U.S. SENATE COMMITTEE ON FINANCE MINORITY STAFF REPORT THE NRA SEPTEMBER 2019 AND RUSSIA HOW A TAX-EXEMPT ORGANIZATION BECAME A FOREIGN ASSET ______THE NRA AND RUSSIA______ Table of Contents Introduction & General Overview of the Investigation ............................................. 2 Current Law Relating to Tax-Exempt Organizations ........................................... 9 Current Law Relating to Sanctioning of “Specially Designated Nationals” ...... 15 I. Official NRA Participation in the 2015 Moscow Trip ...................................... 17 II. Russian Contacts - NRA Officers and Donors Met with High Level Russian Government Officials and Oligarchs Close to Vladimir Putin on Multiple Occasions.......................................................................................................... 31 III. Private Inurement - Russian Influence Scheme Included Opportunities and Offers for Personal Financial Gain, Which at Least One NRA Officer and One NRA Donor Pursued ........................................................................................ 45 IV. Access to Other Conservative Organizations and Interests – From as Early as 2014, Torshin and Butina Relied on Their Growing Relationships with NRA Officers to Gain Access to Other Conservative Organizations ....................... 58 V. Conclusion ......................................................................................................... 75 1 ______THE NRA AND RUSSIA______ Introduction & General Overview of the Investigation The Finance Committee has exclusive jurisdiction in the U.S. Senate over tax laws, including laws related to tax-exempt organizations. The National Rifle Association of America (NRA) is classified as a social welfare organization exempt from tax under Internal Revenue Code (IRC) section 501(c)(4).1 The NRA maintains an affiliated charitable foundation (The NRA Foundation), a voter registration fund (NRA Freedom Action Fund), a special contribution fund (NRA Whittington Center), and a legal defense fund (NRA Civil Rights Defense Fund), all of which are exempt from tax under section 501(c)(3) and are eligible to receive tax-deductible charitable donations. In addition, NRA maintains a political arm (NRA Political Victory Fund), which is exempt from tax under section 527. The Finance Committee has historically engaged in robust oversight of the tax-exempt sector and related tax-exempt issues. These include a multi-year bipartisan investigation into concerns over IRS processing of 501(c)(3) and (c)(4) applications submitted by political advocacy organizations, which resulted in a bipartisan 2015 report;2 a multi-year investigation into nonprofit hospitals;3 an investigation into tax- exempt credit unions;4 an investigation into museums operated as private foundations;5 an investigation into certain tax-exempt workers’ organizations;6 an investigation into the Association of Community Organizations for Reform Now (ACORN);7 an investigation into the Statue of Liberty-Ellis Island Foundation;8 an investigation into syndicated conservation easement transactions;9 an investigation into certain veterans’ organizations;10 an investigation into political activity by certain tax-exempt 1 National Rifle Association of America 2017 Form 990 Public Filing. 2 U.S. Finance Committee Bipartisan Investigative Report: The Internal Revenue Service’s Processing of 501(c)(3) and 501(c)(4) Applications for Tax-Exempt Status Submitted by “Political Advocacy” Organizations from 2010 - 2013; www.finance.senate.gov/release/finance-committee-releases-bipartisan-irs-report. 3 Finance Committee Investigation into Nonprofit Hospitals, May 2005, www.finance.senate.gov/chairmans- news/grassley-releases-non-profit-hospital-responses-expresses-concern-over-shortfalls-in-charity-care-community- benefit; February 2018, www.finance.senate.gov/chairmans-news/hatch-grassley-press-irs-for-answers-on- nonprofit-hospitals. 4 Finance Committee Investigation into Credit Unions, January 2018; www.finance.senate.gov/imo/media/doc/1.31%20Credit%20union%20letter.pdf. 5 Finance Committee Investigation into Museums Operated as Private Foundations, November 2015; www.finance.senate.gov/imo/media/doc/SFC%20Letter%20to%20Museums.pdf 6 Finance Committee Investigation into Workers’ Organizations, April 2015; www.finance.senate.gov/chairmans- news/hatch-and-ryan-ask-irs-to-clarify-tax-exempt-status-of-worker-centers#_ftn1.* 7 Finance Committee Investigation into the Association of Community Organizations for Reform Now (ACORN) September 2009; www.finance.senate.gov/ranking-members-news/finance-committee-tax-staff-review-of-acorn-tax- exempt-status. 8 Finance Committee Review of Charitable Governance Problems and Best Practices Relating to the Statue of Liberty-Ellis Island Foundation, August 2004; www.finance.senate.gov/chairmans-news/grassley-on-reported- problems-at-the-statue-of-liberty-foundation. 9 Wall Street Journal, Thousands of Investors Got Big Tax Breaks for Land-Rights Donations, IRS Finds: Lawmakers Scrutinize Conservation Easements that Let People Profit Quickly, March 14, 2018, www.wsj.com/articles/thousands-of-investors-got-big-tax-breaks-for-land-rights-donations-irs-finds-1521053766; Finance Committee Press Release: Grassley, Wyden Launch Probe of Conservation Tax Benefit Abuse, March 27, 2019, www.finance.senate.gov/chairmans-news/grassley-wyden-launch-probe-of-conservation-tax-benefit-abuse. 10 Finance Committee Investigation into Certain Veterans’ Organizations, May 2012; www.finance.senate.gov/chairmans-news/baucus-burr-investigate-nonprofit-for-exploiting-veterans-taxpayers- abusing-tax-exempt-status. 2 ______THE NRA AND RUSSIA______ organizations;11 an investigation into universities with large endowments;12 an investigation into lobbyist Jack Abramoff’s use of tax-exempt organizations culminating in a 2006 report;13 an investigation into tax-exempt organizations that support terrorism;14 and a multi-year investigation into abuse of tax laws by The Nature Conservancy, culminating in a 2005 report on the abuse of conservation incentives;15 among others. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., in February 2018 began an inquiry of the NRA following public reporting of potential improper activities related to financial contributions and its role in the 2016 presidential election. He subsequently referred information he obtained and related communications with the NRA to the Federal Election Commission.16 On July 15, 2018, Maria Butina was arrested in Washington, D.C., and charged by the federal government with conspiracy to act as an agent of the Russian Federation within the United States without prior registration.17 Butina is a Russian national who traveled to the United States with Russian government official Alexander Torshin for NRA events beginning in 2014. She moved to the United States on a student visa in 2016.18 Butina’s actions are alleged to be part of an effort to gain political access within the United States utilizing a “GUN RIGHTS ORGANIZATION,” understood to be the NRA.19 In April 2019, she pleaded guilty to one count of conspiracy to act as a foreign agent in the United States without registering with the U.S. Department of Justice (DOJ) and was sentenced to 18 months in prison.20 In its case against Butina, the DOJ outlined a conspiracy in which she and her Russian government handler utilized the NRA to gain access to American conservative organizations on behalf of the Russian Federation. DOJ filings make clear that Butina worked at the direction of a “high-level official in the Russian government” who “was previously a member of the legislature of the Russian Federation and later became a top official at the Russian Central Bank.”21 The Russian official is widely understood to be 11 Finance Committee Investigation into Political Activity by Tax Exempt Organizations, September 2010; www.finance.senate.gov/chairmans-news/baucus-calls-on-irs-to-investigate-use-of-tax-exempt-groups-for-political- activity. 12 Finance Committee Investigation into Universities with Large Endowments, January 2008; www.finance.senate.gov/release/baucus-grassley-write-to-136-colleges-seek-details-of-endowment-pay-outs- student-aid. 13 Finance Committee Investigation into Jack Abramoff’s use of Tax-Exempt Organizations, October 2006; www.finance.senate.gov/imo/media/doc/109-68.pdf. 14 Finance Committee Investigation into Tax Exempt Organizations Supporting Terrorism, December 2003; www.finance.senate.gov/chairmans-news/records-sought-about-tax-exempt-organizations-for-committees-terror- finance-probe. 15 Finance Committee Investigation into The Nature Conservancy, July 2003; www.finance.senate.gov/release/grassley-seeks-answers-on-nature-conservancy-donations-deals. 16 Finance Committee Press Release: Wyden Refers NRA Correspondence to the Federal Election Commission, May 3, 2018; www.finance.senate.gov/ranking-members-news/wyden-refers-nra-correspondence-to-the-federal- election-commission. 17 Department of Justice Press Release, July 16, 2018; www.justice.gov/opa/pr/russian-national-charged-conspiracy- act-agent-russian-federation-within-united-states. 18 Washington Post, “Timeline: The odd overlap of Maria Butina, the gun-rights movement and the 2016 election,” July 16, 2018; www.washingtonpost.com/news/politics/wp/2018/07/16/timeline-the-odd-overlap-of-maria-butina- the-gun-rights-movement-and-the-2016-election/. 19 Department of Justice Press Release: Russian National Charged in Conspiracy to Act as an Agent of the Russian Federation