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“The Court considers that the purpose of the NRA in filing a bankruptcy petition resembles less a traditional bankruptcy case in which a debtor faces financial difficulties or a judgment that he cannot satisfy, than a case in the courts filed for bankruptcy to gain an unfair advantage in litigation or to avoid a regulatory regime, ”Hale wrote.
His decision followed 11 days of testimony and arguments. New York attorneys and the NRA’s former advertising agency grilled the group’s contested top executive Wayne LaPierre, who acknowledged the NRA had entered Chapter 11 bankruptcy without the knowledge or consent of most board members and other senior executives .
“It is nothing short of shocking to have so many people excluded from filing for bankruptcy, including the vast majority of the board of directors, chief financial officer and general counsel,” added the judge.
Phillip Journey, an NRA board member and Kansas judge who sought to appoint an investigator to investigate the group’s leadership, commented briefly on Hale’s verdict: “1 word disappointed,” he wrote in a text message.
LaPierre made a declaration that he would continue to fight for gun rights.
“While we are disappointed in some aspects of the decision, it does not change the general direction of our association, its programs or its support for the second amendment,” LaPierre said on the NRA’s Twitter account. “Today is ultimately about our members – those who bravely stand up to defend constitutional freedom at the NRA. We remain an independent organization that can determine its own course even if we stay in New York to confront our opponents. “
Attorneys for New York Attorney General Letitia James argued that the case was an attempt by the NRA leadership to evade responsibility for using the group’s coffers as a personal piggy bank. However, the NRA lawyers said it was a legitimate effort to avoid political attack by Democrat James.
LaPierre testified that he kept the bankruptcy largely a secret to prevent leaks from the group’s 76-member board, which is divided in its support for him.
Hale dismissed the NRA’s case unscathed, which means the group can resubmit it. However, he warned that the leaders of the NRA would risk losing control.
The judge wrote that if he responded again, he would immediately address “Disclosure, Transparency, Nondisclosure and Conflict of Interest Concerns” between NRA officials and their bankruptcy team. He said the lawyers expressed “unusual involvement” in the NRA’s affairs that the group “could not perform the fiduciary duty” and could induce him to appoint a trustee to oversee them.
The NRA declared bankruptcy in January, five months after James’ office filed for liquidation after alleging executives illegally diverted tens of millions of dollars on lavish personal travel, no-show contracts and other questionable expenses.
James is New York’s chief law enforcement officer and has regulatory powers over nonprofits that are incorporated in the state. It sued the NRA last August, saying at the time that the “breadth and depth of corruption and illegality” at the NRA justified its closure. James took similar measures to force the closure of former President Donald Trump’s charitable foundation after claiming it used it to advance business and political interests.
During a press conference following the verdict, James said she had read transcripts of LaPierre’s testimony, which was “full of contradictions.” She reiterated that she intends to see the NRA disband, which will ultimately be decided by a judge rather than the Attorney General. The discovery process in her lawsuit is still ongoing, James said, and she expects a trial to take place sometime in 2022.
“There are individuals and officials who use the NRA as their personal piggy bank and they need to be held accountable,” said James.