A federal bankruptcy judge dismissed efforts by the National Rifle Association to file for bankruptcy Tuesday, ruling that the gun rights group had not filed the case in good faith.
The ruling slams the door on the NRA’s attempt to use bankruptcy laws to evade New York officials attempting to dissolve the organization. In its ruling, the federal judge said that “using this bankruptcy process to solve a regulation enforcement problem” was not a valid use of bankruptcy.
The bankruptcy process had stalled other legal challenges the NRA faced, but that decision brings the group back to their confrontation with the New York attorney general who is trying to shut them down on alleged “fraud and abuse”.
“The @NRA cannot dictate whether or where it will respond for its actions, and our case continues in the New York Court,” New York Attorney General Letitia James said in a tweet following the verdict. “We sued the NRA to put an end to their fraud and abuse and now we will continue our work to hold the organization accountable.”
The National Rifle Association said during the process that it had enough money to pay its creditors. Instead, she declared bankruptcy for a tactical reason: to avoid the reach of the New York attorney general. Last year, the Attorney General sought permission from a court to dissolve the NRA, alleging a variety of financial misconduct, mostly by the NRA’s top executive: CEO Wayne LaPierre.
The NRA had no immediate comment on the news but had argued during the case that it was being persecuted for its political views. The group asked a federal bankruptcy judge to drop his other legal cases and allow him to reorganize in Texas, where he may be out of the reach of the New York attorney general.
“In bankruptcy usage, we have a predatory lender trying to foreclose our assets,” argued Greg Garman, an attorney who represents the NRA.
However, the side-effect of the months-long process was that senior NRA officials included details of personal expenses in the public records. It also portrayed an organization in crisis, with some of the sharpest criticisms coming from current or past insiders of the organization.
The testimonial included examples of the nonprofit’s tax-exempt funds used for wedding expenses, private jet travel, and exotic getaways. For example, LaPierre’s private travel advisor, who was paid $ 26,000 a month to personally care for him, testified how LaPierre directed them to change private jet travel bills to hide their real destinations.
The process also gave a rare glimpse into the behavior of LaPierre, who has led the controversial organization for nearly 30 years. LaPierre is a mysterious character who makes few public appearances outside of carefully written speeches.
During questioning, he admitted to having traveled annually to the Bahamas, where he would stay on a luxury yacht from an NRA operator – a conflict of interest he did not disclose at the time, which according to testimony and legal proceedings was against NRA guidelines. Instead, he established Caribbean circles in court as a “safety retreat” necessary for the safety of himself and that of his family members.
LaPierre appeared to irritate the judge, who was repeatedly overseeing the case, by wandering on, talking about his privileged conversations with his lawyers, and not answering questions directly.
“I’m going to say something I’ve been saying for a day and a half. Can you answer the questions asked?” The judge asked LaPierre once. “Do you understand that I told you this more than a dozen times in the last day?”
“Yes sir, your honor. I’m sorry, I – I’ll do my best,” replied LaPierre.
The NRA claims it is financially sound, but investigations and litigation have hampered the group. Information provided during the trial indicated the organization had spent $ 72 million on its primary law firm alone in less than three years. Related to this, the group had sales of $ 291 million in 2019, the last year for which public records are available.
Since 2019, when disputes between representatives of the NRAs became public knowledge with the dramatic resignation of its then President Oliver North, the NRA has moved from crisis to crisis. A number of NRA board members have resigned in protest over stories of suspected executive misconduct emerged. The NRA severed its relationship with its main advertising firm, Ackerman McQueen, resulting in costly lawsuits and the broadcast of even dirtier laundry.
After the bankruptcy case was dismissed, the NRA is now returning to its previous state of vulnerability: it is fighting for its survival against a New York attorney general who is trying to shut down the entire organization. [Copyright 2021 NPR]