Tag Archives: Ackerman McQueen

NRA may lose tax-exempt status due to internal corruption

A long article by Mike Spies, “Secrecy, Self-Dealing, and Greed at the N.R.A.,” in The New Yorker, April 17, 2019, describes the National Rifles Association (NRA) as being in serious trouble.

The Hill reports that the New Yorker article led gun-control group Everytown For Gun Safety (EFGS) to file an IRS complaint on April 19, claiming that the NRA is in violation of tax laws on charitable organizations and should be investigated. As EFGS says in a letter attached to their complaint:

The NRA is a purported charity and exempt from federal tax under section 501(c)(4) of the Internal Revenue Code and we write today to alert you to what we believe are activities that clearly fall outside of the NRA’s charitable purpose and mission. We call on the IRS to commence an investigation into whether (i) the NRA has violated the federal laws governing 501(c)(4) charitable organizations, and (ii) if so, consider what remedies are warranted, including potential revocation of the NRA’s 501(c)(4) status.

For his New Yorker article, Mike Spies conducted interviews and obtained the NRA’s federal tax forms, charity records, contracts, corporate filings, and internal communications. Although the “vast majority” of contributions to the NRA come from “millions of small individual donors”, what Spies uncovered is an organization of secrecy, corruption, and grossly overpaid executives. Memos by a senior NRA employee describe a workplace distinguished by secrecy, self-dealing, and greed, whose leaders have encouraged disastrous business ventures and questionable partnerships, while marginalizing those who object.

Spies’ article, “Secrecy, Self-Dealing, and Greed at the N.R.A.,” begins with an admission by NRA top executive Wayne LaPierre that the organization is “troubled”. Here are the signs of financial trouble:

  • In recent years, the NRA has run annual deficits of as much as $40 million.
  • A financial audit from 2017 revealed that the NRA had nearly reached the limit of a $25 million line of credit.
  • According to minutes of a meeting of the NRA board’s finance committee in December 1996, “the NRA has been technically insolvent for several years” and “has incurred substantial debt.”

To raise money, the NRA:

  • Raised its dues for the second time in two years.
  • Liquidated more than $2 million from an investment fund.
  • Borrowed almost $4 million from its officers’ life-insurance policies, while the costs of insurance increased by 341% from 2018 to 2019.
  • Tapped another $4 million from its affiliated charitable foundation.

To cut costs, the NRA:

  • Eliminated free coffee and water coolers at its headquarters.
  • Froze its employees’ pension plan.
  • Reduced spending on its avowed core mission of gun education, safety, and training to less than 10% of its total budget.

The source of the NRA’s insolvency is a small group of executives, contractors and vendors who “extracted hundreds of millions of dollars from the nonprofit’s budget, through gratuitous payments, sweetheart deals, and opaque financial arrangements“.

The small elite group who’s bleeding the NRA dry includes:

  1. LaPierre, who earns more than $1 million a year.
  2. Dana Loesch, NRA spokesperson and former Breitbart News editor, who earned close to $1 million in at least one year.
  3. Oliver North, NRA president and former Iran-Contra operative, is paid roughly $1 million a year.
  4. Kyle Weaver, former executive director of NRA’s general operations who was fired in the fall of 2016, nevertheless was paid $720,000 for that year. State filings show Weaver also received $150,000 upon his exit, and continued to be paid through 2018, receiving “a final lump sum” this past January.
  5. Weaver’s successor, Josh Powell, was paid nearly $800,000 in 2017. Powell came to the NRA after running two clothing catalogues that catered to men who enjoy adventure, venison, and fine wine. He was sued at least 20 times by businesses that had worked with him, for unpaid bills amounting to more than $400,000. In December, 2018, Powell was moved out of the job of executive director of general operations, and was “promoted” to the NRA’s legal team as  a “senior strategist” although he is not an attorney.
  6. Mike Marcellin was a senior NRA employee for almost 23 years who oversaw the NRA’s relationship with Lockton Affinity, an insurance administrator that worked on Carry Guard and other NRA-branded insurance products. Iin 2016, Marcellin retired from the NRA and started a private consultancy. Although he had worked only the first few weeks of January, the NRA paid him a full year’s salary — nearly $630,000, mostly in the form of a bonus. During the same year, Lockton paid him about $450,000. No one was aware that Marcellin was receiving income from both organizations—a situation that should have been disclosed on the NRA’s 2016 tax filings.
  7. Curiously, North and Loesch technically are not employed by the NRA, but are paid by Oklahoma-based public-relations firm Ackerman McQueen, which has shaped the NRA’s public identity for more than 30 years, wields great influence over the NRA’s initiatives, and is involved with nearly all of the group’s divisions. In 2017, according to tax filings, the NRA paid Ackerman McQueen and its affiliates $40.9 million, or about 12% of the NRA’s total expenses that year.

The NRA and Ackerman McQueen 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. For instance, Ackerman has worked closely with LaPierre’s wife, Susan, who maintains an Ackerman e-mail address and was briefly employed there in the mid-1990s.

Many NRA employees have long suspected Ackerman of inflating the cost of the services it provides. Aaron Davis, a former special-education teacher from rural South Carolina who spent a decade working in the NRA’s fund-raising department, told The New Yorker: “Most staffers think that Ackerman is too expensive. They think they’re just using the N.R.A. to make a massive profit.”

On April 12, the NRA sued Ackerman McQueen, claiming that the PR firm has denied the NRA access to basic business records, including the terms of Oliver North’s contract, and blaming Ackerman for the NRA’s financial insolvency.

Marc Owens, who was head of the Internal Revenue Service division that oversees tax-exempt enterprises for 10 years, recently reviewed the NRA’s records, said:

“The litany of red flags is just extraordinary. The materials reflect one of the broadest arrays of likely transgressions that I’ve ever seen. There is a tremendous range of what appears to be the misuse of assets for the benefit of certain venders and people in control. Those facts, if confirmed, could lead to the revocation of the N.R.A.’s tax-exempt status.

Without its tax-exempt status, the NRA likely will not survive.

H/t truckjunkie and Guns & Gadgets

~Eowyn

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