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Lawsuit against the National Rifle Association isn't just for show, it's serious

The NRA now faces a significant threat by an attorney general’s office that plans to seize its coffers.
A man inspects a firearm in an exhibit hall at the Kay Bailey Hutchison Convention Center during the NRA's annual convention on May 6, 2018 in Dallas, Texas.Loren Elliott / AFP - Getty Images file

The National Rifle Association, the most dominant gun lobby in the United States, which has wielded its power in Washington for decades, is under fire in New York. The state’s attorney general, Letitia James, says the organization's top executives used its funds as their “personal piggy bank,” failing to serve the interests of its members.

James is seeking the dissolution of the powerful gun rights advocacy group, accusing top executives, including its chief executive Wayne LaPierre, of illegal financial conduct that contributed to losses of more than $64 million over three years, according to a civil lawsuit filed Thursday in the Supreme Court of the state of New York, New York County, in Manhattan.

Under New York law, the attorney general has a wide range of supervisory powers over nonprofit corporations like the NRA, including the authority to sue for its proper administration.

In these cases, James has the power to remove officers and directors, obtain relief from transactions motivated by self-dealing, protect whistleblowers, enforce the rights of the members and even sue on behalf of the group against officers, directors or third parties. In addition to all of that, she can also seek to dissolve the organization, take its assets and distribute them.

Dissolution is what she has decided to seek in this case against the NRA, by asking the court to act in the interests of its members.

“The NRA’s influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets...The NRA is fraught with fraud and abuse, which is why, today, we seek to dissolve the NRA, because no organization is above the law,” she said at a press conference Thursday.

James, who launched the investigation into the NRA last year, making good on a campaign promise to dig into the group’s non-for-profit status, was not clear as to why she is seeking its dissolution as opposed to requesting the removal of the named officers and reorganizing the leadership.

Does the suit have any power to do real damage to the gun lobby? The attorney general’s lawsuit isn’t just for show; it’s serious. When she brought a dissolution proceeding against the Trump Foundation, it eventually agreed to dissolve.

She has said that she is acting on behalf of NRA members, by requesting its dissolution and seeking to “distribute its remaining and future assets to be applied to charitable uses consistent with the mission.” She did not say who would be responsible to distribute those funds, much of which come from dues, nor did she explain how the NRA’s substantial assets might be distributed in a manner “consistent” with its mission.

LaPierre responded to the lawsuit Thursday by calling it “an unconstitutional, premeditated attack.”

"The NRA is well governed, financially solvent and committed to good governance. We're ready for the fight. Bring it on," he said.

The NRA filed a countersuit against James on Thursday in federal court in upstate New York, claiming she violated its First Amendment rights. The suit alleges that James was motivated solely by the campaign “promise to ‘take down the NRA’ — not by refuting its policy positions or by advocating for gun control legislation, but by wielding the powers of the NYAG to dismantle the NRA as a not-for-profit corporation,”

Meanwhile, President Donald Trump on Thursday weighed in, suggesting the “NRA should move to Texas and lead a very good and beautiful life. And I’ve told them that for a long time."

If James is successful in seizing the NRA’s apparently considerable assets, she likely will not distribute them to a relocated NRA successor. If the NRA moves to Texas or elsewhere, it may have to start completely anew.

The NRA will now try to have a federal court put a stop to James’ suit, and it will almost certainly move to dismiss the state court complaint. The NRA now faces a significant threat by an attorney general’s office that plans to seize its coffers. The organization reported $172.8 million in total cash and investments as of the end of 2018. More than 41 percent of its 2018 revenue was from membership dues. During the 2016 presidential election, the NRA spent more than $30 million on behalf of the Trump campaign.