The National Rifle Association told board members on Friday it will hold an emergency meeting over developments in the group’s bankruptcy.
NRA general counsel John Frazer told board members the meeting will deal exclusively with the next step in their bankruptcy, according to an email obtained by The Reload. Frazer said the board will be asked to approve a reorganization plan the gun-rights group’s lawyers want to present to the court.
“NRA President Carolyn Meadows is hereby calling a special meeting of the Board of Directors to take place on Saturday, May 1, 2021, at 9:00 a.m. Central Daylight Time in Dallas, Texas,” Frazer said in the email. “The object of the meeting is to review and approve the NRA’s plan of reorganization prior to its filing with the federal bankruptcy court.”
The meeting is scheduled to take place at the Sheraton Dallas Hotel. Frazer said board committee meetings will precede the meeting on Thursday, April 29, and Friday, April 30. A second email from Frazer said Meadows also called for a special meeting of the executive committee—a select group of board members empowered to make some decisions on the board’s behalf—to be held via teleconference on Monday, April 19. That will be followed by an in-person executive committee meeting in Dallas on May 2.
How the NRA decides to restructure itself will have a major impact on what the 5-million-member gun-rights group looks like if and when it emerges from bankruptcy.
The meeting comes after two weeks of testimony in the group’s bankruptcy trial have revealed corrupt dealings by NRA executives and questionable oversight practices by management and the board. The special meeting is the second in as many months. The board retroactively approved the bankruptcy filing on March 27 despite not being informed of the move ahead of time.
Since then, NRA leadership’s decision not to tell the board about the bankruptcy plan ahead of time has become a key sticking point in the fight over whether the court should appoint a trustee to oversee the gun group or throw its case out for being filed in bad faith. New York Attorney General Letitia James (D.), who is trying to have the group shut down over accusations of executives’ financial impropriety, wants the case dismissed because she believes it is intended to interfere with her prosecution. Her lawyers have extracted a series of embarrassing admissions from NRA officials over the course of the trial.
On April 6, John Frazer testified that Wayne LaPierre’s long-time assistant Millie Hallow “diverted” $40,000 of the group’s funds to pay for her son’s wedding and other personal expenses. Hallow pleaded guilty in 1984 to felony theft at the job she worked before being hired by LaPierre. Frazer said Hallow remained employed by the NRA, and he was not aware of her being disciplined for taking the money other than having to pay it back.
Similarly, LaPierre himself testified on April 7 he took $300,000 in “excess benefits” from the NRA, and the only discipline he faced for the diversion of funds was having to pay it back. LaPierre said he did not directly disclose to the board he overcharged the group but instead relied on them reading the group’s public tax filings.
Former NRA CFO Craig Spray said he refused to sign the 990 tax form submitted by the group last year over concerns about verifying travel expenses included in the document. LaPierre signed it instead, and Spray said that disagreement led LaPierre to fire him. Spray said he was also not informed about bankruptcy before it was filed. He said he was told to wire $5 million to the NRA’s top outside counsel Bill Brewer in the lead up to the bankruptcy but wasn’t specifically told how the money would be used. He said he was not aware of the formation of the subsidiary the NRA used to file bankruptcy in Texas even though he is listed as responsible for the company’s accounts and records.
Woody Phillips, who was CFO before Spray and had also been caught embezzling money from his previous employer, refused to answer almost every question posed to him during a deposition by the New York State Office of the Attorney General. His testimony was read into the bankruptcy trial record on Friday.
“I declined to answer based on the privilege provided to me by the Fifth Amendment of the U.S. Constitution,” Phillips said dozens of times throughout the deposition.
The NRA’s lawyers have focused on arguing the organization has already reformed itself and corrected its past problems. They argued the bankruptcy filing was in good faith and should be allowed to continue with the current leadership in place because, while it can pay its bills today, James’s attempt to seize its assets represents the financial threat required under bankruptcy law. The lawyers also argued LaPierre is vital to the NRA’s operations and irreplaceable in its fundraising efforts—a claim backed up by the testimony of Frazer and Spray.
The NRA did not respond to a request for comment on the special board meeting, but there is a possibility the meeting won’t even take place. The current portion of the bankruptcy trial is set to end on April 23, and the judge is supposed to issue an order in the case by April 30. If the judge decides to appoint a trustee or dismiss the case, it is possible the group won’t have an opportunity to present the restructuring plan the board is set to review on May 1. A trustee could also fire current leadership and the board of directors before the meeting occurs.