Republicans are dropping out of a nonprofit organization of state attorneys general that bills itself as nonpartisan over allegations of growing liberal bias and questions over its financial management.
Documents from a National Association of Attorneys General (NAAG) executive committee meeting in early December obtained by Fox News Digital show the organization went from $24 million of total revenue to $4.5 million over the past year, which includes a drop in dues of around $600,000.
NAAG faced significant criticism from Republican attorneys general for netting tens of millions of public money off the top of consumer protection settlements that Republicans alleged were often bigger cuts than states themselves received.
These include a controversial $15 million cut from a $573 million nationwide settlement with McKinsey & Co. that resolved allegations that it improperly advised pharmaceutical companies on how to boost opioid sales.
Additionally, documents show that the group lost roughly $37 million of public money in investments over the past year.
One former senior staffer to a Republican attorney general told Fox News Digital that NAAG, a group historically propped up by taxpayer-funded dues from states, exhibits financial habits akin to the “Wild West.” Failed investments, lost dues, declining revenue from settlement cases, and other spending over the past year contributed to NAAG being $53 million lighter in its bank account, the staffer said.
NAAG was at one point bringing in $3 million a year in dues from states in a “house always wins” situation in which they would “demand the money” every year in a billing statement, according to the ex-staffer.
“They were taking big cuts off of consumer cases and these were all normally take-it-or-leave-it offers where the people who really liked NAAG would come to everybody else and be like, ‘This settlement has already been negotiated and NAAG is going to get $15 million, and it’s time for you to sign the deal,'” the former staffer said.
“That just rubbed a lot of people the wrong way.”
The former Republican staffer told Fox News Digital that as many as 21 states were not paying their dues at one point amid growing discontent about the large cuts NAAG was taking from consumer protection settlements.
The document obtained by Fox News Digital contained minutes from a previous meeting where concerns about dues were addressed, including by Republican Florida AG Ashley Moody who suggested the group suspend all dues temporarily as a show of good faith to the disgruntled members and in order to ensure NAAG continued to be a “sustaining organization.”
NAAG ultimately decided to temporarily suspend dues into next year despite some objections but is still mulling how to handle dues from members going forward.
The former Republican staffer said that the “downward spiral” of NAAG started to become evident in April 2021 when Republican Alabama AG Steve Marshall announced he was leaving the organization.
“I can’t justify spending taxpayer dollars to fund an organization that seems to be going further and further left,” Marshall said in a statement at the time. “With the money we will save, I can add a young lawyer to my consumer protection division and yield a far better return on the taxpayer’s investment.”
“We bear a solemn oath to our taxpayers and as trustees of major settlement funds,” the AGs wrote to the organization in a May 2022 letter. “The responses to our stated concerns about NAAG’s financial management and practices have fallen short of the assurances we need to continue being faithful stewards of those funds.”
In May, then-Republican Arizona AG Mark Brnovich also pulled out of the group.
That same month, eight Republican AGs sent a letter to NAAG calling out the group’s alleged partisanship and handling of public funds and income from consumer protection cases like the McKinsey opioid settlement.
“This group has been taken over by Left wing staffers—no taxpayer dollars should flow to a political group that once was non-partisan and serious,” Grover Norquist, president of Americans for Tax Reform, tweeted in May.
O.H. Skinner, executive director of Alliance for Consumers, a group that has funded ads criticizing former NAAG President Iowa Attorney General Tom Miller over the past year, told Fox News Digital that it is “not surprising” that NAAG is in “financial distress.”
“NAAG has operated with a steady stream of public money for years, requiring millions in annual dues paid by taxpayers and profiting from public consumer protection cases,” Skinner said.
“As scrutiny has rightly increased on NAAG’s financial practices and attorneys general have demanded accountability for all of this public money, those income streams have dried up. The spotlight on NAAG is a direct consequence of their own questionable behavior. It remains to be seen if the organization will right itself and find a way forward that doesn’t involve gorging on public money.”
Fox News Digital spoke with two attorneys general who left NAAG due to the organization’s politics and financial practices, including Brnovich, who said NAAG’s operating procedures are “untenable.”
“At one point NAAG was a place where Republicans and Democrats could work together but became a piggy bank for the group to finance plaintiff lawsuits that states were disagreeing with,” Brnovich said.
Brnovich said that NAAG is the “equivalent of a buggy maker while Henry Ford is perfecting the assembly line” and said the group has become “more and more partisan” and did not allow for “enough voice or input” from conservatives and Republicans in the organization.
Montana AG Knudsen told Fox News Digital that he sent staff to NAAG conferences when he first took office, but the reports back to him were of a group that was “extremely, extremely left-leaning” and “progressive.”
“A lot of climate change stuff, a lot of social justice stuff,” Knudsen said. “You know, it’s obviously not really in line with what I’m doing in this office and in my administration.“
Knudsen said the group offered “no counterpoint” for conservative opinions and there was “not even an inkling of any conservative content or alternative viewpoint.”
The Montana AG explained that Republican leaders were sometimes put in charge as “tokens” but had little sway in the inner workings of group leadership.
Knudsen’s decision to leave the group was not solely based on the partisanship of the group, claiming that the “straw that broke the camel’s back” was the group’s failure to provide him with access to its books following allegations of “possible mismanagement and co-mingling the moving of funds from the settlement accounts.”
“You tell us everything is fine, great,” Knudsen said. “Show us the books. Prove to me that the state of Montana funds are secure with NAAG, and they’ve just flatly refused to do that. So, that’s when I just decided, ‘You know what? That’s enough of this.'”
“Those are state funds I mean, those are monies that belong to the state,” Knudsen continued. “They don’t belong to NAAG. NAAG was able to negotiate itself into the settlement, in some of these things as the trustee, but it doesn’t change the fact that those are still state funds and NAAG owes a fiduciary duty legally.”
There have been allegations that NAAG was using some settlement funds to run day-to-day operations, he said.
“That obviously would be a breach of their fiduciary obligation under the law, certainly under the laws in Montana. But I think probably 49 other states as well,” Knudsen said.
“And again, prove me wrong, please. I hope I’m wrong. But the fact is that they will not provide the accounting to us. We get the same canned one-page letter back from them every time we ask about this. ‘Nothing to see here. Everything’s fine. Trust us.’ I’m big on trust but verify. Should show me the books. Then I’ll trust you. They won’t show them to us.”
Fox News Digital asked Knudsen if there was anything NAAG could do to encourage him to bring Montana back into NAAG and resume paying dues.
“Full disclosure of the finances and a payout of our state’s funds,” Knudsen said. “Short of that, not interested.”
The former senior Republican staffer told Fox Digital that multiple state attorney generals have turned down offers to lead NAAG in the future due to the uncertainty over the group’s financial situation.
NAAG’s president, Ohio Republican Attorney General Dave Yost, told Fox News Digital that the group he was elected president of earlier this month has “work to do” to “restore trust” and said he was “sympathetic” to “some of the criticisms” from Republicans about NAAG over the years.
Yost explained that several of the declining revenue streams, such as investments, are connected to the economy more so than any perceived liberal bias, but he said he plans on examining the group’s financial records in the coming months.
“I’m used to dealing with numbers, and we’re going to look behind the summary of the financial statements that you have and drill down,” Yost said. “And I wouldn’t be surprised to see the way the finances are presented looking a little bit different and having more detail in the future.”
Yost suggested that Republicans who have concerns with NAAG should stick with the group in order to ensure future bipartisanship.
“NAAG has about $200 million with the current valuation of the stock market,” Yost said. “If you’re really worried about that being used for left-wing projects, the worst thing you could do as a Republican is to walk away from the table [and] leave that loaded money gun in reach of the progressives. You got to stay involved and make sure that the organization actually is bipartisan.”