The problematic pass-through arrangement [former Treasurer and CFO, Wilson “Woody”] Phillips is said to have devised involved a public relations company called Ackerman McQueen and one of its subsidiaries, the Mercury Group.
From the time LaPierre took over the group’s leadership in the early 1990s until 2018, when Phillips resigned, Ackerman was the NRA’s largest vendor, billing the organization $50 million for work done in 2017 and 2018 alone. During that two-year period, Ackerman billed the NRA an additional $18 million for expense reimbursements.
A portion of those expenses were incurred by NRA officers, who would seek reimbursement from Ackerman, which would then submit to the NRA for reimbursement.
“The NRA used this arrangement to conceal expenditures by NRA executives … many of which were personal or lacked documentation required by IRS publication 463 to permit the NRA to avoid reporting such expenses as taxable income,” the complaint said.
“The effect of the pass-through expense arrangement was that these expenses would be paid for by the NRA without written approvals, receipts, or supporting business purpose documentation in accordance with NRA policies and procedures, and without disclosure to or internal review by the NRA FSD [Financial Services Division],” the complaint said. “Payment of these expenses also violated IRS rules governing reporting of income for each of the recipients on their W-2 forms, exposing the NRA to penalties for false filings and for under-withholding of taxes due.”
– Robert Freedman in Financial irregularities at heart of lawsuit to dissolve NRA