NRA says bankruptcy shows why NY attorney general cannot shut it down

New York State Attorney General, Letitia James, speaks during a news conference, to announce a suit to dissolve the National Rifle Association, In New York, August 6, 2020. REUTERS/Brendan McDermid
  • NRA: Judge found no persistent fraud or illegal action
  • New York seeks dissolution of NRA for alleged corruption

NEW YORK (Reuters) - The National Rifle Association, which unsuccessfully filed for bankruptcy to escape New York's bid to shut it down, said the dismissal of that case nonetheless established that the state's attorney general cannot dissolve it for alleged corruption.

In a Tuesday court filing, the gun rights group also renewed its demand for an injunction against both a shutdown and the removal of longtime Chief Executive Wayne LaPierre by Letitia James, the state's Democratic attorney general.

It said that despite dismissing its Chapter 11 case in May, U.S. Bankruptcy Judge Harlin Hale's decision "comprehensively undermine(s) James's false narrative of an organization rife with corruption that it is unable to reform itself."

James' office had no immediate comment.

The NRA had filed for bankruptcy in January and said it would relocate to Texas after 150 years in New York, accusing James of suing for its dissolution the previous August because she disliked its politics.

James has accused the NRA of diverting millions of dollars to LaPierre and other executives, in part to support lavish lifestyles.

Hale, who sits in Dallas, threw out the bankruptcy case after a 12-day trial.

Citing testimony that the NRA's finances were the strongest in years, he called the case an improper end-run around James, and said LaPierre's decision to pursue it without telling many top NRA officials "nothing less than shocking."

But he also concluded that the NRA "now understands the importance of compliance" and that it can pay creditors, continue its mission, and improve governance and internal controls.

The NRA said this was "dispositive" of James' claim that it operated in a "persistently fraudulent or illegal manner" that harmed or menaced the public welfare, and could be dissolved under New York laws governing nonprofits.

The NRA countersued James in February, and is seeking unspecified damages.

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

For NRA: William Brewer, at Brewer, Attorneys & Counselors

For New York attorney general: James Sheehan, Charities Bureau Chief

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