- Thanks to Deep Sentinel
for keeping Legal Eagle safe and sound. Get 15% off the only security system that stops crime before it
happens with a link below. I know I speak for the
vast majority of Americans when I say thoughts
and prayers to the NRA. Thoughts and prayers. These are troubled times for
the National Rifle Association. The nation's oldest gun
rights organization. Last year the NRA chief
executive Wayne LaPierre, who has been at the helm of
the organization for 30 years was accused of financial fraud by former NRA president Oliver North. When North accused LaPierre
of spending donor money on private jet travel and luxury wardrobe, LaPierre fired him and the NRA sued North. North countersued, claiming that he was a whistleblower who was booted from the organization because he repeatedly tried to warn others that LaPierre and other key employees breached their fiduciary
duties to the NRA. You know it's 2020 when
Oliver frigging North is the one who's blowing the whistle on untoward and unscrupulous activity. Now New York has accused
LaPierre and his cronies of funneling millions of
dollars into their own pockets for lavish vacations,
golf club memberships. Luxury black car services,
African hunting trips, and much more. Newark attorney general
Tish James filed a lawsuit to dissolve the NRA following
an 18 month investigation that allegedly found evidence
of financial misconduct that contributed to a loss
of more than $64 million over a three year period. The suit alleges the top NRA executives misused charitable
funds for personal gain. Awarded contracts to
friends and family members, and provided contracts to former employees to ensure loyalty. When NRA board members
tried to blow the whistle on this allegedly fraudulent conduct, they allegedly faced
intimidation and retaliation. So it seems the New
York AG is out for blood and is looking to dissolve the NRA itself. Can she do that? Is this just a partisan political attack on a very successful gun
rights lobbying group? Or is there more to the story? (dramatic music) Hey legal eagles it's time
to think like a lawyer because New York has the
NRA in its crosshairs. See what I did there? Now according to the State of New York, the effect of the NRA's
internal misconduct, quote, "has been to divert
millions of dollars away from the NRA's charitable mission, imposing substantial
reductions in its expenditures for core program services,
including gun safety, education, training. member
services and public affairs." But the NRA and its supporters
have slammed the lawsuit as just the latest attempt by a blue state to cancel a successful conservative group. - It's just a lawsuit to crush an influential conservative organization in an election year Rudy? - Of course it is. I mean she's a poor excuse
for a lawyer anyway. - And if a judge dissolves
the NRA in New York, what happens to the
organization nationally? Well that's what we're
going to find out today. Now obviously when you talk about the NRA it tends to get political. And this raises a couple of concerns. First, as Popehat said, "It's perfectly possible
for two things to be true at the ame time. The NRA is thoroughly
corrupt and the NYAG's action is motivated by political animus." And I think that that is a valid concern. We'll talk about here. That there may be
improper conduct going on, but it also may be that the investigation is slightly motivated by political animus. And that's probably not a good thing. If we support the First Amendment, we should support it in all cases. Even if people espouse beliefs about things that we don't agree with. And obviously a lot of progressives don't agree with the NRA's position. But by that same token, there's another horn to this dilemma. Which as my friend Andrew
at Opening Arguments says, "the allegations against the NRA, if true, not their political activities, support dissolution and
to give them a break because of their political activities seems profoundly wrong. And I think that these are two things that we should always keep in mind here. Free speech is free speech. We should allow people
to espouse their beliefs. And we shouldn't punish
people based on those beliefs. But at the same time, just because organization is political is also not a reason to give them a break. This is a complicated subject that probably deserves its own video. And we're going to try and
thread the needle here. But I think it's worth asking that if you are on the political left and a charity that you happen
to ascribe to like the ACLU or Planned Parenthood
were accused and convicted of this very same things that
we're talking about here, would you support the
dissolution of that charity in that circumstance? But with that in mind, let's talk about the applicable laws here. Now there are at least 1.5
million nonprofit organizations in the United States. And section 501 of the U.S. tax code outlines which types of
nonprofit organizations may be granted a tax
exempt status by the IRS. This section States that organizations are exempt from federal income taxes if they fall under the section, which you might've heard before, 501(c). The most common title
have nonprofit designation is 501(c)(3) which applies
to groups which are organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster rational
or international amateur sports competition. Or for the prevention of
cruelty to children or animals. Nonprofits organized under 501(c)(3) cannot be involved in
lobbying or politics. But organizations that
file under 501(c)(4) are permitted to engage in
some political activities without losing their tax exempt status. And the NRA is organized as a section 501(c)(4) organization. And like a section 501(c)(3), a (c)(4) organization is tax exempt for federal income tax purposes. But that doesn't mean that they're exempt from payroll taxes, real
estate taxes and so on. And in addition donations
to a (c)(4) organization are typically not deductible by the donor as a charitable contribution
for federal tax purposes. But that's just under the federal system. States also have certain regulations and reporting requirements for 501(c)(4)s. So let's talk about New York State law and the attorney general's authority to dissolve a nonprofit. The NRA as a 501(c)(4) corporation is a charity under New York State law. Subject to the authority of
the New York Attorney General. And New York's not for profit law gives the attorney general
powers over nonprofits including dissolving a, quote, "corporation that has
acted beyond its capacity Restraining any person or persons from acting as a domestic
or foreign corporation within the state." Seeking a judgment, removing a director of
a corporation for cause. Restraining a corporation from
undertaking any activities in New York State. And compelling directors and
officers of a corporation which has been dissolved to quote, "account for the assets of
the dissolved corporation." This gives the state AG
the right two nonprofits who don't comply with New York law. Barring them from operating in the state and dissolving their legal charter. And requiring the directors
and officers to pay back any money or assets that
were improperly diverted. So how often does this happen? Do the courts ever dissolve a nonprofit after the state AG files a lawsuit? Well, yes. Courts have dissolved nonprofits when they commit serious fraud. And despite the fact that
it's sort of been memory holed at this point, you might actually recall that the Donald J. Trump Foundation is a prime example of what
happens when a New York nonprofit violates the law. So let's talk about the State of New York versus The Trump Foundation. The State of New York sued
the Donald J. Trump Foundation and its directors, President Trump, Donald Trump Jr, Ivanka
Trump and Eric Trump for improper transactions
going back at least 10 years. The lawsuit against the
Donald J. Trump Foundation was filed in June of 2018. The state said that Trump repeatedly used the Foundation money for
his own personal business and political interests. A judge concluded that
Trump and his children flagrantly breached
their fiduciary duties. For example, in 2016, the presidential campaign
directly distributed $500,000 in Foundation money at a campaign rally right before the Iowa caucus. Then candidate Trump
subsequently took credit for making those payments, citing them as proof of his good deeds. In reality, the money that
he doled out was not his own. It was given by individual
donors to the Trump Foundation. By law, this money could not
be distributed by the campaign. After the court's decision, President Trump admitted
to dozens of violations of New York law, including using the Foundation's funds for that Iowa campaign event. He also admitted that he
used the Foundation funds to settle legal obligations of
companies that he controlled. And that the Foundation spent
money on sports memorabilia and champagne, as well as on a portrait
of Trump that cost $10,000. Trump admitted the Foundation failed to provide oversight
over the Foundation and failed to adopt
legally required policies and procedures. He admitted that these failures quote, "Contributed to the
Foundation's participation in seven illegal transactions." The Trump family stipulated that the AG could take possession of the
charity's remaining assets and that the Foundation
would be legally dissolved. If President Trump ever founds
another New York charity, he will be subject to close
monitoring by the state. So please consider this
your friendly reminder that the president of the United States was the head of a fraudulent
charitable organization that diverted charitable funds
away from charitable ends like helping cancer patients, and used them for his own personal gain. Yeah. That a thing that actually happened. All right we're gonna
talk about the allegations against the NRA in a second. And believe me, they
are pretty scandalous. But first let's talk about
some of the requirements that New York has for nonprofits. New York nonprofits must
appoint directors and officers who will discharge the duties
of their respective positions in good faith. And with the care an
ordinarily prudent person in a like position would exercise under similar circumstances. These individuals may only be paid quote, "a reasonable amount for
services actually rendered." They cannot be paid from dividends or from distributing quote, "any part of the organization's
income or profit." The board of directors must also adopt, implement, and assure compliance with the conflict of interest policy. It must implement a policy
protecting whistleblowers from retaliation. Some nonprofits must
register and file accurate and complete reports with
the attorney general. Executives cannot lie or
make misstatements of fact in any financial statement
that is filed with the state. And the New York Prudent Management of Institutional Funds Act governs the management
and investment of funds held by not-for-profit corporations
and other institutions. The NRA does in fact, hold such institutional funds
and the board of directors has a duty to use such funds
for the good of the company and not for themselves. So let's talk about the allegations of the actual lawsuit itself. Despite being a national organization, the NRA was chartered by
special act of the state of the New York Legislature
on November 17th, 1871. And throughout its history, it's been legally domiciled
in the State of New York. Despite having its headquarters
in Fairfax, Virginia. The NRA has members and
engages in fundraising throughout the United States
and has five key missions. One, to protect and defend
the Second Amendment. To promote public safety
and law and order. To train people on safe
handling of small arms. To promote shooting sports and to promote and defend hunting. And interestingly, the NRA of today looks really nothing like the NRA of 50 years ago. Frank Smyth, the author of "The NRA, The Unauthorized History" explains that the
current makeup of the NRA relates back to the
1977 Cincinnati Revolt. At which time, hardcore gun rights advocates
essentially launched a coup against the current management of the NRA and took over the ideological
structure of the organization. And at the same time that
the members of the NRA who launched the Cincinnati Revolt and made the organization tack to a much more ideologically
extreme positions with much more local activity. They also at the same time prevented any kind of
public financial disclosures from being released. Which had been standard
practice up until that time. So with that in mind, the New York AG's lawsuit
alleges that Wayne LaPierre and the executive staff have effectively looted the NRA's funds. Diverting the organization
from furthering the goals listed by their mission statement. For personal gain unrelated
to their core missions. Information from several whistleblowers is included in the complaint. Including two members of the NRA board described as dissident
one and dissident two. Describe the numerous efforts by LaPierre to block them from their legal obligations to fiduciaries. The New York lawsuit names the
NRA as a corporate defendant, and also the top four
officials at the NRA, including Wayne LaPierre. Former chief financial
officer, Woody Phillips. Former chief of staff, Joshua Powell. And general counsel, John
Frazer as individual defendants. The suit accuses LaPierre
of using charitable funds for personal gain including
a post employment contract valued at more than $17 million. It was not approved by the
NRA's board of directors. LaPierre allegedly received
more than $1.2 million in expense reimbursements over four years. Including gifts for friends, travel expenses and memberships
at golf clubs and hotels. LaPierre allegedly used money for purposes unrelated to the NRA's mission. Such as sending extended
family on private vacations paid for by the NRA, even when he was not present. Traveling to Africa with
his wife on a Safari gifted by an NRA vendor. Spending at least $3.6 million
on luxury black car services and travel consultants in just two years. And in the past five years, LaPierre and his family have
really visited the Bahamas by private air charter
at least eight times. At a cost of more than
$500,000 to the NRA. Although NRA employees are required to use the NRA's in-house travel
agent to book travel. LaPierre's travel was handled
by an outside travel agent who from 2016 to 2019 was paid a fixed fee of $19,000 a month. And this kind of expense
obviously adds up fast. Now the complaint alleges that LaPierre used a secret poison pill contract to make him the chief
executive officer for life. And a contract allegedly requires LaPierre to receive an annual payment of $1 million if he chooses to retire. However, if he's ousted from the group, the contract actually
pays LaPierre even more, up to $1.5 million annually. According to the lawsuit, neither the NRA's first
nor second vice president signed the contract as
required by NRA policy governing procurement. And there's no evidence that the NRA board was even aware of the original contract or its numerous extensions. In addition to Oliver North, several other people tried to
blow the whistle on LaPierre but he apparently retaliated
against those individuals. The suit also alleges that
LaPierre hired other defendants in order to help him
further his self-dealing. The New York AG says that
Pierre hired Woody Phillips, Joshua Powell and John Frazer despite their lack of skills or experience for their respective roles
and responsibilities. At Lafayette discretion, Phillips allegedly instituted a practice whereby millions of
dollars in entertainment and travel expenses
incurred by NRA executives were billed to the NRA as disbursements by the NRA's largest vendor. That practice evaded both
the NRA's own accounting and board established expense
reimbursement process. And the IRS requirements for
proper expense reimbursement. And according to the lawsuit, LaPierre, Phillips and Powell regularly use this
pass-through arrangement to conceal private travel and other costs that were largely personal in nature. And wasting substantial
charitable resources. The lawsuit also alleges
that Woody Phillips, who as treasurer was responsible for managing the financial
operations of the NRA, lied on financial disclosure forms and set up numerous
deals to enrich himself and his girlfriend. And according to the lawsuit, several of Phillip's staff
became whistleblowers in the summer of 2018. Disclosing to the NRA audit committee, longstanding failures by
NRA senior executives, including Phillips and Powell, to comply with NRA financial
policies and procedures. And Phillips allegedly set
up a contract for himself just before he retired, that was supposed to be for
ongoing consulting services to the incoming treasurer. But the incoming treasurer
told the New York AG that he was not even
aware of this contract, and that the contract was never approved by the NRA board of directors. The lawsuit also alleges that the former NRA Chief of
Staff Joshua Powell's salary more than tripled a
little more than two years into his tenure, which started in 2016. His salary started at $250,000, but rose to $800,000 by the second anniversary with the group. And although LaPierre described Powell as abusive to his employees, Powell was promoted after
his abuses were discovered. And Powell was also accused
of directing charitable funds to be used for the benefit of his family. Including approving a $5
million consulting contract with the firm McKenna and Associates. Which in turn that consulting organization ultimately hired Powell's wife and paid her $30,000 a
month in consulting fees through the NRA. And even before this lawsuit, the NRA actually fired
Powell in January of 2020 for misappropriating funds. And the complaint alleges
that NRA General Counsel John Frazer didn't even
meet the requirements required for in-house
attorneys for a nonprofit. And despite the lack of qualifications, he was simply hired to help LaPierre funnel money to himself and others. And that Frazer is accused of
repeatedly certifying false or misleading annual
statements by the NRA. Now the lawsuit identifies
18 formal causes of action against the defense. In other words, things that give rise to
some violation of law. And the key claim against
the NRA as a corporation is that it has carried on, conducted, or transacted it's business in a persistently fraudulent
or illegal manner. Or by abuse of its powers
contrary to public policy. And the lawsuit seeks the
dissolution of the NRA as a nonprofit in the state. And the second cause of
action against the corporation cites New York State law that
allows judicial dissolution of the nonprofit where the directors or members in control of
the corporation have quote, "looted or wasted the corporate assets, have perpetuated the corporation solely for their personal benefit, or have otherwise acted in an illegal, oppressive or fraudulent manner." And if this relief is granted, the state seeks to
distribute the NRA's assets towards causes consistent
with its mission statement. And LaPierre, Phillips, Frazer and Powell are sued in their individual capacities for injustly enriching themselves because they obtained a benefit that should have gone to the NRA. And the New York AG
asked that all of the men repay the compensation and reimbursements that they received at the
detriment of the company. The men are also being
sued for their breaches of their fiduciary and
professional duties to the NRA. And are sought to be barred from operating charities of the future. And this leads to one of
the main counterarguments about the way that the New
York AG has handled this and actually seeking the
dissolution of the NRA itself. And pointing to why it might
be politically motivated. There've been a fair number
of people that have said that if these allegations are true, the top of officials at the NRA should obviously be prosecuted and forced to disgorge the
profit that they received at the detriment of the company. But even if that's the case, the organization should in fact remain. Even if we may disagree with
what that organization does. Unlike the Trump Foundation, which existed apparently solely to benefit the members of the Foundation. And to be able to divert charitable funds towards their own aims, the NRA does a number of things that fit with the mission
of the organization itself. Even if some of those funds were diverted by the men at the top. But the counter-counterargument is that that's an incredibly low bar and that these allegations do actually warrant
dissolving the company itself. But this is not the only
lawsuit against the NRA. Washington, D.C.'s attorney general is also suing the NRA Foundation, which is a separate nonprofit that's chartered in the district. For allegedly diverting funds to the NRA to help pay for improper
spending by top NRA executives. And as a result, the DC lawsuit is demanding
a constructive trust be placed over the amount it
says was improperly diverted to the main NRA. And the NRA is also battling
its former advertising agency, Ackerman McQueen. The ad agency allegedly had
an arrangement with the NRA to help them cover up the excess spending. And the lawsuit against
Oliver North is also ongoing. So if New York dissolves the
NRA and removes its officers, what happens next? Well the NRA would cease to
exist in the State of New York. But nothing would stop it
from chartering under the laws of a more hospitable state. But if the court grants the state's motion to seize and redistribute
the NRA's assets, the organization would
probably be crippled. Even if they went to another state. The New York lawsuit seeks
to remove the core officers of the NRA, which would likely mean that
a new version of the NRA would need a different leadership group. But given the popularity
of the NRA's mission in the United States, it's likely that many other organizations would probably step into the vacuum left by the disappearance
of the NRA would take over. And many justified the mission of the NRA and the Second Amendment as
a way to protect their family and their homes. But contrary to popular belief, the second amendment only
allows you to possess a firearm. It doesn't absolve you from
the liability of using it. And if you did shoot an
intruder in your own home, you're almost be certainly
subject to a massive lawsuit. A better way would be to stop
a crime before it happens. Imagine if you had 24
hour video surveillance and guards that could stop a package thief or an intruder before they got in. Well with Deep Sentinel, you can. And I can tell you from
personal experience that it's amazing. I personally reached out
to them because I love it. I actually just moved houses and I knew I wanted a new security system. Because I used to live in a house with a traditional security system with one of those stupid key pads where the alarm would go off if you didn't put your code in in time. And I actually got fined hundreds
of dollars multiple times when the police were
called out unnecessarily. And I also tried one of those
systems with wifi cameras. And all it did was record the fact that somebody stole my package. But Deep Sentinel is different. Deep Sentinel is the only security company that actually monitors
your property in real time and will actually intervene
before something happens. Once the security system is triggered their surveillance guards,
actual human beings, watch your property in real time. It's genius. And here's how it works. First when triggered, the outdoor camera starts
strobing red light. Showing that the video was
recorded and monitored. Then a surveillance agent is notified and makes a quick decision
about whether to intervene. And here's the best part. The alarm system has a
loud two-way speaker. You're giving the agent
the ability to find out why someone is there or stop
them from doing something bad. And you can really see the advantage of having a real person here. And finally, if necessary, the Deep Sentinel agent
can warn the person to stop and call law enforcement with a description of the suspect. No one else can do that. And because it's real humans, there are effectively no false alarms. With Deep Sentinel, you get a system that is
proactive, not reactive. With a traditional system, it takes several minutes
before the alarm is triggered and several more minutes
before the police arrive. Assuming it's not a false alarm, which it probably is. In the same timeframe, someone can steal your
package, break into your car, or even break into your home. At best, the system will
just give you a record of what happened. But all of that is a thing in
the past with Deep Sentinel. And like any modern security system, everything is wifi and app-enabled. So I can pull out my phone
and check on my front porch or backyard with one click
anywhere in the world. And from my phone, I can turn on the two-way radio and talk to a delivery person or guests. And the system even automatically tells me when packages have been delivered. It's all wireless. So installation requires
literally one screw. That's it. When I moved, I knew Deep Sentinel was
the only security system I actually I really wanted. So I immediately reached out to them to sponsor this channel. And Dave and Tomas didn't let me down. Legal eagles will get 15% off when you go to deep
sentinel.com/LegalEagle. Or use the promo code
LegalEagle at checkout. But this is a special deal
that will expire in 14 days and only if you use the link below. Before I installed Deep Sentinel, several hundred dollars worth of packages were stolen from my front door. Because, you know, D.C. But I haven't lost a single package since installing Deep Sentinel. If you're worried about security and don't have the time to
self-monitor a video system, and who does? Give Deep Sentinel a try. And get 15% off using the
link in the description or go to deep sentinel.com/LegalEagle. Plus clicking on that link
really helps out this channel. But remember this deal
expires in a few days. So do you agree with my analysis? Should the NRA be
dissolved for malfeasance or is it a political witch hunt? Leave your objections in the comments and check out this playlist over here with all of my other real law reviews. where I talk about
legal issues in the news related to the Trump
administration and COVID. It's all there. So click on this playlist
and I'll see you in court.
Added to my watch later list. I hope the NRA gets YEETED out of existence asap.
Would be nice!
I think the NRA is one of the main reasons people on the left are seen as anti-gun, even though many of them (myself included) are pro-gun