AP

Judge dismisses NRA bankruptcy case, leaving group to face lawsuit in New York State

May 11, 2021, 4:25 PM | Updated: Dec 30, 2022, 11:21 am

FILE - This Feb. 29, 2020 file photo, National Rifle Association Executive Vice President and CEO W...

FILE - This Feb. 29, 2020 file photo, National Rifle Association Executive Vice President and CEO Wayne LaPierre speaks at Conservative Political Action Conference, CPAC 2020, at the National Harbor, in Oxon Hill, Md. New York’s attorney general is suing the National Rifle Association, seeking to put the powerful gun advocacy organization out of business over allegations that high-ranking executives diverted millions of dollars for personal benefit. The lawsuit filed Thursday, Aug. 6, by Attorney General Letitia James followed an 18-month investigation into the NRA, which is a nonprofit group originally chartered in New York.(AP Photo/Jose Luis Magana, File)

(AP Photo/Jose Luis Magana, File)

DALLAS (AP) — A federal judge dismissed the National Rifle Association’s bankruptcy case Tuesday, leaving the powerful gun-rights group to face a New York state lawsuit that accuses it of financial abuses and aims to put it out of business.

The judge was tasked with deciding whether the NRA should be allowed to incorporate in Texas instead of New York, where the state is suing in an effort to disband the group. Though headquartered in Virginia, the NRA was chartered as a nonprofit in New York in 1871 and is incorporated in the state.

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

“The Court believes the NRA’s purpose in filing bankruptcy is less like a traditional bankruptcy case in which a debtor is faced with financial difficulties or a judgment that it cannot satisfy and more like cases in which courts have found bankruptcy was filed to gain an unfair advantage in litigation or to avoid a regulatory scheme,” Hale wrote.

His decision followed 11 days of testimony and arguments. Lawyers for New York and the NRA’s former advertising agency grilled the group’s embattled top executive, Wayne LaPierre, who acknowledged putting the NRA into Chapter 11 bankruptcy without the knowledge or assent of most of its board and other top officers.

“Excluding so many people from the process of deciding to file for bankruptcy, including the vast majority of the board of directors, the chief financial officer, and the general counsel, is nothing less than shocking,” the judge added.

Phillip Journey, an NRA board member and Kansas judge who had sought to have an examiner appointed to investigate the group’s leadership, was concise about Hale’s judgment: “1 word, disappointed,” he wrote in a text message.

LaPierre pledged in a statement to continue to fight for gun rights.

“Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our Association, its programs, or its Second Amendment advocacy,” LaPierre said via the NRA’s Twitter account. “Today is ultimately about our members — those who stand courageously with the NRA in defense of constitutional freedom. We remain an independent organization that can chart its own course, even as we remain in New York to confront our adversaries.”

Lawyers for New York Attorney General Letitia James argued that the case was an attempt by NRA leadership to escape accountability for using the group’s coffers as their personal piggybank. But the NRA’s attorneys said it was a legitimate effort to avoid a political attack by James, who is a Democrat.

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

The NRA declared bankruptcy in January, five months after James’ office sued seeking its dissolution following allegations that executives illegally diverted tens of millions of dollars for lavish personal trips, no-show contracts and other questionable expenditures.

James is New York’s chief law enforcement officer and has regulatory power over nonprofit organizations incorporated in the state. She sued the NRA last August, saying at the time that the “breadth and the depth of the corruption and the illegality” at the NRA justified its closure. James took similar action to force the closure of former President Donald Trump’s charitable foundation after alleging he used it to advance business and political interests.

During a news conference after the ruling, James said she read transcripts of LaPierre’s testimony, which was “filled with contradictions.” She reiterated that she intends to see the NRA dissolved, which ultimately would be decided by a judge, not the attorney general. The discovery process in her lawsuit is ongoing, James said, and she expects a trial to happen sometime in 2022.

“There are individuals and officers who are using 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 serious of tweets that the bankruptcy dismissal “comes at the worst possible time for the NRA: right as background checks are being debated in the Senate.”

“It will be onerous if not impossible for the NRA to effectively oppose gun safety and lobby lawmakers while simultaneously fighting court battles and mounting debt,” said Watts, whose organization is part of the Michael Bloomberg-backed Everytown for Gun Safety.

The NRA’s financial standing has been upended by the coronavirus pandemic. Last year, it laid off dozens of employees, canceled its national convention and scuttled fundraising. The NRA’s bankruptcy filing listed between $100 million and $500 million in assets and between $100 million and $500 million in liabilities. Still, the organization claimed in announcing the move that it was “in its strongest financial condition in years.”
___
Sisak reported from New York.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

AP

Supreme Court Police officers stand on duty outside of the Supreme Court building on Thursday, June...

MARK SHERMAN, Associated Press

The Supreme Court upholds a gun control law intended to protect domestic violence victims

The Supreme Court has upheld a federal gun control law on Friday with intentions to protect domestic violence victims.

4 days ago

A photo taken of Matthew Perry in 2022....

Clayre Scott

Criminal investigation opened in relation to Matthew Perry’s death

A criminal investigation has been opened in relation to Matthew Perry's death due to high levels of ketamine found in his blood.

1 month ago

FILE - The United Nations (UN) headquarters are pictured in Geneva, Switzerland, Friday, Sept. 9, 2...

EDITH M. LEDERER, Associated Press

U.N. to vote on resolution that would grant Palestine new rights

The U.N. General Assembly is expected to vote Friday on a resolution that would grant new "rights and privileges" to Palestine.

2 months ago

President Joe Biden arrives at Chicago O'Hare International Airport to attend a political fundraise...

ZEKE MILLER and AAMER MADHANI, Associated Press

Biden says US won’t supply weapons for Israel to attack Rafah

Biden said the U.S. was still committed to Israel's defense, but that if Israel goes into Rafah, "we're not going to supply the weapons and artillery shells used."

2 months ago

Adult film actress Stormy Daniels, who just testified in the Trump hush money trial....

Associated Press

Adult film star testifies in Trump hush money case

Donald Trump's attorneys have unsuccessfully pushed for a mistrial during the testimony of porn actor Stormy Daniels. She was testifying at Trump's hush money criminal trial that she had a sexual encounter with Trump after meeting him at a Lake Tahoe celebrity golf outing where her studio was a sponsor.

2 months ago

This photo provided by NASA shows an Eta Aquarid meteor streaking over northern Georgia on April 29...

CHRISTINA LARSON, AP Science Writer

The Eta Aquarid meteor shower, debris of Halley’s comet, peaks this weekend. Here’s how to see it

The Eta Aquarid meteor shower, remnants of Halley's comet, peaks this weekend.

2 months ago

Sponsored Articles

Underwater shot of the fisherman holding the fish...

Bear Lake Convention and Visitors Bureau

Your Bear Lake fishing guide

Bear Lake offers year-round fishing opportunities. By preparing ahead of time, you might go home with a big catch!

A group of people cut a purple ribbon...

Comcast

Comcast announces major fiber network expansion in Utah

Comcast's commitment to delivering extensive coverage signifies a monumental leap toward a digitally empowered future for Utahns.

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.

...

Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

Judge dismisses NRA bankruptcy case, leaving group to face lawsuit in New York State