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Justice Department objects to National Rifle Association's bankruptcy plan

NRA files for bankruptcy
NRA files for bankruptcy 00:24

The U.S. Department of Justice is objecting to the National Rifle Association's bankruptcy plan, pointing to what the agency says is mismanagement of funds by leaders of the gun advocacy organization. 

Lisa Lambert, assistant U.S. Trustee in the DOJ's Trustee Office, said Monday during the NRA's bankruptcy case in Texas that the group's longtime CEO, Wayne LaPierre, used NRA funds for his own purposes and failed to properly safeguarded the group's financial records.

"The record is unrefuted that Wayne LaPierre's personal expenses were made to look like business expenses," she said in a hearing in the United States Bankruptcy Court for the Northern District of Texas.

Lambert is asking the judge overseeing the NRA's case to halt proceedings and either dismiss it or appoint an outside investigator — known as an examiner — to assess whether the organization had a legitimate reason to declare bankruptcy.

The NRA's lawyer, Greg Garman, objected to Lambert's comments in court on Monday, the New York Times reported. "Your honor, we have natural enemies," Garman said. "This Department of Justice may not see eye to eye with the National Rifle Association, but so be it, we have done the right thing."

Escape from New York

The NRA in January filed for Chapter 11 protection, declaring its intent to relocate the the group's headquarters from Fairfax, Virginia to Texas. 

In New York, where the organization is chartered, the NRA is facing a lawsuit from Attorney General Letitia James. She has accused four of its top executives of mismanaging funds and violating state and federal laws, resulting in the loss of more than $64 million for the organization in a span of three years. Senior leaders spent NRA money on trips to the Bahamas, private jets, luxury hotels and fine dining, James alleges.

LaPierre has denied James' allegations, calling the lawsuit "a baseless, premeditated attack on our organization." 

A move by the bankruptcy judge presiding over the NRA case to appoint an examiner could thwart the NRA's plans to move its HQ to Texas, experts say. The court is expected to make a decision next week. The NRA on Monday submitted a reorganization plan that keeps LaPierre as CEO and lays out the organization's plan for repaying creditors. 

Examiner likely 

The U.S Trustee Program represents the Justice Department in bankruptcy cases. It's not uncommon for trustees to seek dismissal in smaller cases, said Steven Brown, a bankruptcy expert and law professor at the University of Buffalo. But calls for dismissal in higher-profile cases are less common. 

"The U.S. Trustee doesn't file these often, so when they do it's going to get some notice, including with the bankruptcy judge," he said. 

The judge overseeing the case is likely to appoint an examiner to review whether the NRA had cause to file for Chapter 11, said Gregory Germain, a bankruptcy expert and law professor at Syracuse University. 

"That's the safest thing for the bankruptcy court to do," Germain said. "But it's going to slow things down because everybody is going to be waiting for the examiners' report."

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