NRA Bankruptcy Proceedings

NRA on Trial: Day 1 Summary of Bankruptcy Trial

April 5, 2021

Today kicked off Day One of a six-day trial in the NRA bankruptcy proceedings, which mark the first time NRA executives — including NRA CEO Wayne LaPierre and others — will be examined and cross-examined in open court relating to the financial scandals that have engulfed the organization over the past two years.

Key Points

In opening statements, Monica Connell of the New York Attorneys General Office argued “If the NRA faces an existential crisis by the bankruptcy, it was a crisis brought on by LaPierre and his enablers and by their choices.” She added that the “evidence will show that the process Mr. LaPierre followed to file these bankruptcy cases is itself a master class in bad faith and dishonest conduct.”

Brian Mason, an attorney for former NRA vendor Ackerman McQueen, focused on the NRA’s attempt to use the bankruptcy process to evade responsibility for its actions, saying “The NRA’s leadership has repeatedly told its members to stand up and fight, but here the NRA’s leadership is trying to run from the New York Attorney General as fast as they can.” Mason also argued “The NRA’s leadership is asking this court to ignore New York sovereignty… [and] years of bankruptcy precedent and make a politically driven decision. It is consistent with who the NRA has sadly become, a nonprofit in name only who ostensibly exists to defend the Second Amendment, but in reality is driven to enrich its top management and keep them in control at all costs.”

The NRA’s counsel Greg Garman argued — incredibly — that the various revelations of extravagant spending, vendor arrangements, and executive benefits were not evidence of misconduct, but instead evidence of the strength of the NRA’s compliance efforts. Garman acknowledged to the Court that will “there be moments that are moderately cringeworthy [during the trial]? The answer is yes.” He conceded that longtime former NRA CFO Woody Phillips was a “man not up for the job.” Phillips has pled the 5th Amendment in connection with this case. Garman, in his opening statement, said of Wayne LaPierre: “he is [the NRA’s] greatest asset,” but later acknowledged that the NRA knows they eventually “have to find a successor” to LaPierre. 

The first witness called was NRA First Vice President Charles Cotton, who once callously blamed the pastor of the Emanuel AME Church in Charleston for the shooting deaths of his parishioners. On the stand, the NYAG and Ackerman McQueen established several pieces of evidence from Cotton that suggested that the NRA’s bankruptcy was concealed from the board and certain NRA executives:

  1. The NRA’s retention with the bankruptcy law firm (Neligan) was done without satisfying the NRA’s procurement policy that required sign-off on contracts from the NRA’s Treasurer (Craig Spray) and NRA General Counsel (John Frazer).
  2. Days prior to the NRA bankruptcy filing, a new contract for Wayne LaPierre was approved by the board giving LaPierre the authority to “reorganize or restructure the affairs” of the NRA, yet there was no explicit discussion of “bankruptcy” with the board, despite the fact that there had been discussion among leadership for months about the potential for bankruptcy. 
  3. A Texas state “choice of law” and “venue” provision included in LaPierre’s final contract — which Cotton admitted may have raised questions among board members about the focus on Texas had they seen it — was not included in the draft of the LaPierre employment agreement reviewed by the board. 
  4. Cotton admitted on the stand that the full board of directors was not informed of the NRA bankruptcy ahead of the Chapter 11 filing. To Cotton’s knowledge, neither Treasurer Craig Spray nor General Counsel John Frazer knew the NRA was declaring bankruptcy ahead of the Chapter 11 filing. 

Cotton also testified that Wayne LaPierre made the decision to put the NRA into bankruptcy. Cotton, who is one of three members of the NRA’s Special Litigation Committee, admitted that the only attorneys the Special Litigation Committee consulted with ahead of the bankruptcy were outside lawyers hired by LaPierre.