The National Rifle Association (NRA) says that a Yahoo News report alleging wrongdoing by the gun rights group was “politically motivated” and “misrepresented facts to create a false narrative regarding the NRA’s fundraising efforts.”
“The assertion that the NRA was involved in ‘systematic fraud’ is patently false,” NRA spokesperson Jennifer Baker said.
In a Yahoo News piece published in April, freelance reporter Alan Berlow accused the NRA of engaging in a “brazen shell game with donations.” The piece has since been updated with a partial correction and a 566-word addendum that includes many of the NRA's objections, but the headline, which the NRA objects to, remains unchanged.
Yahoo News said they were standing by its report and reporter.
“Multiple requests for comment from the NRA by Yahoo News went unanswered," Yahoo News PR Director Andrew Kirk said. "When a spokesperson for the NRA did respond, we reflected their views in an update added to the piece."
“We stand by Alan Berlow's reporting.”
One of the main allegations in the report says the NRA failed to disclose its political spending to the IRS from 2007 through 2013, and thus likely evaded taxes through the omission.
The NRA says that it only engaged in “non-exempt” direct political spending in 2012, but that it reported that spending to the IRS, and paid $613,671 in taxes on the spending for that year. The NRA claims that a clerical error resulted in the spending not being reflected on a tax form called a 990, which led to Yahoo News concluding that no political spending had been reported, and no taxes had been paid on it, at all.
A copy of the NRA's check to the IRS shows the payment was made on March 12, 2013, and the NRA did report the spending on a different form called a 1120-POL, a copy of which was shown to the Free Beacon.
The other major allegation in Berlow's report accused the NRA of soliciting thousands of dollars in donations for its political action committee, the Political Victory Fund (PVF), by misrepresenting them as donations to its 501 (c)(4) non-profit, the Institute for Legislative Action (ILA).
The allegation is based largely on the fact that a donation Berlow made to the ILA ended up being deposited to the PVF's account.
The NRA said that Berlow's donation, made through the ILA's website, was part of a relatively small group of donations which were misdirected to the PVF by a coding error which was identified and fixed by their tech department. $125,135.03, or 0.2 percent of the roughly $50 million raised by the ILA and PVF in the last election cycle, were deposited incorrectly because of the error, according to the NRA.
The NRA said only 33 donations from non-members, a group that cannot give to the PVF, were involved in the glitch.
A copy of a Political Victory Fund transfer slip shows the NRA moved the erroneous donations back to their intended destination at the Institute for Legislative Action on April 28. The NRA said the transfer came after the accounting department learned of the misallocation from the Yahoo News piece.
“In an attempt to further his personal political agenda, Berlow went to great lengths to misrepresent what was merely a clerical and internet coding error,” Baker said.
John Pomeranz of Harmon, Curran, Spielberg & Eisenberg, who was quoted in the original Yahoo piece as a “leading expert on the election-related activities of tax-exempt organizations,” said in his opinion the new developments still showed violations of federal election law, but the efforts the NRA made to correct their mistake should be enough for the FEC.
“I see that the NRA is now acknowledging that it erred in failing to report its political activities on the organization’s IRS Form 990s for a number of years, and it does appear that there were federal election law violations (inadvertent, the NRA says) in how some funds were solicited and deposited into the organizations connected political committee," Pomeranz said. “At least these things appear to be violations of federal tax and election law.”
“However, I would expect that efforts by the NRA to correct the errors … might well persuade the IRS and the FEC to reduce or waive any penalties.”
Joseph Birkenstock, an attorney who has served as chief counsel of the Democratic National Committee and commented in the original Yahoo News piece, took a similar view.
“The idea of soliciting contributions from the general public and depositing them in the wrong accounts isn't a question of your intent,” Birkenstock said. “It's a question of what you did.”
Birkenstock said he still believes the NRA broke the law.
“Honestly, it sounds to me like they admit they broke the law,” he said. “I think they're making the point that as these things go it might not be a particularly serious violation.”
Donald F. McGahn, a former commissioner and chairman of the FEC, said the misdirected donations are not a major lapse and are unlikely to draw significant attention from the federal government.
“It's not uncommon,” he said. “Not the first time this has happened. Won't be the last time it'll happen to somebody similarly situated. This isn't a big deal. Previous reports, I think, were way overblown.”
McGahn said he does not believe the violation is serious.
“What you look for isn't so much the ‘gotcha’ glitch, it's did they discover it? Did they take corrective action? Did they unwind whatever happened? In this case it looks like they did."
The NRA said the report, which it sees as further proof of bias directed at the organization by the media, would not alter its mission or attitude.
“Despite an ongoing bias coming from many so-called journalists, the NRA will continue to unapologetically fight to protect the Second—and First—Amendment rights of the American people,” NRA spokesperson Baker said.