A federal judge rightly threw out the NRA’s attempt to declare bankruptcy to escape a lawsuit

The scandalized National Rifle Association, a target of allegations of financial mismanagement and corruption, is attempting to duck and cover. The maneuver is not working.

New York’s attorney general in August filed a lawsuit alleging mismanagement of funds by top NRA officials. Among the claims: the organization’s funds were used for such personal expenses as charter planes. The lawsuit calls for steep penalties, including the dissolution of the NRA’s corporate charter, which would effectively eliminate the organization.

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To wiggle out of the crosshairs, NRA CEO Wayne LaPierre led the organization to file for Chapter 11 bankruptcy so that the company could sneak out of its formal relationship with New York and reincorporate in Texas, thereby stripping the New York AG of much of her power to propel forward her lawsuit.

It was not to be. A federal judge has ruled that attempting to escape an ongoing lawsuit is not an appropriate reason to invoke bankruptcy. He’s tossed the case out of court and threatened to install an independent trustee to ensure transparency if the NRA appeals its bankruptcy filing.

The law is catching up to the gun rights power broker.

The organization’s physical headquarters are in Virginia, but it is incorporated in New York and therefore subject to New York’s nonprofit laws and authority. At around 5 million members, it remains one of the most influential lobbying groups in the country, capable of ginning up support and dollars for political figures, almost entirely Republicans, who back the NRA’s legislative goals.

By LaPierre’s own testimony, the organization is growing its membership and is financially strong. He also admitted on the witness stand to keeping the bankruptcy maneuver a secret from other top officials until he authorized the Chapter 11 petition. Judge Harlin Hale ruled that the testimony and evidence produced at trial indicates that the most likely reason for the bankruptcy filing was to avoid the lawsuit in New York.

The judge’s decision rightly forces the NRA to answer to New York’s top prosecutor for its alleged financial misconduct. The lawsuit against the nonprofit, which still is in discovery and likely to begin in 2022, is not a partisan hit job. NRA members have a right to know how their contributions are being spent.

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To retain its status as a nonprofit, the NRA needs to be able to prove that it uses its funds responsibly and for the public good. Much of the NRA’s work is, in fact, for the public good: its popular firearms safety courses and hunting safety training. A slush fund for executives? Not so much. If misspending is proved, the consequence should be steep and it should be meted out not only by the government but also by the organization’s members, who may be thinking now about a switch in leadership.

— Pittsburgh Post-Gazette

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