A Justice Department official all but quashed the National Rifle Association’s hopes at declaring bankruptcy and moving to Texas on Monday.
The U.S. Trustee, a DOJ office that enforces bankruptcy laws and which rarely takes sides in bankruptcy disputes, told a Texas federal judge that it opposed the NRA’s bankruptcy petition and that “the evidentiary record clearly and convincingly establishes” that NRA Executive Vice President Wayne LaPierre “failed to provide the proper oversight.”
“The record is unrefuted that Wayne LaPierre’s personal expenses were made to look like business expenses,” Assistant U.S. Trustee Lisa L. Lambert told federal bankruptcy judge Harlin Hale, the New York Times reported.
It’s an extremely rare rebuke from the office of the U.S. Trustee, and comes as the NRA tries to use chapter 11 bankruptcy to reconstitute itself in the gun-friendly state of Texas.
The Trustee’s remarks reportedly stunned the NRA’s attorney in the case, Greg Garman.
“I’m disappointed that I hear for the first time in closing arguments that the United States Trustee has now taken a position for which I’m expected to respond in real time, but that is what it is,” he told the judge, before trying to politicize the issue. “Your honor, we have natural enemies. This Department of Justice may not see eye to eye with the National Rifle Association, but so be it, we have done the right thing.”
In moving to Texas, the NRA would be able to evade New York Attorney General Letitia James, who sued the gun group in August 2020 alleging that its executives had systemically looted the non-profit. James is seeking dissolution of the NRA.
Lawyers for the New York Attorney General have portrayed the NRA’s bankruptcy petition as a bid to escape its lawsuit and accountability for the looting of the organization. The NRA was chartered in New York State in the 1870s, and has been located there ever since.
But at one point in the hearing, Lambert suggested that she may agree with James’ interpretation of the bankruptcy.
“The N.R.A. has stated that it is seeking refuge from the New York attorney general’s actions and wishes to change its state of incorporation,” the Trustee official reportedly said. “That can be done outside of bankruptcy. It is not a legitimate reason for filing bankruptcy.”
The Trustee reportedly said at the hearing that evidence showed that LaPierre and others had in fact committed “irregularities,” and reportedly cited episodes including LaPierre’s penchant for pricey Ermenegildo Zegna suits that were expensed to the NRA account.
In trying to prevail on the bankruptcy petition and defeat James’s lawsuit, the NRA has repeatedly said that its problems, while serious, are a thing of the past. The organization has pointed to corporate governance reforms its undertaken, while LaPierre himself paid $300,000 in “excess benefits” back to the non-profit.
But Lambert, the Trustee official, reportedly suggested that those efforts don’t cut it.
“Even after the self-described course correction the irregularities were not fixed,” she told the judge.