AFTER IT was slapped with a lawsuit brought by the New York attorney general alleging fraud and abuse, the National Rifle Association filed for bankruptcy in federal court in Dallas in a bid to reorganize and move to Texas. It was a brazen effort to try to evade New York officials enforcing the laws that govern nonprofits, and it backfired. Not only did the judge call out the NRA for its duplicitous use of bankruptcy laws, but testimony during the trial reinforced the claims made by New York officials of an organization riven by corruption and mismanagement.
Judge Harlin D. Hale, the chief of the federal bankruptcy court in Dallas, last Tuesday dismissed the NRA’s Chapter 11 petition, finding that the nation’s largest gun rights groups had filed the case not for legitimate financial reasons but to gain an unfair litigation advantage. “The NRA is using this bankruptcy case to address a regulatory enforcement problem, not a financial one,” he wrote in a 37-page decision. Judge Hale did not bar the NRA from refiling for bankruptcy, as requested by New York Attorney General Letitia James, but he warned that if the case returned to his court he would consider appointing a trustee to assume control of the organization because of concerns about transparency, secrecy and conflicts of interest.
The decision means the NRA will have to face the charges brought by Ms. James in a civil case that seeks to dissolve the organization, which, though headquartered in Virginia, was chartered as a nonprofit in New York in 1871 and continues to be incorporated in the state. In a suit filed last August, Ms. James outlined illegal self-dealing that funded the lavish lifestyles of NRA chief Wayne LaPierre, his family and a small group of allies. The actions, according to the suit, contributed to the loss of more than $64 million in three years.
Testimony during the bankruptcy case buttressed the charges with details of the organization’s tax-exempt funds used for wedding expenses, private jet travel and exotic getaways. Mr. LaPierre’s private travel consultant testified that he instructed her to alter travel invoices for private jets so as to hide their true destinations. Mr. LaPierre testified he didn’t know how his former chief financial officer had received a $360,000-a-year consulting contract after leaving under a cloud, and he admitted to trips on a luxury yacht belonging to an NRA vendor — a conflict of interest he did not disclose. That Mr. LaPierre kept the bankruptcy filing secret from other NRA officials, including its general counsel, was, the judge wrote, “nothing less than shocking.”
The NRA under Mr. LaPierre’s leadership proved to be, as Ms. James said, an organization in which “the rot runs deep.” Whether it can be reformed or should be dissolved will be up to the court in New York, but it’s good that there will be a long-overdue reckoning.
The Post’s View: How did Caribbean yacht vacations promote the Second Amendment? We may find out in court.
Megan McArdle: If conservatives want to keep their guns, they’re going to have to find a way to stop mass shootings