Director Rocky Marshall Moves to Intervene in NY Dissolution Suit!

Here’s his motion. It’s a good one. As a sitting director, he has legal standing that members lacked. This could be NRA’s salvation. I can only take off a few minutes from work to skim it, will update this after quitting time. The man has guts!

“Mr. Marshall agrees with the Attorney General that the Board has simply “rubberstamped” the actions of Wayne LaPierre, the Brewer law firm, and other LaPierre cronies. As Mr. Marshall notes, the NRA Board has remained completely passive even after a senior bankruptcy judge dismissed the Ch. 11 filing and specifically stated his concerns about “disclosure, transparency, secrecy, conflicts of interest of officers and litigation counsel, and the unusual involvement of litigation counsel in the affairs of the NRA, which could cause the appointment of a trustee out of a concern that the NRA could not fulfill the fiduciary duty required by the Bankruptcy Code for a debtor in possession.” NYSCEF Doc. # 360; Bankruptcy dismissal order, p. 37 (emphasis added).

“It is clear that the NRA’s Board has not and will not fulfill its fiduciary duties to the NRA and its members. As Mr. Marshall says, these issues have been raised many times in the last several years by intelligent and serious people but the Board has steadfastly refused to objectively investigate and analyze them, or to take any action against the Individual Defendants.

“Therefore it will do no good to merely remove the Defendants LaPierre and Frazer, because this would leave the same passive Board in place that has allowed the misconduct that brought the NRA to where it is today. Only a new and independent NRA Board elected by the membership and free from Defendant LaPierre’s influence and control can effectively hire new executive leadership to oversee the NRA’s rehabilitation.

“This can be achieved with a minimal burden on the Court by the appointment of a temporary Receiver under N-PCL § 1111.1 A Receiver would have the authority to hire independent accountants, attorneys and other professionals for an accounting of the numerous dealings on which the AG’s action is based, and to pursue recovery of all funds or other assets found to be misspent or “looted and wasted” as the AG has alleged.”

Here’s the answer he proposes to file to the AG’s suit. Among other things,

“The Attorney General’s Complaint seeks to impair or completely destroy the rights of all NRA members, including Marshall, to the continuation of the NRA’s mission and programs for their use and benefit. Accordingly, due process under the federal and New York constitutions, as well as § 1104, requires that each member must be given meaningful notice of this action and a meaningful opportunity to contest the Attorney General’s dissolution claims.”

“Thus, the wrongful acts alleged by the Attorney General (if proven) were committed against the NRA and its members rather than on its behalf, and in such instances dissolution is improper. Fraud against a corporation is not the same as fraud on behalf of the corporation, and the former will not justify dissolution.”

“The Attorney General will not represent or protect any interests of Marshall or the NRA’s other 5.5 million members. Although purporting to assert derivative claims of the NRA against the Individual Defendants under N-PCL § 623 and 720, the Attorney General has not filed this suit to benefit the NRA or its members. In reality the Attorney General seeks to destroy the NRA and liquidate and give away its assets without any allegation, proof or apparent consideration of whether the NRA is incapable of continuing its core missions and programs if the Individual Defendants are removed from their positions.

“b) The allegations of the Complaint make the Individual Defendants adverse to the NRA as an entity. These defendants will not demand examination by the Court and the present parties of the outside vendor fees they allegedly approved and caused to be paid, and the Individual Defendants will certainly not pursue their own removal or payment of restitution to the NRA.

“c) The Complaint alleges that Defendant LaPierre “effectively dominates and controls the Board of Directors as a whole.” ¶ 429 and 750(b). Marshall verily believes this to be true, and alleges that the NRA has no independence as a separate entity because Defendant LaPierre controls whatever claims the NRA does or does not assert against him in this action, and thus the NRA cannot adequately protect the rights and interests of Marshall and all other NRA members.”

“Exhibit B to Marshall’s affidavit in support of intervention is a letter from the NRA’s then-President and first Vice-President to the NRA’s General Counsel and Audit Committee Chair details BAC’s legal bills to the NRA that averaged “$97,787 per day, seven days a week, every day of every month” for the first quarter of 2019. Generating these fees would require 10 lawyers billing $1,000 an hour each, averaging 9.7 hours of work per day per lawyer, for every day of every week during that quarter.”

Update: Here’s the New York AG’s press release on the motion, and here’s the Wall Street Journal’s article on it (paywall).

The motion and proposed answer read very well, and propose to give the court a third way that would neither involve blessing the corruption nor dissolving the corporation, that would let the court instead reform the NRA, and get rid of the scoundrels that have mismanaged it.

One possible problem: Marshall was appointed to fill the term of director Adam Liptak, who had resigned. His term expires at the end of the 2021 members’ meeting, only a week from tomorrow. Marshall’s motion won’t be decided until after that. Does he lose standing to intervene as a director once he is no longer a director?

There’s one simple solution to that: other directors, or at least one other director, whose terms will run past this next meeting, must join in his motion. Surely among the 74 other directors (there won’t be an election for the 76th) there is one willing to take a stand with him? Diogenes, light your lamp and go looking….