settlement, the board members voted in August to strip the NRA president and EVP of their ex officio board seats and eliminate the NRA’s right to appoint Foundation trustees.
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NRA VP Doug Hamlin reviewed the proposed amendments in advance and confirmed his assent as long as he could still make recommendations about funding priorities. Nine of eleven trustees who voted in favor of the amendment were sitting NRA board members. Nevertheless, NRA’s leadership purported to be shocked, shocked that the Foundation would be so uncooperative after the overhaul. According to the Foundation, it rebuffed requests to buy the NRA’s headquarters building or to pay $800,000 for a firearms collection of “no particular historical significance.” Eventually, the NRA demanded that the Foundation start handing over 20 percent of its revenues as a “royalty” on the name “NRA Foundation” — the legal name of the entity, which it had been using without paying a licensing fee for decades.
In January, the NRA sued the Foundation in federal court in DC, alleging trademark infringement, breach of charitable trust, and a grab bag of other claims under DC law. Per the complaint, the August 2024 board meeting was a secret coup by LaPierre loyalists to undermine the reformers righting the mothership.
On June 24, Judge Sparkle Sooknanan dismissed everything but the trademark dispute, declining to exercise jurisdiction over the charitable trust, breach of contract, and governance claims, which involve novel questions of DC charitable law. The NRA immediately refiled the dismissed claims in DC Superior Court.
The following day, the Foundation filed its own complaint in the Eastern District of Virginia. It alleges that, when the Foundation refused to pay the “royalty,” the NRA cut off access to donor lists, locked the Foundation out of its own social media accounts, and launched a competing charity to poach the Foundation’s donors.
The complaint also alleges that the NRA is fraudulently representing to the IRS and its own auditors that it retains “control” over approximately $176 million of Foundation assets, allowing it to claim net assets of $257 million, rather than $81 million:
But beyond retaliating against the Foundation, the NRA took action to deceive its auditors and the public. Recognizing that deconsolidation of the Foundation from the NRA for accounting purposes would strip approximately $176 million in net assets from the NRA’s financial statements — likely triggering a going-concern qualification that would reveal the NRA’s true financial condition to its creditors and the public (including its members and donors) — the NRA filed its lawsuit as a pretext to tell its auditor that the Foundation’s lawful governance reforms were invalid and that the NRA still “controls” the Foundation. The NRA then directed two of its own employees — who held dual NRA/Foundation finance titles — to sign a Management Representation Letter to the NRA’s auditor on the Foundation’s behalf, from the NRA’s headquarters, using NRA email addresses, without the knowledge, authorization, or consent of the Foundation’s actual management or Board. That letter falsely represented to the auditor, on behalf of the Foundation, that the NRA had “maintained control over the Foundation” and that the Foundation’s governance amendments “did not follow regulatory and legal requirements.” The Foundation’s Board and management never saw, reviewed, or approved this letter.
It’ll be hard to blame that one on Wayne LaPierre! But you know they’re gonna try.
Liz Dye produces the Law and Chaos Substack and podcast. You can subscribe by clicking the logo:
