Pete Brownell, the CEO of the Grinnell-based firearms retailer Brownells, was a key target in a scheme by foreign agents who used the National Rifle Association "to gain access to American conservative organizations on behalf of the Russian Federation," an eighteen-month investigation revealed. The report by Democratic staff on the U.S. Senate Finance Committee determined that while representing the NRA, Brownell met with sanctioned individuals in Russia in December 2015. That trip helped demonstrate to the Kremlin that Russian government official Alexander Torshin had strong American connections.
In addition, investigators found evidence Brownell went to Moscow "primarily or solely for the purpose of advancing personal business interests, rather than advancing the NRA’s tax-exempt purpose." Maria Butina (who worked closely with Torshin and was later charged in connection with special counsel Robert Mueller's investigation) set up meetings for Brownell with Russian arms manufacturers and retailers and traveled with the Iowan for three days before the rest of the NRA group arrived.
By using the so-called social welfare organization's resources in this way, the NRA and Brownell may have violated portions of the federal tax code relating to private inurement and excess benefit transactions.
Bleeding Heartland's efforts to reach Brownell for comment on September 27 were unsuccessful. The media contact for the Brownells company did not return phone calls.
The full investigation is worth a read.
My first thought was to publish all the passages that mentioned Brownell, just as Bleeding Heartland pulled out the portions of the Mueller report referring to Iowan Sam Clovis or Barbara Ledeen, a senior staffer on the Senate Judiciary Committee led by U.S. Senator Chuck Grassley at the time.
I soon realized that approach was impractical, because so much of the new report relates to Brownell, who was the NRA's vice president and incoming president during the period under scrutiny. He became NRA president in May 2017 and served in that role for a year. He stepped down from the group's board this May.
Senator Ron Wyden, the Finance Committee's ranking Democrat, launched this investigation in February 2018 "following public reporting of potential improper activities related to financial contributions and its role in the 2016 presidential election." The Finance Committee has jurisdiction over tax-exempt organizations like the NRA, a 501(c)(4) group. Although some committee probes are bipartisan, Republicans chose not to explore the NRA's Russian ties, which is why the minority (Democratic) staff produced this report.
Documents obtained from the NRA, Brownell, and others reveal "the degree to which the NRA and its leadership were aware of, and cooperated with, Butina and Torshin to provide them access to the NRA and other domestic organizations." The excerpts below include the the most important findings connected to Brownell's activities.
BROWNELL AFFIRMED HE AND OTHERS REPRESENTED THE NRA IN RUSSIA
Whereas "numerous participants refused to respond" to committee questions "or only provided partial information," Brownell generally cooperated with the investigation, answering questions through an attorney and providing relevant e-mail correspondence. On pages 17 through 30, the report presents evidence that the NRA authorized and helped organize the December 2015 trip, despite public claims by senior NRA officials that the group did not sanction or plan the Russia visit.
Brownell helped set the record straight. (pp. 20 and 21)
No NRA personnel expressed concerns about the Moscow trip to then-NRA Vice President Pete Brownell, who agreed to replace Cors as a last-minute addition to the delegation
Brownell affirmed via counsel that he believed the Moscow trip to be an official NRA event.96 In fact, emails provided by the NRA and Brownell show that Brownell’s subsequent addition to the delegation, explicitly in his capacity as future-President of the NRA, is what ultimately allowed the trip to go forward. 97 Furthermore, despite his position as then-Vice President and likely future President, Brownell asserted through counsel that no NRA personnel expressed any concern to him about participating in the trip at that time, or any other time, despite Cors’ 2019 claim that he and Wayne LaPierre held such concerns.98
Brownell, had multiple interactions with NRA staff prior to the trip where concerns could have been relayed to him. On December 2, 2015, just prior to departing for Moscow, Brownell traveled to Washington, D.C., to attend a December 3 NRA Finance Committee meeting, attended by other senior NRA officials.99 While at NRA headquarters for this meeting, Brownell also collected dozens of pieces of official NRA merchandise to be provided as gifts for Alexander Torshin, Maria Butina, and several other individuals the NRA expected its representatives to meet while in Russia.100
Not only that, "NRA staff also prepared an itinerary for two legs of Brownell’s travel: first, from Iowa to Washington, DC for official NRA business; second, from Washington, DC to Russia, several days ahead of the rest of the delegation’s arrival so he could explore personal business opportunities with Russian weapons manufacturers. 109"
During the summer of 2016, Brownell wrote checks covering the travel expenses of some people who had traveled to Moscow, and the NRA reimbursed him for those costs ($21,535.10). However, about a week after the Senate Finance Committee began investigating the matter, NRA's outside counsel asked Brownell to repay the organization, so he wrote a $17,000 check in February 2018. (pp. 24-25)
Brownell’s counsel stated that it was unclear which specific costs were included in that amount and declined to provide documents memorializing these transactions. However, counsel characterized the final transaction, which was made at the NRA’s request, as a way of “getting the trip off the NRA’s books.”122
RUSSIAN AGENTS NEEDED BROWNELL'S PARTICIPATION
During the fall of 2015, then NRA president Allan Cors canceled plans to go to Moscow for health reasons. As a result, "Butina worked closely with conservative political operative Paul Erickson to pressure Brownell into joining to ensure the trip would happen." Butina and Erickson visited Brownell in Grinnell in early October. Later the same month, Butina e-mailed the Iowan with a pitch: (p.27)
According to your plans about Russian market [joining the NRA delegation] would be very good trip for this purpose. In the NRA group’s schedule there are some meeting (sic) with Russian VIP including people how (sic) are responsible for our gun manufacturing and close to Russian government ...
But especially for you and your company I have something more. During this week that I have spent in Moscow I had several meeting (sic) with key people in Russian gun retail and manufacturing, as well as with some manufactories of gun accessorizes (sic) and supplies, and we talked about The Brownells. They are ready to meet you and talk about export and import deals. One of the companies (they do Kalashnikov modifications, SYD and etc.) is located far away from Moscow. It is 2 days trip but could be really very good for your business.132
After Cors backed out, Erickson wrote Brownell to reinforce the pitch.
The NEXT President of the NRA – who would assume office at the same time as the NEXT American President – is a man that the Kremlin (and Russian arms manufacturers) want to meet. [...]
You WOULD benefit greatly from arriving in Moscow a few days ahead of the delegation to take advantage of the private meetings that Maria has offered you with Russian arms manufacturers located outside of Moscow.133
Weeks later, when Brownell still had not agreed to the trip, Erickson wrote again, dangling the prospect of an “audience with Russia’s leader," but "only if the delegation is led by the NRA President (or future President.)" The next day, Brownell confirmed he would travel to Moscow.
BROWNELL MET WITH SANCTIONED INDIVIDUALS DESPITE WARNINGS
Investigators obtained documents showing the Treasury Department’s Office of Foreign Assets Control (OFAC) "cautioned" Brownell "about meeting with individuals who OFAC has listed as Specially Designated Nationals and Blocked Persons (SDNs)." (pp. 6-7)
The Compliance Director of Brownell’s private business determined that he was permitted to meet with sanctioned Russian nationals because he planned to do so as part of a cultural exchange in his official capacity as a member of the NRA’s delegation—a delegation that the NRA subsequently claimed was not an authorized trip.31 Brownell was further advised to avoid meeting with any SDN if that individual could derive a benefit from the interaction. Evidence detailed in the course of this investigation shows that Brownell did meet with sanctioned individuals and that he may have done so to discuss potential future business deals.
NRA leadership in 2019 publicly distanced itself from the delegation’s trip, but provided no documentation through the course of this investigation to demonstrate that it took action to discourage or prevent its officers from using organization resources to explore business opportunities or to meet with sanctioned individuals and entities. The NRA had full knowledge of the Russian individuals and entities its board members, officers and donors planned to meet in Moscow.
The report lays out the evidence about those meetings. From pages 34 and 35:
On December 12, 2015, Dmitry Rogozin, the then-Russian Deputy Prime Minister in charge of Russia’s defense industry, posted an image of himself, Keene, and Brownell together at a Russian shooting range on social media.169 At the time, Rogozin was an SDN under OFAC’s Ukraine/Russia sanctions program.170 Pursuant to this designation, all assets of Rogozin were “blocked” and could not be “transferred, paid, exported withdrawn or otherwise dealt in” by U.S. persons, and in particular, U.S. persons could not make or receive “any contribution or provisions of funds, goods, or services” from Rogozin. 171
Pete Brownell asserted via counsel that the delegation did not schedule a meeting with Rogozin during the 2015 Moscow trip, but said Rogozin happened to be at a shooting range at the same time the NRA delegation was there.172 Documents provided in this investigation raise questions about this characterization. They show Butina planned a meeting for Brownell with Rogozin because Rogozin was “responsible for the productions of ALL Russian arms.” Brownell had previously characterized the trip to his company’s Director of Compliance as an opportunity to “introduce our company to the governing individuals throughout Russia.”173[...]
Rogozin’s bio was also included on an itinerary sent later that same month by Butina to Brownell noting, “[t]he time has not been scheduled yet.”177
Additional contemporaneous documents show Brownell’s Director of Compliance informed Brownell that he could, in fact, legally meet with Rogozin while in Moscow only because he was traveling as a member of the NRA’s delegation and would not be meeting with Rogozin in a business capacity [...].
The other sanctioned individual who appears on NRA itineraries was Igor Shchyogolev, described as a “special assistant of president Putin.” Brownell's attorney told Senate Committee staff that his client did not recall meeting Shchyogolev.
Brownell and fellow travelers also met with several "oligarchs" close to Putin and representatives of sanctioned entities. (p. 41)
Documents show that NRA delegation members met with individuals designated in their own right as SDNs, including Dmitry Rogozin and Igor Shchyogolev. Further, NRA delegation members met with employees, officers and other representatives of the following designated entities or entities owned or controlled by SDNs: Kalashnikov Concern (Degtyarev), Molot-Oruzhie (Kalashnikov and Rostec subsidiary), and Tula Cartridge Works (Svetlana Nikolaev, board member, Konstantin Nikolaev, oligarch and part owner, Rostec subsidiary). Brownell’s counsel additionally noted that Svetlana Nikolaev’s husband, Konstantin Nikolaev, owned the “Tula Ammo Factory.”231 According to additional reporting, Svetlana Nikolaev also sits on the board of TPZ (Tula Cartridge Works, JSC).232
Documents also show Butina planned a five-hour meeting for Pete Brownell with TsNIITochMash, the Central Research Institute for Precision Machine Building (another subsidiary of Rostec), though Brownell asserted through counsel that he did not remember if he met with TsNIITochMash. Each of these individuals and entities have been designated as SDNs by OFAC or are subsidiaries or representatives of SDNs.
The NRA delegation also toured manufacturing facilities for Russian weapons manufacturer Orsis and subsequently appeared in the company’s promotional materials.233 While public information appears to show that Orsis is privately held, the company’s relationship to the Russian government and Dmitry Rogozin specifically, raises additional questions about its ownership and controlling interests that merit further investigation.
Those meetings were problematic and possibly illegal. (p.44)
This report concludes that some members of the NRA delegation traveled to Russia to cultivate future business opportunities. Some of these NRA members also met with sanctioned individuals. Further, members of the NRA delegation provided interviews, permitted the use of trademarked NRA logos, and appeared in promotional material for a sanctioned Russian arms manufacturer in their official capacity as representatives of the NRA. These interactions raise significant concerns under U.S. sanctions law. As described previously in this report, U.S. sanctions law does not prohibit meeting with SDNs, but does bar U.S. persons dealing in present, future, or contingent property interests of SDNs, including making or receiving contributions of funds, goods, or services to designated entities.
BROWNELL USED HIS POSITION AS NRA OFFICER TO EXPLORE BUSINESS DEALS
Several portions of the report discuss Brownell's travel with Butina before the rest of the NRA group arrived in Moscow. She had appealed to Brownell's business sense long before that trip was in the works. (p.46)
Documents provided to Committee staff by the NRA and Pete Brownell show Brownell expressed interest in exploring Russian business opportunities as early as January 2015 when he first began communicating with Maria Butina. Based on these contacts, Butina explicitly pitched Brownells’ then- Director of Compliance Rob McAllister on ways to “make the company closer to the [Russian] government” to make it easier to conduct business in the country. She also appears to have worked to connect one of Brownells’ subsidiary companies–Crow Shooting Supply–with Russian suppliers. 255
Brownell wrote to Butina in January 2015, "When regulations are favorable, Russia and surrounding countries have always been a great source for firearms, ammunition and product." Brownells compliance director McAllister also corresponded with Butina about "great potential in Russia for our industry." Regarding private meetings with weapons manufacturers, Brownell e-mailed McAllister, (p. 49, emphasis added)
There is an opportunity to be hosted in Russia to broaden our business opportunities. This is a joint nra trip.
Read below. I am not interested in attending if just an nra trip. I am also not interested if we are rushing into a market before its time. This would be strictly diplomatic trip to introduce our company to the governing individuals throughout Russia.
Is it time to attend Russia?
As a side note: is there any state or DOD clearance needed if I go?
A few weeks later, Brownell e-mailed subordinates about his plans to fly to Moscow early, stating he did not want to spend the time if "it does not provide Brownells or crow with an import or export opportunity."
Erickson told Brownell that Butina had pulled strings with the Russian security services to fast-track his clearance to visit the Molot-Oruzhie weapons factory. (p. 51)
Brownell's attorney asserted that "he used his time in Russia to continue business discussions he had already been pursuing without Butina’s help," adding "that Butina did not make any business introductions to people he did not already know, and that he ultimately decided not to pursue any of the business deals that he discussed during the trip to Moscow."291 (p. 52)
It is not clear how much of Brownell’s expenses for the Russia trip the NRA paid for. The NRA did not respond to the Ranking Member’s request for this information. However, trip arrangements made by Perrine and other NRA staff clearly contemplated his early arrival, before the rest of the delegation, in order to accommodate business meetings arranged by Butina as an incentive for him to attend. Brownell made clear that he would not have participated in the trip but for the opportunity to advance his personal business interests.
Absent the NRA’s association with the entire trip, and Brownell’s attendance in his capacity as the incoming president of the organization, it is likely that the trip would not have occurred in the first place. In the end, Brownell was able to introduce his company to governing officials in Russia, including, as McAllister advised, sanctioned Russian officials, because of the NRA sponsorship.
A section on page 45 explains applicable tax law:
[T]he tax code provides that an organization may not be treated as exempt from tax under section 501(c)(4) if the organization’s primary activity does not promote social welfare. Courts have held that a section 501(c)(4) organization is not entitled to continued exempt status if its non-exempt activities are “substantial” or if it is operating primarily for the benefit of its members rather than the community as a whole. 253 In addition, section 501(c)(3) and (c)(4) organizations may not permit private inurement. Inurement arises whenever a person in a position to influence the decisions of an exempt organization (i.e., an “insider” of the organization) receives benefits from the organization disproportionate to her contribution to the organization (e.g., unreasonable compensation).
In addition to the general prohibition on private inurement, tax code section 4958 imposes an excise tax penalty on certain “excess benefit transactions” between the organization and specified organization insiders, referred to for this purpose as “disqualified persons.” The Commissioner of the IRS may revoke the tax exempt status of an organization that engages in one or more excess benefit transactions by reason of violating the general prohibition on private inurement under section 501(c)(3) and (c)(4), after considering certain factors enumerated in the regulations.
BROWNELL FACILITATED RUSSIAN INFILTRATION OF THE NRA
The report notes that "Participants’ willingness to meet with sanctioned individuals, despite recognition of their SDN status and the potential political sensitivity of such meetings, enabled Butina and Torshin to further entrench themselves in the NRA." (p. 44) But Brownell's cooperation with the foreign agents wasn't limited to his December 2015 travels. From p. 65:
Shortly after returning from Moscow, Brownell instructed NRA staff to begin the process of inviting several Russian nationals to the NRA’s 2016 Annual Meeting. Documents provided to committee minority staff do not show that the organization conducted any level of due diligence or vetting of the individuals provided by Butina.
Butina wrote to Brownell in January 2016 with a list of individuals she wanted to attend the annual meeting. She mentioned more than 20 events for which the Russian delegation would want invitations, as well as "the possible meeting with Trump's sons." The NRA did invite many of the people Butina had suggested. At a fundraiser held during the annual meeting, Brownell introduced Donald Trump, Jr. to Butina and Torshin. (p. 69) Another NRA board member later wrote to Brownell, "Torshin went away feeing (sic) good about his visit."
E-mail correspondence shows Brownell was skittish about Russian media coverage of his visits to weapons manufacturers, fearing the publicity could jeopardize his U.S. government contracts. (p. 51) I wonder whether Brownells will experience any fallout from this damning report on how its CEO became a tool for foreign agents trying to influence the 2016 election.
Top photo of Pete Brownell distributed with an NRA news release announcing his election as president in May 2017.