Guns and money: Calls mount to probe NRA finances

(Yahoo News Photo Illustration/AP/Getty)

A leading national gun safety group, joined by members of Congress, is calling for investigations of the National Rifle Association’s fundraising practices and finances in response to a Yahoo News investigation published last week.

The Coalition to Stop Gun Violence (CSGV) has launched a nationwide petition campaign asking the Federal Election Commission and the Internal Revenue Service to investigate “violations of federal law” by the National Rifle Association.

The petition drive cites the Yahoo News report which disclosed that the NRA had violated multiple provisions of the Federal Election Campaign Act, failed to report its political expenditures to the IRS for six consecutive years, and appears to have avoided paying federal taxes.

CSGV spokesman Ladd Everitt called the NRA violations “hugely significant.” Everitt said his goal was to press the two federal agencies responsible for enforcement of tax and election laws to “launch investigations into the NRA’s fraudulent activities immediately.” The CSGV is made up of 48 organizations, among them religious, social justice, political and child welfare groups.

Yahoo News reported that the NRA misled prospective donors by telling them that money was being raised to support the tax-exempt operations of the organization when the money was, in fact, deposited to the account of its political action committee. Federal law — as well as multiple state laws — requires that fundraisers explicitly inform donors who the beneficiary of a contribution will be.

Sen. Richard Blumenthal, D-Conn. (Photo: Drew Angerer/Getty Images)

“If donations have been used to support candidates or causes with deception to the donors, there is a likely violation of law,” said Sen. Richard Blumenthal, D-Conn., a former Connecticut attorney general. “NRA donors deserve to know where their donations are going without any misinformation, and the solicitations described by Yahoo News merit scrutiny.”

Federal law also bars organizations like the NRA from raising funds for their political action committees (PACs) from the general public, and from using publicly accessible websites to finance their PACs. Tax-exempt corporations like the NRA are only allowed to solicit from their members. The NRA violated all of these provisions of the Federal Election Campaign Act in soliciting contributions during the 2014 elections.

Responding to the Yahoo News report and the CSGV petition drive, Rep. Mike Thompson, D-Calif., said, “Everyone needs to play by the same set of rules. If the evidence reported is true, the FEC and IRS should conduct a full and thorough investigation into its [the NRA’s] fundraising and reporting activities.” Thompson, the chairman of the House Gun Violence Prevention Task Force, said, “Many Second Amendment supporters and responsible gun owners contribute to the NRA because of the work it does to promote gun safety and support the hunting community. They have a right to know whether their money is going to these causes or to Beltway-NRA political efforts that undermine common-sense laws designed to keep criminals, domestic abusers and the dangerously mentally ill from getting guns.”

Thompson was referring indirectly to the NRA’s support for candidates who backed its successful 2013 campaign to thwart expanded background checks for gun purchases. The measure died in the U.S. Senate.

The CSGV’s petition notes that NRA executives — including Chris Cox, who heads both the NRA lobbying arm, which solicited the donations, and the NRA political action committee, which deposited the funds to its account — had yet to comment on the findings in the Yahoo News report. “They apparently believe they are above the law. They are not, and it’s time to hold them accountable.”

Chris Cox — executive director of the Institute for Legislative Action, the political and lobbying arm of the NRA — speaks at the NRA convention in Nashville, Tenn., this month. (AP Photo/Mark Humphrey)

The NRA also failed to respond to a request for comment on the CSGV petition.

Rep. Elizabeth Esty, D-Conn., whose district includes the Sandy Hook Elementary School where 26 children and adults were shot to death in 2012, said her office had heard from advocacy groups about the issues raised in the Yahoo News report. “I join with gun safety advocates in calling for an immediate and thorough investigation,” she said. “The NRA is not above the law.”

The NRA has twice been challenged by the FEC for illegally moving corporate funds to its PAC. In 1983, the NRA signed a consent decree declaring that it would “no longer spend corporate funds in connection with any federal election” and would limit its “partisan communications” to members. Eight years later, in 1991, U.S. District Court Judge Stanley Sporkin held that a $415,000 payment by corporate NRA to the PVF was an “illegal contribution” in violation of the Federal Election Campaign Act. But an appeals court ruled that the FEC as then constituted lacked authority to enforce the law.

Although gun control groups have scored a number of significant victories in the states in recent years, at the national level they are largely playing defense. But representatives of these groups say the campaign finance and tax law violations reported by Yahoo News may provide an opening to rein in the nation’s most powerful gun lobby. Beyond the call for two separate federal investigations, these groups are exploring the possibility of filing complaints with state attorneys general and state election boards. CSGV’s Everitt suggested that individuals and smaller local organizations could play an important role in pressuring state agencies to investigate the NRA. He cited the 2014 case of Sam Bell, a 24-year-old Brown University graduate student who singlehandedly shut down the Rhode Island division of the NRA for several months by filing a complaint with the state Board of Elections. The board eventually imposed a $63,000 fine on the NRA, which admitted it had improperly funneled money to its Rhode Island PAC and filed inaccurate reports with the Rhode Island board.

State election and campaign finance laws vary widely from one state to another, making it difficult to say whether the NRA violations reported at the federal level would provide any cause of action before state election boards. But the NRA’s online fundraising appears to have violated a variety of state laws designed to protect consumers from fraudulent fundraising. In California, to cite just one example, the law declares that a charitable organization “shall not misrepresent … the nature or purpose or beneficiary of a solicitation,” and requires that contributions be deposited to an account “that is solely in the name of the charitable organization on whose behalf the contribution was solicited.” Those procedures were not followed in the cases of solicitations Yahoo News reported. Many legal experts believe that state attorney generals are in the best position to probe the NRA’s fundraising — so more investigations may lie ahead.

UPDATE: An earlier article by Yahoo News raised questions about the National Rifle Association’s fundraising and tax reporting practices. The NRA did not respond to numerous requests for comment for that story. After this second article was published, NRA spokeswoman Jennifer Baker contacted us with a response. (A message Baker left prior to publication was not received.) The main points are these:

1. The NRA acknowledges that for a period of four months in 2014, online donations to the NRA-ILA, including the two made by Alan Berlow, the author of the articles, were in fact deposited to the account of the NRA-PVF. According to Baker, this was inadvertent, the result of a “coding error” that was caught and corrected internally. The total amount of donations affected was approximately $125,000, according to Baker, out of a total of $50.8 million raised by the ILA and PVF combined for that election cycle. That amount has been transferred from the PVF to the ILA account, Baker says, which will be reflected in documents that will be filed with the Federal Election Commission on May 20. The NRA also denies that it solicited donations to the PVF from nonmembers. Nonmembers who attempted to make donations on the publicly accessible part of the PVF website were sent to a page which, in turn, led to another page with an option to make contributions to the ILA. According to Baker, the same coding error routed some of these to the PVF by mistake.

2. The NRA acknowledges that its tax filings for 2012 were incomplete with respect to its political expenditures, as reported by Yahoo, but says it paid the taxes that were due, of approximately $600,000, and has provided Yahoo with the evidence.

3. The NRA confirms that it failed to report its political expenditures (such as fundraising on behalf of the PVF) to the IRS for the years 2008 to 2013, as Yahoo News reported. Baker adds that the NRA “did not engage in any taxable [emphasis added] corporate political campaign activity from 2007-2011; nor did we do so in 2013” — in other words, it didn’t owe taxes for those years, and the lack of reporting was, in Baker’s words, “a clerical error” that did not affect its tax liability. Yahoo News did not claim that the NRA owed taxes for those years; it reported, correctly, that even if no taxes are due, the IRS requires this information from all 501(c​)(4) organizations, including the NRA. Baker’s statement reads, in part: “While a box was erroneously left unchecked … the assertion that this represents fraud on the NRA’s part is absurd, as is the suggestion that the NRA would file publicly-available documents that deliberately attempt to conceal any of our activities.” Yahoo News did not claim that the NRA’s failure to report these expenditures represented fraud. The second article quoted a spokesman for the Coalition to Stop Gun Violence calling for the IRS and the FEC to “launch investigations into the NRA’s fraudulent activities immediately.”

4. The first article said that Berlow “never knowingly contributed to the NRA-PVF.” That statement was accurate with respect to the online donations that were the subject of the article, but in fact Berlow made separate contributions by check to both the ILA and the PVF. Those checks were deposited to the correct accounts. The article should have reported these donations. Yahoo News regrets the error.