A federal judge on Tuesday dismissed the National Rifle Association’s bankruptcy case, leaving the powerful gun-rights group to face a New York state lawsuit accusing the NRA of financial abuses and that aims to put it out of business.
The case was over whether the NRA should be allowed to incorporate in Texas instead of New York, where the state is suing in an effort to disband the group. Though headquartered in Virginia, the NRA was chartered as a nonprofit in New York in 1871 and is incorporated in the state.
Judge Harlin Hale said he was dismissing the case because he found the bankruptcy was not filed in good faith.
His decision followed 11 days of testimony and arguments. Lawyers for New York and the NRA’s former advertising agency grilled the group’s embattled top executive, Wayne LaPierre, who acknowledged putting the NRA into Chapter 11 bankruptcy without the knowledge or assent of most of its board and other top officers.
Lawyers for New York Attorney General Letitia James argued that the case was an attempt by NRA leadership to escape accountability for using the group’s coffers as their piggybank. But the NRA’s attorneys said it was a legitimate effort to avoid a political attack by the Democrat.
LaPierre testified that he kept the bankruptcy largely secret to prevent leaks from the group’s 76-member board, which is divided in its support for him.
The NRA declared bankruptcy in January, five months after James’ office sued seeking its dissolution following allegations that executives illegally diverted tens of millions of dollars for lavish personal trips, no-show contracts and other questionable expenditures.