NRA bankruptcy case denied, allowing New York dissolution case to proceed: NPR
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Updated 6:43 p.m. ET
A federal bankruptcy judge rejected an attempt by the National Rifle Association to declare bankruptcy on Tuesday, ruling that the gun rights group had not filed the case in good faith.
The decision slams the door on the NRA’s attempt to use bankruptcy laws to evade New York authorities seeking to dissolve the organization. In his ruling, the federal judge said that “the use of this bankruptcy case to resolve an enforcement problem” was not a permitted use of bankruptcy.
The bankruptcy lawsuit had put on hold other legal challenges the NRA had faced, but the move returns the group to its confrontation with the New York attorney general, who is seeking to shut it down over allegations of “fraud and fraud. abuse”.
“The @NRA cannot dictate whether and where it will answer for its actions, and our case will go to court in New York,” said the New York attorney general. Letitia James said in a tweet after the decision. “We have sued the NRA to end its fraud and abuse, and now we will continue our work to hold the organization accountable.”
the @NRA cannot dictate whether and where he will answer for his actions, and our case will go to court in New York.
No one is above the law.
– NY AG James (@NewYorkStateAG) May 11, 2021
During the trial, the NRA said it had enough money to pay its creditors. Instead, he declared bankruptcy for a tactical reason: to avoid the reach of the New York attorney general. Last year, the attorney general sought court approval to dissolve the NRA, alleging a wide variety of financial misconduct, mostly from the NRA’s top executive: CEO Wayne LaPierre.
In response to the judge’s dismissal, the NRA said it had taken steps to improve internal financial controls and would continue to pursue its gun rights mission.
“While we are disappointed with some aspects of the decision, there is no change in the general direction of our association, its programs or its advocacy for the Second Amendment,” LaPierre said in a statement. “We remain an independent organization that can chart its own course … The NRA will continue to fight, as we have for 150 years.”
The NRA had argued during the case that it was being persecuted for its political views. The group has asked a federal bankruptcy judge to put its other legal cases on hold and allow it to reorganize in Texas, where it may be out of the reach of the New York attorney general.
“In bankruptcy parlance, we have a predatory lender looking to seize our assets,” argued Greg Garman, a lawyer representing the NRA.
But the month-long trial had the side effect of making public details of the personal expenses of senior NRA officials. He also painted a picture of an organization in crisis, with some of the sharpest criticism coming from current and former insiders of the organization.
Testimonials included examples of the nonprofit organization’s tax-exempt funds used for wedding expenses, private jet travel, and exotic getaways. For example, LaPierre’s private travel consultant, who was paid $ 26,000 per month to take care of him personally, testified to how LaPierre asked him to change the travel bills of the private jets in order to hide their personal expenses. real destinations.
The lawsuit also provided rare insight into the behavior of LaPierre, who led the controversial organization for nearly 30 years. A secret figure, LaPierre makes few public appearances outside of carefully scripted speeches.
When questioned, he admitted to making annual trips to the Bahamas, where he would stay on a luxury yacht owned by an NRA vendor – a conflict of interest he did not disclose at the time. whose testimony and court proceedings have shown him to be in violation of NRA policy. . Instead, he justified the Caribbean trips to court as a necessary “safety retreat” for his safety and that of his family members.
LaPierre appeared to irritate the judge overseeing the case on several occasions by rambling, talking about his privileged conversations with his attorneys, and not answering questions directly.
“I’m about to say something that I’ve been saying for a day and a half now. Can you answer the questions that are asked? the judge asked LaPierre at one point. “Do you understand that I told you more than a dozen times in the last day?”
“Yes, sir, your honor. I’m sorry, I’m – I’m doing my best,” LaPierre replied.
The NRA claims it is financially sound, but investigations and litigation have hampered the group. Information provided during the trial indicated that in less than three years, the organization had spent $ 72 million on its main law firm alone. For context, the group made $ 291 million in revenue in 2019, the most recent year for which public records are available.
Since 2019, when infighting between NRA officials came to light with the dramatic resignation of then-president Oliver North, the NRA has gone from crisis to crisis. A number of NRA board members resigned in protest as allegations of management misconduct surfaced. The NRA severed its relationship with its main advertising agency, Ackerman McQueen, resulting in costly lawsuits and the spread of even more dirty laundry.
With the bankruptcy case dismissed, the NRA is now reverting to its previous vulnerable state: fighting for survival against a New York attorney general seeking to shut down the entire organization.