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New York AG scoffs at gun group’s counterclaims in dissolution suit

Lawyers for the state argued Friday that the NRA brought counterclaims against it as a smokescreen in what is an ongoing fraud probe.

MANHATTAN (CN) — A New York judge appeared unlikely Friday to give the National Rifle Association a pass as it faces a campaign by the state attorney general to dissolve the 150-year-old gun group for financial malfeasance.

“Despite the fact that those actions have merit ... you’re saying that I should throw it out because the decision to go after these meritorious claims was made in advance,” Manhattan Supreme Court Judge Joel Cohen responded to NRA attorney’s framing of its First Amendment claims. “Seems like awful big loophole to violating the law.”

In its September motion to dismiss, the NRA claimed that New York Attorney General Letitia James is attempting to dissolve the organization and “silence the constitutionally guaranteed political speech of its 5 million members” based on the actions of five board members and two of the organization’s executives.

“If Letitia James went after the NRA because she disagreed with its political speech, that is a First Amendment violation,” Svetlana Eisenberg, of the firm Brewer, Attorneys & Counselors, argued in a 90-minute hearing in Manhattan Supreme Court conducted as a videoconference this morning.

Quoting the attorney general's promises to investigate the NRA while on the campaign trail before she was in office, the NRA says James brought the action against it as illegal retaliation for constitutionally protected speech.

Assistant Attorney General Monica Connell meanwhile told the court that the court would "set terrible precedent” if it allows the NRA’s counterclaims to proceed to discovery, essentially giving the targets of investigations carte blanche to "harry prosecutors."

“Fraud and illegal conduct are not entitled to First Amendment protection," Connell said.

“We have been very clear the First Amendment activities of the NRA are not the subject of this action at all," she added. "It is the fraud, it is the theft, it is the waste, it is the related-party transactions, it is everything else."

Attorney General James brought the suit to dissolve the powerful gun lobby in August 2020, saying NRA CEO Wayne LaPierre and other executives used the nonprofit as a “personal piggy bank” to pay for private jet rides and trips, among other expenditures.

“In the end, your honor, there are very, very serious allegations of extensive, long-running, pervasive illegality and fraud within the NRA that continue until this day, and the NRA has pled what it needs to plead to be able to assert counterclaims against the attorney general," Connell argued before the court Friday.

In briefings and other filings, Connell notes that the attorney general is authorized to seek dissolution in appropriate cases and her decisions are entitled to a presumption of good faith — this on top of the absolute and qualified immunity to which the holder of her office is afforded under federal and New York state law.

"Ultimately, it would subject law enforcement to counterclaims for fair exercise of their discretion," Connell said Friday. "That should not be permitted."

Connell directed Judge Cohen to a recent decision in Manhattan Supreme Court that denied efforts by former President Donald Trump and his family to avoid deposition in subpoenas issued by the attorney general.

“Attorney General James has First Amendment rights, she’s allowed to speak as a politician on matters in which she’s concerned,” she said. “And where there are allegations and objective evidence that there’s illegal conduct going on, claims of bias or selective enforcement should simply not be permitted to stop her prosecution.”

Later in her rebuttal argument, Connell asserted: “The defendants in criminal and civil enforcement and regulatory activities cannot and should not be able to subject government attorneys to such searching inquiries.

“The NRA attempts to leap-frog over fundamental pleading requirements. … This is not something the attorney general has made up,” she argued. “This is the law. If they want to assert these counterclaims, they must plead these elements, and they have not done that.”

Judge Cohen adjourned the hearing with a promise to deliver a written order.

The NRA attempted to escape the suit by New York regulators by filing for bankruptcy protection in Dallas last year and announcing plans to reincorporate in the Lone Star State. Those maneuvers fell apart, however, when a Texas judge tossed the bankruptcy case for bad faith four months later.

The tax-exempt gun-rights group, which is headquartered in the wealthy Washington, D.C., suburb of Fairfax, Virginia, claimed in its 16-page Chapter 11 filing it had between 200 and 999 creditors, between $100 million and $500 million in assets, and between $100 and $500 million in liabilities.

The gun-rights advocacy organization has since reincorporated in Texas, where a federal bankruptcy judge rejected its attempt to declare Chapter 11 bankruptcy in May. 

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