A new complaint in a lawsuit filed by the National Rifle Association against its former advertising agency, Ackerman McQueen, alleges that the firm engaged in “a stunning pattern of corruption, fraud, and retaliation” that nearly topped the organization’s CEO.
The complaint filing from October 25 first reported by the Daily Beast, also claims the gun rights organization’s infamous “culture war” publicity strategy was largely constructed by Ackerman McQueen — and that NRA executives found its work “distasteful and racist.”
In response, Ackerman McQueen argues — as its executive vice president Bill Powers did in an email to me — that the complaint is only an effort to hide the fact that the NRA is “self-destructing.” Ackerman McQueen accuses the NRA of committing fraud itself and of covering up a vast number of misdeeds, including allegations of sexual harassment.
In its counterclaim, the advertising firm states that — contrary to the claims of the NRA — the gun rights group and its CEO, Wayne LaPierre, were well aware of the messaging being used in its content. In fact, Ackerman McQueen alleges that LaPierre would ask for “more gasoline” and even riskier language in order to gain more notoriety for the group. In Ackerman McQueen’s telling, the NRA was well aware of the ad firm’s spending, with LaPierre’s “apparent paranoia and lust for secrecy” ensuring that he knew everything about the ad agency’s shaping of the NRA’s digital media outlet, NRATV.
The dueling complaints indicate one certainty: the relationship between the NRA and Ackerman McQueen, one that began in the early 1980s and made the NRA the most recognizable and powerful gun rights organization in America, is now one for the courts to adjudicate.
And the consequences for both sides could be dire. For Ackerman McQueen, allegations of fraud and double-billing could sink an 80-year legacy in advertising. But for the NRA, the lawsuit and the increasingly embarrassing allegations that court filings have revealed about the organization have already proven to be a dangerous distraction.
A finding against the NRA in court could put the group’s very existence at risk. If it were to lose the suit — and its tax-exempt status — it would be subject to not just the cost of losing the suit, but also the cost of annual income taxes (and back taxes as well.)
The NRA claims it was misled into wasting millions of dollars on a “dystopian culture rant”
As I’ve written previously, the NRA and Ackerman McQueen’s current enmity stems from alleged financial mismanagement that may have put the gun rights group in financial jeopardy.
The souring stems from an NRA insurance program Ackerman McQueen helped to roll out that would cover legal fees for self-defense shootings. That program is under investigation by New York State authorities, and the costs of dealing with that probe have the gun rights organization increasingly concerned about its finances.
The NRA filed lawsuits against Ackerman McQueen, with one complaint alleging financial mismanagement, and another focused on NRATV. But the lawsuits have become a massive headache for the NRA and for the advertising firm, as allegations from both Ackerman and the NRA have led to former NRA president Oliver North stepping down from his post after just one year on the job amid allegations he attempted to blackmail NRA CEO Wayne LaPierre and fueled accusations of outrageous spending on both sides.
Some of the spending on Ackerman McQueen’s part is fueled by revenue it has gained from the NRA — in fact, according to reporting by the New Yorker and the Trace, only 10 percent of the gun rights organization’s money is being spent on gun safety, training, and education, with the rest going to “messaging” efforts, like an Ackerman-produced magazine created to show off wealthy NRA members’ cars and planes.
The October 25th filing alleges that much of the money the NRA spent on Ackerman McQueen’s services was rendered under false pretenses. It claims Ackerman McQueen went to great lengths to defraud the NRA, most visibly through NRATV, the organization’s online streaming service that shut down earlier this year. The NRA did not immediately respond to a request for comment.
The filing contends that Ackerman McQueen inflated viewership numbers for the streaming service, fabricating and “misrepresenting” the service’s performance. And the NRA claims that in 13 in-person meetings with NRA leadership and “countless emails,” that the advertising agency lied to the NRA in order to get it to spend more money on a service Ackerman McQueen knew was “based on underlying, unvarnished, fulsome metrics that it intentionally withheld from the NRA ... an abject failure.”
According to the NRA, this strategy by Ackerman McQueen was effective in getting the gun rights group to spend roughly $20 million a year on NRATV — and thus, on the advertising firm — an amount “viewed by NRA leadership as unsustainable without tangible proof that the platform would soon monetize itself.”
This is the NRA’s totally reasonable, super clever, and not a little bit racist response to a Nigerian train character being introduced.— Mike (@MaskedBrute) September 12, 2018
Because... that character existing means...Thomas was in the KKK before? Or something?
Ok, I give up. This is disturbing as hell. pic.twitter.com/E7Yb9GSOVk
In the filing, the NRA argues that the messaging used by NRATV was offensive even to NRA leadership, mentioning an episode of the NRATV program Relentless, hosted by Dana Loesch, that portrayed characters from the children’s television show Thomas & Friends in Ku Klux Klan hoods. The filing says that NRA leaders found those themes “distasteful and racist” and noted that the messaging “strayed from the Second Amendment.”
Loesch declined to comment on the litigation between the NRA and Ackerman McQueen.
In another section of the filing, the NRA describes NRATV’s programming as “a dystopian cultural rant that deterred membership growth,” and says the platform was a growing concern for NRA leadership already spending tens of millions of dollars on NRATV.
The NRA shut down NRATV in June of this year, a few months after suing Ackerman McQueen for alleged financial mismanagement. In its lawsuit centered on NRATV filed in August, the NRA alleged that NRATV was “a failed endeavor under any appropriate performance metric” and an “abject failure” — one that the NRA alleges Ackerman McQueen said would “pay for itself” and yet no one watched.
Allegations of extortion, double-billing, and a coup
The NRA’s filing is lengthy, and in addition to the details regarding NRATV, it contains allegations that the advertising firm double-billed the gun group and even used NRA equipment to help other clients. The gun rights group also takes issue with the fact that the firm continues to use the NRA’s name and intellectual property on its website. (I checked the Ackerman McQueen website and it does showcase the NRA’s name and images on its “Clients” page.)
But the filing also responds to information it alleges has been shared with media outlets by Ackerman McQueen in order to extort the gun rights group, including details on spending by NRA CEO LaPierre.
This information includes documents published by the Wall Street Journal earlier this year showing that LaPierre had billed Ackerman $39,000 for one day’s shopping at a Beverly Hills boutique and more than $12,000 for a car and driver in Italy.
In response, the NRA argues that much of that spending was for efforts encouraged by Ackerman McQueen.
And then there was the effort by former NRA president Oliver North to attempt to force out LaPierre by accusing him of sexual harassment and financial misdeeds, an effort the NRA describes as a “coup” orchestrated by the advertising firm.
In late April, North sent a letter to the organization’s board of directors alleging LaPierre spent more than $200,000 on clothing from a vendor and stating that he was forming a “crisis committee” to fix the organization’s financial problems.
But then LaPierre fired back — in a letter of his own to the board, he said that on April 24, North called one of LaPierre’s staff and said that unless LaPierre resigned, North would send a damaging letter to the NRA board alleging sexual harassment against another staff member and more financial improprieties (like excessive staff travel).
According to LaPierre, the message from North and others was clear: drop the complaint against Ackerman and resign from his post as CEO (North allegedly told LaPierre’s staffer that he could negotiate an “excellent retirement” for him), or risk having damaging information about him made public. In the letter, LaPierre argues that only when Ackerman faced legal scrutiny did it, via North, make these demands. By Saturday, it was North who had resigned.
In the filing, the NRA says of this “failed coup:” “The NRA does not take kindly to threats, and neither did Mr. LaPierre.”
In a statement to Vox, Michael J. Collins, partner at Brewer, Attorneys & Counselors and counsel to the NRA, said:
“The NRA believes Ackerman McQueen breached its fiduciary duties, engaged in fraudulent billing, and failed to maintain adequate books and records – all in an effort to enrich itself at the expense of the NRA and its members. The allegations reveal a pattern of corruption that included NRATV, a failed media enterprise the agency proposed, managed and sustained through misleading accounts of viewership and promised commercial viability. In the end, the NRA believes NRATV became all ‘smoke and mirrors’ – a vehicle touted by Ackerman for the sole purpose of continuing the flow of millions of dollars of fees which the agency needed to sustain itself.”
“At the same time, when questions began to arise about Ackerman’s billing practices and whether it was taking advantage of the considerable discretion it possessed in such matters, the agency stonewalled the inquiry and embarked upon a scorched-earth campaign against all of its perceived adversaries. Ultimately, this included the CEO of the Association, executives, and outside professionals charged with obtaining answers to legitimate concerns about the agency’s practices. The NRA and its members are determined to ferret out what now appears to have been a considerable amount of corruption.”
Ackerman’s response is centered on LaPierre
In response to my inquiries, Ackerman McQueen’s EVP sent over the organization’s counterclaim, in which the advertising firm argues that despite the “seemingly benign veneer” of its case, the NRA is actually engaging in “sinister and intentional efforts to destroy AMc’s business.”
The counterclaim takes a legal baseball bat to the gun rights group, and more specifically, to its CEO, Wayne LaPierre. Ackerman McQueen argues that the NRA isn’t the victim of extortion or double-billing, but of a law firm that’s taking the gun group on a “self-destructive path” — referencing the NRA’s efforts to sue New York State. And it attacks LaPierre as a CEO engaging in “financial adventurism and organizational mismanagement.” The complaint also references the investigation into the NRA’s ties with Russia and sexual harassment allegations regarding LaPierre’s chief of staff.
In short, the document concludes, “In the span of two short years, the NRA, with LaPierre leading the charge, has destroyed or attempted to destroy what was built over decades. In doing so, it has caused massive personnel disruptions, enormous expenses, loss of economic opportunity, loss of profits and reputational harm that may be irreparable, or at least will take enormous time and effort to repair.”
Ackerman McQueen claims LaPierre “often exhibited defensiveness”
In Ackerman McQueen’s telling of events, the NRA — and specifically, LaPierre — was well aware of both the cost of the advertising firm’s services and the “culture war” tactics it developed. And it claims the NRA directed the firm to be even more strident in its messaging.
Contrary to the NRA complaint, Ackerman McQueen alleges that every aspect of NRATV was controlled by LaPierre, who it says argued in favor of NRATV before the NRA board repeatedly.
Ackerman also alleges that LaPierre was intimately involved in hiring for NRATV, personally recruiting Loesch to the network and even telling Ackerman personnel how happy he was with NRATV and that the NRA would be happy to continue backing the network financially.
And in response to allegations from the NRA that Ackerman was responsible for LaPierre’s purportedly outrageous spending, Ackerman argues that LaPierre made clear that all of his expenses were NRA expenses:
LaPierre made two things quite clear: he was the only person with ultimate authority to speak for the NRA and direct the relationship on behalf of the NRA, unless he specifically designated someone in writing to perform that task; any expenses he incurred, either personally or through were legitimate NRA expenses, and therefore subject to reimbursement to AMc.
It is perhaps an understatement to say that the filing is incredibly harsh towards LaPierre, describing him as a liar and even referencing news reports that describe LaPierre as “awkward,” noting that LaPierre avoided serving in Vietnam, and that he was not initially supportive of Donald Trump’s run for the White House — a potentially devastating accusation given the tight ties between the NRA and the Trump administration. In the counterclaim, Ackerman’s attorneys even quote LaPierre referencing a “Trump slump” caused by Trump’s 2016 presidential victory as the reason for spiraling donation numbers.
The counterclaim also alleges that LaPierre invented the extortion story that led to Oliver North stepping down from his post as president of the organization, writing, “Making such a reckless accusation, false as it is, is a clear example of the malice shown by LaPierre and the NRA towards AMc.”
The counterclaim describes the breakdown of the relationship between the firm and the NRA as a “compendium of missteps” rather than any wrongdoing by Ackerman McQueen, listing offenses including the NRA’s actions regarding investigators from New York State and leaks by the NRA to media outlets like the New York Times the firm alleges were done to hurt Ackerman McQueen’s reputation.
In a statement to Vox, Ackerman McQueen stated in part:
The [NRA] membership is being misled. The NRA is pouring tens of millions of non-profit funds into lawyers and lawsuits to cover up the abject failure of executive and board leadership. They continue to contrive allegations that they are not currently proving and will continue to not be able to prove in any legal setting. Instead they grovel at the feet of the media they used to decry, hoping to create some spin for Wayne LaPierre.
The lawsuits have already proven deeply embarrassing to both the NRA and to Ackerman McQueen, and cost both entities millions in court costs. For Ackerman, the NRA was once the firm’s most prominent and lucrative client; now the firm is facing a lawsuit that could cost it millions. And for the NRA, the allegations — high-spending executives, accusations of sexual harassment, and an overall lack of oversight — have damaged the group’s reputation among some gun rights supporters. Even President Donald Trump has urged the NRA to “get its act together,” and the allegations against LaPierre have riled prominent members of NRA’s leadership.
But there is one point upon which Ackerman McQueen and the NRA have agreed: Both want a jury trial to settle the rupture of a once-successful partnership.