A New York judge blocked the state’s attorney general from trying to put the National Rifle Association out of business but will allow a lawsuit accusing top executives of misusing funds to proceed.
Manhattan Judge Joel M. Cohen expressed concerns that shutting down the NRA could infringe on the First Amendment rights of its millions of members. However, the lawsuit regarding allegedly misused funds can continue, but it does not warrant the “corporate death penalty” sought by New York Attorney General Letitia James, the Associated Press reported.
“The complaint does not allege that any financial misconduct benefited the NRA, or that the NRA exists primarily to carry out such activity, or that the NRA is incapable of continuing its legitimate activities on behalf of its millions of members,” the judge wrote in his opinion.
In August 2020, James filed a lawsuit to shut down the NRA alleging three top executives and CEO Wayne LaPierre diverted tens of millions of dollars in funds to use for personal use, violating the charity law. The lawsuit alleges LaPierre used the nonprofit’s money to fly on private jets, hire car services, pay for travel consultants and personal security, and that he spent more than $500,000 for several trips to the Bahamas with his family, the AP added.
The lawsuit alleges that LaPierre “exploited the organization for his financial benefit, and the benefit of a close circle of NRA staff, board members and vendors.” The suit claims NRA senior executives “regularly ignored, overrode or otherwise violated the bylaws and internal policies and procedures that they were charged with enforcing” in order to divert assets, Vox reported.
The CEO is also accused of setting up a $17 million post-employment contract for himself and accepting luxury gifts from vendors including African safaris and a 107-foot yacht, according to the AP.
“The court let stand all of the Office of the Attorney General’s claims of self-dealing, abuse, and unlawful conduct by LaPierre, who has been at the helm of the NRA for three decades,” James’ office said in a statement. “Today, the court affirmed my office’s right to pursue its long-standing claims that fraud, abuse, and greed permeate through the NRA and its senior leadership.”
The NRA initially denied the allegations of misspending, but the group filed a tax document with the IRS stating the organization “became aware during 2019 of a significant diversion of its assets.” The document also showed LaPierre reimbursed the NRA for $300,000 in travel costs, Vox reported.
However, Wednesday’s ruling means the New York Attorney General’s Office cannot shut down the association or seize its assets.
“This is a resounding win for the NRA, its 5 million members, and all who believe in this organization,” NRA President Charles Cotton said in a statement. “The message is loud and clear: The NRA is strong and secure in its mission to protect constitutional freedom.”
In 2021, the NRA declared bankruptcy and reported between $100 million and $500 million in assets and the same amount in liabilities, according to the bankruptcy documents. The organization tried to move its state of incorporation to Texas from New York, but a Texas judge blocked the move, saying the bankruptcy was not filed in good faith, the AP reported.
Update 3/2/22, 6:00 p.m. ET: This article was updated with a statement from the NRA.
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