Manhattan, New York — The remedies phase of the NRA’s civil trial has begun.

The trial’s first phase concluded in February, with a jury finding the NRA failed to safeguard its charitable assets and ordering former Executive Vice President Wayne LaPierre to repay millions in misdirected funds. While this phase of the trial is without a jury and expected to be a third of the length of the first phase, it may prove much more consequential to the NRA’s future: the Attorney General is seeking implementation of remedial reforms, a court-appointed independent consultant, new disclosure practices, the barring of Wayne LaPierre from any leadership role at the NRA or any NRA-affiliated organization, and a more constrained role for John Frazer.  The NRA maintains the governance problems at issue in the first phase of the trial have already been dealt with internally, and no further court action is warranted. But some of its members and officials scheduled to speak in the case are unhappy with either side.

Judge Joel Cohen is tasked with deciding the fate of the nation’s largest gun-rights group over the course of the next two weeks, which The Reload will publish periodic updates on as the trial progresses.

Day One

The New York Attorney General called two witnesses who featured prominently in the first phase of the trial: former NRA president Charles Cotton and expert witness Jeffrey Tenenbaum.

Charles Cotton, Former NRA President

The New York Attorney General’s first witness was Charles Cotton, whose testimony in the trial’s first phase was drawn out over several days.

The New York Attorney General scrutinized the NRA’s response to the verdict of the first phase of the trial, as well as the organization’s stance towards its former EVP, Wayne LaPierre. Citing a triumphant NRA press release following the verdict of the first phase of the trial, the NYAG explored the NRA leadership’s reception of the verdict, to which Cotton responded, “I haven’t talked to a single board member who wouldn’t respect the jury’s findings on this.” NYAG also asked why, although LaPierre had been found to owe the NRA millions, there was “no public reprimand” – citing the same release – and asked, “You were a longtime supporter of Wayne LaPierre?” to which Cotton responded, “I was a longtime supporter of the NRA.” During the National Rifle Association’s cross-examination, Cotton clarified impressions of board entrenchment and corrupting social ties: “I don’t socialize with any board members” and that given the geographic dispersal, private meetings were rare – Cotton testified that LaPierre hadn’t ever traveled to solely meet with him until March 2019.

The New York Attorney General also used Cotton’s testimony to explore the leadership’s internal harmony.  On Cotton’s response to possible insider interest in disbanding its Special Litigation Committee, the former NRA president responded he’d never heard that interest voiced: “No one said that to me.” The NYAG raised questions about other disputes: including possible “booing” during an exchange between him and fellow board member Amanda Suffecoll. “I assumed the booing was because of her response,” Cotton said. He also used his testimony to describe procedural changes he believed would benefit the NRA, including that committee membership nominations should be more “like the Supreme Court,” where nominations by the president are confirmed by vote.

Cotton also lamented the toll the lawsuit had been taking on its ability to recruit leadership. “We’re not going to recruit a Lee Iacocca while this lawsuit is hanging over our heads,” he said.

Jeffrey Tenenbaum, NYAG Expert Witness

The Attorney General called another witness who had testified during the first phase: expert witness Jeffrey Tenenbaum, a DC-based nonprofit attorney. Tenenbaum’s testimony focused on a presentation of several reforms he recommended.  Multiple recommendations focused on NRA board composition and practices. While conceding that many large non-profits operate with sizable boards, Tenenbaum opined that a board of 12-20 would be preferable to the current 76-member board. He speculated that term limits, which he also specifically recommended, could drive such a shift, while also providing an opportunity to enact additional recommended changes, such as renewing the board with “age diversity” and removing inactive board members. Additional recommendations receiving lighter attention were regular board trainings, revision of purchasing procedures (including competitive bidding, requiring additional or different approvals above certain dollar amounts, and the removal of bidding exemptions).

Some recommendations were more narrow or had been at least partially satisfied. While Tenenbaum argued in favor of implementing an executive compensation committee to “measure performance against goals,” but agreed that the NRA’s annual officer elections, while “unusual,” allowed for much of the same function with respect to accountability and board oversight of leadership. Tenenbaum also took partial but emphatic issue with the “form and format” of the NRA’s Policy Manual: “It’s not a legal term but its a dumpster fire” but that the issues weren’t in the content – not taking issue with “the substance of the policy,” but more narrowly that it “needs to be rewritten.”

Some of Mr. Tenenbaum’s recommendations align with actions the NRA is planning or has taken. Tenenbaum, like Cotton had in his own earlier testimony, highlighted the value of board votes on presidential nominations. The hiring of Robert Mensinger as Chief Compliance Officer was also in line with Tenenbaum’s opinions: “very exciting that the NRA took my recommendation.” He hedged during testimony that “there’s a history of people like Mensinger being retaliated against,” and citing annual officer elections as a potential concern.

The NRA ensured to clarify whether these recommendations were closer to legal requirements or best practices, with Tenenbaum agreeing: “Non-profits are not, in the ordinary course, regulated to the degree proposed.”

Additional Notes

The NYAG unsuccessfully sought to block the NRA’s compliance plan (its “Compliance Commitments to Members”), which details an annual review of travel and entertainment expenses, contracts, related party transactions, and business ethics; continued special procedures by the NRA’s independent auditor, published to members; publishing whistleblower and large vendor data to members; an online portal to access board and committee documents for transparency; propose changing the Audit Committee to being elected through nominations by the president followed by votes of the full board to reject or ratify candidates; background checks and information-sharing policy commitments from all board candidates; banning related party transactions with board members or immediate family unless approved by the full board.

Day Two

The second phase of the trial continued into its second day with expert witness Jonny Frank and newly elected Executive Vice President and President Doug Hamlin and Bob Barr, respectively.

Jonny Frank, NYAG Expert Witness

The New York Attorney General began Day 2 of the bench trial with Jonny Frank, a former Assistant US Attorney and Partner at PricewaterhouseCoopers, to present typical features and considerations of Monitorships. The monitorship is the most significant remedy the Attorney General has sought since its original aim to dissolve the NRA was blocked by Judge Cohen near the outset of the case.

Drawing from his experience in a similar monitoring role at for-profit organizations such as Deutsche Bank and Fiat Chrysler, Frank presented a framework informed by the Department of Justice. First, he enumerated factors to consider when evaluating whether or not to appoint a monitor, then potential issues in deciding how an authority may do so.

In recommending questions to when evaluating whether to appoint an internal monitor, Frank applied the Department of Justice’s  “10-Factor Framework,” from its “Monitor Selection Memo.” In testimony and additional trial materials, he emphasized the following three areas of exploration: the adequacy of “remedial measures” the NRA has taken to address conduct, whether the NRA implemented an “Effective Compliance Program and Sufficient Internal Controls,” whether the NRA “adequately tested its compliance program and internal controls to demonstrate that they would likely detect and prevent similar misconduct in the future.” Frank raised questions about the individuals tasked with the investigation. “Are they reviewing their own work?” Are they an “advocate?” and is the investigator competent in the subject of inquiry? “Did they do that out of the box thinking with identifying internal controls?” he asked at one point. In congruence with the NYAG’s consistent themes, he emphasized the importance of “tone at the top.”

Less time was spent on describing how a monitor might be implemented. Specifically, what’s the monitor’s title, length of oversight, selection process, and mandate?

Selection and duration were relatively straightforward: Frank recommended that the NRA select candidates for a monitor from which the judge or attorney general can choose, and he said most monitorships last three years. Frank estimated that the cost of a monitor across three years would be $960,000 to $1,600,000. When the NRA inquired whether the breadth or lack of definition of the monitor’s Mandate could lead to “scope creep,” the witness agreed – but clarified with the help of Judge Cohen that, while the role “could expand larger than originally thought,” this may be positive.

Judge Cohen questioned Frank about the imposition of “external force” and whether there was “rigorous, academic” research regarding monitorships, particularly on “how effective they’ve been” and “how efficient they’ve been.” When asked whether monitors interfere in day-to-day operations, Frank said “absolutely not,” and that monitorship was “similar to a relationship with an auditor.”

The NRA countered that Frank’s guidance was not applicable. Most narrowly, the NRA stressed that the DOJ’s framework was intended for criminal rather than civil issues. More broadly, they questioned the generalizability of the type of organization. Frank confirmed he had “never been involved in a monitorship imposed on a nonprofit” instead having experience with for-profits. The NRA also emphasized that monitorships are typically a result of an agreement, while this monitorship would be compelled. When asked, “Have you ever heard of a monitorship being imposed on a nonprofit over its objection?” he replied, “I have not.” Frank cited an incident with Apple Computer in 2015, which became famously adversarial: “If Apple had entered into the monitorship voluntarily, these requirements likely would not have resulted in much contention,” said a law professor during the conflict.

Both the New York Attorney General and the NRA sought to contextualize whether the NRA’s own efforts had bearing on the value and impact of a monitor. With the backdrop of compliance programs that the NYAG’s experts applauded as “promising” but relatively new, the NYAG asked whether the maturity of compliance programs was important. Frank said, “Absolutely, its how far you’ve gone down the road.” However, Frank also confirmed that the NRA may have the tools of a monitor in its recently created Chief Compliance Officer (CCO) position. “A CCO can perform many of the functions, all of the functions of a monitor if its well-resourced and competent,” he said. He added, “The reason you have a third party is assurance that the company is going to do it and do it in a timely manner.”

Doug Hamlin, NRA Executive Vice President

The NRA board elected Doug Hamlin, the NRA’s former Executive Director of Publications, as Executive Vice President (EVP) at its most recent meeting in May. He replaced interim EVP Andrew Arrulanandam, who stepped into the role after LaPierre’s retirement just before the trial’s first phase. He took the stand on the second day of the trial, examined by Assistant Attorney General Monica O’Connell.

Hamlin was immediately questioned about his motivation for seeking the role and how long he expected to serve. “Did a lot of soul searching?” O’Connell asked. Hamlin maintained an even tone, repeatedly emphasizing the need for “fiscal responsibility” at the NRA throughout his testimony. “Do you consider yourself an interim?” O’Connell followed up. Hamlin responded that it’s “not entirely up to me,” “come April, it’ll be up to the board,” and that he’d be “open” to running again. Some of the uncertainty is due to the continued existence of an “Executive Search Committee,” confirmed by Cotton the previous day, and Hamlin’s further confirmation that he was “not even aware of an EVP search committee” until recently.

O’Connell spent most of her time delving into Hamlin’s actions in his first two months. Hamlin confirmed on the stand that he had split NRA co-defendant John Frazer’s role almost immediately, replacing him as General Counsel while retaining him as Corporate Secretary but maintaining his salary (during the first phase of the trial, Frazer confirmed he volunteered for a pay cut during COVID, which had, at least as of his testimony, not yet been fully restored). Hamlin also confirmed having rehired recently ousted staff to senior roles without inquiring about their cause of dismissal.

Another area of focus during Hamlin’s direct examination was his dealings with the board. Hamlin indicated he had not always been fully aware of the NRA Relocation Committee’s exploration of moving the organization’s office from Virginia to Texas. Asked by Judge Cohen for his reason for running despite feeling the NRA had been improving, Hamlin’s first response was “I think the move to Texas was a big part of it,” and earlier cited concerns that it would “destabilize” the staff. He also testified to killing a Letter of Intent signed by his predecessor two days after the phase one verdict, which later testimony described as “rushed.” The NYAG again, as it had with Charles Cotton, raised the question of interest in dissolving the Special Litigation Committee – the committee responsible for overseeing this very litigation. Hamlin confirmed he thought it should be disbanded and explained that he saw it as “authority that was taken away from the EVP’s office.” However, Hamlin may not have taken action to get rid of the committee. When  asked “Have you spoken with them about disbanding?” “No.”

Hamlin provided insight into his outlook on many nascent questions for the NRA during cross-examination. He emphasized that he was “very impressed” with the new Chief Compliance Officer Bob Mensinger “both professionally and at a personal level.” He also took an opportunity to highlight his relationship with his competition for the EVP, Ronnie Barrett, who was put forward by the NRA’s nominating committee and was called a “Rockstar” in the gun community the previous day by Charles Cotton. Hamlin described a video the two had collaborated on for staff, meaning to communicate “there’s been a sea change” and placing focus on the “next 154 years” with faith that the NRA will “continue to be the important organization that we’ve always been.” Hamlin again demonstrated his interest in the staff’s morale when describing the impacts of both headcount cuts and, separately, the effect of the New York litigation. “It’s been devastating,” he said. Referring to his goals for the NRA, Hamlin enumerated his focus on working to keep current members, “attract new members,” “build trust with donors,” and foster “trust of the industry.”

“If we do all those things, we’ll get the NRA back on track,” Hamlin said.

UPDATE 7-18-2024 4:17 PM EASTERN: This piece has been updated with further details from the trial. It has also been corrected to show Charles Cotton’s exchange was with Amanda Suffecool, not Carolyn Meadows.

Bob Barr, NRA President

The Attorney General called former Congressman and new NRA President Bob Barr to the stand late Tuesday, with testimony continuing through the following morning. He was examined by Assistant Attorney General Steven Shiffman.

Barr’s testimony offered early insight into his tenure as president and his interactions with the board. Barr has been on the NRA’s board for 25 years and was elected to succeed Charles Cotton as President in late May. His testimony included descriptions of his presidential platform: that this was the “most critical time in the NRA’s 150-year history,” touting that the NRA had “avoided the corporate death penalty.” Barr also testified that he’d committed to not “play favorites” with committee assignments. Barr said he appointed his predecessor, Charles Cotton, to continue to serve on the Audit Committee and as its chairman. When Shiffman asked for justification of that move, Barr testified that he had a “high opinion” of Cotton’s “ability to operate that committee,” citing generally that he had the “appropriate background” in accounting and history with the NRA. Specifically, Barr defended that he “was also very impressed” with the audit committee on “the so-called course correction.”

Barr also offered his impression of Doug Hamlin, the newly elected EVP. He testified that he found Hamlin to be “dedicated and forthcoming.”

Shiffman brought up the NRA’s recent asset sale, further exploring the NRA’s finances as well as Barr’s depth of familiarity with them in his second month as president. Barr confirmed that he had voted for the NRA’s liquidation of “all of its non-restricted assets.” Barr said the NRA aimed to “pay down its line of credit” and that was the sole reason for the sale. However, he couldn’t recall the amount. Shiffman also questioned the depth of analysis behind these transaction decisions. Barr confirmed that while he couldn’t “recall a particular analysis” or exploration of alternatives, there was an “analysis on the impact on revenue,” referring to the net savings of paying down its credit.

Another consistent subject in at least the first several days of the Attorney General’s case surrounded the NRA’s consideration of relocating to Texas. When Shiffman asked about the board’s response to leadership’s interest in relocation, Barr said, “I do remember there was a resolution that the EVP should assist in the board’s decision to relocate the NRA.”

The NYAG also continued its focus on the Special Litigation Committee, which is overseeing the NRA’s legal strategy in the case. Like Cotton, Barr indicated that to whatever extent internal interest in disbanding the SLC existed, it was not proactively relayed to leadership. “No one’s approached [me] directly,” he said.

The NYAG cited a July 2nd piece in Ammoland by Jeff Knox, one of the newly elected board members who ran as part of the “Four For Reform,” as indication there are recent justifications for disbanding the SLC. According to separate testimony solicited by NRA lawyer Sarah Rogers, the SLC was formed to prevent conflicts of interest because LaPierre and Frazer are both co-defendants in the New York litigation. But Knox argued that concern was outdated. “Dissolving the SLC is a valid option, as LaPierre and Frazer are no longer EVP and General Counsel, respectively, thus negating the conflict of interest and the need for the SLC,” he wrote in the Ammoland piece.

During the NRA’s cross-examination, Rogers repeated the resolution and justification for the SLC as well as Barr’s comments that leadership “wouldn’t be able to” effectively manage litigation without it. Rogers also questioned how much support for unraveling the committee exists on the board, pointing to the fact its makeup now includes Bill Bachenberg and Mark Vaughan–both of whom were backed by the reformers in the May leadership elections. Rogers also suggested Barr did not have the independent authority to dissolve the SLC because it is not a “standing committee.” She said since it was established by the board, it would “have to be changed by the board, not the President.” Rogers asked whether anyone on the board had taken the opportunity to do so; Barr testified that even though the May board meeting featured “disagreements” and “contested resolutions,” “no one” asked to disband the SLC.

The New York Attorney General continued to raise questions about Rogers’ firm, Brewer Attorneys and Counselors, and its relationship with the NRA. Shiffman asked whether Barr knew how much the NRA had paid the firm for its efforts in the case. Barr said he “knew [the amount was] substantial” but didn’t have an exact figure.

The NYAG also pressed Barr on whether the NRA was covering the legal expenses of its codefendants, specifically Wayne LaPierre and John Frazer. A recent deposition of Frazer, which was presented during Barr’s testimony, featured Frazer testifying those bills were paid by the NRA. Asked whether this would continue, Barr said, “It’s fair to say it’s an open question” depending on “if it’s related to his official duties.” Regarding LaPierre’s expenses, Barr said, “We have made such a decision, and that was not to pay them.” Beyond LaPierre’s legal bills, Barr was questioned about other financial exposure to its former EVP and whether the NRA was trying to recover the $5.4 million a jury found he owed the organization. Barr didn’t provide a definitive answer. Instead, he said that it depended on several things, including “insurance issues.”

UPDATE 7-21-2024 11:40 PM EASTERN: This piece has been updated with further details.

Day Three

Bob Barr, NRA President

The end of Assistant Attorney General Steven Shiffman’s examination of Barr focused on board member Phillip Journey, who would begin his own testimony later in the day.

Shiffman asked Barr about an email he wrote after a dispute over Journey communicating with the AG’s office. He questioned Barr’s response to Journey’s back and forth with the office, his perception of the NRA’s interests, and his awareness of the group’s whistleblower policy. Barr confirmed he was “aware” that the NRA’s whistleblower policy “expressly permits employees to report potential wrongdoing to the government.”

As part of the email in question, Barr stated that if “any board member” spoke with the government “for any reason,” including reporting wrongdoing, the director “should alert the NRA so [the board] can safeguard the interests of the Association.” The email also instructed board members to disclose “legal interests adverse to the NRA.”

When asked whether board members who “criticized the Brewer firm” or who “want more robust reforms” were “adverse to the NRA,” Barr said “not necessarily” and that his concern in this email was specific to the “context of ongoing litigation.”

“People can have all sorts of opinions,” he said.

“Did you view Mr. Journey’s comments in his e-mail about the Brewer firm to be adverse to the NRA?” Shiffman followed up. Barr responded that he was “not specifically” concerned with Journey’s “opinion” but, instead, that “information be channeled appropriately so that it does not adversely affect the interests of the NRA as a party in the litigation.”

During the NRA’s cross-examination, Rogers asked Barr about concerns over leaks and directors breaking the NRA’s attorney-client privilege.

Rogers cited Barr’s same email to the board and emphasized an early passage where he granted some room for disagreement among board members.

“While board members have the right to express dissenting views on matters, including legal tactics or strategy, no individual board member can waive the NRA’s legal privileges,” Barr wrote.

Another email shown by Rogers included Journey telling the Brewer firm not to “assume there’s any attorney-client privilege in our communications” because he had “not received them via appropriate channels.”

The NRA’s counsel questioned Journey’s reliability. They cited his accusation in the email to the Brewer firm that “Your firm and bankruptcy counsel stood at the podium and proclaimed I was the NRA’s greatest enemy.” Barr testified that lawyers from the Brewer firm were “sitting in the back of the room silently,” during the alleged sequence and that a different filed the NRA’s bankruptcy petition.

The NRA’s counsel ended her cross-examination by questioning the Attorney General’s public statements about the jury’s findings from the first phase. Introducing exhibits with a tongue-in-cheek comment that she didn’t think the AG would contest the document’s provenance, Rogers presented two press releases—one announcing the verdict of the first phase of the trial and another for Wayne LaPierre’s resignation.

She called the AG’s characterization of the verdict into question, as the AG had for the NRA’s own releases earlier. The AG claimed in the releases that the jury had determined LaPierre to have “steered lucrative contracts to friends and relatives,” which NRA President Barr testified he didn’t remember seeing in the jury findings.  The AG also said in the releases that LaPierre had spent “millions” of the NRA’s money on “lavish travel, private planes, expensive clothing, and more,” which Barr disagreed with.

In a January 5th press release, the AG claimed that LaPierre’s resignation on the eve of the trial confirmed her allegations and that its senior leaders were “financially corrupt.” The AG objected on scope, hearsay, and relevance. Judge Cohen overruled the objection while cautioning that he wasn’t “sure any of this really moves the needle for me at all” and citing the AG’s earlier questioning of the NRA’s communications.

Barr testified that LaPierre resigned for health-related reasons. Rogers, followed by LaPierre’s counsel P. Kent Correll, finally scrutinized the description as “corrupt,” asking whether the NRA’s members, any board member, or Mr. LaPierre were found to be corrupt by the jury per Barr’s understanding.

“I don’t think there was any language using the term ‘corrupt,'” Barr said.

The NRA’s counsel asked if anywhere in the “huge pile of documents” he’d seen across years with the NRA “have you ever seen a single document” that the NRA board “was complicit in any corruption at the NRA” or “willfully blind letting it happen?” Barr responded that he had not seen documents to this effect.

Correll arguably went further: “When Letitia James and the attorneys working for her put out a press release saying to the public and to the people of the State of New York suggesting that the jury had come back and found that Mr. LaPierre was corrupt, that was a lie—wasn’t it?” Barr responded, “it was, shall we say, a mischaracterization.”

The Attorney General declined the opportunity to address these statements and did not re-direct.

While the New York Attorney General has been noted for its broad case against the NRA and its executives and has celebrated the February verdict as “Win(ning) the Trial,” its statements may be broader than the jury’s findings. According to its press release following the jury trial verdict, the jury concluded that LaPierre abused his position “for personal benefit,” steered contracts to friends and relatives, and spent the NRA’s money on “lavish travel” and “expensive clothing,” but the jury’s verdict sheet did not detail exactly which expenses it found him liable for paying back.

While the AG sought to confirm that LaPierre engaged in wrongful related party transactions with contractor MMP – from whom he “received millions of dollars in free vacations” and the source of now infamous stories of yacht trips – this was not proposed to the jury or confirmed in its verdict. Other transactions dropped from the jury’s consideration include those with Ackerman McQueen from whom the AG intended to argue provided “personal goods and services.” Only one of these four possible wrongful related party transactions identified for LaPierre pre-trial was confirmed by the jury: Susan LaPierre’s makeup and hair expenses, which was estimated to cost $43,463.60.

However, the jury did find LaPierre breached his fiduciary duties, and that this breach caused $5.4m in monetary harm to the NRA. But there is no confirmation of what the jury used to arrive at this amount – made more difficult given the wide range of damages asserted through the six weeks of its jury trial. At least one possible indicator, though, is that the jury accepted roughly one million dollars in reimbursements LaPierre made for private flights to count as repayment to the NRA.

When asked if the AG office’s decision not to dispute the critiques of its press releases in court indicated that it might feel the NRA’s complaints were valid, the office pointed The Reload to parts of the press release explaining the jury saw voluminous evidence of misspending.

Daniel Roach, NYAG Expert Witness

Barr was succeeded on the stand by the third of the AG’s four expected expert witnesses, Daniel Roach, an attorney and 30-year healthcare compliance veteran. In conferring with the parties in March, Judge Cohen had voiced his interest in hearing from corporate governance and compliance experts in the second phase of the trial to provide “the best perspective on what, if any, nonmonetary relief makes sense here.”

Roach’s direct examination by Monica Connell, an Assistant Attorney General and Senior Litigation Counsel for the New York Attorney General, included how to implement and evaluate an effective compliance and ethics program. It also covered his input on ongoing questions surrounding remedies. The AG used the testimony to argue Roach’s compliance plan could work for the NRA.

“I believe that scrutiny by the government is the right thing to do,” Roach testified.

The NYAG asked what Roach thought would be foundational. Roach’s recommendations followed those of previous expert witness Jonny Franks, who advocated following federal criminal sentencing guidelines for NRA remedies, despite this being a civil trial on state non-profit law.

Roach detailed how foundational compliance and ethics for an organization like the NRA should start from the principles in the federal guidelines. He testified it should adopt comprehensive, organization-wide risk assessments to be implemented on an ongoing basis, and build a properly resourced staff below a compliance officer.

Roach also reinforced other arguments made by the AG. He recommended enhanced oversight, outside or 3rd party consulting, and the need to discipline staff. Roach testified he didn’t believe Wayne LaPierre should be in any leadership role or that John Frazer should be in a role with any “oversight of the compliance and ethics program, at least for a reasonable period of time.”

Noah Peters, counsel for NRA, and Kent Correll, counsel for Wayne LaPierre, questioned whether Roach’s experience in Healthcare regulations was relevant to the case. “Billions of dollars each year in revenue,” Peters said. “Tens of thousands of employees; Multiple different sites and locations; Extremely high regulatory exposure.”

Kent Correll, who has emphasized the First Amendment in his defense of LaPierre, asked Roach “Are civil rights advocacy groups also among the most highly regulated entities in this country?”

“I don’t believe they’re as highly regulated as health care at all,” Roach responded.

Roach also testified he wasn’t aware that the ACLU and NAACP lacked a Chief Compliance Officer, which the NRA elected two months ago.

Correll attacked the AG’s political motivations for bringing her suit as well. He argued the NRA’s political stature made it, and LaPierre, critical in an election year. He said the NRA was Trump’s largest donor in 2016, and noted the AG filed its suit to dissolve the NRA three months ahead of the 2020 election. That came after Correll previously asked if any of Roach’s former employers “mobilize four or five million people in support of a candidate in any political election,” pointing to the unique landscape of the defendants as well as the potential political impact of implementing Roach’s oversight recommendations.

The defendants went on to challenge Roach’s skepticism toward the NRA’s compliance efforts and his understanding of the case. Despite citing the verdict as support when advocating for his removal, and spending 30 hours with the attorney general to testify, Roach testified he was unaware of any claims the New York Attorney General had unsuccessfully asserted.

UPDATE 7-25-2024 12:36 PM EASTERN: This piece has been updated with further accounts from the trial.

Phillip Journey, NRA Board Member

The last witness of the day was Judge Phillip Journey – a recently re-elected NRA board member and longtime dissenter. His testimony extended into the following morning. Found to be a whistleblower during the jury phase of the trial and elected to the board since the verdict, Journey was questioned regarding his impression of the current state of the NRA and how it responded to the verdict. Journey also attempted to intervene in the bench trial phase – hoping to add himself as an additional party – and was asked for his thoughts on the State’s remedies.

The Attorney General’s office asked Journey about his recent re-election to the board, as part of the “Four for Reform” along with Rocky Marshall, Jeff Knox, and Dennis Fusaro. Journey testified that ran out of concerns that the NRA “would not continue to exist” given the “operating procedures of those in power.” He said the slate sought to “correct the direction of the ship” and restore services the NRA had cut.

As part of his intervention attempt, which Judge Cohen denied, Journey requested the court “Remove those board members who have sought and received compensation placing their personal interests ahead of the organization’s and those who actively aided and abetted the looting of NRA assets and enjoin [the Brewer firm] from further representation and association with the National Rifle Association.” Asked why he sought to intervene, Journey testified that it became “apparent” to him that “they were going to come after [him] as soon as this trial’s over.” As described in earlier testimony from Barr and Cotton, Journey was concerned with “Mr. Cotton’s appointment by President Barr to head the Ethics Committee” which “can remove a director” and “revoke their membership.” Journey, who has long been a critic of the Brewer firm, testified that he sought their removal as the NRA’s counsel because “in his observation” they had counseled the NRA “to take legal strategies that clearly have failed.” He also testified that “they were active participants in the acts that caused me to be declared a whistleblower,” in that they “were all in it together” and Brewer attorneys “didn’t do anything” when “attorneys that were co-counsel with Brewer” had “stood up from the podium and pointed at me and said I was the greatest enemy of NRA.”

Journey echoed other AG witnesses that the NRA has “a really nice” whistleblower plan but “don’t seem to be implementing it or following it in any meaningful way.” He lamented that the NRA hadn’t “done a darn thing” to resolve the issues that led to retaliation against him.

“These leopards are not going to change their spots,” Journey said.

The AG also asked Journey to describe how the NRA’s longtime leadership responded more generally after the trial. They asked whether “Mr. Cotton has adequately acknowledged the evidence introduced at trial in this matter?”

“I think he’s intentionally misled the board of directors of what actually happened in this trial,” Journey responded.

However, he also testified that he hadn’t heard Cotton’s comments on the trial directly, as he’d not been able to attend the meeting in question.

During the NRA’s cross, Svetlana Eisenberg questioned Journey about his communications with the AG’s office. After a disagreement between the AG and the NRA, the judge allowed the NRA to question Journey about the language he’d used in communications with Assistant Attorney General William Wang. The text messages offered in court showed Journey communicating with Wang as far back as February and through Journey’s election to the board. The texts appeared to show Journey referring to the NRA as “they,” which Journey said was meant to refer to specific “personalities” in the group. They also show Journey receiving texts from Wang the day before the board elections: “How are we feeling with one day to go?” Wang asked. Eisenberg emphasized Wang’s use of “we” during the back and forth.

Journey denied that this meant the AG’s office and himself. LaPierre’s counsel, P. Kent Correll, later cited the exchange in hopes of examining Wang as a witness. “We have a record now that Mr. Wang was involving himself in the election of this private organization,” he said. Beyond questioning whether Journey’s interests and actions were adversarial to the NRA, Eisenberg also tried to use the text messages to question Journey’s general credibility. Eisenberg asked Journey about an exchange with Wang where he may have suggested that “when a transformer blew up outside of the headquarters building, that that was done on purpose by someone at the NRA.” Journey said that he was joking but added that while he “had no evidence” that it was on purpose, that “there was a coincidence” and that “the circumstances warranted review.”

Journey also offered his view of current leadership during testimony. Journey said he accepted new EVP Hamlin as someone he can “certainly feel comfortable with” and that, assuming no surprises, he’s “going to do a great job.” Journey also confirmed positive impressions of several board members recently appointed to top committees, including Bill Bachenberg and Mark Vaughan, but that new faces on important committees may not be enough because they “aren’t a majority.”

Journey was asked his opinions on the remedies sought by the AG. Journey testified that LaPierre shouldn’t return given “his physical condition, his demeanor.” He also blamed LaPierre’s “judgment” for leading to the NRA’s current state. Although, he left an open door to the idea that there was a “useful purpose” in “his likeness for fundraising” because he’s still “popular” with “some members.” Journey cautiously praised Frazer. He said he believed Frazer could continue as NRA Secretary but with some limits. “He just has to follow the rules,” Journey said. He also responded to the AGs question of whether training would be appropriate that it “couldn’t hurt.”

“Everybody needs to do continuing legal education,” Journey said.

He also testified that he found the monitorship proposal “interesting” with “some modification.” He argued that the member’s “personal data” should not be “shared in any way” and that the monitor should not have oversight of NRA’s Institute for Legislative Action. He further testified he believes that the monitor should have “no ability to interfere in any way” with the NRA’s “thousands of political decisions,” including endorsements. Correll ended his cross-examination of Journey by asking whether AG’s plan “would chill free speech.” Journey said he was optimistic “that those considerations would be taken into account.”

UPDATE 7-29-2024 11:17 AM EASTERN: This piece has been updated with further testimony from the trial.

Day Four

Andrew Arulanandam, Former Interum NRA CEO and EVP

Following Phil Journey, the State called Andrew Arulanandam – the NRA’s longtime public affairs director and Wayne LaPierre’s short-term replacement as Executive Vice President.

The state’s questions explored the prudence of the NRA’s decision-making and the extent of LaPierre’s influence. Although the second phase of the trial was meant to focus more on the interpretation of the facts presented in the first phase, both sides have raised questions about events since the February verdict as indications of the current state of the NRA.

The AG’s office asked about NRA leadership’s exploration of relocating its headquarters in Texas. Assistant AG Connell specifically asked how relocation was addressed to the board. Connell asked Arulanandam about longtime board member David Coy submitting a resolution through two other NRA members. Arulanandam confirmed that Coy “had some role” in the resolution’s writing. Arulanandam also testified he’d “alerted the board officers” about the potential move and reported to the Finance Committee in between board meetings.

Connell asked whether the NRA had “completed a detailed financial analysis of the impact of relocation” and if Arulanandam, nevertheless, “signed a letter of intent to sell the headquarters with a sale price of $16 million.” He confirmed he signed the letter without a detailed analysis. Arulanandam repeatedly emphasized that the letter was non-binding, requiring full board approval for execution.

NRA counsel Rogers referenced the AG’s tension with Arulanandam in her cross-examination. “I think there was additional information you wanted to give, but the attorney general didn’t want you to give,” she said. “Can you explain to the Court any additional information you think is important?” Connell objected “to the colloquy.”

Arulanandam testified that he conducted different analyses, having asked the “financial department to pull together what it costs the NRA to run the building in Fairfax and then add the different scenarios” including possible leasing of the building. He said he then did “another phase” of analysis in which the HR director was asked to “put together an impact study” and that he hired an outside consultant for a market study.

Arulanandam also testified about the NRA’s contract with former President Marion Hammer. Three of the twelve related party transactions in the trial’s first phase were with Marion Hammer but the Jury found they were properly ratified. Arulanandam testified that the NRA entered into a contract with Hammer for $220,000 per year, and he “recalled [Hammer] saying” something to the effect of “Wayne told Woody to draw up a contract to protect me” regarding the origin of the contract. Rogers asked Arulanandam about the cancellation of Hammer’s contract in her cross. Arulanandam testified that upon becoming interim EVP, he requested “any contracts that the EVP’s office had purview over,” and that Hammer’s was the “one remaining contract.” He then “made the decision to review the contract” and asked Hammer for “some details as to what she did for that contract.” Arulanandam said Hammer told “Mr. LaPierre know what was going on with the board” and “give him intel.” Arulanandam described requesting written reports of Hammer’s work for the NRA, which he did not receive to his satisfaction, leading him to cancel her contract.

David Medrano, NRA Auditor

The Attorney General also called David Medrano, who would also testify as a witness for the NRA. He’s led the Internal Audit for the association since January 31st.

The AG questioned Mederano’s qualifications for the role. He testified that while he had “not held the role of a tax accountant for a nonprofit” nor had experience in 990 preparation, he had been “working in internal audit for multiple decades.” When asked by the NRA, Medrano confirmed he’d worked for organizations with concerns of “control overrides,” “improper expense reimbursements,” “deviations from contracting, bid or procurement policies,” or “mistreatment of whistleblowers.”

The AG also questioned his in-person interaction with the NRA. Medrano admitted he’d only been to NRA headquarters “less than a handful” of times.

Medrano responded to earlier concerns raised by Daniel Roach that his Internal Audit Charter was copywritten material lifted from Roach. Medrano testified that “part of the job is promoting professional standards” and that the auditor organization “promote[s] the use of it.” In Roach’s testimony, the NRA had questioned whether a monitor would be necessary if steps such as a work plan could be successfully produced internally. Another step that the state had argued was necessary, and therefore justified a monitor, was a risk assessment. Medrano testified to having taken an “independent review and evaluation” of the assessment conducted by NRA CFO and Treasurer Sonya Rowling. He said the review was limited to “the most significant risks” and the “ones most closely aligned” to the AG’s complaint. The AG asked if Medrano had conducted a separate risk assessment of his own – Medrano testified “no, but that is planned for later in the year as part of the audit process.”

The state asked whether Medrano was sufficiently independent. Medrano confirmed that his manager, Chief Compliance Officer Robert Mensinger, reviewed his performance and controlled his compensation.

The judge took particular interest in whether Medrano had sufficient support to fulfill the goals of his role: “Is that realistic to be the only one doing this job for an organization the size and scope of the NRA? Aren’t you going to need help?” Medrano said that he could “get a lot of work done in a very short period of time” given that he has a “lot of experience” but that as they “mature the department,” it would be helpful “to have a little bit more resources on which to draw.”

The NRA emphasized that Medrano would have the support necessary to do his job. “How confident are you that you’ll be able to build out the resources for this function that you need?” Rogers asked. “I believe that there is a commitment to the integrity of the compliance program and the function,” Medrano responded.

Sonya Rowling, NRA Treasurer

The state briefly called the NRA’s Chief Financial Officer and Treasurer, Sonya Rowling. She would also reappear for the NRA later in the trial.

Rowling was questioned about her department’s response to the verdict, her input on hiring, asset handling, and the Brewer firm’s billing.

The Attorney General’s office asked if Rowling hadn’t “been directed,” nor “independently decided,” in her “capacity as CFO and Treasurer,” to “take any action in response to the jury’s verdict.” She testified she hadn’t. Rowling testified during cross-examination that, given the two phases of the trial, she believed “the verdicts are not final.” To the extent the jury made specific findings, Rowling testified “corrective action has been taken for the last six years. We have no more corrective action that needs to be taken. This was old news that the jury was making decisions on.”

When asked by the AG whether the NRA had hired “any additional attorneys to work under Mr. Mensinger in the Compliance Department” or “any additional compliance staff besides Mr. Medrano,” Rowling confirmed it had not.

The state continued questions regarding documentation of proper diligence of financial dealings. Rowling confirmed that despite “no formally documented analysis,” “the NRA did, in fact, liquidate all of its non-endowment investments” to pay down its debt. Rowling testified during cross that the decision “did make sense,” citing discussions of the board.

John Frazer, NRA Secretary

The last witness of the day was John Frazer, the Secretary of the NRA and, until recently, its General Counsel. The state is seeking limitations on Frazer’s role and to require him to undergo further training.

Frazer’s questioning included his legal costs and the Special Litigation Committee, and further questions about the Brewer firm. The state questioned Frazer about legal payments for his defense as well as that of LaPierre and spent much of questioning trying to get him to give a total amount for payments to the Brewer firm. Frazer testified to the NRA paying his legal costs as of at least April.

UPDATE 7-29-2024 12:15 PM EASTERN: This piece has been updated with additional testimony.

Day Five

The Attorney General’s office began its case on Day Five with Wayne LaPierre, former Executive Vice President of the NRA, and a defendant in this phase of the trial as well as its earlier jury phase. The questioning was brief, only seven minutes, but elicited details on LaPierre’s reasons for resignation and his future plans.

Wayne LaPierre, Former NRA CEO and EVP

The State questioned whether the longtime EVP’s resignation, on the eve of trial, was for health reasons as he’s maintained. When the AG asked if he hadn’t taken any steps “to establish a succession plan,” nor “to develop or promote someone as a potential replacement […] for EVP,” LaPierre confirmed he hadn’t. He also testified that his resignation was not expected and that only two people “knew the day before.”

The Attorney General is seeking to enjoin LaPierre from holding any position at the NRA or any of its many affiliated organizations with fiduciary duties or as a “paid fundraiser or consultant.” LaPierre’s attorney argued that this is a First Amendment violation. LaPierre testified that while he had “absolutely no intention of doing anything with the NRA,” he “should be free to associate and speak out.”

The AG’s office concluded by asking the former EVP if he felt he’d mislead those at the organization he used to run.

“Mr. LaPierre, as you sit here today, would you say that, in the past, you breached the trust of members of the NRA?” the AG’s office asked.

“No, I wouldn’t,” he responded.

Ronald Andring, NRA Member

LaPierre’s testimony was followed by testimony from Ronald Andring, an NRA member. He was, notably, the only witness testifying as a regular member.

The state asked him about his unique circumstances as an NRA member and witness. The AG’s team focused on key areas during its questioning: board leadership, specifically former NRA President Charles Cotton, and perceptions of risks and the necessity of imposing a monitor.

Arnding testified that after the first phase of the trial, he’d created a Facebook group titled “Members Take Back Our NRA” for group discussion. He said that he’d been motivated out of “concern” that “a group of directors and insiders who have been on the board for a very long time” consistently withholds information and “largely populates” the “important committees” of the board. This characterization, which mirrors the attorney general’s representations, was repeatedly emphasized by Andring throughout his testimony.

Arnding testified that he’d written letters to Judge Cohen and James Sheehan, the chief of the Charities Bureau for the NY Attorney General, about reform resolutions that he presented to the NRA. Arnding testified that the “first resolution regarded conflicts of interest” and the second was intended to address the Audit Committee’s clarity of duties, specifically, “to make certain that members of the Audit Committee did not have a reason to say they didn’t quite understand what their role and responsibilities were.” He said that was necessary in response to “deficiencies” which had been “brought out in the trial.” Arnding presented these resolutions to the board but was concerned they “did not get a hearing in front of the members” at the 2024 Members Meeting because of a “hard adjournment” to allow members to listen to a speech by “President Trump.”

Andring also echoed the state’s description of Cotton, testifying that he felt that, given Cotton’s “position as chair of the Audit Committee” during “much of the time when the misbehavior” at issue in the first phase of the trial occurred, he had “failed to do his fiduciary responsibilities in that case.”

Andring also testified he’d feel “heartened that somebody would be overseeing the continued reform of the organization” if the court appointed a monitor over the NRA. He testified he’d come to “understand” that, in the event of a monitorship, there would be a “fairly clear firewall between the monitor’s oversight of the financial aspects of the organization” and the NRA’s political work.

Cross-examination took up about as much time as the AG’s questioning, just half an hour. Sarah Rogers of the NRA questioned Andring’s contact with the AG. Andring said he’d prepared with the AG the day before, “for an hour and a half.”

Andring testified earlier that he was concerned the Audit Committee “didn’t quite understand what their role and responsibilities were.” The NRA asked if he had an understanding of whether the board had “adopted a charter governing who can be on the Audit Committee and what the committee must do.” Andring replied that he was “unfamiliar with anything specific like that.” Andring confirmed that his bylaw proposals mandated the NRA annually “hire an independent outside auditor who meets professional CPA standards,” and that the Audit Committee “must maintain detailed minutes,” but admitted he was “not certain as to what minutes [the Audit Committee] keep[s]” and that he was “not familiar with whether or not [the NRA was using] an outside auditor.”  Andring testified he would be concerned if the monitor the AG sought to impose couldn’t feasibly be firewalled from the NRA’s programs and political activity.

The Court took interest in Andring’s view of the NRA’s board nominations, with the judge directly asking for “any feedback or concerns about the nominating process, in general, in terms of the choices that members have for the directors.” Andring said that while there had been “suspicion” that “the process was being manipulated” through selection by “Mr. LaPierre or somebody else in NRA headquarters,” that “concerns are somewhat lessened” because “reform candidates” nominated “some of the individuals who are currently on the committee” that decided who gets on the board ballots.

“You’re saying, the current Nominating Committee has been changed?” Cohen asked. “I think I have a better chance of being heard by the members of the Nominating Committee,” Andring responded.

Rogers cross-examined Andring a second time, emphasizing possible inconsistency in Andring’s familiarity with NRA governance. She also redoubled focus on Andring’s involvement with the AG’s office. “Mr. Andring, the concern you express about key committees being dominated by an entrenched group of board members, does that come from the Attorney General’s presentation at trial?” Rogers asked. Andring said that his understanding extended back to “at least 2018,” citing statements made “publicly” and at annual NRA meetings. He emphasized what he saw as resistance to “any kind of investigation or audit” regarding “allegations” that were “floating around in the public domain.” Rogers challenged that Andring didn’t know whether the NRA took such efforts, asking whether he knew if the organization has “outside, independent audits now” given this concern. Andring responded that he was “unfamiliar with the financial operations of the National Rifle Association.”

Rogers also questioned the basis of Andring’s assessment that various committees were “dominated by entrenched directors.” Andring wasn’t able to recall the directors on the Audit Committee, Executive Committee, or Finance Committee beyond Charles Cotton, David Coy, and Joel Friedman. She concluded by asking whether he knew if “the jury made any findings of wrongdoing by any of these directors?” Andring responded that while he generally understood that the “NRA had failed to faithfully execute its responsibilities,” he was “not aware of any specific allegation.”

Dennis Fusaro, NRA Board Member

The state followed Andring with “Four for Reform” NRA Board Member Dennis Fusaro. Testimony focused on the reforms sought by the newly elected board member, and his thoughts on a monitorship.

Mr. Fusaro testified that he was focused on expenditures and legal expenses. He said he wanted the “Special Litigation Committee eliminated,” “the Brewer law firm released from its services to [the NRA] immediately,” and “legal defense for Mr. Phillips and Mr. LaPierre recovered by the NRA.”

Fusaro testified to going so far as asking for the “breakdown of hours billed per attorney at the Brewer firm,” as confirmed in documents cited by the AG, naming Rogers and Bill Brewer.

Fusaro also testified he’d “like a smaller board.” Fusaro said that he “absolutely” had concerns with Cotton’s roles on the board. He concurred with the AG and previous witnesses’ statements that Cotton had “lied” about “what the jury found regarding the NRA.”

While Fusaro saw the NRA’s “new whistleblower policy and enhanced provisions” and its “conflict-of-interest policy” as positive changes, he argued this didn’t undo the need for oversight. Fusaro agreed the NRA would “need some supervision for a period of time,” and specifically testified that he did support a court-appointed consultant “as long as it is somebody that the NRA has the right to vet and pick.”

As with Andring, Rogers asked Fusaro whether reformers were aware of NRA operations they’d attacked. Fusaro said he was familiar with directors getting member recruitment fees any NRA member would receive but did not know if any related party transactions had been approved or ratified by the Audit Committee since the trial or since 2020.

Rogers read excerpts of an email Fusaro had sent to board members indicating internal tension. “I’m telling you straight up so that any of you wimps. you know who you are – on this board want to tell it to my face, you know what I’m going to do before I do it,” Fusaro wrote in one exerpt read during questioning. Fusaro also confirmed describing another board member as a “flunky,” and said that “sometimes strong language is required to make a point.”

Frank Tait, Former NRA Board Member

The state ended its examination of reformer NRA members with former director Frank Tait, a Benefactor Life Member who served as deceased board member Dave Butz’s replacement for six months. Tait testified that he’d been nominated to the board four separate times, but that “each year [he] received a letter stating that there were more qualified candidates, and [he] was not selected.” Tait said that was despite the fact that he had “been serving on nonprofit boards continuously since 1998” and currently serves “on four boards.”

Tait described the NRA’s reform today as a “modified limited hangout,” meaning “doing enough to try and convince an average person that you have solved a problem without really solving it.” In continuity with Andring and Fusaro, Tait also voiced concern about Cotton and Coy on the board. “The people that got you into the problem are not the people that are going to get you out of the problem,” he said. Tait also voiced his frustration that the Special Litigation Committee “does not take minutes.”

Tait said he agreed with previous AG witness testimony regarding the NRA’s characterization of the jury trial verdict. “The NRA spun it as a win for the NRA in that there were some bad actors who were found guilty, but everything is good with the NRA,” he said.

Tait also testified in support of court oversight, with his only concern being that it “doesn’t go far enough.”

“My understanding is that the core operations, general operations,” Tait said. “So, competitions, education and training, conferences, event shows are outside the Institute for Legislative Action and political victory fund, and the victory fund would be outside and it’s really about internal controls and governance.”

Rogers questioned those limitations on oversight in her cross as well as Tait’s communications with the AG’s office. Tait testified he’d prepared with the AG’s office for “about two and a half” hours, but did not discuss how firewalling of NRA programs would take place. They “didn’t get into that level of detail,” he said. Rogers asked if Tait would “revisit” his support for a monitor “[i]f it was to turn out that it was not feasible to monitor the NRA’s internal controls without touching the NRA’s lobbying or any of its general operations or any of its mission programs.” Tait said he “would be surprised if they were not able to.”

Rogers drilled down on the point. “Would you want the compliance monitor to have oversight over vendors” that were “retained by the NRA for mission-related communications and fundraising”” she asked. “Absolutely,” Tait said.

However, Tait confirmed to LaPierre’s counsel, Kent Correll, that he did not think the government should limit the NRA’s associations. Tait also confirmed that in a disputed board resolution critiqued by the AG, he “observed” Frazer disagreed with Cotton and that Frazer’s view prevailed.

UPDATE 7-29-2024 2:25 PM EASTERN: This piece has been updated with more testimony.

Day Six

Eric Hines, NYAG Expert Witness

The state called its last expert witness, Eric Hines on the 19th, finishing on Monday the 22nd. Eric Hines’s testimony featured prominently for the AG in the jury phase of the trial – providing summary evidence to round up 6 weeks of trial. But it also received significant criticism from the NRA.

Hines said he reviewed the “current status of the NRA’s compliance-and-controls efforts” in light of “DOJ guidance” regarding “independent compliance oversight.” He described using “documents” and “transcripts” from the phase 1 trial and phase 2 depositions, and also “considered typical guidance.” He testified that guidance came from the federal sentencing guidelines and the “DOJ Monitor Selection Memo” used by other expert witnesses for the state.

Hines testified the NRA maintained “risk” of the “same issues” such as “control violations” stemming from “tone at the top,” as he had testified to the jury.

Hines argued an organization committed to compliance would respond to findings such as those of the jury trial with a “documented, thorough, investigative effort” followed by “root cause analysis,” a “corrective action plan” or “remediation plan,” and “disciplinary measures” like “changes in personnel.” He said the NRA had “inadequate follow-up and discipline.” Hines elaborated by focusing on the same key factors of DOJ and federal sentencing guidelines as the AG’s previous expert witnesses.

Judge Cohen followed up with his own questions.

He asked Hines about his skepticism of analyses done by NRA CFO Sonya Rowling because they didn’t have sufficient “consideration” of “root cause analysis.” Judge Cohen said that, unlike a “newcomer,” Rowling “was there in the midst” of the NRA’s operations, and “found to be a whistleblower of the actual events,” so “the root cause is just part of her DNA.”

Hines conceded that it was a “fair point,” offering in rebuttal that the “documentation”  shouldn’t be “all on the head of one person” in case Rowling left, and pointed to potential issues at the board level. Cohen said someone like Rowling “would have certainly the advantage in terms of familiarity and expertise” compared to a court-appointed monitor. At least for “internal controls at the staff level,” he said.

Judge Cohen also asked to what extent an in-depth analysis of the degree Hines offered as foundational was necessary for the NRA. “Is the stuff that went on here really all that complicated?” he asked. Hines said the subject matter is “fairly complex.”

Cohen remained skeptical. They “ran invoices allegedly through a vendor and it came in without details,” he said. “That’s not that hard to unpack.”

Hines agreed that “it’s not the Enron or Madoff massive,” but argued it was “complex for certain other reasons.”

“These were not fraud masterminds,” Cohen said.

Hines relented that that “may be the case” but asked, “Then why hasn’t something been done” yet “six years into the course correction.”

Cohen said what he was “trying to work [his] way through here” was whether a company with “different personnel” and “whatever other kinds” of nonmonetary remedies “might be able to do it themselves, rather than having a three-year monitorship or whatever we’re calling it.”

“Why can’t this be done by professionals who are in place?” Judge Cohen asked. “Maybe they can hire their own consultants rather than having the long arm of the state and the Court involved for three years.”

Hines responded by returning the root cause analysis.

Jeffrey Knox, NRA Board Member

The state’s last witness was Jeff Knox, the third of the Four for Reform. Knox is an Endowment member of the NRA, and has been a NRA member for “45 years” in addition to being elected to the board earlier this year.

Knox testified about communication in the NRA community, offered his preferred remedies, and his view of the NRA’s leadership.

Knox said he writes “regular columns for various magazines and publications” with his views on the NRA and Second Amendment community. He testified some of those pieces had drawn a response from NRA President Bob Barr. He responded to Barr claiming his writing includes “many falsehoods and, sadly, outright lies.”

“I was raised on Louis L’Amour and John Wayne,” Knox said. “Calling me a liar is not something I take lightly.”

When the AG’s office asked Knox about the NRA’s description of the outcome of the jury phase of the trial, which it claimed was false, Knox argued most NRA members likely learned about the trial from the organization itself. “The vast majority of NRA members get most of their information about the NRA from NRA publications,” Knox said. He said that meant NRA members get “most of their information from NRA publications.”  He also testified that his own readers “don’t, typically, trust the mainstream news.”

The AG’s office asked Knox whether “reforms are possible absent court order to take steps to explore them.” Knox said it was “extremely unlikely” given that the board was “entrenched.” Knox testified to support for third-party oversight, but with “caveats,” such as degree of control, and the length of consultantship. He said he preferred “a year with extensions available” rather than the 3 years requested by the AG.

Noah Peters, an NRA attorney, asked Knox more about what limitations he’d want to see on a court-appointed monitor or consultant. “With respect to the monitorship, you would prefer something, kind of, light touch, like quarterly reports to the Court to show the NRA’s progress, right?” Peters asked. “Correct,” Knox responded.

Knox backed the AG’s request to shrink the NRA’s board, which he found “way too big” and should comprise “9-15 professionals” rather than its current 76-member headcount.

Knox also voiced his frustration with former NRA President Charles Cotton. “It is stunning to me to see Charles Cotton as the chairman of the Ethics Committee,” he said. Knox also offered colorful descriptions of board dynamics, including that “the Nominating Committee was pretty much guided by Mr. LaPierre and his minions on the board.”

However, Knox agreed that a “majority of the NRA Board of Directors” had “the NRA’s best interest at heart.” When Peters asked if the lion’s share of the Board “is trying to move the NRA in the right direction,” Knox agreed. However, he said that he “would qualify” that he didn’t “necessarily agree with their approach to it.”

Knox also said that he generally found board leadership “to be willing to listen to me and talk about things.” He also said he supported the new NRA EVP Doug Hamlin.

When Peters asked about new Chief Compliance Officer Bob Mensinger’s efforts, Knox agreed that it seemed “the NRA’s compliance efforts were more substantial than [he] had seen in the past.”

“Probably the most significant changes in NRA leadership in decades and decades, right?” Peters asked. “Yes,” Knox responded.

Knox was also cross-examined by John Frazer’s counsel, William Fleming. Knox testified he “think[s] he is a good guy in general” and he “appreciates the efforts that [Frazer] has made.” However, Knox said he wanted him gone. “I think that Mr. Frazer has done the best he can with the tools that he has got,” he said. “I personally am disappointed in the way things have gone. And frankly, think that he should not be at NRA anymore.”

UPDATE 7-29-2024 3:16 PM EASTERN: This piece has been updated with more testimony.

Day Six

Sonya Rowling, NRA Treasurer

The NRA called Sonya Rowling, who also appeared earlier for the Attorney General, as its first witness. Rowling, a CPA, is CFO and Treasurer at the NRA, where she’s been for “almost 25 years.” Six of her eight years of experience prior to the NRA “were auditing all non-profits.” Ms. Eisenberg, examining Rowling for the NRA, offered the CFO a chance to give the court her view on the NRA’s workforce. Hamlin and other NRA management noted the toll that the NRA’s volatility had taken on its core team. Rowling lauded the staff as “hundreds of dedicated hard-working employees I am honored to work with” and who she’s “had the pleasure of working with for 25 years.”

As Treasurer, Rowling is primarily responsible for the NRA’s financial management and controls.

Rowling reiterated the origin story of the Course Correction in and around 2018 but also provided her view of updates in compliance since that time, as well as thoughts on the state’s proposed remedies. She said the NRA’s “whistleblower policy has been updated twice” and “now includes anonymous reporting,” with information available on its use in the NRA’s “intranet,” “timekeeping system,” and on “posters” throughout NRA headquarters.” She testified “travel” and “purchasing” policies and procedures have received “added detail” as well. Rowling also said that she’d heard from the board that related party transactions were “winding down” but that there was still a contract out with former NRA President Marion Hammer.

She testified the NRA had amended its “bylaws to add a chief compliance officer,” who is now building his department, including “hiring an internal auditor.” They “report directly to the board” to “provide complete independence,” she said.

Rowling then testified she’d presented a risk assessment to the Audit Committee for the first time last November. The state emphasized that happened in the “sixth year of its course correction.” Rowling said the assessment was conducted at an opportune time to memorialize its recent efforts. Eisenberg also gave Rowling an opportunity to respond to testimony from the state’s expert witnesses, that her risk assessment might be “deficient” because it hadn’t “sufficiently analyzed the root cause of problems that were identified back in 2018.” Rowling said that argument was “a little bit shortsighted” because Rowling’s team “couldn’t create that Risk Assessment without understanding what caused the problems.” Rowling testified they’d “identified at Day 1 of our Audit Committee meeting what really was the risk associated with our concerns, which was senior management override of internal controls.”

Eisenberg asked for Rowling’s reaction to the state’s proposed relief.

“It fails to acknowledge anything that we have done,” she said. “Anything that I — all that I just talked about. All of the processes that have changed. All of the procedures that have changed. It doesn’t acknowledge that anything has been done. It even references changes to the compliance program. I mean, we changed our bylaws to add a Chief Compliance Officer.”

“To have none of that recognized is actually insulting,” Rowling said.

Greg Plotts, NRA Expert Witness

Greg Plotts is an independent auditor at Aprio, which has the NRA as one of its clients. He was brought as a witness by Noah Peters, attorney for the NRA.

The NRA has attacked Attorney General Letitia James (D.) throughout the case as motivated by her political opposition to the organization, which she called a “terrorist organization” in a 2018 interview, rather than a true desire to reform it. Plotts testified that NRA management had expressed concerns that the AG’s pursuit would be a “long process” that could “drag out and be a detriment to the operations of the NRA.” Plotts testified that that conversation happened 5 years ago, in 2019.

Plotts also praised the NRA’s current financial leadership.”With Sonya Rowling being the CFO we have a very great professional relationship that is very transparent,” he said. “In your experience is the compliance officer typically or rarely a team of one?” Peters asked Plotts. “For an organization this size, I would think with Dave Medrano and then with Bob Mensinger is plenty for what they are doing right now,” he replied.

Plotts also testified that, in order to reach the firm’s satisfactory level of comfort in supporting financial statements, the NRA’s auditor had already been performing analyses and tests in line with those the AG argued were “foundational” and that justified the need for a court-appointed monitor.

Correll, LaPierre’s lawyer, used his cross-examination to emphasize the AG’s attacks on the NRA and his client. The AG asked Plotts earlier if his “other clients have been found be liable for failing to properly administer assets,” which Correll countered by asking if any of his other clients had “been sued by a State Attorney General who had called them a terrorist organization?” He then asked, “Have any of your other clients been sued by a state attorney general who called them a criminal enterprise?”

The AG’s office objected to the line of questioning but was overruled. Judge Cohen allowed Correll “one more” question on that point. “Have any of your clients been sued by an attorney general who sought to remove the CEO and bar that CEO for life from associating in any fiduciary capacity with the client?” Correll asked. Plotts testified he had not.

Day Seven

Plotts’s testimony carried over briefly into July 23rd. Afterward, the NRA called Bruce Blacker, an expert witness who’d also testified in the Jury phase.

Bruce Blacker, NRA Expert Witness

Bruce Blacker testified he put together a report on the NRA’s operations. He said he co-authored it with Ryan Sullivan, as he had in the first phase, specifically applying “the tools of economics, accounting, and finance to an evaluation of the requested relief by the NYAG.” He argued that “there are limited benefits from the requested relief” because it is unnecessary and duplicative given the NRA’s “course correction.” He said “some of the testing that’s being requested [is] already being performed.”

Blacker testified government oversight was unwarranted because of “personnel evolution.” He said the NRA’s “policies have evolved,” there’s been “reinforcement of policies that were good on paper to begin with” but are now “enhanced,” and the NRA now has “multiple layers” of support–citing Rowling’s team, internal audit (Medrano) and external audits.

Blacker argued that the NRA actually demonstrated “prudent business judgment.” He said they “kept the good leaders, “ousted the abusers,” and brought in “fresh faces to give a new perspective.”

He testified that, since the course correction started in 2017-2018, 36 of the NRA’s 76 board members were new. Rogers, the NRA’s lawyer, asked Blacker whether it would be preferable if there were “all new faces on all of its key committees,” more in line with the preferences of the AG’s witnesses. Blacker argued a total board overhaul “creates control issues,” and there should be a balance between hard-to-replace “institutional knowledge” and bringing “fresh faces to bring a new perspective.”

Judge Cohen expressed some skepticism over some of Blacker’s premises. He said that some of those who Blacker championed as “here for the course correction” were “also there for the course deviation.” Blacker argued that board members, such as Charles Cotton, were not part of the “inner circle that allowed the management to override the internal controls.” He said that responsibility rested with the CFO, and the oversight of the CFO then rested with the board.

Bill Bachenberg, NRA First Vice President

Bill Bachenberg. the NRA’s recently elected First Vice President, then took the stand. Bachenberg was part of the reformer slate that won leadership positions over the official slate offered up by the NRA’s Nominating Committee back in May.

Bachenberg testified to his strong working relationships with board members that other reformers opposed. He said he was “glad” that NRA President Bob Barr “didn’t make major changes” to the group’s Audit Committee because he valued “consistency” in the committee. He also testified, unlike other reformers, he agreed with former President Charles Cotton remaining on the committee. “Charles has put in thousands of hours of volunteer work that very few have stood up to want to do,” he said. “I think he’s done a great job at that.”

Judge Cohen asked Bachenberg whether he could “appreciate why some might think it questionable” that the “new NRA” includes people who were in high positions when misconduct was found.

Bachenberg testified that, having been “on that committee for six years,” he remembered the board as fundamentally doing its job. “What was reported to us, we followed up on,” he said.

Bachenberg argued that “this was a small group, internally, that hid what they were doing from us.” He testified he believed the NRA was on the right track now. “I believe now that with the policies and procedures and the internal audits that we have, it would be extremely difficult to have anything near what happened,” Bachenberg said.

Mark Vaughan, NRA Second Vice President

Mark Vaughan was elected as Second Vice President of the NRA on the same reformer slate as Bachenberg, who testified they work well together.

Vaughan shared Bachenberg’s more optimistic view of the NRA’s current situation compared with the NRA reformers the AG’s office called earlier in the case. Vaughan also endorsed Charles Cotton’s continued role on the Audit Committee. After “observing Charles now for five years or more,” Vaughan testified he couldn’t “imagine anyone who’d devoted more of his life on a voluntary basis.” Rather than symptomatic of internal volatility, Vaugh testified Cotton “has guided us through these turbulent times of this litigation.”

Vaughan’s testimony also departed from the view of an unworkable, opaque board.

Vaughan saw in his “personal observation that the members of the board of directors exhibit good, solid leadership traits.” He also denied ever feeling marginalized despite not being in Wayne LaPierre’s inner circle. Asked how he viewed allegations that “NRA Board is controlled by a cabal who were loyal to Wayne LaPierre,” Vaughan said he “saw no evidence of control. Wayne was a charismatic leader and he elicited loyalty.” But he testified it wasn’t universal loyalty.  Vaughan repeatedly testified to LaPierre’s counsel that he wouldn’t support a prospective LaPierre return.

Vaughan also testified that he believed a court-appointed monitorship would be redundant to the NRA’s current reform efforts.