The group has been plagued by infighting and allegations of self-dealing and is defending itself against a sweeping lawsuit filed in August by the New York attorney general that alleges that the organization violated its nonprofit status as its top leaders allegedly raided the organization’s coffers for personal gain.
The NRA disclosed last year that it was cutting salaries and preparing to lay off employees as donations dried up during the coronavirus pandemic.
Several key executives left the organization in the past two years, including the NRA’s former top lobbyist Chris Cox, who resigned in 2019. And political spending dropped significantly last year compared with the previous cycle. In 2016, the NRA spent $54.4 million on political advocacy, according to the Center for Responsive Politics. In 2020, that spending fell to $29.4 million.
Now, the NRA’s top executives are soon likely to take the stand in a Dallas courtroom, a potentially bruising public display, in a federal hearing scheduled to open April 5 to determine whether the organization will be allowed to declare bankruptcy, as it requested earlier this year.
New York Attorney General Letitia James and the NRA’s former longtime advertising agency, Ackerman McQueen, have asked a federal judge to reject the bankruptcy petition, arguing that it is a ploy to avoid litigation and tough questions about the group’s spending.
This week, the NRA told the judge it has entered negotiations with James’s office to resolve differences. But if the talks fail and the hearing goes forward, the witness list is expected to include present and former NRA executives, including chief executive Wayne LaPierre, who has led the group’s efforts to fight gun-control measures.
The bankruptcy proceedings are likely to reveal embarrassing new details about the organization’s internal workings and extravagant spending. Already, filings associated with the process have documented 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.”
NRA lawyers say the organization has acknowledged past fiscal problems and has worked to rectify them, making a “commitment to good governance” and replacing top officers.
LaPierre and other executives also have “voluntarily participated” in the attorney general’s investigation, NRA attorney William A. Brewer III said, also accusing James of being “fueled by political animus.”
Historically, the NRA has reacted with defiance to gun-control proposals that emerge after mass shootings, including in 2012 when LaPierre gave a speech calling for armed guards at schools in the aftermath of the attack at Sandy Hook Elementary School in Newtown, Conn., in which 26 were killed. The NRA was seen then as having blocked what at first appeared to be a rare bipartisan demand for congressional regulatory action after the school massacre.
Days before this week’s Colorado shooting left 10 dead, the NRA was touting the success of a legal challenge that blocked Boulder from enforcing an assault weapons ban. And just after the Boulder killings, the gun-rights group responded with a symbolic restatement of its mission, tweeting the language of the Second Amendment.
NRA officials say efforts by President Biden and Democratic majorities in Congress to push ahead with gun legislation will spur a spike in membership and renewed donations to the group. They say 140,000 new members have joined since the election alone and that the group’s financial situation is strong.
But the new gun-control campaign also will serve as a test of the NRA’s continued political clout in the face of its challenges, its opponents said.
“Lawmakers who used to run away from the issue of gun safety now run on it, and a big reason for that is the sharp decline of the NRA,” said John Feinblatt, the president of Everytown for Gun Safety, a leading advocate of gun regulation. “In just a few short years, the NRA has fallen from perhaps the most powerful political group in America to a bankrupt shadow of their former selves — all while endangering millions of lives.”
NRA President Carolyn Meadows rejected that analysis and said the group is as powerful as ever.
“The NRA has never been stronger or more critical to the fight for Second Amendment freedom,” she said in an email, citing enthusiasm for the bankruptcy reorganization and the move to Texas. “Our enemies have been predicting our demise for years,” she said.
The organization’s most serious challenge comes from the lawsuit in New York, the state where the NRA was chartered in 1871. The suit seeks to remove the NRA’s current leadership and dissolve the organization.
It alleges that top NRA executives, including LaPierre, diverted organization resources for their personal gain. When she filed the suit, James said she was referring some of the findings of her investigation to the IRS for review.
Her suit also names John Frazer, the organization’s secretary and general counsel, 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.
Powell has since written a book, “Inside the NRA: A Tell-all Account of Corruption, Greed and Paranoia Within the Most Powerful Political Group in America,” and has said he is cooperating with the attorney general’s legal team.
After the New York case was filed, the NRA immediately countersued, alleging that James was seeking to harm the NRA politically at the expense of the group’s First Amendment rights. It denied the allegations of wrongdoing and asked the court to reject James’s suit and require New York state to pay legal costs.
The NRA said in January that the political environment in New York had become so toxic that it needed to depart, declare bankruptcy and reincorporate in Texas.
“An important part of this plan is dumping New York,” LaPierre said in announcing the bankruptcy filing. The Texas attorney general welcomed the organization and joined with 16 other Republican attorneys general in siding with the NRA in its legal dispute with New York.
In filings, James has argued that U.S. Bankruptcy Judge Harlan Hale should reject the bankruptcy petition as a ploy to avoid accountability in New York. Brewer, the NRA’s outside counsel, said the group looked forward to litigating the claims, which he called “contrived.”
Other creditors of the organization told the judge that they support the NRA’s position, arguing that bankruptcy is the appropriate route to protect the group against the consequences of the New York action.
Next month’s bankruptcy hearing is scheduled to last six days. If the judge allows the bankruptcy filing to proceed, he will then weigh other touchy questions, including a request from a dissenting NRA board member who has asked the judge to appoint an independent examiner to review the organization’s finances.
Phillip Journey, a state court judge in Kansas, alleged in a filing that the organization paid excessive compensation and had not consulted with its board before filing for bankruptcy.
He also alleged that the organization’s counsel at one point told a member of the board “to sit back, shut her mouth, stop asking questions, and trust NRA management had everything under control.”
In an interview, Journey said he believed the NRA board “has become supine and acquiescent” to LaPierre and his lawyers and staff, and that he worries about the organization’s future.
“My goal is to save the NRA, to restore the trust between membership and leadership and restore corporate governance. I want to turn the safety switches back on and then walk away,” he said.
The NRA has scheduled a special informational board meeting in Dallas on Sunday to discuss the bankruptcy and deal with concerns expressed by Journey and others.
NRA officials have said Journey’s complaint shows a misunderstanding of the organization’s bylaws and recent history. They note that he only recently rejoined the board, in July 2020, after years away from the organization.
Journey said an examiner is necessary to probe recent decisions made by the organization’s leaders.
The New York attorney general and Ackerman McQueen would go further. If Hale allows bankruptcy to proceed, they ask that he appoint a trustee to replace the group’s leadership and run the organization while it reorganizes.
A list of witnesses who might be called to testify during the bankruptcy hearing is expected to be submitted to the court in coming days.
In preparation for the proceeding, lawyers from the attorney general’s office deposed LaPierre and other current and former top executives, all of whom could be called.
At issue in all of the matters before the judge will be the financial conduct of NRA leaders.
The Washington Post and other news organizations have reported that the NRA directed organization funds to members of its board and that LaPierre spent hundreds of thousands of dollars at a Beverly Hills clothing store and on travel expenses. James’s lawsuit alleges that LaPierre billed the NRA more than $500,000 for private charter flights and that he visited the Bahamas with his family eight times in three years.
The Post also has reported that LaPierre sought to have the organization buy him a $6 million, 10,000 square-foot French-style estate in Texas after a mass shooting in Florida, arguing that after the mass shooting at a high school in Parkland, Fla., he needed a more secure home. Those expenses, and more, were detailed in the recent filings by the New York attorney general.
“The NRA seemed to think filing for bankruptcy would solve all its political, financial and legal problems,” said Justin Wagner, a former New York state assistant attorney general who directs investigations for Everytown for Gun Safety. “Instead, while the public demands gun safety reform, the NRA’s bankruptcy so far has revealed even more bloated spending, financial mismanagement and the gun lobby in complete disarray.”
Alice Crites contributed to this report.