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FIRST ON FOX: Montana’s Republican attorney general threatened to sue a nonprofit organization of state attorneys if it didn't return taxpayer money amid accusations of growing liberal bias in the group.
AG Austin Knudsen sent a pointed letter with a 90-day deadline to the National Association of Attorneys General (NAAG) following an exodus of members as questions swirl about the group's finances and a supposedly liberal agenda despite labeling itself as nonpartisan.
"There is no doubt in my mind now that NAAG is an unreliable and improper financial steward, and that Montana’s share of the money at NAAG needs to come home," Austin Knudsen wrote in the letter, which was dated Wednesday and obtained by Fox News Digital.
"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."
Montana AG Austin Knudsen is demanding that NAAG return his state's taxpayer funds. (Fox News Digital)
Knudsen was one of several attorneys who fled NAAG in the last year as accusations were made that the group was banking money from consumer protection settlements often bigger than the cuts the states themselves received. The group also allegedly mismanaged funds and promoted liberal causes while stifling conservative members' voices, Fox News Digital reported last month.
"Over the last six-plus months, the disheartening revelations about NAAG have confirmed the wisdom of extricating Montana from NAAG activities," Knudsen wrote in his letter, citing Fox News Digital’s reporting that the group is down $53 million in revenue since last year.
The letter also cited reports that the group has heavily invested in companies that promote economic policies known as ESG (environmental, social and governance) that conservatives claim are used by the left as a social credit score to force businesses and financial institutions to adopt progressive ideologies across the globe.
Kansas Republican AG Kris Kobach, a member of NAAG's executive committee, sent a letter to the taxpayer-funded organization last month to demand answers on investments with companies like BlackRock that promote ESG and, according to Kobach, "destroy shareholder value in pursuit of faddish ideological aims, often without proper disclosure to investors."
"NAAG may not have a policy affirmatively endorsing ESG, but actions speak louder than words, and they have invested millions of dollars in funds linked to ESG initiatives," Knudsen told Fox News Digital.
NAAG recently agreed to suspend dues paid by the states with taxpayer money after Republican attorneys general began pulling out or threatening to pull out of the organization. Critics said leadership has been pushing "woke" programming and mismanaging its share of legal settlements.
The controversial settlements include a $15 million cut NAAG took from a $573 million nationwide settlement with McKinsey & Co. that resolved allegations it improperly advised pharmaceutical companies on how to boost opioid sales.
That cut represents 40% more than the state of Kentucky received and twice the amount NAAG gave state attorneys general to investigate the case in the first place.
"These states have lost thousands of their citizens to the opioid epidemic and represent thousands more who still struggle," Kentucky Republican AG Daniel Cameron said in a letter to NAAG obtained by Legal Newsline last year. "Yet NAAG, an entity with no such constituency, collected $15 million."
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Former Arizona Republican AG Mark Brnovich, one of the attorneys to leave NAAG, told Fox News Digital that the group had recently changed.
"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.
Taxpayer funds collected by NAAG are better off being spent in the states by people who more represent the values of voters, Knudsen told the organization in his letter.
"It’s time for the money that is lawfully Montanans’ come back to where it can be put to use benefiting them," Knudsen told Fox News Digital. "These funds belong to Montana taxpayers and should not pay for European junkets and investments that run counter to the interests of our state."
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In addition to concerns about consumer protection settlements, investments and ESG, Knudsen said in the letter that he obtained documents that "call NAAG's entire financial structure into question" – including a document that he told Fox News Digital shows the Internal Revenue Service considers NAAG "an instrumentality of the state."
That designation carries "significant implications for the status of Montana’s money," Knudsen told Fox News Digital – and it raises concerns whether NAAG is breaching its fiduciary obligations in the way it handles taxpayer funds.
"From what I have seen, it appears the entire NAAG arrangement is premised on a series of arrangements that do not square with the [way] law works in Montana, or maybe in any other state," Knudsen wrote in the letter.
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Montana Attorney General Austin Knudsen (Montana DOJ, Attorney General's Office; Dukas / Universal Images Group via Getty Images)
O.H. Skinner, executive director of Alliance for Consumers, told Fox News Digital that he believes Knudsen is "exactly right" to take action against NAAG. He bashed the group, saying it cannot be trusted with hundreds of millions it collects from consumer protection settlements.
"Between NAAG’s foreign stock investments, the financing of lavish foreign trips and the secret investments in ESG with liberal activist asset managers like BlackRock, they have proven themselves to be wholly unreliable and have teed up legal action against themselves," Skinner said.
Skinner added that it is time for NAAG to "throw in the towel" and "send their cash stash back to the states and consumers."
A spokesperson for NAAG told Fox News Digital the organization has received the letter and is "working with our executive committee of attorneys general on the matter and will present it to our membership."
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The National Association of Attorneys General has seen its revenues plummet since the high-profile exit of several GOP members, with the group contending with sagging investments and membership dues, internal documents show. (Fox News)
Knudsen's letter instructs NAAG to preserve documents and any related communications involving the state of Montana, investments, fees collected and other financial details and that "spoliation" of any relevant evidence will have "serious consequences."
"I hold out hope that you will return Montana’s money without the need for litigation," Knudsen's letter concludes. "But if not, I expect to be seeing you in court. The choice is yours."
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