NRA Bankruptcy Proceedings

NRA on Trial: Day 5 Summary of Bankruptcy Trial

April 13, 2021

Filing Summary

Week two of the NRA’s first bankruptcy trial in Dallas continued today with extraordinary testimony.  NRA board member and sitting Kansas state court judge Phillip Journey took center stage, lambasting NRA CEO Wayne LaPierre and NRA leadership. Former NRA Chief Financial Officer and Treasurer Craig Spray — who refused to sign the NRA’s 2019 regulatory filings and was subsequently fired by LaPierre — provided impactful testimony as well. Recently installed acting NRA Chief Financial Officer Sonya Rowling also concluded her testimony.

Major moments during today’s testimony included:

Key Points

  1. NRA Board Member Philip Journey Testified the NRA is Attempting to “Avoid Criminal Prosecution.” Judge Journey and fellow board members previously filed a motion seeking appointment of a bankruptcy examiner to investigate fraud at the NRA. When asked about his views on current NRA management, Judge Journey testified that it is seeking “to avoid criminal prosecution.” He added that, “It’s obvious to me that the next step is criminal investigation and I believe that is ongoing” (emphasis added). Judge Journey did not provide any details for his belief that such an investigation was “ongoing,” but previous reports indicate that NRA CEO Wayne LaPierre is reportedly under criminal investigation for potential tax fraud and LaPierre has reportedly said that NRA lawyer Bill Brewer is going to “keep him out of jail.” 
  2. “Wayne’s Kingdom.” In a particularly dramatic moment, Journey testified he has come to realize the NRA “essentially operated as a kingdom rather than a corporation,” adding that it was “Wayne’s kingdom.” He added that “[i]t became clear that corporate governance and […] the systems of checks and balances were essentially non-existent” and the state of compliance “was worse than I ever imagined.”
  3. “‘Wayne Said’ Culture.”  Former NRA CFO Craig Spray testified that he had described the culture at the NRA as a “Wayne said culture” where verbal authorizations by LaPierre would lead to the circumvention of internal financial controls. He cited a November 2020 example of three NRA board members flying first class or business class on the NRA dime without written authorization. When he found out, Spray was upset and sent an email saying, “Frankly, I’m disappointed in all of you” and “I can’t emphasize what a breakdown this is.” The November 2020 date of this incident clearly undercuts the NRA’s claims that the organization had cleaned up its act.
  4. More Evidence the NRA Filed Chapter 11 Without Informing the Board of Directors or Other NRA Leaders. Judge Journey corroborated other testimony that NRA leadership did not tell the board of directors about its plan to file bankruptcy. He went further, and testified he believes he was misled at the NRA board meeting prior to the Chapter 11 filing. Journey said that he believed the NRA “membership deserves the truth”, and that after he raised his concerns, he was ostracized by NRA board leadership. This included not permitting him to speak at the board meeting, and that he was “shouted down” by 2nd Vice President Willes Lee when he tried to explain his concerns to the full board. Similarly, Craig Spray testified that, despite then-being CFO and treasurer, he was surprised by the NRA’s bankruptcy filing and there was no financial reason for the NRA to file bankruptcy. The testimony supports the NYAG and Ackerman’s contention the Chapter 11 filing was not in good faith. 
  5. CFO Tried to Ask Questions About Executive “Excess Benefits”, Was Refused Access to Information. CFO Spray confirmed he was not comfortable signing NRA tax regulatory filing for 2019 because of “surprises” that were dropped in at the end of the process, including reporting of excess benefit transactions to LaPierre and the NRA’s former chief lobbyist Chris Cox. When Spray asked for information to verify how the excess benefit amounts were determined, he was told he couldn’t have access to it and that it was “privileged.” After his refusal to sign the filing, Spray testified NRA officers stopped communicating with him. A few months later, LaPierre told him the NRA had decided to go ‘in a different direction.” This testimony lines up with that of Judge Journey, and the accounts of others who raised questions at the NRA, only to find themselves sidelined or expelled from the organization.