New York judge presses state on NRA dissolution effort

A general view shows the National Rifle Association (NRA) headquarters, in Fairfax, Virginia, U.S., August 6, 2020. REUTERS/Jonathan Ernst

(Reuters) - A judge on Friday questioned whether New York Attorney General Letitia James’ bid to shut down the National Rifle Association goes too far if the issues she has with the gun rights group are limited to alleged financial misconduct by its leadership.

Justice Joel Cohen of the New York State Supreme Court asked Assistant Attorney General Jonathan Conley about whether dissolution is appropriate rather than "addressing the specific problems." Cohen repeatedly pressed Conley on the issue during arguments over the NRA’s latest effort to dismiss the state’s lawsuit accusing the organization of diverting millions of dollars in charitable funds for the personal benefit of NRA executives and associates.

The lawsuit, filed in August 2020, aims to dissolve the NRA or, in the alternative, remove its top officers, including CEO Wayne LaPierre.

The NRA and LaPierre have denied wrongdoing and called the lawsuit politically motivated.

Cohen suggested that if the attorney general’s concerns lay with the NRA’s leadership, and not its mission, then the removal of the organization's leadership should solve its problems, rather than the full dissolution of the group.

Conley said the group has had opportunities to turn itself around but has failed to do so.

“It continues to engage in corporate malfeasance and has not shown any inclination [toward] remedying those problems,” Conley said.

Cohen also asked Conley whether his argument that the NRA should be shut down due to its leaders’ alleged misconduct would stand if the situation involved a different non-profit entity such as the Red Cross.

“Yes, if the facts and circumstances in any other nonprofit were the same as those here, it would be well within the discretion of the attorney general to pursue those claims,” Conley said.

The judge also challenged the NRA’s position, appearing skeptical of its contention that the state's claims are precluded because they were already addressed by a Dallas bankruptcy judge earlier this year. The NRA said when U.S. Bankruptcy Judge Harlin Hale denied the attorney general’s motion to appoint a bankruptcy trustee to oversee the organization’s Chapter 11 case, he held that the NRA had undertaken “course correction” that involved more disclosure and self-reporting to address internal compliance problems.

Cohen noted that Hale dismissed the NRA’s bankruptcy anyway. Hale found that it was filed to gain an “unfair litigation advantage,” not for legitimate purposes under bankruptcy law.

“You see the irony of your approach, right?” Cohen said to NRA attorney Svetlana Eisenberg of Brewer Attorneys & Counselors.

Cohen did not indicate when he may issue a ruling.

The case is New York v. National Rifle Association of America Inc, New York State Supreme Court, New York County, No. 451625/2020.

For the NRA: William Brewer III, Sarah Rogers, Mordecai Geisler, David Partida and Svetlana Eisenberg of Brewer Attorneys & Counselors

For the attorney general: Assistant Attorneys General Jonathan Conley, Monica Connell, Yael Fuchs and Stephen Thompson

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.