New York Attorney General Letitia James has welcomed yesterday”™s decision by a federal bankruptcy court judge in Texas that the National Rifle Association cannot use a bankruptcy filing in Texas to avoid court actions being pursued against the group in New York state.
Judge Harlin Hale of the Northern District of Texas said the NRA”™s filing was “not an appropriate use of bankruptcy.”
Judge Hale dismissed the NRA”™s bankruptcy filing and said, in part, “The court finds there is cause to dismiss this bankruptcy case as not having been filed in good faith both because it was filed to gain an unfair litigation advantage and because it was filed to avoid a state regulatory scheme. The court further finds the appointment of a trustee or examiner would, at this time, not be in the best interests of creditors and the estate.”
Hale was critical of NRA head Wayne LaPierre for having initiated the bankruptcy filing without approval of other NRA officials including its board of directors.
Hale said, “What concerns the court most though is the surreptitious manner in which Mr. LaPierre obtained and exercised authority to file bankruptcy for the NRA. 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.”
James has alleged that LaPierre and others diverted millions of dollars in NRA funds to benefit themselves and otherwise violated New York”™s laws governing nonprofit organizations.
The state”™s lawsuit charges the NRA with illegal conduct because of the alleged diversion of millions of dollars away from the charitable mission of the organization for personal use by senior leadership, awarding contracts to the financial gain of close associates and family, and appearing to dole out lucrative no-show contracts to former employees in order to buy their silence and continued loyalty.
In reacting to Hale”™s action, James said that his order “reaffirms that the NRA does not get to dictate if and where it will answer for its actions. The rot runs deep, which is why we will now refocus on and continue our case in New York court. No one is above the law, not even one of the most powerful lobbying organizations in the country.”
