N.R.A. Chief Kept Bankruptcy Filing Secret From Deputies
Facing enforcement by the New York attorney general, the National Rifle Association’s chief executive hatched a secret plan for bankruptcy.,
Wayne LaPierre, the embattled chief executive of the National Rifle Association, said on Wednesday that he had kept his organization’s recent bankruptcy filing secret from almost all its senior officials, including its general counsel, chief financial officer and top lobbyist. He also did not inform most of the N.R.A.’s board.
Mr. LaPierre made the comments after taking the stand, virtually, at a trial in federal bankruptcy court in Dallas. Though the N.R.A. is solvent, it filed for bankruptcy protection in January in an audacious bid to circumvent regulators in New York, where the N.R.A. has been chartered for a century and a half.
The state’s attorney general, Letitia James, had sued the association in August, trying to shut it down amid claims of mismanagement and corruption. She is also seeking tens of millions of dollars in misspent funds from Mr. LaPierre and three other current or former N.R.A. leaders.
The nonprofit organization has been enmeshed in scandal for the last two years, with revelations of lavish spending by the N.R.A. and its contractors — on Zegna suits and luxurious trips Mr. LaPierre took to places like Lake Como in Italy and the Atlantis Resort in the Bahamas. Other benefits included chartered jets for him and his family and vacations on a contractor’s yachts, which were named Illusions and Grand Illusion.
The bankruptcy proceedings have become the latest referendum on Mr. LaPierre’s 30-year tenure at the gun rights group — recently beset by infighting — as it seeks to turn the battle with the New York attorney general into a fight over free speech rather than free perks.
“We filed this bankruptcy to look for a fair legal playing field, where N.R.A. could prosper and grow in a fair environment, as opposed to what we believe had become a toxic, weaponized, politicized government in New York State,” Mr. LaPierre said in his testimony.
The association intends to use the bankruptcy to reincorporate in Texas. Mr. LaPierre kept the filing shrouded in secrecy, fearing leaks would jeopardize the plan.
But the attorney general’s office and the N.R.A.’s largest creditor, its former advertising firm Ackerman McQueen, want the case dismissed — claiming that the filing, and particularly the lack of notice to the board, was highly improper.
“The process Mr. LaPierre -followed to file this bankruptcy case is itself a master class in bad faith and dishonest conduct,” said Monica Connell, an assistant attorney general.
The trial, part of the bankruptcy proceedings, began on Monday to determine whether the case would proceed.
During two years of turmoil preceding the trial, the N.R.A. had grown unusually quiet, shuttering its fire-breathing media outlet, NRATV, and parting ways with its former spokeswoman Dana Loesch. It was also largely silent during the 2020 presidential election, after playing a major role in helping elect Donald J. Trump in 2016.
But the organization remains a potent lobbying force that has reshaped the political landscape around guns. Its enduring influence was on display in the aftermath of two recent mass shootings, in Atlanta and Boulder, Colo., when calls for gun control ran up against stout Republican opposition and the realities of the Senate filibuster.
The bankruptcy, however, is a risky gambit for the N.R.A. and a sign of its desperation. Mr. LaPierre and his outside lawyer, William A. Brewer III, an architect of the filing, could lose control over the organization. In one possible outcome, if the case is not dismissed outright, the judge, Harlin D. Hale, could displace the current management by appointing a trustee to take over the N.R.A.’s day-to-day operations. The use of a trustee is rare in large company bankruptcies and usually happens only in cases of fraud, incompetence or gross mismanagement.
Gregory E. Garman, an N.R.A. lawyer, argued in court against such an outcome this week, saying “a trustee is in fact a death sentence.”
“The argument that a trustee assures the future of the N.R.A. beguiles our purpose and our role,” Mr. Garman said.
The N.R.A. has used the trial to argue that the group has reformed after making some modest blunders in oversight. “Compliance has become a way of life at the National Rifle Association,” Mr. Garman said, while acknowledging that there would be “moderately cringe-worthy” moments in the trial.
But those moments undercut claims of reform. Among the issues that have come up in the proceedings is that Mr. LaPierre’s longtime assistant, Millie Hallow, was kept on even after she diverted $40,000 from the N.R.A. for her personal use, including to help pay for her son’s wedding. (Before she was hired by the N.R.A., Ms. Hallow pleaded guilty to a felony related to the theft of money from an arts agency she ran.)
The role of John Frazer, the N.R.A.’s general counsel, also came under scrutiny, when it was disclosed that he had no prior experience in such a role and had only two years of private practice. He was left in the dark on key legal decisions, even though he is the organization’s top lawyer, and was not informed in advance by Mr. LaPierre that the N.R.A. was filing for bankruptcy. According to a former aide, Mr. LaPierre once said that he wouldn’t use Mr. Frazer “for my parking tickets.” In a pretrial deposition, Mr. LaPierre acknowledged that he might have made the remark as “a joke at some point.”
Mr. LaPierre himself admitted making mistakes, including not reporting his use of the luxury yachts.
“I believe now that it should have been disclosed,” he said.
His testimony is expected to continue on Thursday.