HELENA – Montana Attorney General Austin Knudsen filed a lawsuit in state district court Wednesday against the National Association of Attorneys General (NAAG) asking the court to require the group to follow state law and provide a complete and transparent accounting of assets under the organization’s management that lawfully belong to Montanans.

To address the inconsistency between NAAG’s actions and what Montana’s laws require, the state is seeking a declaratory judgment that NAAG and its chief financial officer are subject to the strict accountability requirement of the Montana Constitution and to the requirements of Title 17 of the Montana Code. The state is also seeking the appointment of a special master to conduct accounting to determine what share of assets under NAAG’s management that are Montana’s public funds.

“Montanans deserve a full accounting of their money being managed by NAAG,” Attorney General Knudsen said. “For the last year, I’ve been raising concerns over NAAG’s financial mismanagement, but they have been unable to account for Montana’s public funds and are not following state law. As promised, I’m taking them to court to hold them accountable to Montanans.”

The lawsuit notes that excessive funds obtained by NAAG following the settlements of various legal matters involving the state of Montana are being invested and used for litigation finance without oversight from the public officials and entities that safeguard Montana’s public funds.

In 2021, Montana, along with other states, settled a lawsuit against the consulting firm McKinsey & Company for its role in exacerbating the opioid crisis. NAAG provided $7 million in funds to the lawsuit and, in turn, received $15 million from the settlement. This figure far surpasses the settlement amount received by Montana and the other states involved in the litigation. According to NAAG’s finance model, states have very little say in the amount of money disbursed to NAAG in settlements for which the organization provided litigation financing, nor is there any way to track where the money goes after it lands in NAAG’s possession.

The lawsuit comes after two letters signed by Attorney General Knudsen addressing substantial concerns with NAAG’s lack of transparency and stewardship of public money. In February 2023, Attorney General Austin Knudsen sent a second, unanswered letter calling on the National Association of Attorneys General (NAAG) to return the money in their accounts that lawfully belongs to Montanans. In May 2022, attorneys general from Montana, Texas, and Missouri signed a joint letter withdrawing the respective states’ membership from NAAG.

Read the lawsuit here.

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