The National Rifle Association had a clever plan to avoid the state of New York’s efforts to shut it down over allegations of executive self-enrichment: Declare bankruptcy and reincorporate in the Lone Star state. But Tuesday, after a weeks-long trial, a federal judge has called bullshit on the NRA’s Texas two-step. U.S. Bankruptcy Court judge Harlin Hale ruled that the NRA’s bankruptcy petition was “not filed in good faith” and represented, instead, an “effort to gain an unfair litigation advantage” against the state of New York and to avoid accountability in the state where the non-profit gun group has been chartered since the late 1800s.
“The question the court is faced with,” Hale wrote, “is whether the existential threat facing the NRA is the type of threat that the Bankruptcy Code is meant to protect against. The court believes it is not.”
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The ruling was met with satisfaction by Letitia James, the attorney general in New York. “The NRA does not get to dictate if and where it will answer for its actions,” James wrote on Twitter. “We sued the NRA to put an end to its fraud and abuse, and now we will continue our work to hold the organization accountable.”
The NRA’s legal troubles are rooted in its profligate spending on executive perks, ranging from designer suits to private plane travel to yacht vacations in the Bahamas. Wayne LaPierre, the gun group’s longtime CEO, has already repaid more than $300,000 in “excess benefits.” The NRA has accused its former top lobbyist of receiving at least $1 million in excess compensation. As a non-profit, the NRA is obligated to spend its money in the furtherance of its mission, and not for the enrichment of insiders.
In an unusual move, the Department of Justice weighed in against granting the NRA’s bankruptcy at the end of the trial earlier this month. “The record is unrefuted that Wayne LaPierre’s personal expenses were made to look like business expenses,” testified Lisa Lambert, a trustee with DOJ.
The NRA’s financial dirty laundry has come to light, in part, thanks to a high-profile legal battle between the gun group and its longtime PR firm Ackerman McQueen, which ran NRATV, and employed former NRA president Oliver North, who was accused of seeking to oust LaPierre in a coup. That internecine battle has left the NRA with a schism among its board members, one of whom testified in court that the NRA “essentially operates as a kingdom rather than a corporation: Wayne’s kingdom.”
In a statement, LaPierre recognized defeat, but vowed to press on: “The NRA remains committed to its members and our plan for the future,” he said. “Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our Association. We remain an independent organization that can chart its own course, even as we remain in New York to confront our adversaries. The NRA will keep fighting, as we’ve done for 150 years.”
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