NRA Says Its ‘Corporate Death’ Unwarranted in New York Lawsuit

(Bloomberg) -- The National Rifle Association urged a judge to dismiss a lawsuit by New York Attorney General Letitia James, saying she hasn’t shown rampant misconduct by top executives. Even if she could prove her claims, they would mean the NRA was a victim and that James’ push to dissolve the guns-rights group is misguided, it argued in a court filing.

James is seeking the NRA’s “corporate death” over allegations that executives at the New York-chartered nonprofit misused millions of dollars of assets, the organization said Wednesday in a court filing. The attorney general sued in state court last year and amended her complaint after the NRA’s failed attempt to declare bankruptcy and move to Texas. 

“Even if the disputed allegations against the individual defendants were true, the NRA itself, its Board, and its members were the victims of the wrongdoing, not the perpetrators,” the organization argued. “It would be a fundamental miscarriage of justice -- and contrary to New York law -- to punish the NRA’s 5 million members by dissolving the NRA.”

James has failed to provide evidence that the NRA, longtime leader Wayne LaPierre and three executives diverted millions of dollars in assets to themselves, the group said. The NRA also said the attorney general hasn’t provided support for her claims that LaPierre improperly controls the 76-member board of directors. The NRA repeated an earlier claim that James had a “political vendetta” against the group. 

The legal attack on the James lawsuit came four months after a bankruptcy judge in Texas dismissed the gun group’s attempt to reorganize there, ruling it was an “inappropriate attempt to avoid” the lawsuit in New York. 

At that trial, LaPierre acknowledged he failed to disclose free yacht trips from a vendor and said he and a few close associates didn’t tell the NRA’s board, chief financial officer and general counsel about the January bankruptcy petition until after it was filed. 

Improved Oversight

But on Wednesday, the powerful gun lobby drew on favorable observations by the bankruptcy judge, who noted the NRA had improved its financial oversight and appointed a former whistle-blower as its chief financial officer. 

In her amended complaint, James said the bankruptcy trial provided further evidence that the NRA’s “evasion of accountability” continues unabated and that its leaders have continued to disregard proper corporate governance and wasted charitable assets. The NRA has failed to review LaPierre’s expenses and benefits, including club memberships, hotels, lavish meals, tickets to sporting events and luxury boxes, she said. 

LaPierre’s compensation for 2019 was $1.8 million, the NRA disclosed in a tax filing. 

In a separate court filing on Wednesday, LaPierre’s lawyer asked the judge to dismiss counts that assailed his pay package as excessive. His lawyer, P. Kent Correll, argued that James failed to show that LaPierre knowingly violated the state’s Not-For-Profit Corporation Law. 

Correll also cited the failure of former Attorney General Eliot Spitzer to overturn the $190 million retirement package of then-New York Stock Exchange boss Richard Grasso as excessive under state law. 

The case is State of New York v. National Rifle Association, 451625/2020, Supreme Court of the State of New York (New York)

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