(Bloomberg) — The National Rifle Association hasn’t cleaned up rampant financial and managerial misconduct as it claimed over the past year, illustrating the need for the gun-rights group to be dissolved, New York Attorney General Letitia James said in a court filing.
A failed bid for bankruptcy protection earlier this year exposed the hollowness of the organization’s claim to have corrected the mismanagement, which included lavish spending by its longtime leader Wayne LaPierre and other serious lapses, James said in an amended lawsuit in New York state court. The attorney general said even the bankruptcy judge had cited the “shocking” level of authority LaPierre exercised over the group.
James, who sued to dissolve the New York-chartered nonprofit a year ago, said in her new complaint Monday that the NRA’s “evasion of accountability” has “continued unabated.” She said the organization’s leaders intentionally disregarded proper corporate governance, wasted charitable assets, falsely reported improper transactions, and allowed insiders to take advantage of the NRA.
Several alleged abuses were highlighted during a bankruptcy trial in Texas federal court, where a judge in May rejected the NRA’s attempt to reorganize as not having been filed in good faith. The court wrote that the NRA’s bankruptcy was part of an inappropriate attempt to avoid James’s lawsuit. The judge also said he was concerned about the “surreptitious manner” in which LaPierre excluded NRA board members and executives from his decision to file for bankruptcy.
The NRA disputed the attorney general’s claims.
“It is now more evident than ever that the NYAG’s action is a politically-motivated attack,” William A. Brewer III, counsel to the NRA, said in an email. “In 2018, without a shred of evidence to support her action, the NYAG called the NRA a ‘terrorist organization’ and a ‘criminal enterprise.’ Predictably, she now quotes selectively from a federal court ruling and suggests that it supports her claims against the NRA.”
Brewer also cited the opinion of the bankruptcy judge, who wrote that trial testimony “suggests that the NRA now understands the importance of compliance.” Outside of bankruptcy, “the NRA can pay its creditors, continue to fulfill its mission, continue to improve its governance and internal controls, contest dissolution in the NYAG Enforcement Action, and pursue the legal steps necessary to leave New York,” the judge wrote.
After James sued last year, the NRA filed its charitable tax return with the Internal Revenue Service to disclose for the first time that LaPierre had “spent charitable assets to benefit himself personally,” the attorney general wrote. The wrongful “excess-benefit transactions implicate numerous NRA executives and board members,” she said.
Breaking with years of precedent, the organization’s then-treasurer declined to sign the NRA’s 2019 federal tax form, known as a 990, after several other senior NRA executives and directors declined requests to certify its truth and accuracy, James wrote.
Among the treasurer’s concerns was a discovery that several board members were routinely traveling first class with verbal approval from LaPierre. “There are no ‘Wayne said’ approvals at the NRA,” the official wrote in an email, according to the amended complaint.
Rather than conduct a complete review of senior officials who had received excess benefits, the NRA focused on officers who had disputes with LaPierre, the complaint says.
LaPierre fired the treasurer from his role as chief financial officer in January 2021, two weeks after the NRA filed for bankruptcy, according to the complaint. The NRA boss later testified under oath at the bankruptcy hearing that the treasurer had expressed a desire to move on for “health reasons.” According to James, “These representations were false.”
The case is State of New York v. National Rifle Association, 451625/2020, Supreme Court of the State of New York (New York)