Law & the Courts

NRA Accuses Its Long-time Ad Agency of Multimillion-Dollar Fraud

National Rifle Association spokeswoman Dana Loesch speaks at the Conservative Political Action Conference at National Harbor, Md. 2018 (Kevin Lamarque/Reuters)
In a court filing, the gun-rights group claims Ackerman McQueen damaged its brand and defrauded it of millions in connection with streaming service NRATV.

The National Rifle Association claimed in a court filing last Friday that its longtime advertising partner, Ackerman McQueen, used a recent foray into digital-content production to defraud it of millions of dollars while simultaneously diluting its storied brand by advancing “racist’ and “dystopian” cultural commentary.

The complaint, first reported by the Daily Beast, was filed as part of the NRA’s ongoing lawsuit against Ackerman McQueen (AMc), an Oklahoma City–based ad agency that has counted the NRA as its largest client for more than 30 years. It was this trust, built up over more than three decades of cooperation, that led NRA leadership to give AMc the rope it ultimately used to hang the brand by “stray[ing] from the Second Amendment to themes which some NRA leaders found distasteful and racist,” according to the NRA’s complaint.

If the NRA’s attorneys are to be believed, AMc squandered both the organization’s brand capital and much of its financial capital in the space of little more than two years.

In 2016, AMc executives convinced their NRA counterparts that digital-content production was the wave of the future, prompting CEO Wayne LaPierre to dramatically expand NRA News, which had focused almost exclusively on Second Amendment commentary, into NRATV, a digital-streaming platform featuring commentary on a wide variety of cultural and political issues. Later, over the course of 13 private meetings and phone calls, AMc’s C-suite defended its pivot into digital media — which had clearly been an “abject failure,” according to the NRA — by citing misleading web-traffic metrics and inflated ad-revenue numbers.

The complaint reads:

In these closed-door meetings (which Ackerman insisted upon, ostensibly for reasons of “confidentiality”),12 with Mr. LaPierre and sometimes others from the NRA leadership in attendance, Defendant Montgomery and others made purposely inflated sponsorship and viewership claims now known to be false in order to induce the NRA to continue investing millions upon millions in NRATV and, by extension, AMc. In each of the thirteen meetings listed in the above chart, Defendants led the NRA to believe that NRATV’s viewership numbered in the millions and that Defendants were generating many millions of dollars in value for the NRA. They did so not with facts or evidence but through a carefully coordinated scheme to present misleading, out-of-context, and conjured-up statistics for the consumption of the NRA leadership.

AMc, in its quest to justify NRATV’s cannibalization of much of the NRA’s overall advertising budget, chose to conceal the number of “unique” engagements with NRATV’s content, depriving NRA executives of a key metric that is heavily relied upon to price advertisements and determine the overall value of a digital-media property. The advertising agency also allegedly inflated the importance of “live” content to the NRA brand’s revenue structure because it is the most expensive type of content to produce, and therefore justified the project’s budget, which ballooned from $12 million in 2016 to more than $20 million in its final year of operation, 2018.

In an effort to bolster traffic numbers its leaders knew were insufficient, AMc increasingly came to rely on content that NRA executives found “distasteful and racist,” according to the complaint. By way of example, the complaint cites one segment in which NRATV host Dana Loesch — who, like all NRATV employees, technically worked for AMc — addresses the audience as an image of the children’s television character Thomas the Tank Engine appears on the screen wearing a Ku Klux Klan hood.

“Attempts by the NRA to ‘rein in’ AMc and its messaging were met with responses from AMc that ranged from evasive to hostile,” the complaint alleges.

AMc’s attorneys filed a counterclaim on Monday in which they argue that NRA executives, including LaPierre, actively approved much of the NRATV content they now claim to despise — and even encouraged more inflammatory rhetoric.

“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,” reads the counterclaim, first reported by Vox.

AMc’s attorneys go on to argue that the allegations advanced in the NRA’s claim are implausible given LaPierre’s “paranoid” nature, which led him to require that he “sign off on every performance metric” as well as NRATV’s “culture war” editorial direction.

Asked about AMC’s response to the NRA’s court filing, William A. Brewer III, the partner at Brewer, Attorneys & Counselors who is counsel to the NRA in the case, argued that AMc is seeking to dodge the most serious allegation — that key performance metrics were withheld to conceal the enterprise’s failure — by focusing on LaPierre’s alleged character defects.

“Not surprisingly, the Ackerman filing is another hate-filled rant – fraught with false and misleading information,” Brewer said in a statement to National Review.

Once again, Ackerman refuses to account for the claims and allegations against the agency – and instead opts to smear the NRA and its most senior officials. The agency clings to a desperate strategy, doubling down on its reputational attack against the senior leaders of its former client who determined to hold the agency accountable for its intentional wrongdoing. The NRA is eager to bring all the facts to light.

AMc’s focus on LaPierre is understandable given the less-than-flattering details about his tenure as CEO that have emerged since the legal battle began. Shortly before resigning as NRA president in April, Oliver North sent a letter to the group’s board alleging that LaPierre spent more than $200,000 in NRA funds on clothing. LaPierre claimed in response that North’s letter and his various other claims of impropriety amounted to a blackmail campaign, carried out on AMc’s behalf, in order to force his departure and preserve AMc’s lucrative relationship with the NRA.

In addition to its court battle with AMc, the NRA is fighting to retain its tax-exempt status in an ongoing lawsuit filed by the state of New York.

The NRA’s amended complaint seeks $40 million in damages from AMc and demands that the ad agency stop using the NRA logo in its promotional materials. Both parties are ultimately seeking a jury trial.

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