NRA bankruptcy case dismissed, leaving group to face trial in New York for financial abuse

A federal judge on Tuesday dismissed the National Rifle Association bankruptcy case, leaving the powerful gun rights group to face a lawsuit in New York state that accuses it of financial abuse and aims to bankrupt it.

The case revolved around whether the NRA should be allowed to incorporate in Texas instead of New York, where the state is suing in an attempt to disband the group. Although based in Virginia, the NRA was incorporated as a nonprofit in New York City in 1871 and is incorporated in the state.

Judge Harlin Hale said in a written order that he dismissed the case because he found the bankruptcy was not filed in good faith.

“The Court finds that the NRA’s goal in filing bankruptcy is less like a traditional bankruptcy case in which a debtor faces financial hardship or a judgment he cannot meet and more cases in which the courts have declared bankruptcy was filed to gain an unfair advantage in litigation or to avoid a regulatory scheme, ”Hale wrote.

His decision follows 11 days of testimony and arguments. Lawyers for New York and the former NRA advertising agency have grilled the group’s top executive Wayne LaPierre, who admitted to bankrupting the NRA in Chapter 11 without the knowledge or consent of the group. Most of its board of directors and other senior executives.

“Excluding so many people from the decision-making process to file for bankruptcy, including the vast majority of the board, the chief financial officer and the general counsel, is nothing short of shocking,” the judge added.

Phillip Journey, an NRA board member and Kansas judge who had requested that an examiner be appointed to investigate the group’s leadership, was concise about Hale’s judgment: “1 word, disappointed,” said he wrote in an SMS.

Lawyers for New York Attorney General Letitia James argued the case was an attempt by the NRA leadership to evade responsibility for using the group’s coffers as a personal piggy bank. But NRA lawyers said it was a legitimate effort to avoid a political attack from James, who is a Democrat.

LaPierre testified that he kept the bankruptcy largely a secret to avoid leaks from the group’s 76-member board of directors, which is divided in its support for him.

The NRA declared bankruptcy in January, five months after James’ office sought its disbandment over allegations that executives illegally embezzled tens of millions of dollars for lavish personal travel, non- presentation and other questionable expenses.

“The NRA cannot dictate whether and where it will answer for its actions, and our case will go to court in New York,” James tweeted after the ruin. “No one is above the law.”

James is the head of law enforcement in New York City and has regulatory authority over nonprofit organizations incorporated in the state. She sued the NRA last August, claiming at the time that “the extent and depth of corruption and illegality” at the NRA justified its shutdown. James took similar steps to force the shutdown of former President Donald Trump’s charitable foundation after allegedly using it to advance business and political interests.

Shannon Watts, who founded America’s Moms Demand Action for Gun Sense, said in a series of tweets that the bankruptcy dismissal “comes at the worst possible time for the NRA: just as the background check is debated in the Senate “.

“It will be costly, if not impossible for the NRA to effectively oppose gun safety and pressure lawmakers while simultaneously waging legal battles and growing debt,” said Watts, whose organization is part of Everytown for Gun Safety, supported by Michael Bloomberg.

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