All sides had their chance to make their closing arguments yesterday in the NRA’s bankruptcy case. The morning session was devoted to the NY Attorney General, the US Trustee, and a few others with the afternoon being primarily the NRA along with short rebuttal statements from the NY Attorney General’s team, AckMac, and Judge Journey’s attorney.
I listened in to parts of both the morning and the afternoon arguments. The most surprising came from Lisa Lambert who is the Assistant US Trustee. Her job is to represent the process and preserve the integrity of bankruptcy.
From what I saw and heard yesterday morning, she was on fire. I wish I had video to be able to post but that is not available nor would it be permitted.
Danny Hakim of the New York Times devoted an entire column to her argument.
The National Rifle Association’s hopes of end-running a legal challenge in New York were dealt a serious blow on Monday when a Justice Department official rebuked its leadership and called for the dismissal of its bankruptcy filing or the appointment of an outside monitor to oversee its finances.
Lisa L. Lambert, a lawyer in the United States Trustee’s office, which is part of the Justice Department, said the “evidentiary record clearly and convincingly establishes” that Wayne LaPierre, the longtime N.R.A. chief executive, “has failed to provide the proper oversight.” For a number of years, she added, “the record is unrefuted that Wayne LaPierre’s personal expenses were made to look like business expenses.”
She said that if an Examiner is appointed that they must have a budget much higher than the $350,000 proposed by Judge Phillip Journey and that they have power over spending.
Her comments flustered Greg Garman who is one of the bankruptcy attorneys representing the NRA according to Hakim. I don’t know whether it is because she didn’t mince words or because it is rare to have the US Trustee fire a broadside. Professor Adam Levitin of Georgetown Law said he thought the NRA was in real trouble if the US Trustee gets involved as she did. Professor John Pottow of the University of Michigan Law School echoed his comments noting it was very rare.
While Mr. Garman asserted the transgressions of the NRA were relatively minor and that it “had righted its ship” obviating the need for outside oversight, Ms. Lambert, the Assistant US Trustee, disagreed as she laid out episodes of corruption by LaPierre and others in the NRA.
Regarding the charter flights, she said: “LaPierre says these are for security, but the evidence says he picked up family. The evidence says that extra stops were not to be noted in the booking records. And the testimony is unrefuted that no N.R.A. policy authorizes charter plane flights.”
Mr. LaPierre’s close aide, Millie Hallow, even diverted $40,000 for her son’s wedding, Ms. Lambert noted, but beyond repaying that amount after she was caught, she “otherwise has suffered no additional consequences.”
Mr. Garman said throughout the trial that there was a “line of demarcation” in 2018, when the N.R.A. undertook a self-audit and corrective measures. But Ms. Lambert said the evidence presented in the 12-day trial showed that “even after the self-described course correction the irregularities were not fixed,” noting that, among other things, Craig Spray, the former chief financial officer, refused to sign the N.R.A.’s 2019 tax filings.
“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,” she added. “That can be done outside of bankruptcy. It is not a legitimate reason for filing bankruptcy. ”
Judge Hale ended the hearing by thanking the attorneys on all sides for keeping it relatively civil and noted this was one of the longest trials in his career as a bankruptcy judge. He also jokingly said that this trial was not the reason he plans to retire next year as he had already announced those plans before being assigned this case.
Judge Hale ended by saying a written ruling on the case would be out by next week.
UPDATE: For more perspective on the closing arguments, please read Stephen Gutowski’s report in The Reload on the final day.
UPDATE II: Frank Tait has his impressions of the final day of the bankruptcy hearing here. I missed that part of the arguments about a contract with Marion “The Enemy Within” Hammer running to 2030 but I think any sane person would be appalled by it.
My own feeling is that the best outcome would be an Examiner with an ample budget and powers to make a difference. As Jeff Knox has said to me repeatedly, his fear of a Trustee is that he or she could decide to put the NRA into Chapter 7 liquidation.
What pisses me off more than anything is that just when we need a powerful NRA the most, it is distracted from its task of defending gun rights due to the corruption of Wayne and his cronies. It is beyond frustrating that the Board of Directors cares more about not offending Wayne and preserving the statue quo than about doing what it should be doing to clean house. I feel like invoking Godwin’s law to compare the Board to those Wehrmacht generals who supported Hitler even when they knew he was insane but I won’t. I’ll just say that not doing their job has put the NRA and its members in the position we are in today.