Business

The case against the National Rifle Association, explained

Source: Joshua Roberts, Reuters

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The National Rifle Association – most commonly known as the NRA – has been facing serious financial and legal problems for years.
Those problems got worse on Tuesday, May 11, when a judge ruled that the NRA could not declare bankruptcy just to get out of being sued.
In August 2020, New York Attorney General (AG) Letitia James filed a lawsuit against the NRA. James is trying to get the organization “dissolved,” which basically means it wouldn’t exist anymore.
To avoid this happening, the NRA filed for bankruptcy. By going bankrupt, the organization would be able to avoid this lawsuit and the other legal problems it’s currently facing.

While filing for bankruptcy is generally thought of as a bad thing, it often helps an individual or an organization avoid having to pay back debts and helps them to get out of most other legal trouble.
When the NRA filed for what is known as Chapter 11 bankruptcy back in January, the organization didn’t say it was out of money but only that it wanted to “restructure.”
Restructuring is a business term that means the company is reorganizing the structure of its finances or organization.
In this case, the NRA, which has its headquarters in Virginia, but its legal base in New York, planned to relocate to Texas.
The NRA wanted to do this so that any lawsuits filed in New York wouldn’t apply to it.
But Judge Harlin Hale, a Texas-based federal judge, screwed up the NRA’s plans by ruling that the organization had filed for bankruptcy in “bad faith.”
Hale said the NRA was simply looking to “avoid a state regulatory scheme.”
The day the NRA filed for bankruptcy, its Executive Vice President, Wayne LaPierre, sent a letter to the organization’s members stating, “The NRA is not ‘bankrupt’ or ‘going out of business.’”

In the lawsuit filed on August 6, 2020, James accused the NRA of being “fraught with fraud and abuse.”
Much of the fraud that James says took place was committed by LaPierre, who has been the face of the organization for the last several years.
As a nonprofit charitable organization, the NRA is tax-exempt – meaning it doesn’t have to pay taxes. It avoids having to pay taxes by saying that it is a charity focused on the rights of Americans to own guns.
James claims that the organization and its leaders broke several laws connected with its charitable status and the way it has filed taxes.
It’s been claimed that the NRA falsely reported expenses and wages, in addition to filing false tax information.
LaPierre is also being accused of using donated money for his own personal use.
Among the illegal activities that LaPierre is accused of are using the NRA’s money for private plane trips, travel consultants, private security costs, gifts and club membership fees.
He’s also been accused of traveling to the Bahamas and to Africa for “all-expense paid safaris” – all paid for by the NRA.
LaPierre is also suspected of arranging for former employees to get million-dollar “lucrative consulting contracts” with other companies.

James has been clear that she “seeks to dissolve the NRA.”
On top of that, she wants LaPierre and the other NRA leaders to pay back what they stole and to pay penalties on top of that.
She also wants all of the accused leaders to be immediately removed from the NRA and to never again be allowed to work for any other charitable organization in New York.
If she’s successful, James will almost certainly be celebrated by liberals and gun control advocates who have long seen the NRA as the main opposition to gun reform in the United States.
If the name Letitia James sounds familiar, it may be because of her other high-profile lawsuits.
As the attorney general for New York, James has filed a lawsuit against Facebook, claiming that it has been acting as a monopoly and has too much power.
James is also one of many people currently investigating former President Donald Trump for financial crimes.

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