Jury finds NRA liable for mismanagement, says Wayne LaPierre violated duties

LaPierre and an NRA executive must pay a combined $6.35 million, the NY AG said.

February 23, 2024, 8:40 PM

After five days of deliberations, a jury in New York on Friday held the National Rifle Association liable for financial mismanagement and found that Wayne LaPierre, the group's former CEO, corruptly ran the nation's most prominent gun rights group.

LaPierre and a senior executive at the NRA must pay a combined $6.35 million "for abusing the system and breaking our laws," New York Attorney General Letitia James, whose office brought the lawsuit against the organization, said following the verdict.

The jury determined that LaPierre's violation of his duties cost the NRA $5.4 million in damages, though he already repaid more than $1 million to the organization. He must pay $4.35 million, the New York Attorney General's Office said.

PHOTO: Wayne LaPierre, CEO of the National Rifle Association, leaves New York State Supreme Court, Feb. 23, 2024, in New York.
Wayne LaPierre, former CEO of the National Rifle Association, leaves New York State Supreme Court, Feb. 23, 2024, in New York.
Frank Franklin II/AP

LaPierre, staring forward with his hands clasped in his lap, sat in the first row of the gallery while the jury read the verdict. He did not speak to the press upon leaving the courthouse Friday.

The New York Attorney General's Office sued the NRA and its senior management in 2020, claiming they misappropriated millions of dollars to fund personal benefits -- including private jets, family vacations and luxury goods. The accusations came at the end of a three-year investigation into the NRA, which is registered in New York as a nonprofit charitable corporation.

The jurors, who began deliberating on Feb. 16, were asked to weigh transactions like hair and makeup for LaPierre's wife, payments or speaking fees to board members, and contracts with favored vendors willing to pay kickbacks.

LaPierre announced his resignation from the organization on Jan. 5, days before the start of the trial, citing health reasons, according to the NRA.

The lawsuit alleged that LaPierre filled executive positions at the NRA with unqualified loyalists in order to maintain control and conceal self-dealing, including co-defendants John Frazer, corporate secretary and general counsel, and Woody Phillips, the former chief financial officer and treasurer, the attorney general's lawsuit said. The three of them stand accused of breaching the trust of donors by using charitable money for luxury travel, private planes and five-star hotels, along with entering into multimillion-dollar contracts with favored vendors willing to pay.

Wayne LaPierre, former CEO of the National Rifle Association, arrives for jury selection for the trial of the NRA, at New York State Supreme Court in New York City, Jan. 8, 2024.
Brendan McDermid/Reuters

The jury found that Frazer and Phillips were liable for violating their duties to the organization. Philips was ordered to pay $2 million in damages, the attorney general's office said.

The jury also found that the NRA failed to properly administer charitable funds and violated state whistleblower protections, the office said. Frazer and the NRA were also found liable for making false statements on the NRA's regulatory filings, the office said.

The jury found that there was not enough evidence to provide cause for removing Frazer as secretary of the NRA.

James said the verdict is a "major victory" for her office and the people of New York and that LaPierre and the NRA "are finally being held accountable for this rampant corruption and self-dealing."

"In New York, you cannot get away with corruption and greed, no matter how powerful or influential you think you may be," she said in a statement on X. "Everyone, even the NRA and Wayne LaPierre, must play by the same rules."

The NRA said the verdict confirmed that it was "victimized" by former vendors and fiduciaries "who abused the trust placed in them."

"We appreciate the service of the jury and the opportunity to present evidence about the positive direction of the NRA today,” NRA President Charles Cotton said in a statement, adding that NRA members "should be heartened by the NRA's commitment to best practices."

"To the extent there were control violations, they were acted upon immediately by the NRA Board beginning in summer 2018," the statement continued.

The next phase of the proceedings will be a bench trial in which Justice Joel Cohen is expected to rule on any final remedies against the defendants, the NRA said.

A fourth defendant, former NRA operations director Joshua Powell, settled civil claims of fraud and abuse brought by James prior to the start of the trial.

As part of his settlement, Powell admitted he breached his fiduciary duties of care, loyalty and obedience by using the NRA's charitable assets for his own benefit and the benefit of his family. He also admitted he failed to administer the charitable assets entrusted to his care properly.

During closing statements on Feb. 15, LaPierre's lawyer argued the lawsuit was politically motivated and that he "acted in good faith and with honesty, sincerity and intention," according to The Associated Press.

The state told jurors that the NRA and its executives were "caught with their hand in the cookie jar" and were trying to deflect, while the NRA's lawyer said that any corruption was committed against, not by, the group, according to the AP.

Lawyers for Frazer and Phillips told jurors their clients acted in good faith and in the best interests of the NRA, the AP reported. Phillips' lawyer said his client "doesn't deserve to be made penniless," according to the AP.

James' lawsuit seeks to recoup lost assets and permanently ban LaPierre and the others from serving on any charitable boards in New York. Powell accepted that ban as part of his settlement agreement. He also agreed to pay $100,000 in restitution and to testify against LaPierre and others at trial.

In this May 3, 2018, file photo, merchandise with the National Rifle Association logo is on display ahead of the NRA annual meeting in Dallas, Texas.
Bloomberg via Getty Images, FILE

The lawsuit additionally seeks an independent monitor to oversee the NRA's finances.

The NRA tried to file bankruptcy in 2021 but a federal judge rejected its petition, saying, "The NRA did not file the bankruptcy petition in good faith."

LaPierre previously said the New York attorney general's lawsuit was an "unconstitutional, premeditated attack aiming to dismantle and destroy the NRA -- the fiercest defender of America's freedom at the ballot box for decades."

In 2020, following the attorney general's filing of the suit, an NRA spokesperson said in a statement that at the time that LaPierre was "required to travel private for security purposes, in accordance with NRA Board policy," and that he was "asked by the NRA's former advertising agency to incur certain wardrobe expenses given his enormous public profile."