New York Court Rules NRA Must Undertake Reforms, Former Execs Must Pay Damages

The National Rifle Association (NRA) must reform its operations to conform with New York’s not-for-profit law and two of its former executives must pay the NRA $6.35 million in damages plus interest.

That is the outcome of the latest battle between the gun owners’ organization and New York Attorney General Letitia James. Both sides have praised the court ruling.

This latest judgment follows a mixed jury verdict in February which found that the NRA failed to properly administer charitable funds and violated state laws. That jury found that the former NRA Executive-Vice President Wayne LaPierre and former Chief Financial Officer Wilson “Woody” Phillips Phillips owed the NRA millions in damages for money they misspent.

The Office of the Attorney General (OAG) sought to have the court order the executives to pay back the NRA, while also requiring the NRA to initiate governance reforms.

On December 11, Judge Joel Cohen of the Supreme Court of New York County denied seven of the governance reforms requested by the OAG but agreed that the NRA must enact 13 governance reforms that are “reasonable necessary” to prevent future violations of law. The judge also ordered LaPierre to pay the NRA $4.35 million and Phillips to pay the NRA $2 million, as ordered by a February jury verdict, plus nine percent interest per year.

Jury Finds Former NRA Chief LaPierre Misspent Gun Group’s Funds, Owes $4.4M

Regarding the governance reforms, the judgment requires the NRA to change how it conducts its board elections, hire an outside consultant to advise on the NRA’s compliance with the court’s directives and other governance practices, and increase leadership’s transparency and communication with board members. The NRA is also ordered to permanently bar anyone who served on the NRA’s audit committee between 2014 and 2022 from continuing to serve on the committee and requiring future members to be elected by the full board, not hand-picked by the board president.

“For decades, the NRA let self-interested and self-dealing insiders run the organization with complete disregard for the rule of law,” said James. “This decision requiring the NRA to significantly reform its governance, and the jury’s verdict earlier this year, should send a clear message that we will hold not-for-profits and their leaders accountable when they violate our laws.”

The NRA is calling the ruling a “successful conclusion” of a multi-year legal battle with James, pointing to its defeat of her attempts to dissolve the organization and appoint an outside monitor.

“In the end, Justice Joel Cohen denied all invasive relief sought by the government. Instead, the court’s order is tailored to compliance and governance measures in the NRA’s interest—many proposed by the NRA itself, and several of which were already underway at the Association,” the organization said in a statement.

The NRA also noted that it pays no fines or penalties under this latest judgment and actually gets to collect “millions of dollars from former executives found to have breached their duties.”

After the February 2024 jury verdict against the NRA and its executives, James sought to shut down the organization, but a judge rejected that remedy. James succeeded in getting Phillips to agree to a 10-year ban from serving as a fiduciary of a not-for-profit in New York and secured a 10-year ban on LaPierre from serving as an executive at the NRA and its affiliates.

James filed the initial lawsuit against the NRA and senior officers in August 2020. The attorney general alleged that LaPierre and other executives engaged in lavish spending on travel, consulting contracts for ex-employees, and gifts for friends and vendors — all of which contributed to financial troubles for the organization.

In January 2021, the NRA filed for bankruptcy but in May 2021, a federal bankruptcy court in Texas rejected the NRA’s bankruptcy petition, stating that the petition was not filed in good faith.

In January 2024, Wayne LaPierre announced his retirement from the NRA, where he was in charge for more than 30 years.