Final Judgment Brings New York AG’s Suit Against the NRA to an End With Both Sides Claiming Victory

A final order issued by New York Supreme Court Judge Joel M. Cohen today brings to a close the six-year battle between Attorney General Letitia James and the National Rifle Association. The AG’s lawsuit was filed in the aftermath of disclosures of years of mismanagement and malfeasance on the part of NRA officers including former Executive Vice President Wayne LaPierre.

You can read Judge Cohen’s order here.

In the grand tradition of paying public relations people to make virtually any noteworthy event sound like a good thing, both the Attorney General and the NRA are painting the final outcome of this years-long epic battle as a win. The AG touts the millions in fines to be paid by both LaPierre and former NRA Chief Financial Officer Wilson “Woody” Phillips, along with significant governance and compliance measures that are to be instituted by the NRA.

For its part, the NRA claims that with the end of this epic legal saga, the Association has successfully fought off James’s attempt to shut down the 153-year-old organization. They also say the governance and compliance measures the judge has decreed were steps the NRA wanted to take anyway and some of them have already been put in place.

OK then.

Here’s the Attorney General’s statement regarding Judge Cohen’s order . . .

Attorney General James Secures Court Victory Against NRA Following Jury Verdict that NRA Violated State Laws, Court Requires NRA to Significantly Reform its Governance and Board Elections Process  Court Requires Wayne LaPierre and Woody Phillips to Pay $6.35 Million Ordered by Jury Plus Nine Percent Interest NEW YORK – New York Attorney General Letitia James today secured another victory against the National Rifle Association (NRA) with a judgment requiring the NRA to significantly reform its governance to abide by New York’s not-for-profit laws. This judgment follows a jury verdict which found that the NRA failed to properly administer charitable funds and violated state laws, its former Executive-Vice President Wayne LaPierre caused the NRA $5.4 million in damages, and its former Chief Financial Officer Wilson “Woody” Phillips caused the NRA $2 million in damages. Based upon the trial evidence presented by the Office of the Attorney General (OAG), the court found that the NRA must enact more than a dozen reforms to its governance to prevent future violations of law.  The judgment requires the NRA to change how it conducts its board elections, hire an outside consultant to advise on the NRA’s compliance with the court’s directives and other governance practices, and increase leadership’s transparency and communication with board members. The NRA is also ordered to change its audit committee, by permanently barring anyone who served on the committee between 2014 and 2022 from continuing to serve on the committee and requiring future members to be elected by the full board, not hand-picked by the Board President. The judgment also requires LaPierre to pay the $4.35 million and Phillips to pay the $2 million ordered by the jury plus nine percent interest per year. “For decades, the NRA let self-interested and self-dealing insiders run the organization with complete disregard for the rule of law,” said Attorney General James. “As a result of my office’s efforts to stop corruption at the NRA, the NRA has been forced to clean house. Wayne LaPierre, who resigned from his 30-year tenure at the NRA on the eve of trial, is barred from returning to the organization or its affiliates in any fiduciary role for over a decade. This decision requiring the NRA to significantly reform its governance, and the jury’s verdict earlier this year, should send a clear message that we will hold not-for-profits and their leaders accountable when they violate our laws.” In February 2024, Attorney General James won the first stage of a two-part trial when a jury found the NRA, LaPierre, Phillips, and former General Counsel and current Corporate Secretary John Frazer violated state laws. The jury found that the NRA failed to properly administer charitable funds and protect whistleblowers, that the NRA and Frazer made false regulatory filings, and that LaPierre and Phillips, together, caused the organization $7.4 million in monetary harm. Ahead of the second stage of the trial, OAG reached a settlement with Phillips in which Phillips agreed to a 10-year ban from serving as a fiduciary of a not-for-profit in New York. In the second phase of the trial, Attorney General James secured a 10-year ban on LaPierre from serving as an executive at the NRA and its affiliates. As a result of the jury’s findings, today’s judgment requires the NRA to make significant changes to its governance, structure, and bylaws, including: Hiring a compliance consultant, subject to OAG review and court approval, to work with the NRA’s Chief Compliance Officer to implement court-ordered remedies and recommend best governance practices; Requiring the full board to elect members of the audit committee, which was previously comprised of loyalists to LaPierre who failed to exercise proper oversight of the organization’s finances; Requiring the NRA to remove and not reappoint current members of the audit committee who served on that committee at any time from 2014 through 2022; Changing how board members are elected to reduce entrenchment among longtime board members; Requiring more transparency and fairness in the board nomination process; Issuing to its members an annual compliance report by the Chief Compliance Officer of travel expenses, contract procurements, and other topics, for a minimum of five years; Enhancing the certification process for its annual regulatory filings, including its CHAR500, with OAG by requiring certifications from the NRA Executive Vice President and Treasurer, for a minimum of five years; Implementing protections for the Chief Compliance Officer so that he may do his job free from fear of retaliation; and Providing online access to board members of board governance materials, regulatory filings, and substantial legal rulings, increasing transparency within the NRA. Attorney General James filed a lawsuit against the NRA and the other current and former senior officers in August 2020. In January 2021, the NRA filed for bankruptcy in an attempt to avoid accountability by trying to reorganize in Texas. In May 2021, a federal bankruptcy court in Texas rejected the NRA’s bankruptcy petition, stating, “that the NRA did not file the bankruptcy petition in good faith.” On the eve of the first stage of the trial in January 2024, Wayne LaPierre abruptly announced his retirement as Executive Vice President and CEO of the NRA, a role he held for more than 30 years. In addition, OAG reached a $100,000 settlement with the NRA’s former Executive Director of Operations and Chief of Staff Joshua Powell before the trial’s beginning. At the conclusion of the six-week trial, the jury found all the defendants liable for violating New York not-for-profit laws and determined the damages due to the NRA from LaPierre are $4.35 million, in addition to the more than $1 million he had already repaid, and $2 million from Phillips, which is not affected by his settlement with OAG.   The OAG’s litigation and trial team was led by Assistant Attorney General and Special Counsel Monica Connell and Chief of the Enforcement Section Emily Stern, with a team of attorneys and legal assistants, including Bureau Chief James Sheehan, Assistant Attorneys General Jonathan Conley, Erin Kandel, Jonathan Lester, Alexander Mendelson, Steve Shiffman, Daniel Sugarman, Stephen Thompson, and William Wang, and legal assistant Nyna Sargent — all of the Charities Bureau. Additional assistance was provided by Sophia Friedman, Kenny Ip, Luz Ceballos-Lopez, Amanda Oh, Imani Saddler, and Jacqueline Sanchez. The Charities Bureau is part of the Division for Social Justice, which is led by Chief Deputy Attorney General Meghan Faux and overseen by First Deputy Attorney General Jennifer Levy.

And here’s the NRA’s spin on the outcome of the case . . .

NRA Successfully Resolves Longstanding Legal Battle with New York Attorney General

Fairfax, VA – The National Rifle Association of America (NRA) today announced the successful conclusion of a multi-year legal battle with New York Attorney General Letitia James. In August 2020, James sued to dissolve the Association and seize its assets following a campaign-trail promise to target the Association, its banks, and its donors. After the NRA defeated the NYAG’s “corporate death penalty” claim, James sought a court-appointed monitor to oversee the gun group. The court rejected that request this summer.

In the end, Justice Joel Cohen denied all invasive relief sought by the government. Instead, the court’s order is tailored to compliance and governance measures in the NRA’s interest—many proposed by the NRA itself, and several of which were already underway at the Association. The NRA pays no fines or penalties under today’s judgment. Instead, the judgment entitles the NRA to collect millions of dollars from former executives found to have breached their duties.

“The NYAG sought to shut us down, and then appoint outsiders to oversee management of this historic organization,” said NRA President Bob Barr. “Fortunately for freedom lovers everywhere, this politically motivated attempt failed. This was the ultimate stand at our moment of truth – defeating an unprecedented attack from the highest levels of New York government. The NRA remains strong, safe, and independent – continuing to protect freedoms.”

Today’s judgment caps a six-year saga during which the NRA withstood not only the NYAG’s  lawsuit, but a barrage of other blue-state regulatory actions, sweeping congressional inquiries, and a debanking effort by New York officials that became the subject of a blockbuster Supreme Court decision in June. In that case, NRA v. Vullo, all nine justices backed the Association’s First Amendment claims, and the ACLU stood shoulder to shoulder with the NRA against New York.

“The last six years have been difficult for NRA members, staff, and supporters,” said NRA CEO and Executive Vice President Doug Hamlin. “With Judge Cohen’s ruling, we can now put this challenging chapter in NRA history behind us and focus solely on the business of the members and all law-abiding gun owners. The NRA is committed to transparency, compliance, and good governance going forward. Today’s outcome ensures that NRA members can support the Association, America’s oldest civil rights organization, with confidence.”

SNW has also received a copy of the internal announcement of the order and final settlement that was sent to NRA employees by NRA EVP Doug Hamlin today . . .

To All:

Today is a good day for the NRA. The case brought against NRA by the New York Attorney General has just concluded. The attorney general called our proud association–comprised of millions of law-abiding Americans–a “terrorist organization” before she even took office. The objective was to have this 153-year-old American institution dissolved. She wanted the court to install a monitor to oversee our operations. None of that happened.

A jury trial earlier this year awarded financial penalties for some of NRA’s previous executives. That money will be coming back directly to the NRA to support our mission and programs.

That was followed by a bench trial. The final decision from New York Supreme Court Justice Joel Cohen was handed down today, and in it the court-ordered actions that were already in place or in process, plus some others that will be implemented by your leadership and board of directors.

The last six years have been difficult for NRA members, our Board of Directors, supporters, and especially, you, the NRA staff. With Judge Cohen’s ruling, we can now put this challenging chapter in NRA history behind us and focus solely on the business of the members and all law-abiding gun owners. The NRA is committed to transparency, compliance, and good governance going forward. Today’s outcome ensures that NRA members can support the Association, America’s oldest civil rights organization, with confidence.

God bless America, and long live the NRA!

Doug Hamlin
EVP/CEO

Our quick reading of the outcome — and one that was echoed by another knowledgeable long time watcher of this years-long drama — is pretty much what we thought and hoped would be the result when the lawsuit was announced, lo these many years ago.

To wit: The Attorney General of New York, one of the most anti-gun politicians in one of America’s most anti-gun states, has accomplished what the NRA’s board of directors and its five million members had been unable to do. Her legal action has managed to flush the most venal rats out of their lucrative holes in Fairfax. And the judge has imposed what appear to be basic, common-sense reforms that any responsible non-profit that actually cares about serving its members should be eager to put in place.

We shall see.