The National Rifle Association (NRA) filed for bankruptcy last week. It also announced plans to move from New York – where it incorporated as a nonprofit in 1871 – to Texas. The departure from New York will distance the NRA from the state’s Attorney General, who is suing the organization for tax fraud.
“The NRA’s claimed financial status has finally met its moral status: bankrupt,” writes Attorney General Letitia James. James seeks to dissolve the organization and blacklist its executives based on claims that CEO Wayne LaPierre and other officials used up to $63 million in donations to purchase expensive clothing, lavish vacations, and other luxuries. “While we review its bankruptcy filing, we will not allow @NRA to use this or any other tactic to evade accountability and my office’s oversight.”
16 Republican Attorneys General backed a countersuit.
In it, the NRA claims that James’s lawsuit is for political gain and thus a violation of the First Amendment.
The group’s relocation to Texas will “enable long-term, sustainable growth…in a state that values the contributions of the NRA, celebrates our law-abiding members, and will join us as a partner in upholding constitutional freedom,” explains LaPierre. He added that the organization’s 5.2 million members should expect “no major changes” in the short-term.
The NRA’s decision to file for bankruptcy in Texas instead of New York also means it is more likely to have a judge that respects the Second Amendment.
Chapter 11 bankruptcy helps companies delay lawsuits, restructure operations, and reduce debt. But it can lead to dissolution. The NRA’s decision to file for bankruptcy “means they’re definitely trying to preempt the litigation,” explains John Pottow. Pottow is a bankruptcy law professor at the University of Michigan. “They’re worried they’re going to be sued.”
Former NRA executive Joshua Powell backs James’s lawsuit. Powell says the group stoked fears of imminent gun restrictions to raise money. They then allegedly used that money for no-show contracts, private jets, and other luxuries.
“She’s only at the tip of the iceberg,” says Powell. “When she sees below the iceberg, what she’ll find is decades of fraud, corruption, no-bid contracts to the tune of not tens of millions but hundreds of millions of dollars. It’s far worse than, in my opinion, what she has on paper at this point.”
Further complicating matters is Dave Dell’Aquila.
Dell’Aquila is a major NRA donor who is challenging the group’s bankruptcy filing in an attempt to hold LaPierre and other executives accountable for wasting millions of dollars in donations. If the complaint is successful, it could prevent the NRA from discharging a substantial portion of its debt.
Dell’Aquila initially sued the NRA in 2019 after Oliver North, the group’s former president, accused LaPierre of ‘receiving hundreds of thousands of dollars in clothing, private jet travel, and other benefits.’ This lawsuit has been put on hold due to the bankruptcy proceedings.
Author’s Note: The NRA is strong, but can it survive the Biden Administration and a Democratic-majority Congress?
Sources:
NRA Files for Chapter 11 Bankruptcy, ‘Dumping’ NY for Texas
National Rifle Association, at center of heated national gun debate, files for Chapter 11 bankruptcy protection
National Rifle Associations files for Chapter 11 bankruptcy
Major NRA donor to challenge gun group’s bankruptcy over alleged fraud