MANHATTAN (CN) — The National Rifle Association’s longtime finance chief admitted Friday to entering the group into a $1.36 million contract with his then-girlfriend’s tech company without disclosing his ties.
Wilson “Woody” Phillips was the NRA’s treasurer and CFO from 1992 to 2018. But now, he finds himself as a defendant in the New York Attorney General’s lawsuit against the NRA and its longtime frontman Wayne LaPierre for misappropriating the group’s funds.
In her 2020 complaint, New York Attorney General Letitia James accused LaPierre of misusing millions of the NRA’s donor-funded dollars for his personal gain, including gaudy vacations and luxury clothing. James claims that the NRA spent $11 million on flights and luxury travel alone for LaPierre, his family and friends.
But LaPierre wasn’t the only one with his hand in the cookie jar, according to the attorney general. James’ complaint claims that in 2014, Phillips used his position to enter into a contract with tech company HomeTelos worth $1.36 million. At the time, Phillips was dating Nancy Richards, the company’s CEO.
“Phillips did not disclose that relationship despite NRA policy, which requires that all material facts related to conflicts of interest be disclosed in good faith and in writing to the audit committee before any related action,” James wrote in the lawsuit.
On Friday, Phillips admitted this claim was true. He testified that he didn’t disclose his personal relationship with Richards until 2018 — a year after the contract had ended.
“You did not disclose your relationship with Ms. Richardson until that contract is over, is that correct?” state attorney Monica Connell asked Phillips.
“That’s correct,” Phillips said.
Connell flashed Phillips’ conflict of interest disclosure form on the courtroom screen.
“I have had a longstanding personal relationship with the chairman of HomeTelos,” the document read. “Approximately $1,360,000 was paid on the contract during the period from September 2014 to May 2017.”
Phillips said he didn’t remember why he finally decided to disclose the relationship at that time. The attorney general’s office claims that the disclosure came just two months after NRA whistleblowers caught on to the potential conflict.
The NRA’s audit committee retroactively approved of the contract, according to the attorney general’s complaint. Still, the committee found that the relationship posed a “potential conflict of interest” that “should have been disclosed and approved in advance.”
Phillips’ was also accused of misappropriating NRA dollars to fund a 2018 trip and secure a handsome post-employment consulting contract with the nonprofit. While significant, his expenses ultimately paled in comparison to the millions of dollars LaPierre is being accused of skimming off the group.
But the attorney general’s office claims that Phillips was instrumental in shielding LaPierre’s personal spending from the NRA’s internal controls.
“At LaPierre’s direction, Phillips, the former Treasurer and Chief Financial Officer, 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,” James says in her complaint.
Phillips was asked on Friday to explain LaPierre’s post-employment contract, which was supposed to guarantee him more than $1 million per year through 2030. According to Phillips, that deal was reached behind closed doors, without board approval.
Defense lawyers have since claimed that LaPierre won’t be getting paid out according to that contract.
“There are no superseding employment or post-employment agreements with Mr. LaPierre,” NRA lawyers wrote in a Monday court filing.
Phillips will return to the witness stand on Tuesday to continue his testimony. He is the first defendant to take the stand in this trial, with LaPierre expected to testify as early as next week.
Earlier this week, the attorney general’s office questioned their first expert witness: Jeffrey Tenenbaum, a managing partner at Tenenbaum Law Group who was deemed an expert in nonprofit governance.
Tenenbaum testified that nonprofits are subjected to much more spending scrutiny than for-profit organizations. “You have to make sure that every expense is related to the mission, is reasonable [and] is appropriate,” he said.
During opening arguments, defense lawyers claimed that LaPierre was told that he must fly private due to safety concerns. Tenenbaum was asked how often nonprofits typically pay for executives’ private air travel.
“Rarely,” he said.
The six-week trial is expected to run until mid-February.
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