The Washington Post - 07.09.2019

SATURDAY, SEPTEMBER 7 , 2019. THE WASHINGTON POST EZ RE A

count, they said. Hammer’s loans are secured by her “employment agreement,” tax filings say. “If she quits working, what happens to the loan and the repayment obligations?” asked Atkinson, the professor at F lorida State University. Because the loans were de- scribed as being for property purchases, The Post reviewed public records in the Ta llahassee area where Hammer lives. The records show a number of purchases by Hammer and a trust in her name. In 2 011, she paid $142,000 for a 1,600-square-foot home in Ta llahassee where a daughter and son-in-law appear to live, according to voter registration and other records. Four years later, the three of them paid $150,000 for a 1,700- square-foot home, a property t hat was transferred to Hammer and her granddaughter the following year for $75,000, property records show. Both of the homes were built decades ago. In 2017, her trust bought a 1,500-square-foot condo for $149,000. She owns another Ta l- lahassee property through a trust and co-owns one more home. Hammer declined to discuss the real estate purchases. On the NRA board, Hammer has been one of the fiercest de- fenders of the organization and of LaPierre’s leadership. When three board members who had called for an audit resigned in protest last month, Hammer quipped, “Don’t let the door hit you in the back on your way out.” In a recent blog post, she tout- ed LaPierre’s direct contact with President Trump about proposals to expand background checks on gun buyers after the mass shoot- ings in Dayton, Ohio, and in El Paso. She also lashed out at an NRA donor who has called for LaPierre’s resignation. “Nobody else can do what NRA does,” she wrote. “Does anybody really think any of the dissidents or their leaders get a call from the President of the United States?” She added: “Does anybody believe they even have a clue what to do on Capitol Hill? Absolutely not, they can’t even hold Wayne LaPierre’s coat.” [email protected] [email protected]

Julie Tate and Alice Crites contributed to this report.

tax-exempt organization flipping in and out of default decide that a $200,000 loan for housing would be just peachy, especially since it appears she never paid off the previous loans?” Hill asked. Hammer is among 18 members of the unpaid, 76-member NRA board who have collected money from the group during the past three years, according to tax filings, state charitable reports and NRA correspondence reviewed by The Post. At a time when NRA spending is under scrutiny, tax experts say the payments to board members create potential conflicts of interest that could cloud the board’s independent monitoring of the organization’s finances. NRA tax filings show $1.6 million paid to Hammer between 2005 and 2017. Other NRA records show the money was for consulting. Hammer has defend- ed the payments to board members as “legitimate.” Separately, Hammer earns $110,000 annually as executive director of the Unified Sports- men of Florida, which describes its mission as to “provide protection, information and education concerning Second Amendment rights of the U.S. Constitution and gun safety.” Her salary has not changed since 2004, the year of the oldest tax filing publicly available, except for small modifi- cations in 2005 and 2006. Since 2010, the NRA has given $216,000 every year to the state group to cover Hammer’s salary and office expenses, according to NRA audit committee records recently made public by an investigation of Hammer by the Flori- da Office of Legislative Services. Unified Sportsmen of Florida spent about $220,000 in 2017, its latest tax filing shows. The investigation was trig- gered by complaints from two Democratic state legislators who accused Hammer of violating rules requiring Florida lobbyists to disclose their compensation. The Office of Legislative Services concluded that the NRA affiliate acts as a lobbying firm and direct- ed Hammer to file quarterly reports of the money the affiliate receives from the NRA. Legal experts interviewed by The Post also expressed concern about the security for the loans to Hammer. Loans from retirement funds are typically secured by the balance in the retirement ac-

dealing with the assets of a tax- exempt organization in a way that is not arm’s length and in a way that favors insiders.” When pressed about the interest rate, Hammer referred to regulations for the Employment Retirement Income Security Act, which sets minimum standards for most private retirement plans. The regulations do not set specific interest rates but say they must be “reasonable.” Washington attorney Carol McClarnon said the regulations are interpreted to mean the rate should be similar to what banks are offering under similar cir- cumstances. The average mort- gage rate when the loan began, in March 1995, was over 8 percent, according to Freddie Mac. Two legal experts said nonprofits sometimes grant low-interest loans to workers in limited cir- cumstances, such as when a newly hired employee is relocating to a high-cost metropolitan area. Frances Hill, a University of Miami law professor who teaches about tax policy, noted that the NRA affiliate reported a $28, shortfall in the same year that tax filings show it extended the $200,000 loan. The group nar- rowly broke even in the 2011 filing and reported shortfalls in the 2007 and 2008 filings. “How in heaven’s name can a

dence.” At that time, Hammer was serving as first vice president of the NRA, in line to become the next president. In the 2011 filing, when the loan was about 75 percent paid off, it rolled over into a new, $49,148 loan for “purchase of property.” And in the 2016 tax filing, when that loan was about 40 percent paid off, it rolled over into a new, $200,000 loan to “refinance and purchase property.” The interest rate on the two more recent loans is not detailed in the filings. Hammer owes $194,154, according to the latest tax filing, in 2017. The IRS classifies Unified Sportsmen of Florida as a tax-exempt organization that “must be operated exclusively to promote social welfare” and “may not in- ure to the benefit of any private shareholder or individual.” The IRS can impose tax penalties if officials receive monetary ben- efits from exempt organizations that are out of line with fair-mar- ket value. The agency can also direct officials to return the ben- efits. Miami tax attorney Hank Raat- tama said an interest rate as low as 2 percent means Hammer was “underpaying what she would owe if she went to a local bank.” He called the loans “indicative of an attitude in which they are

tors of the Unified Sportsmen of Florida either did not respond to questions about the loan or declined to comment. The board of directors approved the loans, according to the tax filing. The NRA declined to comment beyond a statement it had previ- ously released about Hammer: “It suffices to say, Ms. Hammer is a tireless supporter of the NRA’s fight to protect the Second Amendment. Her advocacy efforts greatly benefit the NRA in Florida, and the ripple effects of her work favorably impact the political landscape across the na- tion.” Hammer, 80, is credited with spearheading a number of groundbreaking Florida laws protecting the rights of gun own- ers, including the 1987 law allow- ing concealed weapons to be car- ried statewide and the “stand your ground” law in 2005 that permits deadly force to counter a perceived violent threat. In De- cember 1995, she became the first female president of the NRA, a post she held until 1998. Unified Sportsmen of Florida was found- ed in 1976, and Hammer joined as its leader two years later. Ta x records show Unified Sportsmen of Florida initially loaned Hammer $50,210 in March 1995 at an interest rate of 2 percent to “purchase resi-

funds.
Nonprofits are not prohibited
from making loans, but five law-
yers who examined the Florida
affiliate’s tax filings at The Wash-
ington Post’s request said the
terms of Hammer’s loan may
violate Internal Revenue Service
guidelines on “excess benefit
transactions.”
“The agency’s concern about
loans made by nonprofits to
board members and others is
whether they are fair, whether
they further the mission of the
organization or instead appear to
be used for the personal benefit of
organization executives,” said
Douglas Varley, a Washington
lawyer who advises nonprofits on
executive compensation and oth-
er matters.
Hammer said the loans, which
were first reported publicly by
the Ta llahassee Democrat news
outlet, come from her retirement
account, not the nonprofit. “It’s
my money,” she said. “People bor-
row from their retirement ac-
counts all the time.”
Robert Hollar, the Ta llahassee
accountant who has prepared the
group’s filings since 2013, de-
clined to answer questions but
said, “In my opinion they are
prepared properly.”
Several of the lawyers inter-
viewed by The Post said the affili-
ate’s tax filings appear to be
inconsistent with Hammer’s ex-
planation. A line about pension
plan accruals and contributions
was left blank, they noted. The
filings, they said, describe the
arrangement as “a loan from the
organization” and list the interest
paid by Hammer as revenue to
Unified Sportsmen of Florida —
not to a retirement plan.
“They do not seem to be com-
ing from any kind of retirement
account that is ‘hers,’ but rather
out of the organization’s own
funds,” Robert Atkinson, a Flori-
da State University law profes-
sor who has taught taxation of
nonprofits, said in an email.
“Both the procedure for making
the loans and the method of
reporting them look slipshod at
best, and, in all fairness, suspi-
cious.”
Hammer declined to offer any
documentation supporting her
claim that she borrowed against a
retirement plan. She is the non-
profit’s lone employee.
Three officers and three direc-

NRA FROM A

NRA board member Hammer is only employee of organization’s a∞liate in Florida

BY NICK MIROFF AND KEVIN SIEFF

As the Mexican government
claimed success Friday for its
summerlong crackdown on Cen-
tral American migrants, U.S.
Homeland Security officials said
the country’s efforts are stalling
and that the Trump administra-
tion will push for a more aggres-
sive approach during talks in
Washington next week.
The number of migrants taken
into custody at the U.S. southern
border has dropped by more than
half in the past three months,
after President Trump forced
Mexico to ramp up enforcement
by threatening to impose tariffs
on the United States’ third-largest
trade partner.
Mexican Foreign Minister Mar-
celo Ebrard, who will travel to
Washington for talks Tuesday
with Trump administration offi-
cials, told reporters his govern-
ment’s deployment of thousands
of national guard troops has cut
northern migration flows by 56
percent, a ccording to the U.S. gov-
ernment’s own data.
“The Mexican strategy is work-
ing,” he said.
U.S. officials are less sanguine,
at least in private, pointing out

that the number of border cross- ers taken into custody last month — approximately 65,000 according to preliminary tallies — re- mains far higher than any other August in at least five years. Officials from the Department of Homeland Security said this week they believe Mexico’s effort is flagging and they want more robust interdiction. “Mexico started off making some gains, a nd they have executed enforcement operations they’ve never executed before, which the U.S. government has acknowledged and applauded, but those efforts have largely stalled,” said a DHS official who spoke on the condition of ano- nymity to describe how the Unit- ed States is planning to approach next week’s talks. “We’re concerned that Mexico is resting on its laurels and not postured to drive down the numbers to acceptable levels,” t he official said. “We know they can do more, and that’s what the United States expects.” Trump tweeted praise for Mexi- co’s cooperation earlier in the summer, calling the government of leftist President Andrés Manu- el López Obrador a more reliable partner for immigration enforce-

ment than congressional Demo- crats, who have opposed the administration’s border policies. But acting homeland security secretary Kevin McAleenan has said the United States is seeking a return t o the “historic lows” regis- tered during the initial months of the Trump administration, when monthly arrests bottomed out at fewer than 20,000. In their June 7 accord, U.S. and Mexican negotiators agreed the two sides would reassess their efforts after 90 days. That period has expired. During their June negotiations, the United States pushed hard for Mexico to accept a “safe third country” accord that would re- quire it to take in U.S.-bound asylum seekers from other na- tions. The Mexican government re- sisted that pressure but agreed in a separate accord to initiate talks toward an overhaul of its asylum policies. Mexican officials later said they didn’t believe such measures would ultimately be necessary because their unprecedented crackdown would achieve the results the Trump administration was seeking. Trump has not tweeted about Mexico’s migration efforts in re-

cent weeks, nor given any indica- tion about whether he planned to insist on that part of the agreement or resume his tariff threat. Homeland Security officials declined to say if the administration plans to renew the threat. Trump’s t rade dispute with Chi- na and the administration’s wor- ries about a weakening U.S. econ- omy could make it more difficult for the White House to wield tariffs, especially because the dam- age would impact major U.S. companies who have manufacturing and assembly plants in Mexico. Ebrard and López Obrador told reporters Friday that Mexico had accomplished what the Trump administration had asked. “This reduction of 56 percent in the flow of migrants is a result of diverse measures t hat the government has taken, in compliance with the Mexican migration law,” Ebrard said, citing data from U.S. Customs and Border Protection. “I don’t expect there to be a tariff threat on Tuesday.” Ebrard dismissed the idea that Mexico would implement a safe third country agreement at the White House’s r equest. Leaders of Mexico’s Senate, which would have to ratify such a deal, have signaled that they would not ap-

prove it. “I’m not sure if they will try to broach that idea at our meeting, but we already have an answer,” Ebrard said, referring to U.S. officials. He a dded that such a deal “is not in Mexico’s interest.” “We told them that there is a Mexican strategy that can pro- duce results,” he said. “What we showed is that we were right.” Mexico has deployed more than 25,000 members of its newly formed national guard to help interdict migrants, mostly along the country’s southern and northern borders, Ebrard said. Migrant advocates say Mexican officials have done little to provide for asylum seekers sent by U.S. officials to wait f or their court dates in northern Mexico, under the Migrant Protection Protocols policy, also known as “Remain in Mexico.” In the state of Ta maulipas, in the northeastern corner of Mexi- co, returned asylum seekers are regularly kidnapped and extort- ed. The state and federal government have argued over who should bear responsibility for the migrants, and neither has made a serious attempt to provide protection, shelter or food, according to migrant advocates.

Homeland Security officials want to continue aggressively ex- panding the MPP program in Ta maulipas and the Rio Grande Valley, the busiest place along the border for illegal crossings, view- ing it as a major deterrent. Asked for more evidence that Mexican enforcement is waning, DHS officials said they base that view on the fact that while overall migration numbers have fallen, Mexico is apprehending a de- creasing percentage of those heading north than they were in June. DHS officials said they are also concerned by a rebound in the number of mass border crossings by large groups of families. The arrival of a single group of 1,036 migrants in the El Paso area on May 30 — the largest ever of its kind — was the incident that led Trump to erupt at Mexico in the first place. Homeland Security officials said they have had 20 large groups of 100 or more arrive since the June 7 agreement with Mexico, some with more than 200 adults and children. [email protected] [email protected]

Sieff reported from Mexico City.

Mexico touts migrant crackdown e≠orts, while U.S. points to waning results

BY LENNY BERNSTEIN, SARI HORWITZ AND SCOTT HIGHAM

Mallinckrodt Pharmaceuticals,
one of the largest manufacturers
of generic opioids, announced
Friday it has reached a “settle-
ment in principle” with two Ohio
counties scheduled to go to trial
next month against an array of
pharmaceutical companies over
responsibility for the opioid cri-
sis.
Under the deal, Mallinckrodt
would pay Cuyahoga and Summit
counties $24 million in cash and
donate $6 million in drugs, in-
cluding addiction treatment med-
ications.
The proposed deal would take
Ireland-based Mallinckrodt off
the list of defendants facing the
two counties in a test case of
whether the drug industry should

be forced to pay for the prescrip- tion opioid epidemic, which has killed more than 200,000 people since 1999. More than 2,000 counties, cit- ies, Native American tribes and others have sued those companies, seeking compensation for the costs of emergency care, drug treatment, law enforcement and other costs. Their cases have been consolidated before a federal judge in Cleveland. “Mallinckrodt is pleased we were able to reach a settlement in principle with the counties that made sense for all parties,” Mark Casey, Mallinckrodt’s general counsel, said in a statement. Re- solving the two early “bellwether” cases, he added, “gives us the necessary time to continue to work toward a global resolution of the opioid lawsuits.” Plaintiffs’ lawyers said in a

statement that the proposed deal, which still must be approved by the Summit and Cuyahoga county councils, would give the counties “critically needed resources,” as well as “protection in any future insolvency proceeding by Mall- inckrodt.” Frank Gallucci, an attorney for Cuyahoga County in the lawsuit, said the settlement would allow it “to get some dollars earlier than they may get through trial, and start trying to get ahead of the epidemic.” The Washington Post reported in July that a Mallinckrodt sub- sidiary, SpecGX, was the single largest manufacturer of the more than 76 billion opioids distribut- ed across the United States between 2006 and 2012. The data came from a Drug Enforcement Administration database that was released after The Post and HD

Media, which publishes the Charleston Gazette-Mail in West Virginia, waged a year-long legal battle for access to it. Endo Pharmaceuticals and Al- lergan, which made smaller amounts of opioids that were dis- tributed in Summit and Cuyaho- ga counties, already have settled with those counties. The proposed deal comes during a difficult period for drug companies, including distribu- tors and retail pharmacy chains, which have become targets of legal action by communities devas- tated by the opioid crisis. On Aug. 26, an Oklahoma judge ordered Johnson & Johnson to pay $572 million to that state for its role in fueling the opioid crisis there. Purdue Pharma, the maker of OxyContin, the drug widely blamed for helping to spark the opioid epidemic, is in talks to

settle with the 2,000 municipali- ties in the federal suit and more than 40 states that have filed separate lawsuits, for $10 billion to $12 billion. Bloomberg reported Thursday that Mallinckrodt was consider- ing bankruptcy because of the liability it faces in the opioid lawsuits, sending its stock price plummeting. Purdue has also warned it could declare bankruptcy if no settlement is reached, a move that could stymie efforts to recoup funds from the company. In recent days, U.S. District Judge Dan Aaron Polster, who oversees the consolidated federal lawsuit, has ruled against the drug industry defendants on a number of pretrial motions de- signed to derail the mammoth legal action. “Judge Polster, in a very well reasoned opinion a week or so

ago, denied Mallinckrodt’s mo- tion for summary judgment, to throw the case out against Mall- inckrodt,” said Paul J. Hanly Jr., one of the lead plaintiffs’ lawyers. “We’re pleased that one of the major defendants in this litiga- tion, Mallinckrodt, has taken at least the first step in what may be the journey of a thousand miles to resolve its role in the opioid epidemic,” he added. In 2017, The Post reported that the DEA and government lawyers pursued Mallinckrodt as the first major manufacturer in a cam- paign to hold the pharmaceutical industry responsible for the drug crisis. But the effort fell short and the two sides settled for a $ million payment from Mallinck- rodt. [email protected] [email protected] [email protected]

Opioid manufacturer Mallinckrodt moves to settle ‘bellwether’ cases with two Ohio counties

PHIL COALE/ASSOCIATED PRESS Marion Hammer, a lobbyist for the National Rifle Association, addresses Florida state legislators in 2007 in Tallahassee. Hammer is a current NRA board member and past president of the organization.

The Washington Post - 07.09.2019

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