- A Texas judge rejected the NRA’s attempt to go bankrupt, siding with New York state prosecutors.
- Prosecutors said the bankruptcy filing was an attempt to squirm out of other litigation.
- In August, the New York Attorney General’s office accused the NRA of corruption and negligent oversight.
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A Texas judge is throwing out the National Rifle Association’s bankruptcy filing, saying that the case was filed in “bad faith” in an effort to avoid litigation in New York.
Judge Harlin Hale’s decision to throw out the case came after New York Attorney General Letitia James and others questioned the legitimacy of the bankruptcy filing. Law 360 first reported the ruling.
The NRA filed for Chapter 11 bankruptcy protection on January 15 after James filed a lawsuit to dissolve the gun rights organization, alleging it abused its legal status as a nonprofit. In its August filing, New York prosecutors accused the group of corruption and said its longtime CEO Wayne LaPierre “instituted a culture of self-dealing, mismanagement, and negligent oversight.”
While reports of financial troubles have dogged the NRA for years, its bankruptcy filings showed it was financially solvent and had assets worth roughly $50 million more than its debts. The organization tried to restructure in Texas, claiming New York had a corrupt regulatory environment.
Prosecutors for James’s office viewed the bankruptcy filing as an attempt to squirm out of the litigation. Hale’s decision sides with those prosecutors, effectively giving a green light to James’s office to continue its lawsuit.
“A judge has ruled in our favor and rejected the @NRA’s attempt to claim bankruptcy and reorganize in Texas,” James said in a tweet Tuesday. “The @NRA does not get to dictate if and where it will answer for its actions, and our case will continue in New York court. No one is above the law.”
In court hearings, attorneys for the NRA have accused James of waging a political campaign against the organization. Closely aligned with Republican politicians, the NRA rallies its members to thwart gun safety laws typically supported by Democratic politicians. Research consistently shows that strict gun laws reduce gun violence. The NRA’s attorneys said that Texas, controlled by Republicans, would offer a regulatory haven for the organization.
The Justice Department stepped into the dispute earlier in May, saying the “evidentiary record clearly and convincingly establishes” that LaPierre failed to provide proper oversight and manipulated personal expenses so that they looked like business expenses.
Hale’s ruling permits the NRA to file for bankruptcy again, but he said that he would likely appoint a trustee to oversee the group if it does rather than leave LaPierre in control of the organization’s finances.
LaPierre is dealing with several other headaches in addition to litigation from the New York Attorney General’s office. In October, the Wall Street Journal reported he was under IRS investigation for possible criminal tax fraud. And in April, the Trace and the New Yorker published footage of him struggling to kill an elephant. The NRA said the publication of the video was intended to embarrass him.
This article has been updated.