New York Calls For NRA Bankruptcy Dismissal, Cites Bad Faith

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Feb 13 2021, 5:48 AMFeb 13 2021, 5:54 AMFebruary 13 2021, 5:48 AMFebruary 13 2021, 5:54 AM

(Bloomberg) -- The New York attorney general called for the dismissal of the National Rifle Association’s bankruptcy on Friday, alleging it was filed to escape state oversight, court papers show.

The NRA has openly stated that the gun rights organization is “in its strongest financial condition in years” and that it filed for protection from creditors “in bad faith” to avoid New York’s lawsuit seeking to dissolve it, the state said in a filing Friday in bankruptcy court in Texas.

The NRA is “essentially fleeing or seeking an end run around a pending regulatory enforcement action in New York,” the state said in the filing. The lawsuit filed last year by New York Attorney General Letitia James alleges the NRA diverted charitable donations for years to enrich the organization’s top executives in violation of laws governing nonprofits.

A representative for the NRA didn’t immediately provide a comment.

The state in its filings also took aim at NRA Executive Vice President Wayne LaPierre, who it claims fleeced the gun rights organization. LaPierre has disputed New York’s allegations.

LaPierre, who was among the signers of the group’s bankruptcy petition, “is accused of looting the NRA, yet he has made the determination and signed the petitions in an effort to use the bankruptcy court to remove the NRA from regulatory oversight,” the state alleged in its filings.

The NRA is now facing a host of challenges to its bankruptcy. On Wednesday, ad agency Ackerman McQueen Inc. made similar claims of bad faith and ask that the case be tossed out. The NRA and the ad agency have been locked in a complex legal battle that began in 2019.

Earlier this week, a former director for the NRA called for an investigation into fraud allegations made against the NRA in the New York lawsuit. Phillip Journey, a Kansas judge and former state legislator, asked the NRA’s bankruptcy judge to appoint an independent investigator to determine the truth of claims.

The NRA has said the bankruptcy filing will allow it to reincorporate in Texas, free from the “corrupt political and regulatory environment in New York.” But in its court filings, New York points to state law that gives it broad control over the structure of charities incorporated there -- like the NRA.

The state asked that a court-appointed trustee take control of the NRA if its bankruptcy judge won’t toss the case.

Michael R. Bloomberg, founder of Bloomberg News parent Bloomberg LP, is a donor to candidates and groups that support gun control, including Everytown for Gun Safety.

The case is National Rifle Association of America, 21-30085, U.S. Bankruptcy Court for the Northern District of Texas (Dallas). To view the docket on Bloomberg Law, click here.