Is Wayne LaPierre A Peril Or A Hazard?

While I had heard rumors of Lloyd’s of London refusing to renew the NRA’s Directors and Officers insurance, Stephen Gutowski of The Reload confirmed it yesterday morning. He noted that in this past weekend’s Board of Directors meeting, they voted to create a $5 million fund to cover the board and executives as they search for a new policy.

NRA board member Phillip Journey told The Reload the fund was announced during the closed executive session of the gun group’s Saturday board meeting. He said board members were authorized to talk about it after the session ended, though. He believes the fund was created to alleviate concerns about liability raised by a number of board members.

“It was apparent from the comments that there are several board members that have expressed concerns,” Journey said. “This was their attempt to address the concern, knowing that the policy expires in, golly, less than 40 days.”

Lloyd’s did not respond to a request for comment. The elite business group has a reputation for insuring high-risk clients, and Journey said its decision not to renew the NRA’s policy is bad news.

“I mean, if Lloyd’s won’t insure you, who the hell will?” he said.

Judge Journey is correct. Lloyd’s of London will insure and reinsure risks that traditional insurance companies will refuse to cover. It should be noted that Lloyd’s is not a company but a marketplace that brings together investors, underwriters, brokers, and insurance companies.

I taught insurance and financial planning at Western Carolina University as an adjunct instructor for a decade. One of the topics we covered was risk management and ways to mitigate it. Insurance is the proper tool to use when the severity of the loss is high and the likelihood of an occurrence is low. It is properly termed “risk transfer”.

Without getting too deep into the weeds, there are a few definitions that need to be clarified when speaking of insurance. First, risk is the probability or chance of a loss. In the NRA’s case, I am speculating the underwriters calculated that the probability of a loss or claim against the directors and officers for failing to do their fiduciary duty was rather high.

Going further, peril is the direct cause of a loss while a hazard is something that either causes or increases the likelihood of a loss. If you have a homeowner’s policy you will see these terms on it. Looking at the recent condo collapse in Dade County, the collapse was the peril while the deteriorating concrete was the hazard. In terms of the NRA, you could say that Wayne LaPierre’s grifting behavior is the peril and that the Board of Directors acquiescence in letting Wayne do anything he wants is the hazard.

A couple of the major considerations in underwriting D&O insurance are recent legal actions alleging violation of federal or state law and involvement in bankruptcy proceedings. The NY Attorney General’s lawsuit to dissolve the NRA and hold Wayne and others personally responsible fits that bill as does the abortive attempt to use bankruptcy to evade New York’s enforcement authority. When you add that to the Board’s seeming unwillingness to do its fiduciary duty, it is no wonder that the underwriters at Lloyd’s said nope.

As a result, the NRA will self-insure as noted in the article from The Reload. Frank Tait, who is running for the Board, has an excellent look at what self-insuring or setting up a captive insurance company would mean for the NRA.

A more humorous look at this whole debacle comes from Bitter at Shall Not Be Questioned. She notes that Wayne is a bigger risk than fire and brimstone. Lloyd’s is willing to insure the Hawaii neighborhood that sits on top of an active volcano but is not willing to insure the NRA’s directors and officers. At least with the volcano you know the extent of the losses.

So to answer the question posed in the headline, I think you could say that Wayne is the peril and his continuing presence at the top of the NRA is the hazard. Dumping the Gang of Four of Wayne, Carolyn, Charles, and Willes won’t cure the NRA’s problems but it would be a step in the right direction.

10 Potential Replacements For Wayne LaPierre

First off, this is satire. That said, some of them would be more likely to do a better job than Wayne LaPierre in running the NRA.

This suggested list comes from the Gun Cranks. They are Tom McHale, editor of American Handgunner, Brent Wheat, editor of Guns Magazine, and Roy Huntington, the retired publisher of both publications. They are gun guys who have had it with Wayne LaPierre’s grifter ways.

I have edited their discussion down to just their 10 potential replacement for Wayne.

Enjoy!

Lipstick On A Pig

A missive went out yesterday afternoon to NRA members from Wayne LaPierre saying all is well. I didn’t receive it but the Complementary Spouse did. I must be on the Marion Hammer-Willes Lee “enemies within“haters” list since I didn’t receive it despite being an Endowment Life member.

The Complementary Spouse who is not given to invective called it a “crock of shit” after reading it.

Whether it is cherry-picking what Judge Hale actually said or asserting that the decision had no impact “on our staffing, programs or Second Amendment advocacy”, you have to wonder. You have to wonder if they think the great majority of us are so gullible that we will accept this nonsense as the gospel truth. You have to wonder in what alternate universe Wayne and his board supporters live in if they think the NRA is “strong and secure.”

There is one line in which I agree 100%. The second paragraph starts, “Over the past month, we did it again.”

If by did it again, you meant that you gave Bill Brewer and his firm millions of dollars for shady legal advice and are worse off for it, I’d agree. The “Mental Experiment” speculation of the blog NRA In Danger makes a plausible case that Bill Brewer’s ultimate goal is to destroy the NRA and get rich by doing it. I think a strong case can be made that the NRA’s downward trend started the moment that Bill Brewer whispered in Wayne’s ear, “I can keep you out of prison.”

If you didn’t get the letter or have let your membership lapse out of disgust, I have printed it below.

Dear NRA Members,

In my more than 40 years with the NRA, we’ve taken part in some bruising fights to defend our freedoms and our NRA. As they say, nothing worth having comes easy.

Over the past month, we did it again. The NRA took center stage in the fight for our reorganization in federal court in Dallas. Although our case for reorganization was dismissed on May 11, there are many positive developments that bode well for the Association and its plans for the future.

Strong and Secure

First and foremost, the legal decision has no impact on our staffing, programs or Second Amendment advocacy. All of our work continues and remains as vital as ever. We will continue to defend constitutional freedoms, promote firearms education, and advocate for and represent our members in all appropriate forums.

This outcome has no impact on all the divisions and affiliates associated with the NRA. Our programs, political activity, charitable endeavors, and Second Amendment advocacy all continue. We remain strong and secure.

Second, the New York Attorney General and others that aligned against the NRA in opposition to the NRA’s reorganization plan were unsuccessful in their effort to derail us. As you may have read, they sought to dismiss the NRA’s Chapter 11 reorganization filing with prejudice or, in the alternative, appointment of a court-appointed trustee. They wanted to see someone else take control of the Association’s business and financial affairs.

None of that happened. The court in Dallas did not appoint a trustee or impose any other form of oversight on the NRA. Instead, the court dismissed our reorganization filing without prejudice, meaning the NRA has the option to file a new case in the future if the need arises. Importantly, there was no financial watchdog (an examiner) appointed, as sought by some.

The enemies of the Association want to claim the NRA filing was in “bad faith” and the NRA should be assessed penalties. But, that’s not what the judge found. On May 14, the judge clarified that he did not hold that the NRA reorganization filing was in “bad faith.”

In summary, we are no longer in bankruptcy court in Dallas – and our mission moves forward.

Our leadership team remains intact. Those outcomes are far from the “doom and gloom” predicted by the so-called experts, many in the far-left media, and gun control advocates. Don’t believe everything you read in the newspaper: we are not going anywhere. We’re fighting as hard as ever in defense of your freedoms.

Our plans are not finalized, but we remain committed to exploring a move of all or part of the NRA’s business operations to Texas – home to more than 400,000 NRA members. In fact, the court observed that we could still accomplish those goals outside of bankruptcy court. In other words, our business operations and plans for the future are not affected by these developments.

The Record Reflects: Committed to Good Governance

During a 12-day court hearing that occurred over approximately four weeks, the NRA established that it complies with board policies and accounting controls, displaced “insiders” who abused the Association, and accepted reimbursements for costs voluntarily determined to be excess benefits.

The hearing proceedings focused, in significant measure, on the NRA’s compliance efforts and the organization’s renewed commitment to good governance.

In an opinion, dated May 11, 2021, the Hon. Harlin D. Hale, U.S. Bankruptcy Judge, Northern District of Texas, wrote, “In short, the testimony…suggests that the NRA now understands the importance of compliance. Outside of bankruptcy, the NRA can pay its creditors, continue to fulfill its mission, continue to improve its governance and internal controls, contest dissolution in the NYAG Enforcement Action, and pursue the legal steps necessary to leave New York.”

Of course, very little of this was publicly reported.

As I told the media, the NRA remains committed to its members and our plan for the future. This fight is about our 5 million members – those who stand courageously with the NRA in defense of constitutional freedom.

Let this be clear: we are an organization that remains committed to its course, even as we confront our adversaries in New York and beyond. The NRA will keep fighting, as we’ve done for 150 years.

Confronting a Political Agenda – and Fighting for Freedom

That means the NRA continues to confront NYAG Letitia James in her attempt to dissolve the NRA.

The NYAG wants to close our doors as part of a lawsuit she filed on August 6, 2020. In summer 2018, then NYAG candidate James called the NRA a “criminal enterprise” and “terrorist organization.” Her subsequent pursuit of the NRA has been characterized by many legal experts and constitutional scholars as a gross weaponization of legal and regulatory power. Even the ACLU recognized that.

As several NRA board members noted, the record now establishes that NRA members can have great confidence in this institution and its plans for the future. We will work with members, vendors, and other supporters to continue the fight for freedom. And we will never shrink from the tough and principled stands we take on behalf of our law-abiding 5 million members.

It all comes down to protecting your constitutional freedoms. The NRA has never shied away from those fights. And I promise you, that’s a fight we’ll always take on.

Wayne Signature

Wayne LaPierre

Frank Tait and I were on the Armed Society Podcast last night discussing the bankruptcy dismissal. One thing that Frank brought up with regard to the NRA’s strategy over the years is that they have been playing defense as opposed to offense. We both agreed that we wanted a more pro-active NRA that ditched their “not invented here” mindset and that had a strategic plan to optimize what they do best such as training, competition, and Federal lobbying.

Randy Luth’s Shot Across Wayne’s Bow

Randy Luth was the founder of DPMS/Panther Arms and is the president of Luth-AR. I have a Luth MBA-1 buttstock on my “Charlie Foxtrot” DMR AR-15. He has been in the AR end of the firearms industry a long time. He is also no fan of Wayne LaPierre and wants him gone for the benefit of the NRA.

He sent an open letter that has been published in The Outdoor Wires series of online publications. He says something needs to be done to capture the attention of the go-along, get-along NRA Board of Directors as it is obvious that Wayne LaPierre is not going to step down on his own. His suggestion is an industry and member boycott of the NRA Annual Meeting and Exhibition in Houston over Labor Day weekend. The Annual Meeting is a big money generator for the NRA from booth rentals and the fundraising events.

Here is Mr. Luth’s open letter:

Dear Friends and 2nd Amendment Supporters:

Wayne LaPierre- Go Away!

After watching this train wreck over the last 2 years, it is time for the firearms industry to assist in removing Wayne LaPierre from our beloved NRA.

As the bankruptcy proceedings have confirmed, there is a direct lack of leadership at the Executive level as well as the lackluster Board of Directors.

The members of the NRA donate hard-earned money to support the strongest amendment in the Bill of Rights, that would be the 2nd Amendment, not the 1st. When the NRA executives are living like Kings and Queens at the expense of working members, it is long past the time for removal or retirement of the Royalty.

Just think to the lobbying efforts and Pro-gun efforts that could have been initiated if LaPierre and his sidekicks had not caused the many lawsuits and distress within the NRA. It appears the NRA has paid attorneys close to $100,000,000 on the many lawsuits in the last few years. How can any nonprofit organization be involved in that many lawsuits?

It has become obvious the LaPierre will not step down, so it is time to help him make that decision. I propose that the firearms industry and the members boycott the upcoming annual convention/meeting in Houston over the Labor Day weekend. Exhibitors can boycott by either not attending or not setting up a booth. Members can boycott simply by not attending at all.

This proactive protest will send a strong message and may help LaPierre and his followers to pack their bags and depart. This is the only way to save the NRA, we need new Leadership and new ideas. How can there be 100,000,000-gun owners in America and less than 5 million members? I believe the reason is lack of leadership and marketing.

As a Lifetime member of the NRA and a member of the Hunters Leadership Forum, I have suspended all gifting legacy donations as well as HLF donations, in the meantime, I have donated similar dollars to other pro-gun organizations to help fight the fight.

Once new leadership is installed, I will reinstate my donations and support for the NRA, as I have done for 4 decades.

We need the NRA, but we need new Executive leadership and Board of Directors.

I ask that you stand with me. We CAN and WILL be heard loud and clear. We can right this sinking ship. Begin the Boycott!

-Randy E. Luth

I have heard many people express doubt that the NRA Annual Meeting and Exhibition will actually happen. I don’t know but I’d for sure get a room and flight with free cancellation! I probably will go if only to be there if it does come off to be a thorn in the side to the powers that be.

I do wonder how many Texas politicians will find scheduling conflicts when it comes to the NRA’s Leadership Forum. If I were Ted Cruz or John Cornyn or Greg Abbott, I think I might have other pressing matters that called for my attention.

And This Helps Impact National Gun Policy How?

I don’t know who runs the blog NRA In Danger but they have some damn good connections. They just published an internal memo from Wayne LaPierre to NRA staffers. The gist of it is that the NRA will be moving its headquarters to Texas. Gee, I wonder if Brewer, Attorney and Counselors, does any real estate law and would they be any better at that than they are at bankruptcy law.

Here is the memo:

Not for Distribution

Dear Employees:

As we reported, the recent developments in our bankruptcy proceedings have no impact on our overarching goals or efforts to make the NRA more efficient in achieving its mission. As such, we will continue to analyze our business arrangements, cost structure, and operational demands.To that end, I am pleased to announce the formation of a special committee by President Carolyn Meadows to study issues relating to our proposed move to Texas – and to analyze the logistical requirements of those plans. First Vice President Charles Cotton will chair this committee. Second Vice President Willes Lee and board members David Coy, Joel Friedman, and Tom King will join Mr. Cotton on the committee. The following staff members will serve on a project team providing administrative resources:  Joe DeBergalis, John Frazer, Jason Ouimet, Sonya Rowling, Tyler Schropp, Vanessa Shahidi, Linda Crouch, and Jim Staples.

Our first goal is to explore moving our principal place of business to Texas. This is an executive office from which we can manage aspects of our business. Texas is home to more than 400,000 NRA members – the #1 ranked state for NRA membership. It offers a fair regulatory environment and, a positive business climate, and celebrates the Second Amendment freedoms in which we believe. This move will affect a small number of employees.

The second part of our plan involves assessing a potential relocation of our headquarters. This is an endeavor that involves the review of the real estate market, impacts to staffing, and other strategic considerations. We have engaged a leading commercial real estate firm, Colliers International, to assist with this project and we will retain other advisory firms to assist with strategic considerations. Naturally, any major decisions regarding NRA real estate will be undertaken in coordination with the Board, subject to its full approval. Importantly, there are no immediate changes planned to our staffing or programs. Any changes to our organizational structure will be made in the best interests of our members, employees, and with responsibility to achieve our core mission:  protecting the Second Amendment. We will ensure our employees have an opportunity to participate in the continued progress of our great organization. You will hear more from this committee in the weeks ahead. In the meantime, please feel free to contact Vanessa with any questions. I have never been prouder of the NRA or our collective efforts to protect the freedoms in which we believe.

Wayne

Read the comments on it made in the NRA In Danger blog.

My own comment is that the people happiest about this move are every gun control organization in America, every anti-gun politician in Congress, Bill Brewer, and perhaps Susan LaPierre as she’ll probably get that social membership at the golf club now.

The NRA is inside the Beltway for a reason: it is the best location to be if you want to impact national gun rights policy. If the politics of Virginia and Northern Virginia are not good for gun rights right now, do something about it and don’t run off to Texas like a whipped dog with its tail between its legs.

Four Good Reads On NRA Bankruptcy

Bitter and Sebastian at Shall Not Be Questioned have been part of the gun blogosphere for a long, long time. While not as active as they used to be, they are still astute observers of all things NRA.

Bitter has a wonderful fisking of the NRA’s public response to Judge Hale’s dismissal of their bankruptcy case.

She concluded:

In general, this public response highlights that it’s time for Wayne to go, along with most of the yes men he has put into place. This is an embarrassment to the organization, especially as anyone remotely literate can read what the judge really said.

The blog NRA In Danger also provides a brutal fisking of the NRA’s public statement. They may be the new kids on the block in terms of blogging but whoever is writing the blog has a deep, insider knowledge of how things actually work at the NRA.

When a bankruptcy judge who has been on the bench many years, and “seen them all,” says conduct shocks him, you’re hearing it from an expert.

NRA CEO & EVP Wayne LaPierre said today’s decision – and the ongoing independence of the NRA – empowers the Association’s approximately 5 million members. 

If the suit being dismissed empowers the members, does that mean that winning the suit would have dis-empowered them?

“We will never shrink from the tough and principled stands we take”

I’m getting too nauseous to continue. Hitler in his bunker was less delusional.

We had better enjoy the NRA annual meeting in four months, because it will probably be the last annual meeting. Anyone on, or getting elected to, the board, had best face the fact that they face lifelong dishonor as a member of the board that killed this fine organization. NRA has had men who held the Medal of Honor on its board, but they have been replaced by people who tremble at the thought just of dissenting. Let the leadership go insane and destroy the 150-year-old organization, these directors would rather not grow a spine.

Frank Tait, who I supported in his efforts to win a seat on theBoard and who I will be writing in for election to the Board, looked at the bankruptcy effort from a business perspective. He, after all, has been in managerial positions for many years.

“So why did you file? We can only guess that the lawyers saw the prospect of a wealthy client who wasn’t adverse to paying big fees, and thought of nothing else. Not even the most core ideas: 1. What do we want from the court? 2. is that something the court can legally give us?”

In my 40 years in business, I’ve been involved in multiple legal disputes. There is critical mindset to legal matters. THE LAWYERS WORK FOR YOU, not the other way around. The secondary mindset is risk-reward considerations, or as a former CEO liked to say “is the juice worth the squeeze.” Both of these key mindsets appear absent from the EVP and the Officers of the Board – and the remainder of the board is not asking the tough questions that are their fiduciary obligation.

Finally, Georgetown Law professor Adam Levitin has been following the case from the start. He may not be aware of the inner dynamics of the NRA but he wrote the textbook on bankruptcy law. His verdict on the filing from a legal standpoint is that it was a fool’s errand from the start.

The NRA’s bankruptcy petition was dismissed as filed in bad faith. I’m predicting that the court’s opinion will be in the next edition of every bankruptcy textbook as the case really is a textbook example of bad faith.  The court found that there was substantial evidence in the record that the NRA filed for bankruptcy for the purpose of gaining an advantage in its litigation with the NY Attorney General, namely depriving the NY Attorney General of the remedy of dissolution, rather than for any other purpose.  

He notes he’d be surprised if the NRA appeals or refiles. Moreover, he wonders if the creditors’ attorneys will file a sanctions motion against either the NRA or its attorneys for reimbursement of their litigation costs given the bad faith filing ruling.

Read all four of these blog posts. They all take a different approach but all conclude the whole bankruptcy filing was a fiasco.

The Full NRA Response To Bankruptcy Dismissal

The NRA has put out a much longer and complete response to the dismissal of their Chapter 11 bankruptcy case. A quick read through it shows a few thing. First, they are trying to put a positive spin on what is really not a positive for the NRA. That is to be expected.

Second, they cherry-picked the decision. When they say they have the option to file a new case, they forget to say the judge said any new case would have a trustee. That would mean Wayne and Bill Brewer would be booted. Do you really think Wayne and Brewer would file again when they know they are out?

Third, Wayne and the rest of the “Gang of Four” (as some have called them) all made statements to the effect that the NRA is strong, secure, and they will keep up the good fight. The question is are they fighting to keep their positions or actually fighting to advance the Second Amendment. As many have commented, just think what all the millions wasted on the bankruptcy’s legal fees could have done to advance the fight for the Second Amendment.

Below is the NRA’s full response in its entirety. I haven’t even highlighted the stupid shit.

NRA Moving Forward with Legal and Business Strategy in Response to Dismissal of Bankruptcy Filing 

Court Finds That NRA’s Move to Texas Could Still Be Accomplished Outside Bankruptcy

In response to today’s dismissal of a prior bankruptcy filing, the National Rifle Association of America (“NRA”) announced that it will continue to fight on all fronts in the interests of its mission and its members.   

The New York Attorney General and others had aligned against the NRA in opposition to the NRA’s reorganization plan announced on January 15, 2021. They sought to dismiss the NRA’s bankruptcy filing with prejudice or, in the alternative, appointment of a court-appointed trustee, to take control of the Association’s business and financial affairs. Importantly, a United States Bankruptcy Court in Dallas did not appoint a Trustee or examiner, even as it ruled the Association may not proceed with the chapter 11 case. The court dismissed the bankruptcy filing without prejudice, meaning the NRA does have the option to file a new bankruptcy case. 

During a 12-day hearing that occurred over approximately four weeks, the NRA established that it had adopted new policies and accounting controls, displaced many “insiders” who had allegedly abused the Association, and accepted reparations for costs voluntarily determined to be excess benefits. The hearing proceedings focused on the NRA’s compliance efforts, and the organization’s renewed commitment to good governance. 

In an opinion, dated May 11, 2021, the Hon. Harlin D. Hale, U.S. Bankruptcy Judge, Northern District of Texas, wrote, “In short, the testimony…suggests that the NRA now understands the importance of compliance. Outside of bankruptcy, the NRA can pay its creditors, continue to fulfill its mission, continue to improve its governance and internal controls, contest dissolution in the NYAG Enforcement Action, and pursue the legal steps necessary to leave New York.”

Underscoring the importance of the proceedings, Judge Hale previously said the NYAG motion contesting the NRA’s Chapter 11 filing was “the most important motion I’ve ever heard as a judge.”  

The NRA remains determined to further streamline its legal and business affairs in the best interests of its constituents and members.  

NRA CEO & EVP Wayne LaPierre said today’s decision – and the ongoing independence of the NRA – empowers the Association’s approximately 5 million members. 

“The NRA remains committed to its members and our plan for the future,” says NRA CEO & EVP Wayne LaPierre. “Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our Association, its programs, or its Second Amendment advocacy. Today is ultimately about our members – those who stand courageously with the NRA in defense of constitutional freedom. We remain an independent organization that can chart its own course, even as we remain in New York to confront our adversaries. The NRA will keep fighting, as we’ve done for 150 years.” 

The NRA remains determined to confront NYAG Letitia James in her attempt to dissolve NRA. The NYAG seeks such remedies as part of a lawsuit she filed on August 6, 2020. In summer 2018, then NYAG candidate James called the NRA a “criminal enterprise” and “terrorist organization.” Her subsequent pursuit of the NRA has been characterized by many legal experts and constitutional scholars as a gross weaponization of legal and regulatory power.

“The NRA will continue to defend the interests of the Association in New York,” says William A. Brewer III, counsel to the NRA. “Our client has faith in its leadership, and its demonstrated commitment to good governance.” 

“The record reflects the NRA undertook a ‘course correction’ with respect to its management,” says NRA President Carolyn Meadows. “The Association is strong and secure – once again moving forward above the objections of its adversaries and those who oppose Second Amendment freedoms.”

The NRA can still pursue establishing business operations in Texas, and the organization will continue to explore moving its headquarters there from Virginia. Texas is home to more than 400,000 NRA members. 

The bankruptcy hearing became the nation’s highest -profile legal proceeding of its kind. The virtual proceedings, involving more than 20 witnesses, explored novel issues that define the roles and responsibilities of legal defendants subjected to the threat of dissolution. The NRA has maintained it is financially viable, following its current pathway, in part, to escape a toxic political environment in New York. The NRA was incorporated in New York in 1871. 

The legal proceedings revealed the NRA’s commitment to good governance and efforts to follow the “principled path” with respect to its management practices, board oversight, and member obligations under Mr. LaPierre’s leadership. Mr. LaPierre remains at the helm of the organization, directing political affairs, grassroots activities and other functions essential to the defense of the Second Amendment. 

“The record establishes that NRA members can have great confidence in this institution and its plans for the future,” says NRA First Vice President Charles Cotton. “The Association will work with members, vendors, and other constituents to continue the fight for freedom.” 

“Our NRA is pressing forward with its plans, and remains determined to promote constitutional freedoms,” says NRA Second Vice President Lt. Col. Willes K. Lee, USA (Ret). “We will never shrink from the tough and principled stands we take on behalf of our law-abiding 5 million members.” 

Read Judge Hale’s Order Granting Motions To Dismiss here.

# # #

Wayne’s Response

I’m sure Wayne and Bill Brewer are disappointed.

Judge Hale said the decision to declare bankruptcy was Wayne’s alone and therefore he gave Wayne’s testimony the most scrutiny (p. 18). It was Wayne’s own testimony (p. 23) that sunk the case as he ultimately admitted the primary purpose was to gain a litigation advantage against the NY Attorney General by taking dissolution off the table using bankruptcy. Once it was found that the primary purpose was a litigation advantage, it was the bankruptcy had to be considered in bad faith. The alternative to dismissal was an examiner or trustee but Judge Hale said the strong financial condition plus the new safeguards mitigated against the appointment of either.

I think one of the key paragraphs in the whole decision was this one on page 34:

What concerns the Court most though is the surreptitious manner in which Mr. LaPierre
obtained and exercised authority to file bankruptcy for the NRA. Excluding so many people from
the process of deciding to file for bankruptcy, including the vast majority of the board of directors,
the chief financial officer, and the general counsel, is nothing less than shocking.

It is time for the Board of Directors to step up and do what they should have done a long time ago and that is clean house starting at the top.

Closing Arguments In NRA Case

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.

For Your Weekend Reading

The NRA Board of Directors is having a special meeting today in Dallas along with a regular meeting tomorrow on Sunday. The special meeting is to approve the reorganization plan and the Chief Restructuring Officer. This comes on the heels of the last day of testimony in the US Bankruptcy Court hearings.

Day 10, as reported by the blog NRA In Danger, had testimony from the NRA’s outside auditor and the proposed Chief Restructuring Officer as well as cross-examination of Wayne LaPierre. While there is a lot there and you should read it in its entirety, three things captured my attention.

This witness did not do well under cross examination. He argued he’d reformed everything, then was faced with improper events that occurred after his alleged reforms. His choices were to appear corrupt or to appear incompetent and out of control, and he went with the second choice.

That to me provides even more evidence to Judge Harlin Hale that perhaps a trustee is called for. As those who are no fans of Wayne but are really worried about the future of the NRA have observed, a trustee would have the power to convert the Chapter 11 into a Chapter 7 and dissolve the NRA.

The second thing that captured my attention was Wayne’s response to the NRA’s attorney Greg Garman when asked about his background and history.

Background. MA from Boston College in politics, VA legislature. Got Phd. Over at DNC, knew NRA people, NRA right across street. Went into NRA building, they offered me job, late 1977. State liaison for year, then director state local. 1 year, then head govt affairs, in 1980. Membership now 4.9 million. Tried convert NRA into freedom organization. Outreach to celebrities. Celebrity shoots in Hollywood, dinners, etc.

Wayne does not have a PhD. He may have been in a PhD program in political science at BC but he never earned a PhD. I was admitted to the PhD program in political science at UNC-Chapel Hill. However, I left with a wife and no degree. I would never, ever, claim to hold a PhD if I hadn’t earned it. It just isn’t done and is consummately tacky.

Finally, there is Judge Hale’s question that he ordered the attorneys for both sides to answer on Monday. Judge Hale may be nicknamed “Cooter” but he is no fool.

Judge asks question, to be answered in arguments Monday (no court Friday)—chapter 11 purpose is to save company from liquidation bankruptcy. Does court have jurisdiction where sole purpose is to save company from dissolution under state law, which dissolution will only occur if the state court concludes dissolution is in best interests of public?

The blog NRA In Danger examines Judge Hale’s question in more detail. It is the critical question: does the court have jurisdiction? If not, then the case must be dismissed and the NYAG is free to continue in her attempt to dissolve the NRA.

Her dissolution suit has been strengthened by the bankruptcy court revelations. Just the lad day of testimony saw Wayne LaPierre claiming that he’d begun cleaning everything up in 2017, but forced to admit that he’d been given an incredibly lucrative “golden parachute” agreement in mid-2018 (it would have given him many millions had the board ever stopped electing him) that was signed by an outgoing president and Carolyn Meadows, now NRA president and head of the board’s Special Litigation Committee. The signing of the contract implicates NRA’s current board leadership, and also LaPierre himself, and shows his supposed 2017 reforms are. sham. He himself is free to loot despite them. On the same day those board officers signed another golden parachute for Woody Phillips, the NRA treasurer who had to “take the Fifth” dozens of times in his testimony. Others who got such agreements, LaPierre testified he had no idea of the contracts, showing that even if he were honest, in practice others are free to loot NRA at will without his being able to discover it.

Read the whole thing.

Moving on, a column by Stephen Gutowski on his new platform The Reload examines what he calls the membership program. In 2013, Wayne promised to double the membership after it had just hit five million members. Membership now stands at 4.89 million members. Not only has membership not doubled under Wayne’s most recent watch but it has regressed.

If the NRA’s membership has hit a ceiling, that’s significant, and it’s a bad sign for the most influential gun-rights group on the planet. It’s also a bad sign for NRA leadership’s argument in their current argument in the bankruptcy case. NRA leadership has repeatedly argued the LaPierre is the driving force behind fundraising at the organization, and it could not operate anywhere as effectively without him. But LaPierre has not only failed to meet his self-set 2013 goal of doubling NRA membership; membership has actually receded by his own account.

There are millions of new gun owners out there. I imagine some may have joined the NRA this year but the majority have not. Moreover, if what I’m reading across the Internet in forums on hunting, on the Second Amendment, and the like is correct, then there are a lot of people refusing to renew memberships or to make donations so long as Wayne and his grifter cronies remain in power. I am hearing this from both Gun Culture v1.0 and 2.0. I know my own wallet will remain closed to the NRA so long as Wayne is there.

Finally, my friend Kevin Creighton has an excellent post about the NRA’s fund raising approach. He notes Stephen Gutowski’s column on the NRA’s negative growth and relates it to their fund raising approach.

However, let’s face facts. For over 10 years now, the NRA’s primary messaging has been “Give us money, they’re a-comin’ for yer guns.” Okay, fine, let’s say they actually ARE coming for our guns. What have you, the NRA, done to prevent that from happening? What value am I getting for my donation? Why should I give to you right now, except out of habit?

Kevin relates his success fund raising for a faith-based organization using a positive approach. He urges the NRA to get away from the negative approach and return to the more positive approach of the past. Then, both money and membership might grow.

If you are a NRA member or were at one time, you really need to read all these blog posts and articles. Those of us who want a reformed NRA may be voices crying in the wilderness like the Old Testament prophets but the fight for the Second Amendment depends upon it.