NRA's Bankruptcy Shouldn't Stop Lawsuit, Letitia James Says | Law & Crime
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New York Attorney General Urges Judge Not to Let NRA’s Bankruptcy Filing Put a Stop to Dissolution of Organization

NATIONAL HARBOR, MD - MARCH 15: Wayne LaPierre, CEO of the National Rifle Association, delivers remarks during the second day of the 40th annual Conservative Political Action Conference (CPAC) March 15, 2013 in National Harbor, Maryland. The American conservative Union held its annual conference in the suburb of Washington, DC, to rally conservatives and generate ideas.

On the heels of the National Rifle Association’s first federal bankruptcy court hearing, New York Attorney General Letitia James’s (D) office told a judge not to let the gun group try to delay proceedings seeking to dissolve them.

James Sheehan, the head of the attorney general’s Charities Bureau, denounced the NRA’s requested delay of those efforts through their federal bankruptcy proceedings as gamesmanship.

“The NRA’s apparent attempt to automatically stay this action by filing a notice of suggestion of bankruptcy is exactly the kind of procedural abuse that concurrent exercise of jurisdiction by state and federal courts is designed to alleviate,” Sheehan wrote in a letter on Wednesday.

Less than a week ago on Jan. 15, the NRA announced that it was “DUMPING New York” by “utilizing the protection of the bankruptcy court” to re-establish itself as a Texas nonprofit. Federal bankruptcy proceedings have been moving quickly in the Northern District of Texas, where a hearing has been scheduled for 2 p.m. Central Time.

The embattled gun group has been fighting for its life since New York’s attorney general filed a 163-page complaint accusing four of its current and former directors of “pervasive and systemic illegal conduct.”

Alleging that NRA leader Wayne LaPierre used the group as a “personal piggy bank,” the lawsuit detailed his private jet trips to the tropics and African safaris with donor money. The attorney general accused NRA executives of pocketing millions for their personal benefit, filing false regulatory filings, awarding no-show contracts to loyalists, and retaliating against whistleblowers.

When the NRA claimed to be calling New York quits, James emphasized that her pursuit of the group would not end.

“The NRA’s claimed financial status has finally met its moral status: bankrupt,” James wrote in a statement at the time. “While we review this filing, we will not allow the NRA to use this or any other tactic to evade accountability and my office’s oversight.”

James made clear that the NRA’s bankruptcy filing is at odds with their self-professed financial health.

“The NRA expressly stated that it is seeking to exit New York, its state of incorporation for nearly 150 years, to escape the authority of this Court and the oversight of the Attorney General, whom it falsely accuses of ‘an abuse of legal and regulatory power,'” the five page letter states. “The NRA asserts that its bankruptcy filing is not financially motivated, claiming that the organization ‘is in its strongest financial condition in years.'”

The NRA has no offices in Texas but has asserted venue via an affiliate, Sea Girt, LLC, the attorney general said.

Typically, bankruptcy proceedings pause enforcement actions like these, but James says that her action falls under two exceptions designed to protect the public from fraud and from a charity’s abuse of its charitable status. This is how her office described that exception:

With respect to the pecuniary purpose test, none of the Attorney General’s claims involve any interest by the State of New York in property owned by the NRA, but instead seek to enforce compliance with State law governing the administration of the NRA as a state-chartered charitable not-for-profit corporation. Claims for financial restitution of charitable assets lie against the individual defendants only. Any moneys the Attorney General recoups will be returned to the NRA or, upon a judicial dissolution, used in accordance with donor intent or with Court direction and approval for a purpose substantially similar to the mission of the NRA. With respect to the public policy test, the Attorney General is not adjudicating private rights against the NRA but is enforcing New York law designed to protect the public and the undefined charitable beneficiaries as a class from fraud and misconduct by public charities.

If the NRA does not succeed in pausing the New York proceedings, the group will go to court again on Thursday for a motion to dismiss. Their attorney did not immediately respond to an email requesting comment.

Read the NYAG’s letter below:

(Photo by Alex Wong/Getty Images)

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Law&Crime's managing editor Adam Klasfeld has spent more than a decade on the legal beat. Previously a reporter for Courthouse News, he has appeared as a guest on MSNBC, BBC, NPR, PBS, Sky News, and other networks.