Adding to a chorus of dissent by Republican attorneys general, Montana AG Austin Knudsen has threatened to sue the National Association of Attorneys General if it doesn’t return to his state the money it is holding from multistate lawsuit settlements.
The professional association reported some $280 million in assets it kept as its share of settlements negotiated by AGs in cases such as the $260 billion tobacco settlement in 1998, the VW “Dieselgate” scandal and opioid litigation. NAAG uses the money to finance investigations by its members, which in turn generate more settlements and money for its own operations.
Last year a dozen state AGs called upon NAAG to return the money to the individual states, since it represents settlement dollars that belong to their respective state treasuries. The Montana AG upped the ante with his February 8 letter, threatening to sue NAAG if it doesn’t respond to his demands
“Return the money in your accounts that belongs to Montana within 90 days or I will go to court and sue to ensure that the money is safely and legally brought back within the four corners of Montana law,” Knudsen wrote in the letter addressed to Brian Kane, executive director of the Washington, D.C.-based organization. “At this point litigation is reasonably likely between my office and your organization.”
As a nonprofit professional association of law enforcement officials, NAAG occupies an ill-defined space between government and private organizations. It began collecting a share of the money its members obtained in legal settlements in the late 1980s when it set up a “milk fund” to finance antitrust investigations after settling a case with milk producers in New York.
Since then NAAG’s balance sheet has expanded dramatically, including more than $100 million from the tobacco settlement, $11 million from VW and $15 million of a $573 million settlement of opioid clams against consulting firm McKinsey & Co.
The practice of holding state dollars at the national level might violate the law in multiple states, however, as the former treasurer of Ohio claimed last September in a letter to Iowa Treasurer Michael Fitzgerald.
Knudsen also voiced concern that NAAG’s financial practices might violate Montana law. The organization reportedly lost $37 million on private equity and foreign stocks, both of which might be considered improper investments under the laws of certain states. He also criticized NAAG’s practice of following ESG guidelines – for Environmental, Social and Governance – that some conservative states have banned.
“From what I have seen, it appears the entire NAAG arrangement is premised on a series of arrangements that do not square with the law in Montana, or maybe in any other state,” Knudsen wrote.