NRA’s Bankruptcy Lurches Forward ~ But Who Speaks for NRA Members?
Article first appeared on Ammoland.com
USA – -(AmmoLand.com)- The slow-motion train wreck of the NRA, just keeps piling up in spectacular fashion.
A new investigative report by Bloomberg’s propaganda wing, “The Trace,” ( www.thetrace.org/2021/03/nra-new-york-texas-bankruptcy-brewer-lapierre-letitia-james/) and one of the Democratic Party’s online propaganda outlets, “The Daily Beast” has published excerpts of a presentation to the Board outlining a legal strategy to escape New York.
Despite the biased sources, the story appears to have sound legs. Meanwhile, the NRA’s bankruptcy case has seen some interesting action, as the NRA Board of Directors met in an emergency session on Sunday, March 28 to retroactively endorse the Association’s Chapter 11 bankruptcy plan. We’ll cover all that in due time, but let’s start with the under-reported, but critical issue of representation for NRA members.
On Friday, March 23, 2021, Phil Journey, along with two other current NRA Directors and one former Director, filed a motion in the NRA bankruptcy case, calling for the formation of a formal committee to represent NRA members in the case.
There is already a formal committee representing the interests of NRA creditors, and the NRA’s current management is represented as the “debtors,” but Journey and co-movers – Rocky Marshall, Buz Mills, and Esther Schneider – contend that NRA members have the most to gain or lose in the case, and those members are largely unrepresented. Gun writer and NRA Director Bart Skelton has now joined with Journey, Marshall, Mills, and Schneider in this motion.
In most non-profit corporations, the members or donors, are not actively involved in the organization, beyond writing a check now and then. Owing to its history and structure, the NRA is different. NRA members are much more like shareholders in the Association. We participate directly in the governance of the Association, electing Directors and voting on bylaws. We also invest based on our means and commitment to Association goals. The NRA’s five million members allow the organization to operate with a budget in the neighborhood of $300 million to $400 million per year. Tens of millions of dollars more are realized in time and effort donated by members who volunteer their time and talents to NRA at ranges, gun shows, and elsewhere in their own communities.
Though the NRA is often painted as a monolithic organization, with only one goal, it is in reality a very complex, multi-faceted operation offering a wide variety of activities and services for its members.
In the New York lawsuit, NY AG Letitia James named four current and former NRA executives and the NRA itself as defendants and called for the dissolution of the Association. The suit is based on accusations of misuse of funds by NRA executives, including sweetheart deals to cronies, self-dealing, and other activities that lined their or their friend’s or families’ pockets. Current estimates are that at least $68 million was diverted over the past several years. James says that the corruption runs so deep and has lasted for so long, that the only solution is to dissolve the Association and distribute its assets to other New York nonprofits.
Experts interviewed in the “Trace/Daily Beast” article pointed out that the NRA’s best defense against AG James’s attacks would be to hold itself separate from its allegedly corrupt leadership. They say that James has not come close to meeting her burden of proof that the Association itself is guilty and deserves to be destroyed, and that historically, courts go after the people who behaved badly, treating the organizations they worked for as victims, not co-conspirators.
But, they point out, this line of reasoning and argument has never been put forward in any of the NRA’s briefs, motions, or declarations.
If James can indeed prove that Wayne LaPierre and others at the top of the NRA food-chain, absconded with tens of millions of NRA’s dollars, then punishing the NRA would be punishing the victim of a crime.
The real victims would be the NRA members, but in that case, too, the members are not represented. Under the law, the members’ interests are supposed to be represented by AG James, but she has made it abundantly clear that she has nothing but disdain for NRA members, and is not the least bit interested in protecting their interests. Of course, member interests are not of concern to any of the named defendants who are focused on protecting their own assets, so that leaves the NRA itself, through its corporate governance structure, to defend its members.
Unfortunately, that’s not what they’ve been doing.
In fact, the attorneys for the NRA appear to be working on behalf of the named defendants and the Board of Directors, not the members. Not only have they not put forward the arguments that legal scholars suggest would be their best defense against dissolution, but the lead attorney for NRA also started out representing Wayne LaPierre, then shifted over to representing NRA, and installed a former partner and frequent compatriot to represent LaPierre, and that team has worked in unison right down the line. LaPierre also still retains the authority to maintain or dismiss the NRA’s attorney, as well as the attorney for the NRA Board.
That’s some pretty serious conflict of interest, but the NRA Board seems uninterested in addressing the issue.
So, we have a chief executive, LaPierre, credibly accused of corruption and self-dealing, his executive team accused of the same, and a Board of Directors who, at the very least, stood idly by and allowed the appearance of corruption and self-dealing to go unchecked, and which has refused to remove, sanction, or even limit the authority of the CEO accused of the corruption.
In fact, they just renewed LaPierre his contract, promising him a base salary of $1.3 million per year plus various benefits and expense reimbursement, as well as the possibility of a “performance bonus,” at the sole discretion of the three top officers of the Board.
In 2019, after most of the charges had come to light and the Association was struggling with the collapse of Carry Guard, significant declines in donations, and burgeoning litigation costs, LaPierre was given a performance bonus of $500,000.00, raising the question of just what sort of performance metrics are being applied. LaPierre didn’t get to keep all of that bonus though, $300k was returned to the NRA in repayment for monies LaPierre improperly spent flying his niece on a private jet to a Caribbean vacation.
On March 28, 2021, the Board held an emergency meeting in Dallas. This is the only emergency meeting of the Board I can recall ever taking place. The meeting only lasted about an hour, with almost all of it being conducted in Executive Session, meaning that participants are sworn to secrecy and can’t divulge the details of the meeting, but the minutes and conclusion were reported to the bankruptcy court.
According to those minutes, the Board was asked to pass a resolution stating that Directors knew when they voted to approve Wayne LaPierre’s new contract in January, that they were delegating to him the authority to reorganize the Association, including going so far as declaring bankruptcy, without any need for further approval from the Board. The resolution goes on to say the Board knew that they were delegating similar authority to the Special Litigation Committee and then says the Board now explicitly ratifies and approves the actions taken by LaPierre and the Special Litigation Committee, in declaring bankruptcy.
The resolution also says that if the current Chapter 11 bankruptcy is dismissed, the Board approves the refiling of a bankruptcy petition, and further that the Board endorses the retention of Brewer Attorneys and Councilors (whom the NRA paid over $17 million in just the 90 days preceding the bankruptcy declaration) to represent the Association in the current or future bankruptcy filings.
The resolution passed on a vote of 44 Yea, 1 Nay, and 3 Abstain.
A reasonable question for those Directors who voted for this resolution: What the hell are you thinking!?
These lawyers and officers blatantly lied to you, kept you in the dark on one of the most significant decisions in NRA history, sneakily inserted trick language into LaPierre’s employment contract and the resolution formalizing the Special Litigation Committee, to be able to claim that you knew and approved of delegating the authority to file bankruptcy, and then, even though you knew that they lied and suppressed critical information from you, and bypassed you and your fellow Directors to file bankruptcy, you still approved their actions and choose to cover for them?
Do you not realize that you have a binding, legal obligation to know what’s going on in your Association, and to exercise your fiduciary responsibility from a position of knowledge? Do you understand that you can be held personally, civilly, and criminally liable for failing to meet your minimum obligations to the Association?
The members of the NRA Board of Directors aren’t stupid. They are, by and large, very intelligent, successful individuals, but the actions of the NRA Board over the past couple of years prove that smart people can sometimes do very stupid things.
I personally hope and pray that the bankruptcy is not dismissed. While I do believe that it was filed improperly and that the NRA Bylaws make it clear that such a major decision requires debate and a vote of the NRA Board of Directors – in advance – I also believe that the bankruptcy court offers the best opportunity for the Association to survive and thrive into the future, and it offers a mechanism for accomplishing that in a matter of a few months, as opposed to the years it’s going to take to get through the other litigation that the NRA’s involved in.
I also firmly believe that Phil Journey and the handful of other Directors who have joined him in his motions on behalf of NRA members are doing the best thing for the NRA and its members. Their actions are a long shot, but they’re still a shot.
David Dell’Aquila’s class-action suit is another worthy front in the same war, and Dell’Aquila’s position on the Creditors Committee gives him some pretty significant clout with the bankruptcy court, but right now, it’s Journey’s motion and activities that have the potential to right the ship, so I encourage readers who are able, to support those efforts with financial contributions. Tax-deductible donations can be made to their GoFundMe drive (with a small transaction fee) or by sending a check directly to:
CDFE c/o Phil Journey
PO Box 501
Haysville, Ks. 67060
Alternatively, contributions to support either Journey or Dell’Aquila’s efforts can be sent to The Firearms Coalition through our website, with a note designating where you want the money to go. We don’t take a cut of these donations, even though handling the funds costs us a bit.
The NRA is in a deep hole and the Board of Directors continues to dig furiously. If we want to save our NRA, we need representation in the courts. Please do what you can.
About Jeff Knox:
Jeff Knox is a second-generation political activist and director of The Firearms Coalition. His father Neal Knox led many of the early gun rights battles for your right to keep and bear arms. Read Neal Knox – The Gun Rights War.
The Firearms Coalition is a loose-knit coalition of individual Second Amendment activists, clubs and civil rights organizations. Founded by Neal Knox in 1984, the organization provides support to grassroots activists in the form of education, analysis of current issues, and with a historical perspective of the gun rights movement. The Firearms Coalition has offices in Buckeye, Arizona and Manassas, VA. Visit: www.FirearmsCoalition.