The National Rifle Association announced on Friday that it has applied for bankruptcy protection and will try to incorporate the country’s most politically influential gun rights group in Texas instead of New York, where a state lawsuit is trying to put the organization out of action.
The announcement came months after New York prosecutor Letitia James sued the NRA, seeking its resolution on allegations that top executives illegally diverted tens of millions of dollars for lavish personal travel, missing contracts for employees and other dubious expenses.
The coronavirus pandemic has also elevated the NRA, which last year fired dozens of employees. The group interrupted its national congress and raised funds. The NRA’s bankruptcy filings listed between $ 100 million and $ 500 million in assets and between $ 100 million and $ 500 million in liabilities. Nevertheless, the NRA claimed in the announcement that the organization was “in its strongest financial situation in several years.”
The NRA filed for Chapter 11 bankruptcy in a federal court in Dallas, saying it planned to incorporate in Texas, where data shows it formed a corporation, Sea Girt LLC, in November 2020. Sea Girt LLC filed a separate bankruptcy application Friday with a list of few assets and less than $ 100,000 in debt.
In its application, the NRA said its longtime leader, Vice President Wayne LaPierre, decided to apply for bankruptcy protection in consultation with a committee of three NRA officials formed in September to oversee its legal strategies. The NRA board voted on January 7 to clarify LaPierre’s employment contract and give him the authority to “reorganize or restructure the affairs” of the organization.
“The move will enable long-term, sustainable growth and ensure the NRA’s continued success as the country’s leading advocate for constitutional freedom – free from the toxic political environment of New York,” the NRA said in a statement.
In an interview, NRA board member Charles Cotton made it clear that the bankruptcy petition was motivated by disputes and legislative scrutiny in what he called “corrupt New York” – not financial problems.
“We need to get into a state where we can operate without that kind of unnecessary state-of-the-art weapons formation, and frankly get all the disputes in a place where we have an even shake,” Cotton told the Associated Press.
More than 400,000 Texan members
The Republic of Texas, Greg Abbott, quickly welcomed the news, tweeting, “Welcome to Texas – a state that protects the Second Amendment.” The NRA said it has more than 400,000 members in Texas and plans to hold its annual congress in Houston later this year.
The NRA can move to Texas.
From their letter:
“Texas appreciates the NRA’s contribution, celebrates our law-abiding members, and joins us as a partner in upholding constitutional freedom.”
Welcome to Texas – a state that protects the second amendment https://t.co/CCoP5DmGMI
– Greg Abbott (@GregAbbott_TX) January 15, 2021
Shortly after the announcement, James said she would not allow the NRA to “avoid liability” or oversight. The Democrat’s trial last year highlighted erroneous and self-defeating claims that have shaken the NRA and LaPierre in recent years – from hair and makeup for his wife to $ 17 million after self-employment.
“The regulator’s alleged financial status has finally fulfilled its moral status: bankruptcy,” James said.
Adam Skaggs, chief lawyer at the Giffords Law Center for the Prevention of Violence against Weapons, called the bankruptcy petition “an open attempt to avoid (James)’s campaign to hold the NRA and its corrupt leaders accountable.”
Cotton said the allegations in James’ trial will turn out to be false. He said he expects LaPierre to remain at the helm of the reconstituted NRA and praise his popularity among members and his ability to raise money for the organization.
“Wayne’s leaving would be a bigger blow to the organization than Charlton Heston’s illness and death were,” Cotton said.
The Arms Rights Group has about 5 million members. Although headquartered in Virginia, the NRA was chartered as a non-profit organization in New York in 1871 and is incorporated into the state. Going forward, the NRA said a committee will study opportunities to relocate parts of its operations to Texas and elsewhere.
Cotton declined to comment when asked about Sea Girt, which shares the name of a shooting range in New Jersey where the NRA began holding annual competitions in 1892, was formed as part of a plan to facilitate bankruptcy filings in Texas.
Relations with New York have soured
In recent years, the NRA’s relationship with New York has become increasingly acidic.
In 2018, the organization sued the government of Andrew Cuomo, claiming that a “political vendetta” was behind a state economic watchdog’s investigation into whether it violated state laws by marketing an insurance program to gun owners. In November, the NRA agreed to pay $ 2.5 million and accept a five-year ban on marketing insurance in the state.
In response to James’ trial, the NRA countered with claims that her actions were motivated by hostility to its political advocacy, including comments she made when she drove to the Attorney General in 2018 that the NRA is a “terrorist organization”.
The NRA’s largest creditor, who owes $ 1.2 million, is the organization’s former advertising agency, Ackerman McQueen. The NRA sued the company in 2019 with allegations of exaggeration and said in Friday’s bankruptcy application that the debt is disputed. The trial is ongoing.
In the New York lawsuit, Ackerman McQueen was accused of aiding and abetting excessive spending by LaPierre and other NRA executives by picking up the tab and then sending a one-time bill to the “out-of-pocket spending” organization.
“No financial filing can ever cover the moral bankruptcy of Wayne LaPierres and his wife and their guard dogs on the NRA Board,” said Bill Powers, an Ackerman McQueen spokesman and former NRA chief.
Court records also show that more than $ 960,000 is owed to Membership Marketing Partners LLC, a company that lists its headquarters at the same address as the NRA. An additional $ 200,000 is owed to Speedway Motorsports, the North Carolina-based company that owns and operates NASCAR tracks, according to the information.