NRA Bankruptcy Case Denied, Allowing New York Dissolution Case To Move Forward A federal judge threw out the National Rifle Association's bid to declare bankruptcy Tuesday, allowing New York to proceed in its effort to dissolve the gun rights group for alleged "fraud and abuse."

Judge Dismisses NRA Bankruptcy Case, Heightening Risk For Dissolution Of Group

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A federal bankruptcy judge dismissed an effort by the National Rifle Association to declare bankruptcy, ruling that the gun rights group had not filed the case in good faith. It's a setback for the organization, which faces an attempt by the New York state attorney general to dissolve it. The month-long bankruptcy trial put into the public record details of questionable spending by senior NRA officials, and it painted a picture of an organization in crisis. NPR's Washington investigative correspondent Tim Mak has more.

TIM MAK, BYLINE: The National Rifle Association filed for federal bankruptcy for a novel reason. The gun rights group says it has plenty of money and can pay all its creditors. But last year, the New York attorney general filed a complaint alleging widespread corruption within the group and asked the court to shut down the NRA. The NRA has argued it is being persecuted. Their move to file for bankruptcy was an attempt to escape the reach of the New York AG and move to Texas. Here's how Greg Garman, an attorney representing the NRA, put it at the trial.

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GREG GARMAN: In the parlance of bankruptcy, we have a predatory lender who is seeking to foreclose on our assets.

MAK: The trial gave a rare look into the behavior of Wayne LaPierre, who has led the controversial organization for almost 30 years. A secretive figure, LaPierre makes few public appearances outside of carefully scripted speeches. In his courtroom testimony, he admitted taking yearly summer trips to the Caribbean, where he stayed on a yacht owned by an NRA vendor. LaPierre did not disclose this conflict of interest at the time.

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UNIDENTIFIED PERSON #1: And you started staying on the yacht, Illusions, in the Bahamas for a week at a time in 2013, correct?

WAYNE LAPIERRE: For security - it's a security retreat.

UNIDENTIFIED PERSON #1: And family members would join you on these trips - correct? That is the (unintelligible)...

LAPIERRE: Yes.

MAK: He justified the getaway as necessary for his personal safety. LaPierre appeared to repeatedly irritate the judge overseeing the case by rambling on, talking about his privileged conversations with his lawyers and not directly answering questions.

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UNIDENTIFIED PERSON #2: Can you answer the questions that are asked?

LAPIERRE: Yes, sir, Your Honor.

UNIDENTIFIED PERSON #2: OK, and do you understand that I've said that to you more than a dozen times over the last day?

LAPIERRE: Yes, sir, Your Honor.

UNIDENTIFIED PERSON #2: OK.

LAPIERRE: I'm sorry. I'm doing my best.

MAK: The trial aired a lot of the NRA's dirty laundry. Testimony included examples of the nonprofit organization's tax-exempt funds being used to pay for wedding expenses, private jet travel and exotic getaways. Here's Wayne LaPierre's travel consultant, who was paid $26,000 a month to cater to him exclusively. She testified about how LaPierre instructed her to alter travel invoices for private jets.

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GAYLE STANFORD: I was told how to do the invoices.

UNIDENTIFIED PERSON #3: And who told you how to do the invoices?

STANFORD: Wayne.

UNIDENTIFIED PERSON #3: And you're referring to Wayne LaPierre.

STANFORD: Yes.

MAK: The New York attorney general's office had argued that the NRA had filed the bankruptcy in bad faith and should not be allowed to proceed with it. Ultimately, a judge agreed. The last few years have seen the NRA careen from crisis to crisis. In 2019, then-NRA president Oliver North dramatically resigned at the group's annual meeting, being among the first to allege publicly that there were financial problems at the group. Costly legal fights followed. In a span of less than three years, the organization has spent $72 million on its primary law firm alone. The bankruptcy ruling Tuesday returns the NRA to its prior state of legal peril. The most serious threat to the gun rights group is the New York attorney general's efforts to dissolve the group for, quote, "fraud and abuse." That legal process can now continue, heightening the risk of the NRA's demise.

Tim Mak, NPR News, Washington.

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