Judge dismisses NRA bankruptcy case in gun group
“The Court finds that the NRA’s goal in declaring bankruptcy is less like a traditional bankruptcy case in which a debtor faces financial hardship or a judgment he cannot meet and more like cases in which the courts have said 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, a 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.
LaPierre pledged in a statement to continue fighting for gun rights.
“Although 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 via the NRA’s Twitter account. . “Today it is ultimately about our members – those who courageously stand with the NRA in defense of constitutional freedom. We remain an independent organization that can chart its own course, even as we stay in New York to face our adversaries. “
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 it.
Hale has dismissed the NRA’s case without prejudice, meaning the group can file it again. However, he warned that by doing so, NRA leaders risked losing control.
The judge wrote that if the case were closed again, he would immediately address “concerns about disclosure, transparency, secrecy, conflicts of interest” between NRA officials and their legal team in the matter. bankruptcy. He said the lawyers’ “unusual involvement” in NRA cases had raised fears that the group “could not fulfill its fiduciary duty” and could cause it to appoint a director to oversee it.
Hale noted that the NRA could still pursue other legal steps to incorporate in Texas, but James said such a move would require his approval – and that seems unlikely.
In a tweet, Republican Gov. Greg Abbott said, “Texas is on the side of the @NRA and we look forward to working with the Association on their plan to relocate to Texas.”
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.
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.
At a press conference after the ruling, James said she read the transcripts of LaPierre’s testimony, which was “filled with contradictions.” She reiterated her intention to see the NRA dissolved, which would ultimately be decided by a judge, not the attorney general. The discovery process in her trial is ongoing, James said, and she expects a trial to take place in 2022.
“There are individuals and officers who use the NRA as their personal piggy bank and they need to be held accountable,” James said.
Shannon Watts, who founded Moms Demand Action for Gun Sense in America, 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.
The NRA’s financial situation has been shattered by the coronavirus pandemic, but there was a consensus during the bankruptcy lawsuit that it remains financially strong
Last year, the group laid off dozens of employees, canceled its national convention and undermined fundraising. The NRA’s bankruptcy filing indicated between $ 100 million and $ 500 million in assets and the same range of liabilities. In announcing the deal, he trumpeted that he was “in his best financial position in years.”
Adam Skaggs, chief attorney at the Giffords Law Center to Prevent Gun Violence, said even a weakened NRA would likely continue to shape U.S. gun debates.
“I think the question is, despite these self-inflicted wounds and despite being sort of a shadow of themselves, can they continue to exert influence and try to keep opponents of the reforms? , even the most modest, increase the safety of firearms by respecting the line? ” he said.
Sisak reported from New York. Associated Press writer Terry Wallace in Dallas contributed reporting.