by 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.
The blog NRA IN Danger does a good job summarizing the arguments from the morning and the afternoon so I won’t go into much detail.
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.
“compare the Board to those Wehrmacht generals who supported Hitler even when they knew he was insane”
I think the Republican Party still smooching Donald Trump’s hairy orange nether regions is a better, more contemporary analogy, and Godwin’s Law doesn’t apply to it.
From Brian Mason (Ack-Mc lawyer) closing argument: “NRA spent most of their time making the case that no matter what Mr. LaPierre does, as long as the money rolls in, their fundraiser, no matter how big of a slice he and his cronies take of that money, should be allowed to stay. But this is the very definition of corruption: sacrificing what is right for what is lucrative.” The irony is not lost on any of us here. That quote reflects Ack-Mc too, for decades. Mason was more correct than he knew. Ack-Mc was fine with schemes and side deals until money that should have gone to them started going to Brewer.
Money is all that matters. Industry people have been reluctant to admit publicly (other than Tom Gresham) that NRA’s self-destruction is not and never has been about principles of freedom or firearms education and safety. Greg Garman (NRA lawyer) said in his closing that an NRA Board member had told him over the week-end “we don’t sell widgets, we sell dreams of freedom and liberty.” Nothing more than a mirage.
I’m hoping for the examiner to be put it!
To your point, this is just tragic, and all the more so because of the high profile of an organization such as the NRA. Nobody can be surprised that a democratic state would weaponize its legal system against the NRA. Wayne, the Board, et al, were not just fools to be inviting scrutiny with reckless governance, but it really is just a grave offense to all the membership to have screwed over OUR organization this way, and for years. The membership could see it, and despite attempts to correct it, the structure of the organization defeated any attempt at reform. I mean, I really, really, really don’t want to lose the NRA, but I also want to see Wayne and all his cronies like Meadows strung up and hung out to dry. Yeah, criminal charges. That board – no board can be effective with 80 members. Sorry, anything over 14 is a goat rope, and designed in bad faith. It kills me every time I read that the board is there to support Wayne. No, the board is there to provide oversight, and they clearly haven’t been doing that. I would like to see the cleansing fire of an external audit or legal discovery burn through that place, but holding these people personally liable for screwing over the nonprofit, not torching the nonprofit itself.
I think your comments are spot-on. I think we will know early next week what happens.