“The process Mr. LaPierre followed to file this bankruptcy case is itself a master class in bad faith and dishonest conduct,” Monica Connell, an assistant New York attorney general, said in court Monday, contending that NRA chief executive Wayne LaPierre concealed the bankruptcy plan from the NRA board and its general counsel until after it was announced.
NRA general counsel John Frazer, who was among those to take the stand Tuesday, acknowledged under cross-examination that he did not know about the bankruptcy petition until about the time it was filed.
But he and Charles Cotton, the group’s first vice president, have said LaPierre acted properly in pursuing the action.
The NRA maintains it is in sound financial condition, but said it had to file for Chapter 11 bankruptcy and plans to move to Texas because of the existential threat presented by the New York attorney general’s suit.
Cotton testified that the bankruptcy had the support of the organization’s board of directors and audit and special litigations committees, even if the board was not fully informed in advance. He pointed to a special meeting on March 28 at which the board endorsed the NRA’s bankruptcy and reorganization plan that was announced in January.
“The message is loud and clear: The NRA board is united in support of the course set by its leadership,” Cotton said just before the start of the trial.
LaPierre is expected to testify Wednesday.
In addition to the attorney general, the NRA’s longtime advertising agency, Ackerman McQueen, is opposing the bankruptcy petition, arguing that it is a ploy to avoid litigation and scrutiny of the group’s spending.
Lawyers for the NRA countered that LaPierre acted appropriately, and they told U.S. Bankruptcy Judge Harlin D. Hale that efforts to block the bankruptcy petition — or remove LaPierre and his team during the process — would put the organization at grave risk.
During opening arguments in the trial, which is being conducted via WebEx videoconference, NRA lawyer Greg Garman called LaPierre an “irreplaceable asset,” citing his fundraising abilities and defending his management.
Throwing out the bankruptcy petition would wrongly expose the NRA to what Garman argued was a politically motivated attack by James.
“She called us a terrorist organization,” Garman said of James in his opening statement. “She called us a criminal enterprise. She has said without hyperbole her first top issue when becoming attorney general was to target the NRA.”
Garman rejected the idea that LaPierre has improper control over the NRA board, dismissing claims by the New York attorney general’s office that the NRA chief threatens those who challenge him and has used the organization’s resources for his own benefit.
He said LaPierre recognized and addressed financial abuses inside the group that emerged in the past few years.
Recent court filings have shown that the group was informed by the IRS that it owes $3.4 million in taxes dating to 2014, and that it paid for mosquito control at LaPierre’s home, citing the expense as intended for “security purposes.” In a deposition filed over the weekend, LaPierre said he took refuge on a Hollywood producer’s 108-foot yacht in recent years after receiving threats in the wake of mass shootings.
As the organization navigates the complexities of bankruptcy law, it also faces renewed challenges to its long-standing opposition to gun regulation. Following two mass shootings in one week at the end of March, President Biden joined congressional Democrats in demanding action to ban assault weapons and tighten background checks, a position the NRA and Republicans have rejected.
Against this background, gun- control advocates are simultaneously demanding action in Washington while calling attention to embarrassing revelations about the gun lobby recited in the opening days of the bankruptcy trial in Dallas.
In her opening statement, Connell urged the court to reject the NRA bankruptcy petition, a decision that would make it easier for the state of New York to seize the group’s assets if it wins the lawsuit it filed last August.
Failing a rejection of the petition, the attorney general and Ackerman McQueen asked the judge Monday to appoint a trustee to run the organization during the bankruptcy process.
“LaPierre’s only goal is to cling to the power,” Connell told the judge Monday.
She said that LaPierre’s private travel consultant will provide testimony in coming days showing she was instructed to conceal invoices showing LaPierre’s flights to the Bahamas — with stopovers to pick up LaPierre relatives in Nebraska. Prosecutors allege these trips were vacations billed to the NRA.
Connell also said that the NRA’s former chief financial officer, Craig Spray, was fired by LaPierre for raising questions about IRS 990 disclosures.
The NRA attorney disputed that account of Spray’s departure and said private flights were necessary to protect LaPierre’s safety.
“At the end of the day, he flies private because it’s a requirement of the association,” said Garman, the NRA lawyer arguing the bankruptcy case.
And he maintained that replacing LaPierre and his team with court-appointed trustees would pose an immediate threat to the organization’s existence. “A trustee is in fact a death sentence,” Garman said, saying it would sideline LaPierre from fundraising for the 150-year-old organization.
“He is their greatest asset,” Garman said. “He is the only person, the only person who can raise a hundred million dollars a year.”
More broadly, Garman said, LaPierre has led the way since 2018 in instituting more-rigorous fiscal and oversight policies and removing individuals who acted improperly.
That argument drew an incredulous reaction from longtime critics of the gun lobby.
“The NRA’s opening argument presented an alternative world where scandals were somehow evidence of their commitment to good governance,” said Justin Wagner, a former New York assistant attorney general who directs investigations for Everytown for Gun Safety, a nonprofit group that advocates for greater regulation of firearms.
The New York state lawsuit, which seeks to dissolve the organization, alleges that top NRA executives, including LaPierre, diverted organization resources for their personal gain.
The suit also names Frazer, the organization’s secretary and general counsel; former treasurer Wilson “Woody” Phillips; and Joshua Powell, former chief of staff to LaPierre, who was fired in January after being accused of charging more than $40,000 in personal expenses to the organization. All of those individuals are named on witness lists for the trial. Phillips, Frazer and Powell have denied wrongdoing.
The first witness to appear in the case, Cotton, the organization’s first vice president and chair of the audit committee, defended the handling of the bankruptcy filing on Monday and contended that the board was properly informed.
Under cross-examination, he said that while the board did not receive details about bankruptcy, there were references to such a contingency in LaPierre’s employment agreement approved by the board in January. He said that a special litigation committee of the board, of which he is a member, was aware of the decision to file for bankruptcy.
Another member of the board, Phillip Journey, a Kansas family court judge, has said he was stunned to learn of the bankruptcy petition when it was announced in January. He has intervened in the case, asking the judge to appoint an examiner to review NRA decision-making.
In a recent interview, Journey said he believed the NRA board “has become supine and acquiescent” to LaPierre and his lawyers and staff, and said that he worries about the organization’s future.
The NRA has said Journey was not familiar with the organization’s bylaws and noted he had only recently rejoined the board.