Including information about his associates
|
LIBERTY LOBBY, INC., 300 Independence Avenue, S.E. Washington, D.C. 20003 and WILLIS A. CARTO, 130 Third Street, S.E. Washington, D.C. 20003 Plaintiffs, MARK WEBER, GREG RAVEN, an Organization Controlled By Defendants and Holding Itself Out To Be THE LEGION FOR THE SURVIVAL OF FREEDOM, THEODORE O’Keefe, TOM MARCELLUS, ANDREW ALLEN, FRITZ BERG, JOHN CURRY, WILLIAM S. HULSY, ROBERT COUNTESS, HARVEY TAYLOR, JACK RINER, and John Does number 1 through 50, Defendants. |
CASE NUMBER 1:98CV00236 JUDGE: Henry H. Kennedy DECK TYPE: Antitrust DATE STAMP: 01/29/98 |
[Title 18, U.S.C. Section 1961 et seq.] [Predicate Acts: Extortion, Bribery, Robbery]
1. This action is brought pursuant to Title 15 U.S.C. Section 1 of the Sherman Anti-Trust Act, and also pursuant to Title 18 U.S.C. Section 1961, et seq., of the Civil RICO statute. This action is also brought pursuant to 28 U.S.C. Section 1332, et. seq., diversity of citizenship and 1343 et. seq.
2. This action is also brought pursuant to this Court’s pendant jurisdiction under the common law of the District of Columbia regarding tortious interference with contract and business relations, wrongful interference with prospective contracts, tortious interference with business good will and defamation.
3. Venue is proper in the District of Columbia under Title 15 U.S.C. Section 1, Title 18 Section 1961, et seq., and Title 28 U.S.C. Section 1332 and 1343 et seq. The amount in controversy exceeds seventy-five thousand dollars ($75,000.00). A substantial number of the events, conduct, tortious acts and criminal acts described hereinabove took place in the District of Columbia.
4. Willis A. Carto, hereinafter Carto, is a resident of the District of Columbia. He is a plaintiff in this action. He is the founder, treasurer and chief executive officer of Liberty Lobby, Inc., based in Washington, D.C. In 1966 he was appointed a voting member of the Legion for the Survival of Freedom, hereinafter LSF, at which time he began directing its operations until on or about October of 1993. At all times between 1966 and October, 1993, Carto was both publicly and privately known as the prime mover, controlling force and chief fund-raiser for the LSF and was responsible for its management and operation, including the initiation of the LSF divisions, the Institute for Historical Review, hereinafter IHR, and the Noontide Press, hereinafter Noontide.
5. Liberty Lobby, Inc., hereinafter, Liberty Lobby, is a not-for-profit grassroots lobbying institution founded in 1955 and based and incorporated in Washington, D.C., on February 1, 1962, was founded by Carto, who remains its treasurer and chief executive officer. Liberty Lobby, Inc., is a plaintiff in this action. Liberty Lobby publishes a national weekly newspaper, The Spotlight, from its offices located in the District of Columbia.
6. The Legion for Survival of Freedom [LSF] is a non-profit corporation that was incorporated in Texas in 1952. It is a defendant in this action. Beginning in 1966, Carto assumed control and management of the LSF as a voting member of the corporation. In 1966, Carto brought an outside entity, Noontide, under LSF’s control as a wholly-owned subsidiary. In 1979, Carto established the IHR as a wholly-owned subsidiary of the LSF. At all times between 1966 and October, 1993, Carto was both publicly and privately known as the prime mover, controlling force and chief fund-raiser for the LSF and was responsible for its management and operation, including all activities of the LSF’s subsidiaries.
7. Mark Weber, hereinafter Weber, is a resident of California. He is a defendant in this action. Weber was hired by Carto to work for the LSF as a paid employee at the California offices of the LSF. In the spring of 1993, Weber began engaging in an illicit conspiracy to take control of the LSF and unlawfully remove Carto from his management of the corporation. On or about October, 1993, Weber began holding himself out as an officer of the LSF after he and his fellow employees, in conjunction with others, acted to remove Carto from his management position at the corporation. Since that time Weber has engaged in a campaign of defamation, harassment and other unlawful activity against plaintiffs Carto and Liberty Lobby, and against non-parties LaVonne Furr, Lewis Furr, Michael Piper and Henry Fischer and others associated with Carto and Liberty Lobby. Throughout this period Weber and the other defendants attempted to interfere in the good relations between Liberty Lobby and its supporters nationwide. Weber continues to act as an officer and director of the LSF and as one of its paid employees.
8. Gregory Raven, hereinafter Raven, is a resident of California He is a defendant in this action. Raven was hired by Carto to work for the LSF as a paid employee at the California offices of the LSF. In the spring of 1993, only several months after he was hired, Raven began engaging in an illicit conspiracy to take control of the LSF and unlawfully remove Carto from his management of the corporation. On or about October, 1993, Raven began holding himself out as an officer of the LSF after he and his fellow employees, in conjunction with others, acted to remove Carto from his management position at the corporation. Since that time Raven has engaged in a campaign of defamation, harassment and other unlawful activity against plaintiffs Carto and Liberty Lobby, and against non-parties LaVonne Furr, Lewis Furr, Piper and Fischer. Throughout this period Raven and the other defendants have attempted to interfere in the good relations between Liberty Lobby and its supporters nationwide. Raven continues to act as an employee, officer and director of the corporation.
9. Tom Marcellus, hereinafter Marcellus, is a resident of California. He is a defendant in this action. Marcellus was hired by Carto to work for the LSF in 1979 as a paid employee at the California offices of the LSF. In the spring of 1993, Marcellus began engaging in an illicit conspiracy to take control of the LSF and unlawfully remove Carto from his management of the corporation. On or about October, 1993, Marcellus began holding himself out as an officer of the LSF after he and his fellow employees, in conjunction with others, purported to remove Carto from his management position at the corporation. Since that time Marcellus has engaged in a campaign of defamation, harassment and other unlawful activity against plaintiffs Carto and Liberty. Lobby, and against non-parties LaVonne Furr, Lewis Fun-, Piper and Fischer. Throughout this period Marcellus and the other defendants have attempted to interfere in the good relations between Liberty Lobby and its supporters nationwide. Marcellus has since left the employ of the LSF and has announced that he has resigned as an officer of the corporation.
10. Theodore J. O’Keefe, hereinafter O’Keefe, is a resident of New Jersey. He is a defendant in this action. O’Keefe was hired by Carto in 1991 to work for the LSF as a paid employee at the California offices of the LSF. In the spring of 1993, O’Keefe began engaging in an illicit conspiracy to take control of the LSF and unlawfully remove Carto from his management of the corporation. On or about October, 1993, O’Keefe began holding himself out as an officer of the LSF after he and his fellow employees, in conjunction with others, purported to remove Carto from his management position at the corporation. Since that time O’Keefe has engaged in a campaign of libel, harassment and other unlawful activity against Carto, Liberty Lobby, LaVonne Furr, Lewis Furr, Piper and Fischer and attempted to interfere in the good relations between Liberty Lobby and its supporters nationwide. O’Keefe has since left the employ of the LSF and has ceased to act as an officer of the corporation.
11. Andrew E. Allen, hereinafter Allen, upon information and belief, is a resident of California. On information and belief, Allen is an attorney licensed in the State of California. He is a defendant in this action. Allen began providing advice and legal counsel in the spring of 1993 to the paid staff members of the LSF and directing their participation in an illicit conspiracy to take control of the LSF and unlawfully remove Carto from his management of the corporation. On or about September, 1993, Allen then began purporting to act as a director of the LSF, although he has since formally announced that he has resigned as an LSF director.
12. Friederich Berg, also known as Fritz Berg, hereinafter referred to as Berg, is a resident of New Jersey. He is a defendant in this action. On or about September, 1993, Berg began purporting to act as a director of the LSF, although he has since announced that he has resigned as an LSF director.
13. John Curry, hereinafter Curry, is a resident of Nebraska. He is a defendant in this action. For several years prior to October, 1993, Curry was associated with paid employees of the IHR. On or about September, 1993, Curry began purporting to act as a director of the IHR’s parent corporation, the LSF, although he has since announced that he has resigned as an LSF director.
14. Robert Countess, hereinafter Countess, is a resident of Alabama. He is a defendant in this action. Countess was associated with the IHR for several years prior to October, 1993, and was supportive of Carto’s efforts through Liberty Lobby, based in Washington. On or about October, 1993, Countess launched an active campaign of harassment, defamation and other unlawful activity against Carto and Carto’s employees at Liberty Lobby, including Piper. In 1994, Countess also began purporting to act as a director of the IHR’s parent corporation, the LSF.
15. Harvey Taylor, hereinafter Taylor, is a resident of California. He is a defendant in this action. Taylor is currently a director of the LSF and has been a director for at least ten years.
16. Jack Riner, hereinafter Riner, is a resident of Indiana. He is a defendant in this action. Riner is a director of the LSF and has been a director for at least ten years.
17. William S. Hulsy, hereinafter Hulsy, is a resident of California. He is a defendant in this action. Hulsy is an attorney, licensed to practice in the State of California, who represented both Carto, individually, and the LSF and its wholly-owned subsidiaries, the IHR and Noontide, in several instances of litigation. Beginning on or about April, 1993, Hulsy violated his attorney-client relationship with both Carto and the LSF by providing confidential information to the paid employees of the IHR for the purpose of assisting them in a covert scheme to unlawfully remove Carto from his management position in the corporation. In violation of his relationship with his clients, Carto and the board of directors of the LSF, Hulsy also provided legal advice and tactical assistance to the employees when they carried through with what Hulsy described as a terribly disloyal … coup d'etat
against Carto and removed him from the corporation’s management. Hulsy also engaged in a campaign of harassment and intimidation against LSF directors Lewis and LaVonne Furr, coercing them through fraud and duress to resign as officers of the corporation. Hulsy also conspired with the paid staff members in a scheme to violate the LSF’s contract with Michael Piper, an editing and marketing executive employed by Liberty Lobby, to pay Piper for a book that he had written for publication by the LSF. Although Hulsy had previously represented Carto and others, he subsequently accepted employment adverse to their interests in violation of the rules of the California State Bar.
18. The causes of action set forth below are based upon a series of deliberate and tortious actions taken by the defendants which have harmed the plaintiffs. These actions were taken over a period of time. In order to appreciate and analyze the claims, it is useful to understand the historical context in which the actions complained of in this lawsuit occurred. As in most anti-trust actions or related matters, the causes of action here are rooted in a series of complex actions.
19. On April 14, 1952 the LSF was incorporated in Texas by Frances Whalen Clark and Jason and Marcia Matthews. The LSF was chartered as a non-profit educational organization.
20. At that time Carto was active in conservative political affairs shortly after leaving the military service as a decorated combat veteran of World War II. Carto, by the mid-1950's, achieved prominence in his chosen political sphere and was involved in establishing several publishing and educational ventures.
21. In 1955, then based in San Francisco, Carto founded Liberty Lobby as a grass-roots citizens' lobby. The purpose and plan was to provide American citizens with a conservative
or populist
or fight wing
political philosophy and with an action-oriented lobbying institution in the nation’s capital. Carto also envisioned his efforts as creating a national clearing house for grass-roots efforts by both complementing and uniting the efforts of others with similar political evaluations.
22 During the next several years Carto engaged in an ambitious fund-raising and organizing effort and established Liberty Lobby in Washington, D.C. as a high-profile political entity with support from a broad range of persons of like persuasion, with the participation of numerous prominent individuals, including, among others, former Governor Charles Edison of New Jersey, son of the American inventor, Thomas Edison.
23. Beginning in 1960, under Carto’s direction, Liberty Lobby began publishing a newsletter, entitled Liberty Letter, which brought an increasing audience to the efforts of Liberty Lobby. Soon, Liberty Lobby was emerging as a leading voice among Americans who styled themselves as political conservatives. Carto was known as not only the treasurer and founder of Liberty Lobby but also as its driving force, although Carto deliberately attempted to maintain a low profile in order to institutionalize Liberty Lobby.
24. As part of his efforts to promote the work of Liberty Lobby, Carto was constantly associated with others active in political affairs and soon cemented a friendship and close working relationship with those affiliated with the LSF, based in Texas.
25. In 1962, the LSF purchased control of The American Merc.ury magazine which had been founded in the 1920’s by H. L. Mencken, a well known journalist and author, but which had gone through the hands of several owners.
26. On November 30, 1964, Jason Matthews, the sole surviving member and incorporator of the LSF died in McAllen, Texas. Mrs. LaVonne D. Furr, the LSF office manager, assumed management of the LSF’s activities and continued to maintain the publication of The American Mercury. During this period General Edwin Walker, retired, known for his outspoken conservative political views, joined Mrs. Furr as a member of the LSF board of directors. In addition to being a director, Mrs. Furr was a substitute incorporator
or voting member of LSF, along with Marcia Hoyt, daughter of Marcia Matthews.
27. Beginning in 1964, Liberty Lobby, under the direction of Willis Carto, played a major part in the Goldwater-for-President campaign, which many historians have stated energized the rightist
movement in America.
28. Dr. Sara Diamond, an instructor of sociology and journalism at several California universities, has studied, from a critical perspective, the growth of Liberty Lobby and other organizations and publications which constitute what she generally describes as right wing movements
in the United States. In her 1995 book, Roads to Dominion, Dr. Diamond summarizes Liberty Lobby’s growth between 1964 and 1966:
… Circulation of the Lobby’s monthly Liberty Letter soared from 26,000 copies in 1964 to more than 90,000 in 1965, and 174,000 in 1966. Liberty Letter enjoyed a wider circulation than any political publication, including National Review and Human Events, which each published about 95,000 copies in 1966.
29. However, during that same time frame, unlike Liberty Lobby, the LSF was sliding into bankruptcy and as a consequence was unable to continue publishing its monthly American Mercury magazine which comprised its primary educational project.
30. At that time, Mrs. Furr approached Carto and asked him if he would take control of LSF, assuring both the survival of the LSF and continued publication of The American Mercury. Carto believed that continued publication of The American Mercury was vital to the best interests of the American conservative
cause and considered the offer.
31. After negotiation with Mrs. Furr and Marcia Hoyt, it was agreed that in return for Carto arranging to pay off the debts of the LSF that he would assume absolute control of the corporation. Carto made available approximately $20,000 of his own funds that provided for payment of the LSF debts and saved the corporation from bankruptcy.
32. The Houston attorney handling this transaction was Kenneth Graham, Esq., who has remained the Texas attorney of record for the LSF until the present.
33. In the perception of leaders of the American fight wing
movement at that time, Willis Carto was then acknowledged as the person who controlled or was in control of the LSF and its activities. Numerous published scholarly histories of the American fight wing,
many of which were unfriendly to Carto, and the survival of LSF, have asserted this unequivocally and regularly.
34. As a direct and proximate result of Carto’s timely financial intervention and involvement in the activities of the LSF, The American Mercury’s survival was assured and the monthly magazine continued regular publication under Carto’s control for thirteen more years.
35. Under Carto’s management the assets and outreach of the LSF expanded considerably.
36. On or about June 15, 1966, Carto brought the popular semi-monthly Washington Observer newsletter under the control of the LSF. This newsletter, which had been established on or about August 15, 1965, continued to remain in publication under LSF auspices for an additional ten years until its issue of September. 15, 1976, at which time it was incorporated as a regular insert into the monthly American Mercury.
37. During 1966, Carto brought Noontide, a small publishing concern, under the LSF umbrella. All then current Noontide publications, including several which are, or were until recently, still available through LSF, became the property of the LSF. Sales of Noontide publications provided additional financial benefits to the operations of the LSF.
38. Noontide functioned as another of the LSF’s growing means of educational outreach to the American reading public in furtherance of the LSF’s goals as stated in its charter.
39. During this same period, Willis Carto continued to focus his efforts upon the expansion of Liberty Lobby, although he continued to function in a regular decision-making capacity in the editorial and business affairs of the LSF, working closely with LaVonne Furr, the LSF office manager, who also served as editor of The American Mercury.
40. In September of 1975, Carto in his capacity as chief executive officer of Liberty Lobby decided to cease publication of Liberty Lobby’s monthly newsletter, Liberty Letter. In its place he launched publication of a weekly, national, tabloid-sized newspaper, The Spotlight, as the official voice of Liberty Lobby.
41. Within several years The Spotlight had attained paid circulation of 330,000 and emerged as the most widely read publication identified as a voice of the right
movement in America.
42. In 1979, Carto sold The American Mercury, the LSF’s quarterly magazine and began publication of the quarterly Journal of Historical Review under auspices of the LSF.
43. The LSF continued its educational endeavors through the publication of books issued through the outlet of the LSF subsidiary, Noontide.
44. LaVonne Furr withdrew from active involvement in the daily affairs of the LSF at that time, although she remained on the LSF board of directors as did her husband, Lewis Furr. Both also served as LSF officers. LaVonne Furr served as secretary of the LSF board. Lewis Furr served as president.
45. Mr. and Mrs. Furr continued to ratify the continuing operations of the LSF under the direction of Carto who often prepared minutes of LSF board meetings for Mrs. Furr’s signature as board secretary.
46. For the next sixteen years Lewis Furr and LaVonne Furr continued to recognize the legal fight and responsibility of Carto to direct the operation of the LSF and the administration of its financial affairs. Although Mr. and Mrs. Furr were acting as unpaid officers and members of the LSF board of directors, they knew at all relevant times that paid staff employees of the LSF at its offices in California were acting under the authority and supervision of Carto.
47. There was no question, either in the minds of Mr. and Mrs. Furr, or in the perception of those who worked with or for the LSF, including the paid staff employees, that Carto was directing the LSF, raising its operating funds, and publicizing its activities.
48. As a result of his involvement in many educational projects over the years, Carto had concluded that the teaching of history had been corrupted by private, special interests and that it was vital that students and the public in general be exposed to what have been described as alternative
or revisionist
interpretations of history.
49. Carto, therefore, began the process of contacting historians, authors, researchers and others who shared his concerns. Beginning in late 1978, Carto laid the groundwork for what was ultimately established as an Institute for Historical Review,
hereinafter referred to as IHR. The IHR was a wholly functioning subsidiary of the LSF, and it, like the LSF, was directed by Carto.
50. The LSF’s mission was never solely limited to the IHR’s historical research or to one issue. Instead, the IHR was only a subdivision of the multi-faceted LSF which had existed as an entity for some 27 years before the IHR was established.
51. During the last weekend of August of 1979, under the auspices of the nascent IHR, Carto organized a meeting in California described to the public as the First International Revisionist Conference. A wide-ranging host of historians and others were invited to speak on a variety of topics focusing largely on issues related to the period of history preceding, during and following World War II.
52. Carto appointed a paid employee of the LSF, David McCalden, hereinafter referred to as McCalden, as the IHR’s first executive director. In October of 1979, Carto expanded the IHR staff by hiring defendant Marcellus as a full-time assistant for McCalden.
53. Carto and, increasingly, his wife Elisabeth, functioned as the prime movers behind the new IHR endeavor. When the LSF formally applied for a business license to begin public fund-raising and subscription drives under the auspices of the subsidiary name of the Institute for Historical Review,
the license application was filed and signed by Elisabeth Carto.
54. Virtually all press reports stated that the IHR was the creation of Willis Carto and that he was the prime mover behind its operations.
55. While Carto was the primary mover behind both Liberty Lobby and the IHR and its parent body, the LSF, the only contact between employees of Liberty Lobby and the IHR and the LSF came through several limited venues including:
(a) the purchases and sales of books and other materials between the two separate institutions;
(b) Interviews of IHR employees by Liberty Lobby staffers for publication of news stories about the IHR in The Spotlight.
(c) the paid rental of Liberty Lobby and Spotlight contributor and subscriber lists by the IHR.
56. In short, Carto sought to assure that all operations of the two institutions were kept entirely separate realizing that the lobbying mission of Liberty Lobby could be compromised by the controversial historical stands of the IHR and because many IHR supporters did not wish for the IHR to engage in political activities.
57. During the formative stages of the IHR and throughout its entire history and at least up until September 24, 1993, the vast majority of IHR supporters and subscribers to its publication came largely from the ranks of subscribers to The Spotlight, the weekly newspaper published by Liberty Lobby.
58. Through news stories about the work of the IHR and the publication of press releases issued by the IHR, The Spotlight was responsible for helping the IHR to secure its base of support. The IHR utilized Spotlight and Liberty Lobby mailing lists which they had rented from Liberty Lobby to solicit new readers for its first formal regular publication, the quarterly Journal.
59. Throughout the 1980’s and up until early 1993, the actual paid circulation of the Journal hovered in the area of approximately 4,500 subscribers.
60. As a direct result of the IHR’s work, what was increasingly referred to as the revisionist movement,
a term revived and publicized by Carto through the IHR, began to expand, reaching into other countries including Great Britain, Canada, Australia, Italy and France where independent revisionist research was initiated.
61. Several prominent and internationally known historians were among those whose works were featured in the pages of the IHR’s Journal.
62. John George and Laird Wilcox, researchers known for their expertise in the study of the right wing and political fringe groups, have noted that the Journal had contributions by the British historian David Irving, the civil war historian William B. Hesseltine, China authority Anthony A. Kubek, former CIA officer Victor. Marchetti, and Pulitzer Prize-winning historian John Toland.
63. Of Carto’s influence, George and Wilcox, clearly critical of Carto, note that through the aegis of Liberty Lobby it is clear that he, more than any other individual, has been responsible for giving form to the raging band of citizens who make up the rightist fringe.
64. Although the mission of the IHR and its Journal extended far beyond examination of the events of World War II, it was this issue that brought the IHR the most widespread publicity and criticism and generated international interest, both support and opposition to, the work of the IHR.
65. A lawsuit, tangentially related to the issue of events of World War II, was filed on February 19, 1981 in the Superior Court for the State of California for Los Angeles County by California businessman Mel Mermelstein. Named as defendants were the IHR and its parent body, the LSF as well as several other defendants.
66. Although the details of the Mermelstein lawsuit itself are not directly in the purview of the instant litigation, a brief overview of Mermelstein’s complaint against the IHR is appropriate, particularly in light of subsequent developments that are related to the instant litigation.
67. As part of its effort to gain publicity for its work, the IHR offered a $50,000 reward to anyone who could bring forth evidence that proved that the IHR’s view on events of World War II was wrong. The reward was highly controversial.
68. However, the IHR contended that although mainstream histories of the period had resolved all issues and held that they were not worthy of debate there was legitimate historical and forensic evidence to the contrary. The purpose of the reward offer was to bring public attention to the educational work of the IHR.
69. Because there were no serious claimants to the reward offer, Carto directed that it be withdrawn on July 31, 1980. However, McCalden, without Carto’s authorization, specially re-opened the reward offer to the aforementioned Mel Mermelstein after Mermelstein had begun to publicly challenge the IHR in letters to editors of various newspapers both in the United States and abroad.
70. Mermelstein came forth with various allegations and sought to claim the $50,000 reward. The IHR responded that Mermelstein’s unverified claims were not sufficient and refused to pay Mermelstein the reward. At that juncture Mermelstein filed a lawsuit, claiming, among other things, that the IHR breached its contract by refusing to pay him the reward.
71. In April of 1981, Carto fired McCalden as [HR director and defendant Tom Marcellus assumed that position.
72. On June 3, 1981, Mermelstein expanded his suit by adding as defendants not only Willis Carto but also Liberty Lobby.
73. Mermelstein essentially contended that the HR and Liberty Lobby, both creations of Willis Carto, were operating jointly and in tandem, although, as noted earlier, the two institutions were entirely separate entities.
74. Mermelstein’s lawsuit was becoming a media cause celebre, widely reported in the national and international media and brought widespread attention to the IHR.
75. As a result of the often negative media attention being received, the IHR and its officers and employees were subjected to physical attacks upon their persons and vandalism of their homes.
76. In January of 1981, the home of Carto was firebombed. Both Carto’s home and the IHR office were picketed several times by groups which had come to Mermelstein’s vocal public support.
77. On April 5, 1981, when a group picketed the IHR office in Torrance, California, Willis Carto was physically attacked and knocked to the street, suffering injuries.
78. On June 25, 1981, the offices of the IHR were firebombed.
79. On July 4, 1984, another nighttime arson attack on the offices of the IHR totally devastated the institute causing approximately $400,000 in damages. Losses included the entire inventory of salable merchandise, including books, the IHR’s research library, equipment, furniture, irreplaceable original manuscripts and other files.
80. Although Carto had several weeks earlier directed defendant Marcellus, then serving as IHR director, to increase the fire insurance of the LSF, the IHR’s parent body, from $50,000 to $200,000, Marcellus did not do so. Marcellus later said that he had forgotten
to carry out Carto’s directive.
81. The attack on the IHR office, coupled with the negligence by defendant Marcellus, placed the IHR’s future in jeopardy, particularly in light of the ongoing burden of dealing with the Mermelstein lawsuit.
82. However, under the direction of Carto, the IHR launched an ambitious drive to recoup at least a portion of its losses. Carto personally drafted fund-raising letters for the project and negotiated loans with IHR supporters, including Nebraska businessman William Curry who opened a bank account for the IHR in Nebraska where, presumably, it could not conveniently be seized by Mel Mermelstein and his attorneys.
83. The Mermelstein case was settled. In the wake of the settlement, the national media reported that Mermelstein had prevailed over the IHR in court. Mermelstein publicly and incorrectly claimed that the IHR had admitted in the signed settlement that its own historical views had been proven wrong.
84. These claims were injurious to the IHR in that many IHR s.upporters who heard Mermelstein’s remarks believed that the IHR had repudiated its previous public stand. The IHR contested Mermelstein’s claims.
85. Mermelstein then filed a lawsuit against the IHR on October 17, 1988 in the California State Superior Court for Los Angeles County. Mermelstein charged that he had been defamed, subjected to the intentional infliction of emotional distress, and that he was the victim of malicious prosecution by the IHR.
86. Mermelstein once again included not only the IHR and the LSF as defendants, but also Carto and Liberty Lobby. While Liberty Lobby was not involved in the conflict between Mermelstein and the IHR, Mermelstein viewed Liberty Lobby as a corporation with assets.
87. Although the second Mermelstein suit would not be resolved until October 28, 1992, approximately four years after the suit was filed, another major development in the history of Liberty Lobby and the IHR and its parent body, the LSF began evolving. This new development led directly to the current conflict over the control of the LSF and the IHR that has resulted in the instant litigation.
88. In 1980, Jean Edison Farrel, hereinafter referred to as Farrel, a wealthy American, became a dues-paying member of Liberty Lobby’s Board of Policy. Miss Farrel ultimately established residence abroad, settling in Lutry, Switzerland.
89. An understanding of the relationships between Farrel and the plaintiffs and Farrel and the defendants is requisite to place in context the events following the death of Farrel.
90. Farrel was a grand-niece of Thomas Edison. The Edison family had a long association with Liberty Lobby. Farrel’s uncle, the late Governor Charles Edison of New Jersey and the son of Thomas Edison, was a longtime supporter of Liberty Lobby, dating back to its founding in 1955. Governor Edison was himself one of the founding members of Liberty Lobby’s Board of Policy.
91. Through their association with the Liberty Lobby, both Governor Edison and Farrel became friends with Carto and later with his wife, Elisabeth Carto, and followed the work of Liberty Lobby with interest.
92. Due to her association with Liberty Lobby and Willis and Elisabeth Carto, Farrel knew that Carto was the prime mover behind both Liberty Lobby and the IHR. It was as a direct consequence of Farrel’s initial association with Liberty Lobby and Willis Carto that she became acquainted with the IHR.
93. During 1983, Fan-el began subscribing to The IHR’s Journal, a publication launched by Carto. Although she supported the historical work of the IHR, her primary political interest was opposition to the American federal income tax system, one of the primary areas of focus for Liberty Lobby. It was, in fact, because of her desire to escape harassment from the IRS that Farrel actually adopted Colombian citizenship and resided in Switzerland.
94. Between 1983 and 1985, Farrel was in regular and sustained contact with both Willis Carto and Elisabeth Carto. At the invitation of Mr. and Mrs. Carto, Miss Fan-el visited the Washington, D.C. office of Liberty Lobby and the Torrance, California office of the IHR. Her primary association with both Liberty Lobby and the IHR came through her evolving friendship with Mr. and Mrs. Carto and she continued to make regular contributions by mail to both institutions.
95. In the wake of the July 4, 1984, arson destruction of the IHR, at which time Carto was considering the possibility of actually relocating the IHR headquarters out of California, he consulted regularly with Farrel about the possibility of her providing financial support for that relocation.
96. Additionally, Farrel was especially concerned about the possible consequences faced by the IHR and Liberty Lobby as a result of the first of the Mermelstein lawsuits and she regularly provided financial support for defense against the lawsuit.
97. Both the IHR and Liberty Lobby urged supporters, including but not limited to, Farrel to make contributions to the Foundation to Defend the First Amendment, hereinafter referred to as the Foundation, a non-profit organization, also established under Carto’s direction, that was providing legal funds for both the IHR and Liberty Lobby in defense of the Mermelstein litigation.
98. During this time, defendant Marcellus wrote to Farrel urging her to make contributions to the Foundation, assuring her that her support for the Foundation was an ideal way to support the efforts to preserve the IHR in the face of the Mermelstein lawsuit.
99. Marcellus knew at all relevant times that the Foundation was the primary source of legal defense funds for the IHR and that it was due to Carto’s efforts that the Foundation was disbursing funds. Marcellus also knew that the IHR itself did not have the resources available to provide for its own legal defense.
100. In 1984, Farrel advised Carto that her enthusiasm and support for his various endeavors were such that she wanted to make arrangements with Carto which would put him, upon her death, in a position to make use of what proved to be her substantial financial resources.
101. Initially, Farrel suggested that she was willing to draft a will naming Carto as her primary heir, so that he would be able to direct those funds to the causes in which he was involved; the causes which she supported.
102. However, Carto refused that offer. Carto was concerned about the propriety of accepting such a substantial personal gift from a supporter of two institutions with which he maintained a direct fiduciary responsibility, Liberty Lobby, which he served as treasurer, and the LSF, of which he served, under Texas corporate law, as a voting member and business agent.
103. Carto also wanted the funds to reside in a permanent corporation and not in the personal estate of a mortal person. Carto recognized that if he were an individual heir to Farrel’s estate in the event of his sudden death that funds Farrel intended for the political causes she supported would be tied up in the settlement of his own estate.
104. Carto nonetheless expressed an interest in reaching an arrangement with Farrel so that her desire to support his political work after her death could be fulfilled and he agreed to explore the matter further. Acting upon Farrel’s offer, Carto contacted a Geneva attorney, Edward Coughlin, who agreed to set up a mechanism to fulfill Farrel’s wishes in consultation with Carto.
105. On behalf of Fan-el and Carto, Coughlin established the NECA corporation, established under the jurisdiction of the laws of Liberia, which would hold much of Farrel’s assets. Corporate stock in NECA was held in the form of 20 bearer shares.
106. Farrel understood at all times that LSF was under the continuing control of Carto and that upon her death that Carto would assume control of the NECA shares for distribution at his discretion.
107. These share certificates were placed by Farrel in safe deposit boxes in locations in Germany, Britain, Switzerland, Singapore, and in the United States in North Carolina. Under no circumstances did Fan-el ever conceive of the possibility that any other individual or group would have access to those assets which she intended for Carto’s care and distribution.
108. Farrel mailed keys to the safe deposit boxes to Carto. Farrel also traveled to Germany in the company of Elisabeth Carto, placed two NECA stock certificates in a bank vault there and gave the key to that safe deposit box to Elisabeth Carto.
109. It was understood at all times by Mr. and Mrs. Carto and by Farrel that, in the event of Farrel’s death, Carto had the responsibility to secure the NECA shares in order to provide for distribution under the financial arrangements that Carto determined appropriate.
110. Subsequent to making her arrangements with Carto, Farrel also drafted a handwritten will in which she left all of her estate, not including the assets placed in NECk to a neighbor in Switzerland, Mrs. Joan Althaus. The will also stated that if Mrs. Althaus died before Farrel that that estate would go to the IHR’s parent corporation, the LSF.
111. At the time Farrel drafted this will, making these stipulations, Farrel knew that the LSF was a holding company effectively controlled by Carto and which, in fact, was controlled by Carto at the time of Farrel’s death and was up until September 24, 1993 at which time a purported new board of directors organized by defendants presumed to take control of the LSF and its two subsidiaries, the IHR and Noontide.
112. It was Farrel’s intention that upon her death that Carto would assume control of the funds held by the NECA corporation and dispose of those funds for those political causes and educational projects that he determined would best assure the furtherance of Farrel’s wishes.
113. In fact, except for the furnishings of her apartment, personal effects and a safe deposit box in Lutry, Switzerland, Farrel had transferred all other of her holdings to the NECA corporation. It was never Farrel’s intention that the NECA stock certificates would be a part of her estate upon her death.
114. Farrel intended and fully expected that the NECA stock would pass directly into Carto’s control upon her death and that such funds would not be a pan of the estate subject to probate under Swiss law.
115. On August 11, 1985, Farrel died quite suddenly and unexpectedly. Although she had told her neighbor Mrs. Althaus that upon her death Althaus should contact Carto immediately and assist in his expeditious recovery of all NECA holdings earmarked for Carto’s disposal, Mrs. Althaus never contacted Carto. Instead, Carto learned independently of Farrel’s demise approximately one month afterward when he telephoned Coughlin in Geneva to inquire as to why he had not heard from Farrel, prior to then a regular correspondent.
116. Upon learning of Farrel’s death, Carto immediately flew to Switzerland where he discovered that Althaus had not only taken control of Farrel’s apartment and personal effects, but that she was refusing to provide Carto access to the four drawer file cabinet in Farrel’s apartment marked NECA Corporation.
117. At that time, after consulting legal counsel, Carto advised the key members of the LSF board of directors, specifically Lewis and LaVonne Furr, as to what had transpired. Carto concluded that litigation in Swiss courts was necessary to prevent Althaus from securing the bearer shares of NECA Corporation.
118. The death of Farrel took place at a time when the IHR was still in a recovery phase following the devastating arson attack of July 4, 1984. Although the IHR had resumed publishing its Journal after a temporary hiatus forced by the fire and had relocated from Torrance, California to new, more secure, offices in Costa Mesa, California, the IHR’s financial situation remained precarious.
119. Under these circumstances, Carto and the LSF directors and officers Lewis and LaVonne Furr agreed that it was certain beyond cavil that neither LSF nor its subsidiary, the IHR, had the financial resources necessary to launch a legal challenge against Althaus.
120. Indeed, the LSF and the IHR did not even have sufficient funds to defend themselves in court in the action brought by Mermelstein.
121. Carto told the Furrs that for him to take the action necessary to secure any portion of the Farrel estate, it would be necessary for him to raise a substantial amount of money to pay the lawyers and investigators required for the endeavor since the legal action in question involved litigation not only in the United States but likely in England, Germany, Singapore, Switzerland and Japan. Carto explained that no matter how much money was spent that there was no certainty whatsoever that he would be able to secure any of the Farrel funds.
122. Carto recognized that it would be appropriate although not legally necessary to secure the support of the key LSF board members before pursuing the matter further.
123. Therefore, Carto advised the Furrs that if they ratified his authority to take what actions were necessary to challenge Althaus in court in Switzerland and elsewhere, that in return for that action he asked for the absolute discretion to distribute whatever funds he did secure.
124. Carto also assured the Furrs that no funds expended on behalf of the endeavor would be taken from what little assets were held in the name of the LSF and that he would attempt to raise the funds necessary.
125. Carto made it clear, and the Furrs recognized, that the LSF did not have a corporate opportunity in this matter since the LSF did not have the financial capacity to pursue the Farrel funds. Further, Carto and the Furrs realized that since Farrel had predeceased Althaus, the LSF was not a beneficiary of the Farrel estate. it was understood by Mr. and Mrs. Furr that the only opportunity to secure any of the Farrel funds to advance projects Farrel supported would come from actions taken by Carto individually.
126. It is established law that when a corporation does not have a corporate opportunity to secure an asset, it may lawfully pass the right to intervene to another person or entity.
127. Mr. and Mrs. Furr entered into an agreement in which Carto was named an agent on behalf of the LSF in all measures necessary to secure the Farrel funds and which granted to Carto the right to distribute the funds at his discretion if those funds were secured.
128. After he had obtained the authorization and agency status from his colleagues on the LSF board, Carto set in motion a complicated, laborious and expensive international endeavor to challenge the Althaus claim against the NECA corporation assets which Althaus and her attorneys contended were part of the entire Farrel estate, despite Farrel’s intentions to the contrary. Clearly whether the NECA assets were determined to be part of the Farrel estate or outside of the Farrel estate, the LSF had no right to those assets.
129. Between 1985 and 1990, Carto retained the services of twelve attorneys in six countries from Switzerland to Japan at the expense of approximately $750,000. At Carto’s direction, both Liberty Lobby and the Foundation provided funds for these expenses.
130. In January of 1986, during the time that Carto was actively engaged in preparations to secure the portion of Farrel’s assets that she had assumed would pass to his control upon her death, there were a number of personnel changes at the IHR.
131. Defendant IHR director Marcellus voluntarily left the employ of the IHR. Marcellus therefore played no role whatsoever in the attempts by Carto to assure recovery of the Farrel assets.
132. Also, in 1986, Carto hired defendant O’Keefe, hereinafter referred to as O’Keefe, to work for the IHR’s editorial staff. At no time did O’Keefe or any other LSF employee play any role in Carto’s efforts to recover the Farrel’s assets.
133. In fact, Carto’s entire effort to raise funds for the legal actions necessary, including communications with attorneys and investigators and others required for the effort were conducted by Carto himself, working with his wife, Elisabeth, and with the assistance of Henry Fischer.
134. Not only was Fischer fluent in the French language but Fischer also had extensive international business and legal contacts that were vital to Carto’s efforts and which were critical to the ultimate success of the endeavor.
135. Although Carto kept LSF board members Lewis and LaVonne Furr current regarding his efforts, neither of the Furrs played an active role in the matter.
136. In 1987 with no immediate settlement of the Farrel litigation in sight, the LSF once again found itself in dire financial straits and Carto made the difficult decision to suspend publication of the Journal of Historical Review although the operations of the IHR itself continued on a limited basis as Carto continued to raise funds to keep the IHR afloat on a severely limited budget.
137. However, the second Mermelstein lawsuit posed a very serious threat to the IHR’s survival.
138. In July of 1987, defendant Marcellus returned as a pan-time employee of the IHR, serving once again as its office manager under Carto’s direct supervision.
139. In the spring of 1988, Carto revived publication of the Journal of Historical Review after a one-year suspension.
140. In 1989, Carto and the LSF retained an Irvine, California attorney, defendant Hulsy, to represent Carto and LSF in their defense against the ongoing suit by Mermelstein.
141. On July 17, 1990, after five years of extended international litigation, Althaus agreed to settle the dispute with Carto.
142. Under the terms of the final settlement, Mrs. Althaus received 55% of the NECA holdings. The balance valued at roughly $7.2 million dollars came under Carto’s control.
143. At the time the settlement was signed in Switzerland, an attorney, Patrick Foetisch, representing Carto, signed on his behalf and on behalf of LSF. The settlement papers clearly indicated that Foetisch was signing on behalf of both Carto and LSF and that Carto and LSF were joint parties to the agreement.
144. There was no stated division of the amounts from the NECA Corporation funds to be divided by Carto and LSF. As we have seen, the LSF had already assigned its portion to Carto.
145. It was Carto’s personal decision to provide for the LSF to be a part of the settlement. He was not legally required to do so under the agreement that he had reached with Lewis and LaVonne Furr.
146. Under that agreement Carto could have designated himself, through the attorney, the sole recipient of the funds in question.
147. Carto did not personally receive any funds from the settlement of the Farrel estate other than reimbursement for expenses incurred in pursuit of the settlement.
148. At the time of Carto’s successful settlement in 1990 of the dispute over the Farrel funds both the IHR and Liberty Lobby were together facing the potentially devastating $11 million damage suit brought by Mel Mermelstein then pending in the Superior Court for the State of California in Los Angeles County.
149. Published press reports at the time made it very clear that the funds were earmarked for Carto’s control and that he was the intended recipient of these funds. That fact disturbed those who were hostile to both the IHR and Liberty Lobby, recognizing that those institutions stood to benefit from Carto’s successful acquisition of this substantial legacy intended to promote the causes that Carto and Farrel mutually supported.
150. As a consequence, Mermelstein’s lawyers indicated during court proceedings that they knew of the existence of the Farrel money and that in the event that they were able to secure a judgment against Carto, Liberty Lobby and IHR that they intended to move to secure the judgment from those funds.
151. Recognizing the possibility that an impending possible judgment could result in the Farrel funds or the assets of the LSF ending up in the hands of Mermelstein and his attorneys, Carto began the process of assuring that the funds would be protected.
152. To protect the IHR and LSF from Mermelstein and at the advice of attorneys, including LSF attorney Hulsy, Carto restructured the assets of the IHR and its parent company, the LSF.
153. In an effort to conduct all matters in an above-board fashion in keeping with his fiduciary duty to the LSF and Liberty Lobby, Carto additionally secured an agreement from the active LSF board members granting him power-of-attorney to take appropriate action to find an independent repository for the funds received from the Farrel settlement.
154. In accordance with this agreement, Carto authorized the establishment of the independent Vibet corporation, based in the Virgin Islands, to manage the Farrel funds.
155. During this period Carto arranged for his associate Fischer to also receive a power-of-attorney for Fischer’s instrumental assistance in arranging the transfer of the Farrel estate funds into Vibet’s account at the Bank Cantrade in Lausanne, Switzerland.
156. After Carto established the Vibet corporation to hold the Farrel legacy, he actually transferred a total of $900,000 from the Vibet account to the IHR. These funds made it possible for the IHR to rebuild its book inventory and to continue publishing its monthly journal.
157. Carto also paid bonuses to IHR employees, defendants Marcellus and O’Keefe, directly from the Vibet account holding the Farrel funds.
158. There is no evidence, written or otherwise, that Jean Farrel had any idea, in fact, that defendant Weber even existed.
159. Although the defendants, including Weber, Marcellus and O’Keefe among others, have claimed publicly in sworn statements, in open court and elsewhere, that Carto never made any Fan-el funds available to LSF, the fact is that Carto directed some $900,000 from the Vibet account to LSF in the period following receipt of the Fan-el funds.
160. Carto also directed large sums from the Vibet account to Liberty Lobby in Washington, D.C., most of which were used to finance the operation of the nationwide Sun Radio Network which featured two radio shows, Radio Free America and The Editors Roundtable that promoted the political and educational causes of both Liberty Lobby and the IHR.
161. These distributions were fully in keeping with Farrel’s wishes that her funds be used to promote such causes. In fact, in numerous conversations with Carto and Elisabeth Carto, Farrel had repeatedly stated that she was particularly interested in seeing that her views, which were also those of Liberty Lobby and IHR, be given widespread broadcasting through the medium of radio which, in recent years, had become a major communication of political views through the format of talk radio.
162. This radio project, sponsored by Liberty Lobby, was also in line with the corporate charter of LSF, which specifically mandates the use of the medium of radio to propagate its views.
163. On numerous occasions representatives of the IHR were featured on the Liberty Lobby-sponsored radio programming. Guests representing the IHR included defendants Weber and O’Keefe as well as Bradley Smith, a paid spokesman for the IHR.
164. Thus, the Farrel funds were very specifically used to promote the work of the IHR and give it a wider audience and outreach to many Americans who were not subscribers to the IHR’s publications or who would not otherwise hear of the work of the IHR.
165. The Mel Mermelstein case against the IHR and Liberty Lobby was moving toward its conclusion. By this time, serving as counsel on behalf of Liberty Lobby was Mark Lane, hereinafter referred to as Lane. Lane had successfully represented Liberty Lobby in various cases.
166. Although attorney Hulsy continued to represent the IHR and Carto in the case, Lane now served as chief counsel for the defense pursuant to Carto’s instructions.
167. In September of 1991, the Mermelstein case was scheduled to go to trial before a jury in the courtroom of Judge Stephen Lachs of the California State Superior Court for the County of Los Angeles.
168. After nearly a week of pre-trial proceedings, which included examination of Mermelstein by Lane, Judge Lachs dismissed most of Mermelstein’s complaint.
169. A remaining cause of action based upon intentional infliction of emotional distress remained. However, Mermelstein’s attorney moved to dismiss that cause upon the stipulation that if the court’s malicious prosecution dismissal was overruled on appeal and ultimately came to trial that Mermelstein be permitted to raise the question of emotional distress.
170. Lane, speaking on behalf of Liberty Lobby and the IHR, said that to the extent that it was possible to do so that his clients would agree to that stipulation.
171. Although Mermelstein did appeal the lower court’s ruling, t. he California Court of Appeal Second Appellate District, Division Two, ruled in favor of the IHR and its co-defendants on October 28, 1992. Mermelstein elected not to appeal that ruling to the California State Supreme Court. Thus, after eleven years, Mermelstein’s legal campaign against Liberty Lobby and the IHR came to an end.
172. This was considered an important victory for Liberty Lobby and the IHR. 173. During the last several days of the Mermelstein litigation, defendant Hulsy, who had been representing the LSF and the IHR and Carto, approached Carto in a courtroom corridor. In the presence of Lane and Liberty Lobby employee Piper, Hulsy addressed his client, Carto, and said, Willis, just how much did you get out of the Farrel estate?
174. Carto was reluctant to share that information with Hulsy. Hulsy persisted, stating that I'm your lawyer.
Believing that he should be frank with Hulsy and that Hulsy was restrained by legal ethics from revealing anything he was told by a client, Carto yielded to Hulsy’s demand and provided a specific answer.
175. In the year following the victory by the IHR and Liberty Lobby in the Mermelstein case, both institutions continued to move forward under Carto’s guidance and direction.
176. At the IHR, the paid employees, including Marcellus, Weber, and O’Keefe continued to work under Carto’s direction, acknowledging his role as founder of the IHR and as their employer.
177. Carto continued to serve the IHR as an unpaid advisor, overseeing editorial decision making and continued to assure that the IHR was adequately funded through its own direct mail and other fund-raising efforts and through the resources of the Farrel funds held in the Vibet account in Switzerland. His wife, Elisabeth Carto, assisted in administrative and clerical work on an unpaid basis and oversaw LSF and IHR financial record keeping which was carried out by IHR office manager Marcellus and office assistant Jean Scott. Elisabeth Carto personally approved all invoices for payment.
178. In October of 1992, Carto authorized the hiring of a new IHR staff member, defendant Raven, who had been in communication with the IHR exclusively through IHR office manager Marcellus. According to Marcellus, he and Raven had been in touch with each other for ten years.
179. By 1993 the IHR was making progress. It had survived both the arson and total destruction of its offices and the decade-long series of lawsuits by Mermelstein.
180. Recognizing that the IHR had the opportunity to expand its outreach far more than ever before, Carto developed a plan to begin promoting the HR and its Journal to a broader audience.
181. Carto directed a major change in the format of the IHR’s quarterly Journal which had been printed, since its inception, in plain gray card cover format with no art and simple type, similar to academic journals.
182. However, beginning in January 1993, the Journal converted to a magazine style format, with brightly colored covers, including interesting art and photographs and a variety of headlines highlighting the contents within. The new Journal, additionally, featured artwork and illustrations within, along with expanded features.
183. Furthermore, the new Journal also began publishing bimonthly rather than quarterly and the annual subscription price was not increased. All of this was designed to make the Journal’s outreach more accessible to general readers, in addition to scholars.
184. Carto also advanced the position that the IHR should expand its coverage to other issues than the Holocaust. Carto directed editor Weber that that one subject would be reduced to 20% of the Journal’s content.
185. Although the IHR’s positions on the Holocaust had been the primary focus of media coverage of the IHR’s work, Carto felt that the IHR had laid the groundwork to not only continue to report its findings on that issue, but to also bring in new readers and supporters by examining other inappropriately-examined historical subjects.
186. Carto’s employees of the IHR staff expressed some reservations about branching out into other issues than the Holocaust, perhaps in pan because the two primary in-house staff writers, Weber and O’Keefe, had very little experience or interest in writing on issues other than the Holocaust.
187. Approximately during 1980, long before he joined the IHR staff, Weber himself had purportedly begun writing a book which he told various persons that would be the definitive study of the Holocaust. However, by 1993, no such book had materialized, despite the fact that Weber had received extensive subsidies and support for the project from long-time IHR supporter William Curry who had since died. To this date, in fact, no such book by Weber has been published.
188. Although there were several contentious discussions between Carto and his employees about the intended expansion of the IHR’s research, an agreement was reached that Carto felt had settled the matter.
189. Thus, on February 17, 1993 a letter of understanding as to future editorial policies of the IHR and its Journal was signed jointly by Carto and defendants Weber and Marcellus. The memorandum read in part:
190. As we agreed, the Journal of Historical Review in its new format and publishing schedule will continue the same basic purpose and direction as the old Journal. The purpose of the Journal, and the IHR is to bring to light and focus attention on suppressed information about key chapters of history (especially 20th century history) that have social-political relevance today. The Journal and the IHR uphold and carry on the tradition of historical revisionism of scholars such as Harry Elmer Barnes, A. J. P. Taylor, William Chamberlain, Charles Tansill, and Paul Rassinier.
191. At the same time, we agree that the new Journal will more fully embrace areas of history other than the Holocaust issue, including ancient history and American history.
192. As we further agreed, it is neither practical nor desirable to discontinue dealing with the holocaust issue. We understand that this issue is the main reason that the IHR came into being, and that it is because of our thoughtful and informed treatment of this issue that the IHR and Journal have had such a remarkable impact.
193. We recognize the danger in squandering what the IHR and the Journal have achieved by significantly changing direction or by lowering the Journal’s level of quality.
194. In the spirit of this memorandum, a letter was crafted and mailed in April of 1993 to tens of thousands of potential new subscribers. This letter, written by Carto but signed by defendant Marcellus on behalf of the IHR at Carto’s direction, told its readers about the previous successes of the Journal and announced the following:
195. For 12 years the Journal has been written primarily for academics. Now it is carefully crafted to appeal to all intelligent readers.
196. In addition to diligently researched articles covering contemporary and recent history, it will contain articles on ancient history, culture, art, religion, philosophy, social and racial matters, and topical subjects keyed to historical facts, including book and film reviews.
197. This letter was, by any measure of direct mail marketing, a success and the paid circulation of the Journal increased from approximately 4,500 to approximately 7,000, by far the most readers who subscribed to the Journal at any time.
198. As this letter was bringing thousands of new subscribers to the Journal, the IHR and its historical work was the primary subject of no less than four works that were released and widely reviewed in the major media in the United States and around the world. The authors were present at innumerable lectures, meetings and press conferences.
199. This media focus clearly reflected the fact that the IHR, under Carto’s control and direction, had reached a position of undeniable influence not only in its particular sphere of work, but in the eyes of the public at large and that it was then being recognized internationally as a potent force.
200. During this time Hulsy continued to represent the IHR and the LSF in a number of legal matters, including copyright suits filed against the IHR which were pending, including an action brought for the publication of The Report From Iron Mountain.
201. Marcellus had been enthusiastic about Fletcher Prouty’s recommendation to publish the work in regard to The Report From iron Mountain, largely, it appears, because Prouty had, for some time, been writing extensively for publications of the Church of Scientology, a highly controversial organization of which Marcellus was a generous financial supporter and an advanced member authorized to preside at Scientology rituals.
202. Over the years during his IHR employ, Marcellus had spent much time urging fellow employees to study the teachings of Scientology and had actually converted one fellow employee, Michelle Matteau, to that cause. He also brought another fellow Scientologist, defendant Raven, onto the IHR staff.
203. Although defendant Hulsy was involved in the previously-described copyright litigation on behalf of the IHR, Carto had begun to move toward gradually easing Hulsy out of LSF legal affairs.
204. That action would effectively end what had previously been a lucrative financial arrangement for this attorney who had been paid more than $50,000 for his services and who had bragged that he had been able to add an extra room to his office from the fees he had been paid at Carto’s direction which he called the IHR room.
205. In the later stages of the earlier Mermelstein matter, Hulsy had cemented a close personal relationship with O’Keefe and often spent many occasions socializing with O’Keefe at drinking establishments located near the IHR office in Costa Mesa, California and elsewhere. The friendship continued to develop during Hulsy’s continuing representation of Willis Carto and the LSF and its subsidiary, the IHR.
206. O’Keefe had proven unable to meet deadlines and, as a consequence, had been required by Carto to surrender his post as editor of the Journal to Weber. O’Keefe, however, remained an employee
207. Carto soon became disillusioned with Weber because of his failure to follow his directives and began making quiet inquiries among persons he believed might be interested in the position. Weber discovered this and realized that he was to be replaced.
208. O’Keefe had failed to write the book on the Mermelstein case that he had contracted to write. He had spent a year and one-half purportedly working on the book and not a single publishable page had materialized. As a consequence, Carto asked longtime Liberty Lobby employee Piper, to take an unpaid leave from Liberty Lobby, travel to California and write the book.
209. Piper accepted the offer. He gathered up the research materials in O’Keefe’s possession, researched the subject thoroughly and finished the first draft of what ultimately became a 235-page book in one month. Piper left the IHR office on or about August 28, 1993 and plans were set in motion for the IHR to publish the book immediately thereafter.
210. Based upon admissions by defendants Marcellus, Weber, O’Keefe, Raven and others, during April of 1993 it is now known that the defendants actively began conspiring to take control of the LSF and its two subsidiaries, the IHR and the Noontide Press, and to remove Carto from any position of authority over the corporation. During this time the IHR employees were in regular contact with LSF attorney Hulsy, who offered legal advice for a fee about the planned takeover of the board of directors which he was ostensibly serving.
211. O’Keefe was assigned, in the words of Marcellus, to research the corporate and legal basis of Carto’s purported authority to control Legion activities.
It appears that O’Keefe’s new assignment, beginning in April, may have been one of the reasons why he was unable to devote any time during the next four months to writing the book that he had earlier contracted to write. Under the guidance of Hulsy, O’Keefe began familiarizing himself with LSF internal records and documents that the IHR employees were able to obtain in the office files, including searching the desk and private files of their employer, Carto.
212. At approximately this time and shortly thereafter, both Weber and O’Keefe were also in contact with defendant Allen and often traveled to the San Francisco Bay area to consult with Allen.
213. Weber and O’Keefe knew at this time that Allen, for at least eight years, had been hostile to the IHR and had actively supported efforts by former IHR employee, David McCalden, to undermine the IHR through published attacks on Carto and IHR employees, even including, ironically, Marcellus, Weber, O’Keefe and IHR supporter William Curry, father of defendant John Curry.
214. As a consequence of Allen’s previous hostile actions, Carto had actually barred Allen from attending an IHR conference held in California. McCalden’s long-term campaign to undermine the IHR assisted by Allen began when he was fired by Carto in 1981 and ended only because of McCalden’s death in 1990.
215. Allen has admitted under oath that he has been involved in an unusual series of activities and has had a number of provocative international associations that link Allen to forces hostile to the work of the IHR.
216. Despite the fact that Allen had never had any direct involvement in internal LSF/IHR affairs, Allen began providing Weber and O’Keefe with legal advice on how to proceed to remove Carto from his position of authority over the LSF.
217. In June 1993, Marcellus, Weber, O’Keefe and Raven began making telephonic and written contact with Lewis and LaVonne Furr and making allegations of misfeasance and malfeasance by Willis Carto. This contact continued over the next three months.
218. The Furrs, by their own admission and as indicated by their actions during the following months, were particularly upset by the approach made by the IHR employees and, in fact, were frightened by the suggestions made to them that they might be held civilly or criminally liable as a consequence of purported actions taken by Carto.
219. The defendants cautioned the Furrs not to advise Carto of defendants' covert operations against Carto and warned that Carto might take some sort of retaliatory action against the Furrs which could cause them additional trouble, even including civil lawsuits, trouble with the IRS and other official agencies.
220. At this time, the Furrs were particularly vulnerable to the threats and intimidation that they were facing from the defendants. They were an elderly couple in ill health and they had recently not only suffered the loss of Mrs. Furr’s father but had filed for bankruptcy in the face of a $25,000 IRS assessment.
221. Because of these personal problems, coupled with the warnings and the aggressive and threatening tactics of the defendants, the Furrs, frightened and alarmed, began communicating with the IHR employees who continually urged them to take action to remove Carto from his position with the LSF.
222. In June of 1993, defendants Marcellus, Weber, O’Keefe and Raven formally retained the LSF corporate attorney Hulsy to advise them as to what action they might take to remove Carto. According to defendant Marcellus, Hulsy told them that they had standing to bring an action against Carto and the Furrs to remove the Board of Directors and its agent, Carto.
223. On August 25, 1993, Hulsy, acting on behalf of Marcellus, Weber, O’Keefe and Raven, wrote a formal letter to the Furrs and urged them to take action to end Carto’s relationship with the LSF.
224. In light of Carto’s status as a permanent voting member and designated incorporator
of the LSF under Texas law, there was no such authority for them to do so. However, because Hulsy was an attorney, and since he had previously served as counsel for Carto, his letter appeared to the Funs to have authority and the Funs increasingly became more frantic about their own legal liability, which was precisely the intent of Hulsy and his clients on the IHR staff Hulsy advised the Furrs that they could face prosecution for what Hulsy suggested was the Furrs' own misfeasance and malfeasance over the years as members, directors and officers of the LSF.
225. On September 16, 1993, after receiving innumerable phone calls and letters of increasing intensity, including threats of legal action and warnings of impending prosecutions by the Internal Revenue Service and state and federal authorities to be prompted by the defendants, Lewis and LaVonne Furr submitted written resignations from their posts as president
and secretary,
respectively, of the LSF. The letters were mailed to the LSF post office box in Torrance, California.
226. However, LaVonne Furr did not submit her resignation as a voting member of the corporate body. Under Texas law, Mrs. Furr still remained a voting member of the corporation. She would have had to have effected an additional letter of resignation from the corporate body in order to sever her legal relationship from LSF.
227. Upon the resignation of Mr. and Mrs. Fun as officers, Marcellus and his associates acted as if only one board member, Tom Kerr, remained. Marcellus instructed Ken that he was the only board member and it was Kerr’s responsibility to call a board meeting and appoint new board members to save the IHR.
Unaware of the impropriety of this action, having been misled by MarceIlus, Kerr complied. At that time there were four other members of the board.
228. Defendant Marcellus then arranged for the preparation of minutes for a bogus meeting of the LSF board of directors which was purported to have taken place on September 24, 1993, and which Kerr was inveigled into signing. According to the minutes that were later presented, the resignations of the Furrs as officers were accepted and three new directors were ostensibly named to the LSF board by Kerr: defendants Allen, Berg and Curry.
229. On September 25, 1993, Marcellus purported to have discovered that there were yet at least two other LSF board members who had not been invited to the meeting of the board of directors or described in the minutes representing the decisions of September 24. These board members were defendants Riner and Taylor. However, Noel Merrihew and Sam Dickson were also members. Indeed, the defendants had previously attempted to secure Dickson’s support in their effort to remove Carto.
230. Despite all of the careful preparations beginning some five months earlier, actively aided and abetted by two attorneys, Hulsy and Allen, the defendants had not only failed to adequately research the relevant law pertaining to the LSF’s corporate status under Texas law, but they had also failed to determine precisely who was on the LSF board at the time they called their board meeting.
231. Marcellus then instructed Kerr to attend a second board meeting to reaffirm the actions taken on September 24, 1993.
232. At that time, the defendants, purporting to act as the legal board of the new LSF, named new officers of the corporation: President, Marcellus; Secretary, Weber; Treasurer, O’Keefe; and Vice President, Raven. At this meeting, Marcellus was told to take charge of all LSF records and documents.
233. The only legitimate LSF board member participating in the meeting, Tom Kerr, was warned by Marcellus that unless Kerr signed the minutes that not only could the IHR collapse but that he, Kerr, could ultimately go to prison for failing to abide by his fiduciary duty as an LSF director.
234. The actions referred to above took place without notice to other LSF board members, including Merrihew and Dickson. Defendant Weber subsequently admitted that he had, in fact, been aware that Dickson was also a member of the LSF board.
235. At that time these events took place, neither Carto nor his wife were in California. Carto was in Washington, D.C.; his wife was in Europe. Neither were scheduled to return to California for roughly two weeks.
236. Although the second set of minutes were dated September 25, 1993, it was not until October 1, 1993 that Marcellus, Weber, O’Keefe and Raven mailed a letter to Carto advising him that he and his wife had been terminated
and that they were no longer welcome at the LSF office. The letter also ordered Carto to turn over to Marcellus and the new putative LSF board all property, assets, records and documents of the LSF.
237. When Carto did not respond to that letter, Weber called Carto in Washington on October 6 and demanded to know if he had received the document and then faxed it directly to him in Washington.
238. On October 7, Carto sent a fax to Marcellus indicating that he would discuss the matter with the IHR staff upon his return to California on or about October 14, 1993. On that same date Marcellus faxed a message to Carto proposing a meeting between Carto and the IHR staff on October 15.
239. On October 11, Carto sent a fax to Marcellus in which he asked for evidence of the legal authority behind the demand that he turn over all LSF records to Marcellus and the other defendants.
240. By October 11, Elisabeth Carto had returned to California and contacted Marcellus and indicated that her husband would soon be returning to California and wanted to discuss the matter with the IHR staff.
241. On October 12, Marcellus mailed a letter to Carto in care of Carto’s San Diego post office box providing copies of the resolution allegedly adopted by the board on September 24 and 25.
242. On October 14, Carto, by then in California, called Marcellus and told him that he would meet the next day with Marcellus, Weber, O’Keefe and Raven and Hulsy at Hulsy’s law office in Irvine, California, a short distance from the Costa Mesa office of the LSF.
243. On October 15, instead of going to Hulsy’s office, Carto, his wife Elisabeth and three associates went to the LSF office where they were allowed into the building by a loyal, longtime IHR employee, Jean Scott.
244. After the Cartos and their associates had entered the building, Carto sent a conciliatory fax to Hulsy’s office, advising the attorney and his collaborators that Carto was now back in control of the office and that the resignations of the staffers would be accepted gracefully and without publicity regarding the circumstances.
245. Defendants Hulsy, Marcellus, Weber, O’Keefe and Raven rushed to the IHR office, and stormed the main entrance.
246. Hulsy, Marcellus, Weber, O’Keefe and Raven, the latter wielding a loaded gun, broke a lock on the main door, forced their way into the building and began violently to eject the Cartos and their friends. The Cartos refused to leave and both Carto and Elisabeth Carto were assaulted and injured.
247. The husky O’Keefe and the muscular Marcellus were particularly forceful in their physical attacks upon Mr. and Mrs. Carto. O’Keefe and Weber repeatedly hit Elisabeth Carto on the head and face.
248. Defendant Raven, standing next to defendant Hulsy, aimed. his loaded semiautomatic 9mm pistol at Willis Carto’s face, screaming at him that he would kill him if he did not get out.
249. Immediately thereafter, defendant Raven, standing side by side with the attorney Hulsy, aimed his loaded semi-automatic 9mm pistol at Elisabeth Carto’s face, screaming at her to get out or that he would kill her.
250. Ultimately Elisabeth Carto was physically thrown out of the building. Carto positioned himself between the door and the frame, with the heavy steel and glass door being pulled shut against him.
251. Attorney Hulsy pulled at Carto and shouted, He’s a wiry son of a bitch,
while Marcellus and others pummeled Carto from the inside of the office. Carto, who was bruised and bloodied, let go and was pulled into the street by Hulsy and was thus removed from the headquarters of the institute that he had worked so hard to establish by the attorney he had hired to represent the LSF and himself.
252. The Costa Mesa Police Department was summoned. Upon the arrival of the authorities, the competing parties began explaining their versions of what had taken place.
253. Carto advised the police that Raven had drawn a weapon. Although the gun was then not in sight, the police searched Raven’s desk and discovered the pistol hidden where it had just been secreted by Marcellus and Raven. The gun was fully loaded with an extra round in the chamber. The weapon was confiscated as evidence. Raven was immediately arrested, handcuffed, and taken away in a police car.
254. At this point attorney Hulsy and the other defendants began swearing out arrest warrants against Mr. and Mrs. Carto.
255. The police officers asked if the Cartos wished to swear out arrest warrants. Attempting to settle the matter, Carto advised the police that if Hulsy and his clients would abandon their arrest warrants that he would do likewise.
256. Hulsy refused. Only if Carto turns over all the assets and complete control of the Legion,
he stated. Carto stated that he was not about to yield to obvious extortion of his former attorney.
257. As a consequence, several arrests were made, including both of the Cartos who were handcuffed, taken to police headquarters, and placed in cells under $50,000 bail each and held for eight hours. No charges were ever filed.
258. Hulsy, Weber, O’Keefe and Marcellus were arrested as well. Weber had grabbed Elisabeth Carto by the neck and had struck her about the face and the head as had O’Keefe.
259. On October 16, the day following the melee at the IHR office, Carto called the IHR office and spoke to defendant O’Keefe, advising him that he would like to come by the office and pick up his, Carto’s, personal effects that remained at the IHR headquarters. O’Keefe talked to Carto from an upstairs window and brought him a small amount of material. He indicated that the defendants were not going to return the remainder of Carto’s properly.
260. At this time, over four years afterward, the large bulk of Carto’s personal effects have not been returned and a conversion suit has been filed by Carto against defendants Weber and Raven who are now believed to be in control of these items. This suit is still pending in court in California.
261. Beginning on or about December, 1993, the IHR staff members, Marcellus, Weber, O’Keefe and Raven relocated the LSF/IHR office from a business complex at 711 West 17th Street (Units D-3 and D-4) to 1650 Babcock, Costa Mesa, California. In so doing defendants appropriated control of all LSF/IHR/Noontide computers, office supplies, furniture, business records and the balance of the aforementioned personal effects of Willis Carto that were held in his office in the LSF headquarters.
262. Defendants also contacted the U.S. Post Office and directed that all mail intended for delivery to 711 West 17th Street (Units D-3 and D-4) be redirected to the new
LSF/IHR/Noontide Press office.
263. Carto, his wife Elisabeth and IHR staff member Jean Scott reestablished working headquarters at Units D-3 and D-4 at 711 West 17th Street and began receiving mail at that address.
264. Thereafter, defendants Weber and Hulsy began making contact with various individuals, including an attorney in London whom they believed to have been involved in Carto’s effort to secure the Farrel funds. Weber and Hulsy also made contact with the Bank Cantrade in Lausanne, Switzerland and advised the bank that they were now in control
of the LSF and demanded an accounting by the bank of the funds held in the Vibet, Inc. account where the Farrel funds had been deposited.
265. Defendant Hulsy telephonically contacted Liberty Lobby attorney Mark Lane and engaged in a conversation discussing the events that had recently taken place. During this conversation Hulsy referred to the acts by defendants Marcellus, Weber, O’Keefe and Raven as a terribly disloyal … coup d'etat
by Carto’s paid employees at the IHR. Hulsy later repeated that allegation during a deposition.
266. Lewis and LaVonne Furr formally revoked their resignations in writing, realizing and stating that they had been tricked and coerced and manipulated under duress and that, as a consequence, their previous resignations were null and void.
267. LSF director Tom Kerr likewise formally repudiated his own coerced decision to sign the minutes for the aforementioned September 24 and 25, 1993, meetings and he revoked his acts.
268. On November 18, LSF directors LaVonne Furr and Kerr filed suit in the Superior Court for the State of California in Orange County asking the court to rule that they did indeed remain the legitimate directors of the LSF and asking that the court void the first unlawful September 24, 1993, board meeting and the decisions resulting therefrom.
269. At a hearing on December 31 before Judge Robert J. Polis, defendants Marcellus and Weber testified that they did not threaten Plaintiffs Lewis and LaVonne Furr in order to force them to resign. However, under cross examination by an attorney for Mr. and Mrs. Furr, both Marcellus and Weber reversed their testimony and admitted that they had indeed threatened
the Furrs.
270. In spite of this reversal of testimony, Judge Polis stated in tentative ruling on December 31, 1993, which was formally entered into judgment on April 13, 1994, that no threats had been made and that the resignations of the Furrs were voluntary and could not be rescinded.
271. The judge ruled that Kerr could not withdraw his approval of the minutes of the September 24, 1993, board meeting and that therefore, Defendants Allen, Berg and Curry were, in fact, newly-appointed board members.
Subsequently Allen, Berg and Curry resigned as board members.
272. Judge Polis also concluded that Kerr remained a member of this new board, although Kerr continues to maintain, as do Plaintiffs, that the original board existing prior to the September 24, 1993, meeting arranged by defendants, continues to exist.
273. On January 28, 1994, defendant O’Keefe, acting on behalf of fellow IHR staff members and the officers and directors of the new LSF, sent a letter to General Leon Degrelle, whose two earlier books, published by the IHR had been major best-sellers for the HR and among its most popular and widely-hailed works among the followers of the IHR’s historical efforts. IHR supporters were looking forward to the publication of a series of additional books by Degrelle that the aging author was then completing.
274. In his letter, O’Keefe advised the elderly general that the manuscripts for these volumes that had already been received by the IHR were, in O’Keefe’s words, unpublishable.
O’Keefe peremptorily told Degrelle to halt work on the project.
275. Although Carto, who had negotiated the publishing agreement with Degrelle on behalf of the IHR, had nothing to do with the writing or issuance of the letter, O’Keefe and his colleagues sent the letter to Degrelle on an IHR letterhead which listed Carto as founder.
276. The receipt of the letter came as a shock to Degrelle, who had no idea of the events which had taken place at the IHR, particularly since he saw Carto’s name on the letterhead and assumed that Carto was in agreement with the provocative claims and defamatory remarks made in O’Keefe’s letter.
277. Degrelle died within weeks of receiving the letter and on June 22, 1994, his widow issued a letter which described how traumatic
the receipt of the letter had been for both her husband and herself.
278. Mrs. Degrelle noted that her husband felt that he had been betrayed and insulted and that he believed that Carto, whom she described as her husband’s friend, had participated in the draining of the letter.
279. Mrs. Degrelle also revealed that defendant Weber had been actively working through associates of the Degrelle family to pressure her into repudiating a previous statement of support that Mrs. Degrelle had issued on behalf of Carto and condemning Weber and O’Keefe for writing the letter that had so shocked and sickened her late husband.
280. When Carto and Liberty Lobby began advising longtime IHR financial supporters that defendants had repudiated the Degrelle work, defendants actually claimed that they still intended to publish Degrelle’s works, the correspondence from O’Keefe notwithstanding.
281. Defendants realized that longtime IHR supporters rejected the repudiation of Degrelle and were angry at LSF officers and directors and employees for the actions against the elderly general and were attempting to rectify the public relations damage that they had suffered as a consequence.
282. Nonetheless, the actions by defendants had done major damage to the reputation that the IHR had developed among its supporters and contributors.
283. O’Keefe then left the IHR staff and took up residence in the state of New Jersey.
284. In the immediate weeks both prior to and following the aforementioned decision by Judge Polis, defendants commenced an aggressive public relations campaign to defend their actions and to defame Carto among longtime supporters of the IHR who were increasingly becoming aware of the events of the preceding months.
285. Although most public relations attempts to undermine Liberty Lobby and the IHR were conducted directly out of the offices of LSF by defendants Marcellus, Weber, O’Keefe and Raven, defendant Countess, a longtime associate of the IHR, assisted in their efforts.
286. Acting alone from his home in Toney, Alabama, but also in apparent concert with other defendants, Countess engaged in an continuing telephonic and letter-writing campaign over a period of several years, attacking plaintiffs Carto and Liberty Lobby, alleging that plaintiffs had engaged in criminal misdeeds and that Carto faced a certain future in prison for his administration of LSF affairs.
287. Defendant Countess wrote a series of harassing letters to at least three Liberty Lobby employees, Vince Ryan, Trisha Katson and Piper, attacking Carto and Liberty Lobby, urging the employees to engage in disloyal activities for th.e purpose of removing their employer, Carto, as chief executive officer of Liberty Lobby.
288. Defendant Countess harassed Liberty Lobby employee Piper, in particular, stating that he too, deserved to serve time in prison alongside Carto for refusing to be disloyal to his employer.
289. Defendant Countess also stated in writing that Elisabeth Carto would also spend time in prison for her purported misfeasance and malfeasance in the administration of LSF affairs.
290. During 1994, Marcellus, acting on behalf of himself and his fellow defendants, offered a fee to one John Henry Nugent, hereinafter referred to as Nugent, to arrange, through illicit means, including bribery, the theft of the valuable Liberty Lobby Board of Policy membership and Spotlight newspaper subscriber lists.
291. Marcellus knew that Nugent was a longtime consultant to and former employee of Liberty Lobby.
292. Nugent then telephonically contacted William G. Sweet, a Liberty Lobby employee whom Nugent knew was responsible at that time for the computerized maintenance of the Liberty Lobby lists that Marcellus hoped to obtain. Nugent offered Sweet $5,000 if Sweet were to make the list available
293. Sweet refused the bribe and promptly advised Carto, his immediate superior, of the bribery attempt. Subsequently, Nugent himself made contact with Carto and confessed his role as an intermediary on behalf of Marcellus who later admitted, under oath, that he had engaged in this activity although he claimed to have forgotten the amount he had offered.
294. Marcellus has stated under oath that he and the defendants hoped to use the Liberty Lobby/Spotlight lists to attack Carto and Liberty Lobby through direct mail efforts. Defendants would thus gain advantage for the publications of the IHR which was competing with the publications of Liberty Lobby.
295. In early February, 1994, defendants used the LSF/IHR/Noontide Press mailing lists to send letters to IHR supporters, many of whom defendants also knew to be supporters of Liberty Lobby, in which they attacked Carto.
296. As a proximate result, many supporters of the IHR and of Liberty Lobby expressed serious doubts about Carto and Liberty Lobby in written and telephonic communications and vowed that they would no longer support Liberty Lobby because of the allegations published by defendants.
297. In succeeding weeks and months, Carto and Liberty Lobby made strenuous and costly efforts to reply personally to each of the letters and telephone calls received.
298. It is established as a general rule in the publishing industry that for every person who writes or calls about a subject at least 200 persons who feel the same way do not write or call. It is prudent to believe that many hundreds or thousands of supporters of Liberty Lobby were lost because of the defendants' malicious defamation directed against the plaintiffs by the defendants in an effort to secure an economic and competitive advantage.
299. While Carto was not at Liberty Lobby headquarters in Washington, D.C. and was working out of the office at 711 West 17th Street in Costa Mesa, Liberty Lobby employees, including its comptroller Blayne Hutzel, frequently sent Carto large parcels via Priority or Express U.S. Mall containing personal mail sent to Carto in care of Liberty Lobby, business memoranda to Carto from Liberty Lobby employees, private Liberty Lobby business records, including bank statements, mailing lists and orders for materials that had to be processed as well as letters to Liberty Lobby from supporters of both Liberty Lobby and the IHR who were requesting further information about the events that had taken place at the IHR. When Carto received the latter inquiries he would send out pertinent materials presenting his view.
300. During March 1994, one large-sized Priority U.S. Mail envelope containing the documents referred to hereinabove arrived at the U.S. Post Office in Costa Mesa and was inadvertently sent to the new IHR office under the control of the defendants. At that time, defendant Marcellus unlawfully opened the mail in question, cognizant of the fact that it had been sent from Liberty Lobby to Carto and unlawfully appropriated that mail for use by himself and the LSF in furtherance of their continuing efforts to disrupt the work of Liberty Lobby. This mail, taken illegally by Marcellus, has never been returned to Liberty Lobby or Carto. These acts constitute the violation of Title 18, Section 1702 and Section 1708.
301. During April of 1994, a monthly publication known as Criminal Politics, published in Cincinnati, Ohio by Lawrence T. Patterson, hereinafter referred to as Patterson, published a lengthy article entitled Willis Carto’s Campaign Against the Institute for Historical Review.
This article was written by Weber. The article contained numerous false, malicious and defamatory statements about Carto and his administration of the affairs of LSF, IHR and Liberty Lobby.
302. Immediately after this issue of Criminal Politics was released, its publisher Larry Patterson used the U.S. Postal Service to mail to unknown numbers of individuals around the United States who were not subscribers to Criminal Politics copies of the April 1994 issue of his magazine. Accompanying the issue of the magazine was a letter urging the recipients to subscribe to Patterson’s magazine.
303. Based upon subsequent telephonic and written inquiries addressed to Liberty Lobby from those who received this mailing, it was determined, beyond question, that a large number of those who had received this mailing were longtime supporters of Liberty Lobby who had never subscribed to Criminal Politics and some of whom had never actually even been on the mailing lists of the LSF/IHR/Noontide Press.
304. It was also determined that Liberty Lobby subscribers who had received this issue of Criminal Politics had also received a special edition of the magazine different from the regular issue mailed to its regular subscribers; specifically, on the issue that they received had been affixed on the cover of the magazine a special gummed sticker approximately two-inches square with text directing them specifically to the article by Weber attacking Carto, beginning on page 26 of the magazine. This was clearly a deliberate and calculated attempt to sully the reputation of Carto and to diminish support for Liberty Lobby.
305. It was further determined that many of those who had received this special mailing had been among those whose letters and names had been sent to Carto by Liberty Lobby in the stolen U.S. Priority Mail package after they had written Carto and Liberty Lobby in Washington requesting Carto’s response to the allegations that had previously been made by defendants in regard to the events that had taken place at the IHR.
306. The defendants had secured the unlawfully obtained correspondence and had passed the names of the correspondents on to Carto’s competitor Patterson, who, in turn, used those names to mail the special copies of his magazine to those recipients.
307. Patterson’s intervention, through the aegis of his magazine, in the conflict between Carto and defendants came as a surprise to Carto, inasmuch as Carto and Liberty Lobby had, for many years, maintained friendly relations with Patterson.
308. Although the circulation of Patterson’s magazine was substantially smaller than the outreach of Liberty Lobby and its weekly newspaper, The Spotlight, a large number of Patterson’s readers were persons of means with funds to invest, and also subscribers to Liberty Lobby’s publication. Thus, the damage to the reputation of Carto and Liberty Lobby as a direct consequence of actions by defendants, in collaboration with Patterson, were magnified.
309. Plaintiffs assert that the defamatory article referred to above was written and published for the purpose of undermining Liberty Lobby and Carto so as to redirect contributions and support for Liberty Lobby to Patterson and defendants in order to secure economic and competitive advantage for the defendants.
310. The defendants' efforts to remove Carto from the administration of LSF affairs was largely an effort by defendants to appropriate the Farrel funds for their own use and to secure for themselves economic and competitive advantage for themselves against rival publications appealing to the same market.
311. Although in early public communications to IHR supporters following the events of October 15, 1993, defendants had not openly discussed their interest in the Farrel money, thereafter defendants had increasingly begun discussing the Fan-el money publicly, belying their earlier stated claims that they were concerned about Carto’s mismanagement
of the affairs of the IHR and the editorial direction of the LSF’s publications which they had repeatedly stated was their primary concern.
312. Weber became quite vocal in his public and private discussions of the Farrel money and bragged how once he and his associates had obtained the funds that they had intended to buy control of a variety of fight wing newspapers around the country that were not controlled by Willis Carto. At various times Weber alternately described the Farrel assets as being either 20 million or 40 million or even 80 million, clearly betraying his actual lack of knowledge about either the details of Carto’s successful effort to secure the funds or of its subsequent disposition.
313. In pursuit of these funds, defendants Hulsy, Marcellus, Weber, Raven, Allen, Berg, Curry, Riner and Taylor caused a lawsuit to be filed by LSF in the Superior Court of the State of California for the County of San Diego, charging Carto, Liberty Lobby, Fischer, and Vibet, Inc., with civil conspiracy to defraud, conversion, negligence, and violations of California Civil Code Section 6215
(a California statute governing the proper handling of corporate records).
314. The suit alleged that Carto and others had unlawfully misappropriated and mishandled the funds from the Farrel assets successfully secured by Carto between 1985 and 1990 and then distributed by Carto between 1990 and 1993 under the terms designated between agreements by Carto with the LSF board of directors that existed prior to the purported establishment of a new LSF board on or about September 24, 1993.
315. In December of 1994, the aforementioned Criminal Politics magazine published by Patterson, published another article by Weber, one entitled What Has Carto Done with Farrel Estate Millions?
repeating earlier false, malicious and defamatory allegations against Carto and Liberty Lobby and additionally making same similar allegations against Elisabeth Carto and Fischer.
316. Defendants subsequently reproduced this article and gave it widespread distribution above and beyond the regular circulation of Criminal Politics subscribers, mailing copies of the articles to persons on the LSF mailing lists and to others.
317. During 1995, defendants had not yet successfully achieved control of any of the Farrel funds. Contributions to the LSF and IHR were on an downward spiral and subscriptions to the IHR’s Journal, which was issued sporadically, were drastically declining.
318. As the truth about the events that had taken place became more and more a pan of the public record, more and more IHR supporters became disenchanted.
319. Publication of the Journal was erratic and issues were often assembled and mailed months late. Since Carto’s removal from the LSF, its affairs were perpetually in a state of disarray and decline and the LSF was on the verge of bankruptcy and collapse.
320. Defendants began to sell off the LSF’s book inventory, worth an estimated $1 million, and assembled by Carto at great cost in both time and money, at drastically reduced prices in order to maintain income and to pay their salaries and expenses. Carto had hoped and intended that the $1 million book inventory, if sold at standard market prices, would continue to provide regular revenue for the IHR well into the future. Defendants, by their actions, defeated that purpose and thereby cost LSF/IHR/Noontide substantial revenue.
321. Although the civil lawsuit that defendants had filed in the Superior Court of the State of California for the County of San Diego on July 22, 1994 charging Carto with conversion of the Farrel funds was still underway, defendants then altered their tactics and attempted to use the police powers of the government to do what they had not been able to do through their civil lawsuits against Carto and Liberty Lobby.
322. On March 22, 1995 at 7:00 am, some 25 gun-bearing members of a SWAT team raided the West Coast office of Liberty Lobby and The Spotlight located in the San Diego County, California home of Carto and his wife, Elisabeth At the same time, the nearby home of Carto’s associate Fischer was also raided.
323. Among those conducting the raids were not only officers of the Costa Mesa Police Department and deputies from the San Diego County sheriffs department, but also others. During the raid on the Carto home, a helicopter hovered above the Carto property.
324. The officers and agents were ostensibly executing a search warrant looking for evidence that Carto and Fischer had allegedly secreted unspecified valuables and other assets that Carto and Fischer had secured in the settlement of the legal battle over the assets of the late Farrel and the NECA corporation.
325. This raid had taken place because at least two IHR staffers, Weber and Marcellus, had appeared on March 6 before Costa Mesa police department investigator Larry Rooker and sworn out a complaint with the Costa Mesa, California Police Department making preposterous and patently false allegations against Carto and Fischer that they themselves knew were not true. This was apparently Marcellus' last act before resigning from the IHR.
326. Acting upon the affidavit sworn out by Weber and Marcellus, Costa Mesa police investigator Rooker appeared before Judge Suzanne Shaw and filed for a search warrant which the judge granted.
327. Although Carto was not home at the time of the raid, his wife Elisabeth and two young visiting family members were present. Mrs. Carto, alerted to the danger by the barking of the family’s pet dog, encountered the police outside the front door, as they converged upon the house after having broken down the gate leading onto the property.
328. The officers, some carrying assault weapons and wearing ski masks, sprayed her dog in the face with an immobilizing chemical, leaving the dog howling in pain. The officers then violently seized Mrs. Carto and placed her in handcuffs. They then forced their way into the house.
329. Alerted to the events by the ensuing noise, Mrs. Carto’s young niece came to the front door where she was accosted by the police officers who pointed weapons in her face.
330. In the meantime the young woman’s cousin was dragged from his bed in handcuffs. He was held in handcuffs for twenty minutes before being released. The young man, a recent law school graduate in Germany, had come to California for a three-week rest before beginning his new job.
331. Elisabeth Carto and the two young people were held incommunicado as the police officers ransacked the house from top to bottom for five hours.
332. It was not until the police left, five hours after the assault commenced, that Mrs. Carto was able to put through a call to her husband and to attorney Lane, both of whom were in Washington, D.C. at the time of the assault. The raiders took with them fourteen boxes of documents, Mr. Carto’s personal gun collection, Mrs. Carto’s computer, and valuable autographed pictures of historical figures.
333. In the wake of the raid, Weber insisted repeatedly and heatedly that he had absolutely nothing to do with the police action. However, the official statement of probable cause filed by investigator Larry Rooker of the Costa Mesa, California police asking the judge to issue the search warrant authorizing the raid, states specifically that on March 6, 1995, Weber and Marcellus appeared before him and brought the complaint against Carto.
334. In their meeting with Rooker at the Costa Mesa Police Facility Weber and Marcellus had made the allegation which they knew to be false that Carto had embezzled
funds from the IHR’s parent company, the Legion for the Survival of Freedom (LSF).
335. Rooker had initially told interested parties that not only Weber and Marcellus, but also fellow staff member Raven, had sworn out statements with the Costa Mesa police. Raven’s name, however, disappeared from Rooker’s written version of events as it appeared in the statement of probable cause.
336. Although defendant Berg contended following the raid that he had no idea that the raid would be conducted, his name also appeared in the statement of probable cause filed by the police as evidence.
337. Although defendant Countess denied that the new LSF board of which he had been appointed a member had anything whatsoever to do with prodding the police action, the police said otherwise.
338. Defendant Allen told associates that agents from federal agencies, including the FBI, were among the invaders of Carto’s home and office; Allen would not reveal where he acquired this information.
339. Police investigator Rooker, who orchestrated the raid on the Carto and Fischer homes, contended, contrary to Allen, that no federal agencies were involved.
340. What motivated Rooker’s interest in this case has yet to be established; shortly after the raid Rooker told attorney Brian Urtnowski, a California lawyer representing Carto, that the Costa Mesa Police Department would be willing, according to Rooker, to drop any further investigation into the purported embezzlement
if Carto agreed to turn over all assets to the LSF that defendants believed were their rightful property.
341. Rooker admitted to Mrs. Carto during the raid that he knew defendant Hulsy. Later, he denied knowing Hulsy.
342. Rooker was suddenly terminated by the Costa Mesa Police Department a few days after the raid took place.
343. In the wake of the raid on the Carto home, defendants publicly and often proclaimed that Carto faced certain criminal indictment for, in their words, the embezzlement
of the Farrel funds from the IRS. No such criminal indictment has ever emerged nor were any criminal or civil charges filed by any public investigative agency of any kind.
344. During this same time period, a Houston court ruled that an action filed by corporate members Mrs. Furr and Carto against defendants Allen, Berg and Curry by LSF directors Lewis and LaVonne Furr should move forward. That suit demanded that Allen, Berg and Curry cease and desist from proclaiming themselves to be legitimate members of the LSF board.
345. Assisting the Furrs and thereby rejecting the claims made by defendants was attorney Kenneth Graham, hereinafter referred to as Graham, a Texas attorney who has been the LSF’s attorney of record in Texas since 1966. Graham filed an affidavit on behalf of the Furr’s lawsuit against defendants, verifying that the Furrs and, in particular, Carto, were permanent incorporators (voting members) of the LSF and could not therefore be removed by any action taken by defendants.
346. In the immediate wake of the attack on their home, Carto and his wife Elisabeth filed a civil action against those responsible for the March 22 raid.
347. Named as defendants in the action were the Costa Mesa California Police Department investigator Larry Rooker; Costa Mesa Police Department investigator Jerry Holloway; San Diego County Sheriffs Department Deputy Tim Carroll; the City of Costa Mesa; and the County of San Diego; the employees and members of the board of directors of the IHR including Marcellus, who had since left the IHR, and Weber and Allen.
348. As of this time, the litigation stemming from the March 22, 1995 raid on the Carto home, is still pending.
349. In late 1995 defendants made another bribery attempt. Defendant Berg offered $1,000 to former LSF director Kerr if he would sign a document endorsing defendants takeover of the LSF and repudiating his earlier support for Carto and the original LSF board of which Kerr had been a member. Kerr, however, rejected the offer.
350. Faced with increasing pressure as a result of the Texas lawsuit filed by Lewis and LaVonne Furr in which their status as members of the LSF board of directors was directly challenged, defendants Allen, Berg and Curry formally resigned from the LSF board. At one juncture, their attorneys offered a formal settlement in which Allen, Berg and Curry agreed to admit that they had never lawfully been appointed to the LSF board in return for the payment of costs of the legal fees.
351. On November 26, 1996, Judge Runston D. Maino of the Superior Court of California reached a judgment in the case filed against Carto, Fischer and Liberty Lobby in the civil suit filed by defendants in regard to the disposition of the assets of Farrel secured by Carto and distributed to a variety of causes, including Liberty Lobby and the LSF.
352. Maino levied a judgment of $2,650,000 against Liberty Lobby and $6,430,000 against Carto, plus interest often percent. Maino’s judgment essentially concluded that because Liberty Lobby had received approximately $2,650,000 in money directed to Liberty Lobby from the funds received from the Farrel settlement that Liberty Lobby was therefore liable for that amount.
353. Maino’s judgment has been appealed to the Court of Appeals for the State of California and is presently pending there; what is particularly significant is that the judge affirmatively rejected repeated claims by defendants in the instant litigation that Carto and Liberty Lobby and Fischer were somehow guilty of fraud and embezzlement.
354. Thus, in the matter of the case before Judge Maino, only one matter was, in fact, settled and is not subject to appeal. A court of competent jurisdiction ruled that Willis Carto did not embezzle any funds and is not guilty of fraud.
355. At the conclusion of a civil trial in the Superior Court for the State of California, a court which has civil and criminal jurisdiction, Judge Runston G. Maino wrote an official letter to all counsel to inform [them] as to how I saw the evidence.
356. The defendants in the instant case (who were the plaintiffs in the case before Judge Maino) had charged Carto, the aforementioned Fischer and Liberty Lobby with civil conspiracy, fraud, commission of acts with fraud, willfulness, wantonness, malice and oppressions, entitling plaintiff to an award in addition to punitive damages. They had charged Carto with embezzlement.
357. The Court refused to award punitive damages since the Court found no fraud and no embezzlement. In his letter, Judge Maino explained why he found no fraud and he found no embezzlement. He wrote: Mr. Carto is not without sympathy. If he had not purchased the debts of the Legion many years ago it probably would have expired. He has devoted many years of his life toward the Legion, perhaps without pay. He took it upon himself to pursue the Farrel estate at considerable cost to his time and to some of his
personal money.
358. The judge found that Mr. Carto had made errors, but that no fraud or embezzlement took place. For example, he wrote:
359. One of Mr. Carto’s fundamental misconceptions is his relationship to the Legion. Just because he purchased the debts of the Legion and devoted time and money toward its goals does not allow him to use the Legion as if he owned it.
360. Mr. Carto believes that his status of as
substitute incorporator
or member, of the Legion gives him the power and fight to control the Legion.
361. Because Mr. Carto thinks he is the Legion and he owns and controls it, he acted in a certain way toward it.
362. Another of Mr. Carto’s misconceptions is that he and not the Legion is entitled to the proceeds from the Farrel estate.
363. Another misconception by Mr. Carto is that he had the fight to take the Farrel money and give it to other good causes instead of the Legion.
364. A final misconception of Mr. Carto’s is that the Board of Directors gave up the assets of the Farrel estate on March 5, 1991 and allowed Mr. Foetisch to disburse it to suitable independent organizations.
365. In that case, the trial court did hear all of the evidence offered by Weber and his associates who are defendants in the instant litigation. The defendants sought to establish fraud and embezzlement in their pleadings, in their complaint, in documentary evidence which they submitted to the court, and in testimony before the court, as well as in their arguments to the court. The judge ruled very specifically that there was no fraud and that there was no embezzlement.
366. That matter is res judicata. The court with jurisdiction over civil and criminal matters listened to all the testimony offered by the defendants in this case, accepted into evidence their documents, heard their arguments about embezzlement and fraud and then concluded that, in essence, the evidence demonstrated that there could be no criminal action against Carto or Liberty Lobby or Fischer or any of the plaintiffs in the instant litigation.
367. The civil verdict is now being appealed by Carto and Liberty Lobby and Fischer, who were defendants in the litigation concluded by Judge Maino.
368. The defendants have not appealed the ruling of Judge Maino who rejected their fraud, civil conspiracy and embezzlement claims. That aspect of the case is closed.
369. Although the defendants have made many efforts to have Carto and others charged with embezzlement by contacting the FBI, the California Attorney General’s Office, the San Diego Sheriffs Department and the Costa Mesa Police Department, all of which have heard the complaints of the defendants, every one of those efforts have been rejected by the law enforcement agencies in questions. Some of those agencies have read the relevant documents, studied the case thoroughly and all have reached the same conclusion: there was no fraud, there was no embezzlement.
370. Thus every law enforcement agency and court with arguable jurisdiction has rejected the false charges of embezzlement and fraud made by the defendants.
371. Nevertheless, the defendants have continued to assert that Carto and his associates are guilty of embezzlement.
372. On information and belief, it is alleged that during October, 1997, the defendants arranged for the distribution to advertisers in The Spotlight of various documents asserting that Carto had decided to ignore the law as well as his legal and financial obligations, that Carto was dishonest, that Carto, through The Spotlight, has published false statements about these issues, and that the advertisers should not reward Carto’s dishonesty by advertising in The Spotlight.
373. These documents were sent to the advertisers anonymously by A Concerned Patriot,
who claimed to be an advertiser in The Spotlight.
374. The documents referred to above republished a newspaper article dated April 2, 1995, stating, in its headline, that the Farrel funds may have been embezzled.
375. The documents included a newspaper article dated June 16, 1995, that stated that plaintiffs Carto and Fischer may be embezzlers.
376. These documents were sent to advertisers in The Spotlight long after the court had ruled, and the defendants herein had declined to appeal that ruling, that Carto and Fischer had not embezzled any funds.
377. Upon information and belief the defendants sought to gain unfair competitive advantage and to secure financial and economic benefits for themselves through their efforts to cause The Spotlight to cease publication through the loss of advertising and thus create an opportunity for the publications produced by the defendants.
378. Defendants sought improperly to secure unfair advantage against the plaintiffs by embarking upon a campaign to intimidate and frighten counsel for the original incorporators of the LSF in the lawsuit then pending in the 11th Judicial District Court of Harris County, Texas, and by taking other extra-legal actions in that matter.
379. Among other actions, defendants have implied or stated that they would attempt to file criminal charges against counsel if he continued to represent his clients and, in fact, did file a complaint against the attorney, stating or implying that he, the attorney who actually met Carto for the first time during 1994, was responsible for the removal of millions of dollars from Switzerland, an event which had transpired some years previously, and by accusing the attorney of covering-up the facts regarding the removal of funds and of profiting from those funds although the question involving those funds was not before the court in the case in which the attorney represented his clients.
380. The defendants sought to secure unfair advantage against the plaintiffs and their cause by engaging in questionable tactics against counsel for plaintiffs' cause, which included the acts set forth above as well as by other extra-legal actions.
381. After all of the relevant courts, agencies and local, state and federal agencies in the United States that were contacted by the defendants in their numerous efforts to have Carto prosecuted for embezzlement, declined to do so when in possession of the relevant evidence, the defendants then sent very selective documents to the court in Switzerland seeking to have Carto arrested for embezzlement.
382. During September, 1997, defendant Weber, purportedly acting on behalf of the LSF and IHR, and with actual malice, defamed Carto by publishing letters to persons who comprised part of the publishing market which Weber and the other defendants sought to capture by degrading Carto. Although Weber knew that Carto had never been convicted of the crime of embezzlement and, in fact, not charged with that crime by any authority in spite of the numerous and continuous efforts of the defendants to bring about such a charge and in spite of the fact that any allegation of embezzlement had been rejected by the Superior Court which had tried the civil case referred to above, Weber asserted in his letters that Carto embezzled millions.
Indeed, Weber falsely implied in that letter that Judge Maino had determined that Carto was guilty of embezzlement. In that letter Weber made numerous other false and defamatory allegations against Carto including the statement that Carto is widely recognized as a liar and crook,
that Carto illegally
controls two corporations, that Carto has been dishonest
and takes illegal actions
and that Carto lies.
383. In publishing these and other false and defamatory charges, defendant Weber has employed stationary bearing the names of defendants Marcellus, O’Keefe, Raven, Berg, Countess and others. Each of the allegations in the letter and referred to above is false and defamatory and was made by the defendants with actual malice.
384. During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised pan of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendants mailed the documents in envelopes bearing the name and address: Institute for Historical Review, Post Office Box 2739, Newport Beach, CA 92659. USA
385. The documents were unsigned and indicated that a group named In Loco Parentis had created the document on May 1, 1994. These documents were published on the Internet and were internationally circulated at that time and thus remain available to residents of the District of Columbia and elsewhere at the present time. The telephone number which followed the title In Loco Parentis upon the letterhead was (714) 63 11490,
which is the telephone number of the IHR and defendant LSF and the office telephone of defendants Weber and Raven. Upon information and belief it is alleged that the defendants created the document during 1994.
386. It is clear that the defendants widely published the document during November, 1997. Indeed, defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
387. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted. This letter was sent to LaVonne Furr in violation of a protective order entered by the 152nd Judicial District Court of Harris County, Texas, prohibiting the publication to Mrs. Furr of such material by the defendants in that case. The order, signed by Hon. Harvey Brown, was issued on March 7, 1997.
388. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory.
389. The document published by the defendants falsely asserted that Carto moved to San Francisco to escape the consequences of the theft and jailing referred to above.
390. The defendants falsely asserted that Carto secretly was employed by the ADL, and that Mark Lane, the attorney for Liberty Lobby, was assigned by the ADL to control Carto.
391. Each allegation referred to above is false and defamatory and was made with actual malice. The defendants further stated that Lane is paid per case and that he, serving as a conduit for the ADL, then transfers his fees to the ADL. Those allegations are also entirely false.
392. Each of the allegations made in the document referred to above are entire fabrications, are false and defamatory and were made by the defendants with actual malice.
393. On or about October 15, 1997, and both prior to and subsequent to that time period, the defendants, upon information and belief, both caused to be published and published letters and other documents to persons and entities which had previously placed advertisements in The Spotlight, a publication of plaintiff Liberty Lobby, for the express purpose of encouraging advertisers to cease and desist from placing advertisements in The Spotlight.
394. The letters were signed A Concerned Patriot
and the authors of the letter asserted I am not a supporter or representative of the Legion [the Legion for the Survival of Freedom].
The letter asserted that the signer of the letter was an advertiser.
395. The letter asserted that Carto was dishonest,
that he illegally
utilized funds which did not belong to him and quoted selectively from the decision of the Superior Court.
396. The letter concluded that dishonesty
should not be rewarded and urged advertisers in The Spotlight to refrain from placing advertisements in that newspaper in the future.
397. The letter was accompanied by copies of a number of documents which had been in the possession of the defendants and which had been exhibits in cases involving the defendants including a copy of a letter sent by the court to counsel for the defendants in this case.
398. Other documents sent to the advertisers included press clippings which the defendants had previously circulated to others.
399. These letters and documents were sent via mail to residents and businesses located in the District of Columbia and elsewhere, were purposefully directed toward the residents and businesses in the District of Columbia and elsewhere with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia, including plaintiff Liberty Lobby and plaintiff Carto.
400. As a result of the actions of the defendants set forth above, plaintiffs suffered serious and substantial losses including the loss of advertising income from recipients of the letters and documents referred to above.
401. In addition to publishing defamatory documents on the Internet available to residents and businesses in the District of Columbia, publishing via mail to residents and businesses in the District of Columbia defamatory documents about the plaintiffs during the last twelve months as well as prior thereto, and sending defamatory letters to persons and businesses also located in the District of Columbia, that had advertised in The Spotlight, all for the purpose of discouraging those advertisers to continue to publish advertisements in The Spotlight, the defendants engaged in other activity in the District of Columbia purposefully directed to defame the individually named plaintiffs, and purposefully directed to destroy the business of Liberty Lobby by unfair and unlawful means in violation of the laws of the District of Columbia and of the United States.
402. During 1997 and prior thereto, defendant Weber, on his own behalf and on behalf of the other defendants, made numerous telephone calls and sent numerous letters to Andrew Gray, the copy editor of The Barnes Review, hereinafter TBR, a magazine organized by plaintiff Carto and a publication which Carto served as publisher at its inception and which Carto continues to serve as publisher
403. Carto established TBR after the defendants had exercised control over the defendant LSF and its publication, Journal, a publication which Carto had also established. TBR was established for the purpose of providing an historical perspective without regard to accepted legend and in that regard is a business rival of the Journal.
404. Defendant Weber, the editor of the Journal, in numerous letters and telephone calls placed to Andrew Gray, an editor of TBR and a resident of the District of Columbia where TBR is also edited and published, defamed the plaintiffs and urged Gray to disassociate from TBR in the same fashion that advertisers were urged to disassociate from Liberty Lobby. Weber directed his letters and telephone calls to Gray in the District of Columbia with the foreseeable hope and intention that Gray would weaken TBR and strengthen its rival publication, the Journal by leaving TBR. Weber’s letters and telephone calls were purposefully directed to a resident of the District of Columbia with the foreseeable intent and hope of causing serious injury, including financial harm, to TBR which was published by plaintiff Carto, a resident of the District of Columbia and TBR, a publication edited and published in the District of Columbia. Carto has provided free subscriptions to TBR to branches of the District of Columbia library system.
405. Each of the statements made by the defendants and referred to above and below were intentionally made by the defendants and were intentionally designed to discourage subscribers, advertisers and others from associating with the plaintiffs by defaming the plaintiffs and by disparaging the plaintiffs and their businesses.
406. These statements comprise the ton of trade libel or business disparagement and injurious falsehoods consisting of the deliberate and knowing publication of false matter derogatory to the plaintiffs' reputation and to the plaintiffs' business of a kind calculated to prevent others from dealing with the businesses of the plaintiffs and otherwise interfering with the relations of the plaintiffs and their businesses with others, to the detriment and harm of the plaintiffs and their businesses.
407. These statements have already caused very substantial injury to the reputation of the plaintiffs and their businesses and have already caused severe financial losses to the plaintiffs' businesses including, but not limited to, loss of subscription and loss of income from advertising.
408. In addition, defendant Weber, on behalf of his co-defendants including LSF, sent defamatory material about Carto to Piper and other employees of Liberty Lobby. These mailings were sent from 1993 until December, 1997. That material charged Carto with illegal actions. Some of this material was mailed by Weber to Piper at Piper’s home address in the District of Columbia. Piper was at all relevant times employed by Liberty Lobby as an editor and marketing executive.
409. Defendant Weber, on behalf of the LSF and the other defendants, has made telephone calls and has sent letters to Paul Croke. Croke, an editor of plaintiff Liberty Lobby, received both the telephone calls and letters at his place of employment in the District of Columbia. Weber stated to Croke as recently as during November, 1997, that Carto was a criminal, that Carto had committed crimes and could be sent to jail, that Carto might be planning to flee to Europe and that Liberty Lobby had no future. In conversations with Croke, Weber defamed Piper and Carto.
410. The statements made by Weber to Croke in the District of Columbia were purposefully made to residents and representatives of business in the District of Columbia with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia and to destroy the business of Liberty Lobby by unfair competition and other unlawful means in violation of the laws of the District of Columbia and of the United States.
411. During 1994, John Nugent, acting on behalf of the defendants, offered a bribe of Five Thousand dollars ($5,000) to William Sweet, who had been the mailing list coordinator for Liberty Lobby.
412. Each of the defendants and all of the defendants have met, conferred and conspired among themselves and with others presently unknown to harm the plaintiffs and to destroy the fights of the plaintiffs by violating the fights of the plaintiffs through the commission of various improper, unlawful, tortious and illegal acts, all to the detriment and substantial harm and loss suffered by the plaintiffs.
413. After each of the defendants and all of them met, conferred and conspired among themselves, as well as with others presently unknown, they, each of them and all of them acted in furtherance of the conspiracy to harm and destroy the plaintiffs and their fights, thus causing substantial harm and suffering to the plaintiffs.
414. The actions by each of the defendants and by all of the defendants referred to hereinabove and more specifically set forth in detail hereinbelow include, but are not limited to, extortion, bribery, robbery, attempted extortion, attempted bribery and attempted robbery, all in violation of local statutes as well as in violation of Title 18 U.S.C. 1961 et seq.; engaged in among themselves and with others through contracts, combinations and conspiracy to cause unreasonable restraint of trade and commerce among the several states in violation of Title 15 U.S.C. Section 1; acted together and with actual malice to defame the plaintiffs through the publication of false and fabricated statements including, but not limited to, the false charge that the plaintiffs had committed crimes and the defendants did so through the tort of defamation-slander; acted together with actual malice to defame the plaintiffs through the written publication of false and fabricated statements including, but not limited to, the false charge that the plaintiffs had committed crimes, and the defendants did so through the tort of defamation-libel; acted together and with others unknown and acted with actual malice to defame the plaintiffs through oral and written publication of false, harmful and defamatory statements including, but not limited to, the false charge that the defendants had committed crimes and had engaged in other morally reprehensible conduct, and the defendants did so through the torts of defamation-slander and defamation-libel; engaged in, among themselves and with others unknown, intentionally, willfully, wantonly, purposefully, unjustifiably, and unlawfully in acts which were designed to, and did in fact illegally interfere with plaintiffs' business relationships and contracts with their subscribers, supporters, advertisers, suppliers, readers and donors, as well as with plaintiffs' contractual and business relationships with prospective subscribers, prospective supporters, prospective advertisers, prospective suppliers, prospective readers, prospective donors and others, thus tortiously interfering with plaintiffs contractual and business relationships to the great harm, detriment and substantial loss to plaintiffs, all occasioned by the unlawful acts of each of the defendants, which acts included, but were not limited to, filing blatantly and entirely fabricated accusations against the plaintiffs and making fabricated accusations against counsel for the plaintiffs, publishing false allegations to employees and associates of the plaintiffs, attempting to bribe persons associated with or employed by the plaintiffs, engaging in the crime and tort of extortion, engaging in the crime and tort of robbery, attempting to steal the valuable mailing list created and maintained by the plaintiffs at the cost. of many millions of dollars, stealing a portion of the mailing list referred to hereinabove, and numerous other acts set forth below in detail, all designed to unlawfully and tortiously interfere with plaintiffs' contractual and business relationships which did, in fact, interfere with those relationships to the substantial harm of the plaintiffs; engaged in a series of unlawful and outrageous actions against plaintiff Carto, including, but not limited to, outrageous acts of defamation through which Carto was falsely charged with reprehensible and immoral conduct; acts by the defendants including the commission of crimes and attempts to commit crimes including extortion, robbery and bribery, acts by the defendants which violated Title 18 U.S.C. 1961, attempts to intimidate and frighten counsel who had been retained by Carto and the publication of documents which were not only entirely false and fabricated but which were intended to destroy the reputation of plaintiff Carto and to outrage and inflame the recipient of the document as is more fully set forth hereinbelow.
415. In combination and individually, these acts by the defendants were extreme and outrageous, especially considering Carto’s particular sensitivity to baseless defamation and the intimate role he played in creating and building the entities referred to hereinabove; the acts of the defendants were made with the intent to cause Carto severe emotional distress or with a reckless disregard of the emotional distress which their acts would engender; as a result of the defendants' extreme and outrageous acts, Carto has suffered severe emotional distress, including extreme mental suffering and mental anguish.
The plaintiffs complain against the defendants as follows:
416. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 415 of this Complaint, inclusive, as if fully set forth herein.
417. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity,
including bribery.
418. The defendants have attempted to bribe persons associated with the plaintiffs on at least two occasions during the past five years.
419. During 1994, Marcellus, acting on behalf of himself and his fellow defendants, offered to pay $5,000 to John Henry Nugent to arrange to bribe a person employed by Liberty Lobby in order to secure the valuable Liberty Lobby and Board of Policy membership and Spotlight newspaper subscriber lists. Liberty Lobby had expended millions of dollars to develop and maintain those mailing lists.
420. Marcellus knew that Nugent was a longtime consultant to and former employee of Liberty Lobby.
421. Nugent then telephonically contacted William G Sweet, a Liberty Lobby employee whom Nugent knew was responsible at that time for the computerized maintenance of the Liberty Lobby lists that Marcellus and the other defendants hoped to obtain. Nugent offered Sweet $5,000 if Sweet were to make the list available
422. Sweet refused the bribe and promptly advised Carto, his immediate superior, of the bribery attempt. Subsequently, Nugent himself made contact with Carto and confessed his role as an intermediary on behalf of Marcellus who later admitted, under oath, that he had initiated Nugent’s actions.
423. During 1995, defendants made another bribery attempt. Defendant Berg offered $1,000 to former LSF director Tom Kerr if he would sign a legal document endorsing defendants' takeover of LSF and repudiating his earlier supp.ort for Carto and the original LSF board of which Kerr had been a member.
424. Subsequently defendant Berg admitted under oath that he and defendant Allen had offered to pay $1,000 to Mr. Kerr.
425. An enterprise
under Title 18, U.SC. Section 1961(4) is defined as any individual, partnership, corporation, association or other legal entity … or group of individuals associated in fact although not a legal entity.
426. The organization operated by the defendants known as The Legion for the Survival of Freedom [LSF], at all times pertinent to this Complaint, is and has been a corporation with activities that affect interstate commerce.
427. Therefore the LSF, at all times pertinent to this case, was and is an enterprise
as defined by Title 18, U.S.C. Section 1961(4).
428. The defendants were at all pertinent times and remain persons associated with or employed by the LSF in violation of Title 18, U.S.C. Section 1962(b), (c) and (d), by formulating an illegal scheme consisting of bribery, extortion and robbery of the plaintiffs.
429. By and through the pattern of racketeering activity engaged in by the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs treble damages, jointly and severally, against all of the defendants and others to be identified later, due to the pattern of racketeering activity engaged in by the defendants; b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $2,500,000.00; and
Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
430. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 429 of this Complaint, inclusive, as if fully set forth herein.
431. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity
including extortion.
432. Alter defendant Raven, armed with a loaded weapon, accompanied by defendants Hulsy, Marcellus, Weber and O’Keefe, assaulted Carto and his wife Elisabeth Carto, at the offices of the LSF on October 15, 1993, officers from the Costa Mesa Police Department arrived. Carto attempted to resolve the matter by advising the police officers that he and his associates, although injured, would agree to refrain from filing criminal complaints. Hulsy stated, on behalf of himself and those who had accompanied him in the assault, defendants Raven, Marcellus, Weber and O’Keefe, that he would agree not to press criminal charges against Carto and his wife, Only if Carto turns over all the assets and complete control of the Legion.
433. Carto responded that he would not yield to a blatant extortion attempt, particularly when the criminal act of extortion was being practiced by his former attorney to secure advantage for himself.
434. Defendants have also engaged in a pattern of racketeering activity through extortion by making blatantly false claims against counsel for the plaintiffs in an effort to constrain counsel to withdraw from representing their clients.
435. Defendants sought improperly to secure unfair advantage against the plaintiffs by embarking upon a campaign to intimidate and frighten counsel for the incorporators (members) of the LSF in the lawsuit then pending in the 11th Judicial District Court of Harris County, Texas, and by taking other extra-legal actions in that matter.
436. Among other actions defendants have implied or stated that they would attempt to file criminal charges against plaintiffs' counsel if he continued to represent his clients and, in fact, did file a complaint against the attorney, stating or implying that he, the attorney who actually met Carto for the first time during 1994, had been responsible for the removal of millions of dollars from Switzerland, an event which had transpired some years previously, and by accusing the attorney of covering-up the facts regarding the removal of funds and of profiting from those funds although the question involving those funds was not before the court in the case in which the attorney represented his clients.
437. Defendants Allan, Berg and Curry filed false complaints against Howard Singleton, a member of the bar of the State of Texas, who had been retained by Carto during July, 1994, to represent the Incorporators of the Legion for the Survival of Freedom, Inc., [a Texas corporation] against Andrew E. Allen, et al.
438. Defendants falsely asserted without any basis that Singleton profited from the embezzlement
of $6.5 million dollars and submitted a newspaper clipping which said that a bequest may have been embezzled.
439. In fact, the case before the court was unrelated to the distribution of the bequest, the bequest had been distributed years before Singleton was retained by Carto and years before Singleton had even met Carto, and Singleton had been paid only normal
and regular attorney’s fees pursuant to the contract he had entered into with his clients. 440. He had never been paid any sum from the estate in question.
441. All of the charges referred to above were rejected by the relevant authority and every allegation that Singleton had profited from an embezzlement or had in any fashion been involved in embezzling funds were dismissed.
442. During November, 1997, and both before and after that.period, the defendants published to numerous persons who comprised pan of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendants mailed the documents in envelopes beating the name and address: Institute for Historical Review, Post Office Box 2739, Newport Beach, CA 92659. USA
443. The documents were unsigned and indicated that a group named In Loco Parentis had created the document on May 1, 1994. These documents were published on the Internet and were internationally circulated at that time and thus remain available to residents of the District of Columbia and elsewhere at the present time. The telephone number which followed the title In Loco Parentis upon the letterhead was (714) 63 11490,
which is the telephone number of the IHR and defendant LSF and the office telephone of defendants Weber and Raven. Upon information and belief it is alleged that the defendants created the document during 1994.
444. It is clear that the defendants widely published the document during November, 1997. Indeed, defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
445. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted.
446. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory.
447. The document published by the defendants falsely asserted that Carto moved to San Francisco to escape the consequences of the theft and jailing referred to above.
448. The defendants also falsely asserted that Carto secretly was employed by the ADL, and that Mark Lane, the attorney for Liberty Lobby, was assigned by the ADL to control Carto.
449. Each allegation referred to above is false and defamatory and was made with actual malice. The defendants further stated that Lane is paid per case by Liberty Lobby and that he, serving as a conduit for the ADL, then transfers those fees to the ADL. Those allegations are also entirely false.
450. In fact, Mark Lane has been a member of the bar of the State of New York for approximately forty-seven years, is a member of the bar of the District of Columbia, is a member of the United States Supreme Court Bar and has tried cases in approximately half of the states of the United States. He has never represented the ADL, has never sought to control
Carto for the ADL or any other entity and has never transferred fees to the ADL from Carto or from any other client.
451. The blatantly false accusations entirely fabricated by the defendants and made against counsel for the plaintiffs form a pattern of racketeering activity comprised of extortion for the purpose of frightening counsel for the plaintiffs into withdrawing as counsel for the plaintiffs and thus enhancing the financial prospects of the defendants by denying to their adversaries effective and knowledgeable legal assistance and counsel.
452. An enterprise
under Title 18, U.S.C. Section 1961(4) is defined as any individual, partnership, corporation, association or other legal entity … or group of individuals associated in fact although not a legal entity.
453. The organization operated by the defendants known as The Legion for the Survival of Freedom [LSF], at all times pertinent to this Complaint, is and has been a corporation with activities that affect interstate commerce.
454. Therefore the LSF, at all times pertinent to this case, was and is an enterprise
as defined by Title 18, U.S.C. Section 1961(4).
455. The defendants were at all pertinent times and remain persons associated with or employed by the LSF in violation of Title 18, U.S.C. Section 1962(b), (c) and (d), by formulating an illegal scheme consisting of bribery, extortion and robbery of the plaintiffs.
456. By and through the pattern of racketeering activity engaged in by the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs treble damages, jointly and severally, against all of the defendants and others to be identified later, due to the pattern of racketeering activity engaged in by the defendants; b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $2,500,000.00; and c. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
457. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 456 of this Complaint, inclusive, as if fully set forth herein.
458. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity,
including robbery.
459. After defendant Hulsy, accompanied by defendant Raven, who wielded a loaded pistol, as well as by other defendants, broke into the LSF offices by force, they seized personal property belonging to Carto and to Liberty Lobby.
460. Subsequently, the defendants improperly secured 200 copies of a book entitled Best Witness. The defendants converted those books and have refused to return them in spite of requests that they do so.
461. Carto had regularly requested the return of his property which the defendants had seized beginning with requests made on October 16, 1993.
462. Most of Carto’s personal property has not been returned and a conversion suit has been filed by Carto against defendants Weber and Raven who are now believed to be in control of these items. That suit is still pending in court in California.
463. Among the property stolen by the defendants and not returned by them are several rare books, hundreds of valuable books, valuable autographed pictures, back files of magazines and other publications published by Carto and others, lamps, tables, and chairs.
464. An arbitrator assigned to a relevant case concluded in his ruling: I strongly suggest, therefore, that LEGION make every effort to return any possession of WILLIS CARTO which it may have.
(Arbitrator’s Statement of Decision, dated June 17, 1994, page 4)
465. Thereafter, on or about November 7, 1994, during a deposition in an unrelated matter defendant Raven admitted being in possession of Carto’s personal property. During the deposition, Raven personally, and through counsel for defendant Weber and the Legion, agreed to return any personal property of [the Cartos] which is not Legion property.
This oral agreement was later memorized in writing in the form of a deposition transcription executed under penalty of perjury by defendant Raven.
466. Despite repeated demands for the return thereof, defendants Raven and Weber have refused and continue to refuse to return the Cartos’ personal property and, on information and belief, have thereby converted the same and/or breached their oral and written agreements to return the same.
467. While Carto was not at Liberty Lobby headquarters in Washington, D.C. and was working out of the office at 711 West 17th Street in Costa Mesa, Liberty Lobby employees, including its comptroller Blayne Hutzel, frequently sent Carto large parcels via Priority or Express U.S. Mail containing personal mail sent to Carto in care of Liberty Lobby, business memoranda to Carto from Liberty Lobby employees, private Liberty Lobby business records, including bank statements, mailing lists and orders for materials that had to be processed as well as letters to Liberty Lobby from supporters of both Liberty Lobby and the IHR who were requesting further information about the events that had taken place at the IHR. When Carto received the latter inquiries he would send out pertinent materials presenting his view.
468. During March 1994, one large-sized Priority U.S. Mail envelope containing the documents referred to hereinabove arrived at the U.S. Post Office in Costa Mesa and was inadvertently sent to the new IHR office under the control of the defendants. At that time, defendant Marcellus unlawfully opened the mail in question, cognizant of the fact that it had been sent from Liberty Lobby to Carto and unlawfully appropriated that mail for use by himself and the LSF in furtherance of their continuing efforts to disrupt the work of Liberty Lobby. This mail, taken illegally by Marcellus, has never been returned to Liberty Lobby or Carto. These acts violate the provisions of Title 18, Sec 1702 and Title 18, Section 1708. The defendants had entered into a conspiracy to violate Title 18, Section 1702 and Title 18, Section 1708 and then did, in fact, violate those statutes.
469. An enterprise
under Title 18, U.S.C. Section 1961(4) is defined as any individual, partnership, corporation, association or other legal entity … or group of individuals associated in fact although not a legal entity.
470. The organization operated by the defendants `known as The Legion for the Survival of Freedom [LSF], at all times pertinent to this Complaint, is and has been a corporation with activities that affect interstate commerce.
471. Therefore the LSF, at all times pertinent to this case, was and is an enterprise
as defined by Title 18, U.S.C Section 1961(4).
472. The defendants were at all pertinent times and remain persons associated with or employed by the LSF in violation of Title 18, U.S.C. Section 1962(b), (c) and (d), by formulating an illegal scheme consisting of bribery, extortion and robbery of the plaintiffs.
473. By and through the pattern of racketeering activity engaged in by the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs treble damages, jointly and severally, against all of the defendants and others to be identified later, due to the pattern of racketeering activity engaged in by the defendants;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $2,500,000.00; and
c. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
474. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 473 of this Complaint, inclusive, as if fully set forth herein.
475. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity,
including bribery.
476. The defendants have attempted to bribe persons associated with the plaintiffs on at least two occasions during the past five years.
477. During 1994, Marcellus, acting on behalf of himself and his fellow defendants, offered to pay $5,000 to John Henry Nugent to arrange to bribe a person employed by Liberty Lobby in order to secure the valuable Liberty Lobby Board of Policy membership and Spotlight newspaper subscriber lists. Liberty Lobby had expended millions of dollars to develop and maintain those mailing lists.
478. Marcellus knew that Nugent was a longtime consultant to and former employee of Liberty Lobby.
479. Nugent then telephonically contacted William G. Sweet, a Liberty Lobby employee whom Nugent knew was responsible at that time for the computerized maintenance of the Liberty Lobby lists that Marcellus and the other defendants hoped to obtain. Nugent offered Sweet $5,000 if Sweet were to make the list available
480. Sweet refused the bribe and promptly advised Carto, his immediate superior, of the bribery attempt. Subsequently, Nugent himself made contact with Carto and confessed his role as an intermediary on behalf of Marcellus who later admitted, under oath, that he had initiated Nugent’s actions.
481. During 1995, defendants made another bribery attempt. Defendant Berg offered $1,000 to former LSF director Tom Kerr if he would sign a legal document endorsing defendants' takeover of LSF and repudiating his earlier supp.ort for Carto and the original LSF board of which Kerr had been a member.
482. Subsequently defendant Berg admitted under oath that he and defendant Allen had offered to pay $1,000 to Mr. Kerr.
483. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity
including extortion.
484. After defendant Raven, armed with a loaded weapon, accompanied by defendants Hulsy, Marcellus, Weber and O’Keefe, assaulted Carto and his wife Elisabeth Carto, at the offices of the LSF on October 15, 1993, officers from the Costa Mesa Police Department arrived. Carto attempted to resolve the matter by advising the police officers that he and his associates, although injured, would agree to refrain from filing criminal complaints. Hulsy stated, on behalf of himself and those who had accompanied him in the assault, defendants Raven, Marcellus, Weber and O’Keefe, that he would agree not to press criminal charges against Carto and his wife Only if Carto turns over all the assets and complete control of the Legion.
485. Carto responded that he would not yield to a blatant extortion attempt, particularly when the criminal act of extortion was being practiced by his former attorney to secure advantage for himself.
486. Defendants have also engaged in a pattern of racketeering activity through extortion by making blatantly false claims against counsel for the plaintiffs in an effort to constrain counsel to withdraw from representing their clients.
487. Defendants sought improperly to secure unfair advantage against the plaintiffs by embarking upon a campaign to intimidate and frighten counsel for the original incorporators of the LSF in the lawsuit then pending in the 11th Judicial District Court of Harris County, Texas, and by taking other extra-legal actions in that matter.
488. Among other actions defendants have implied or stated that they would attempt to file criminal charges against plaintiffs' counsel if he continued to represent his clients and, in fact, did file a complaint against the attorney, stating or implying that he, the attorney who actually met Carto for the first time during 1994, had been responsible for the removal of millions of dollars from Switzerland, an event which had transpired some years previously, and by accusing the attorney of coveting-up the facts regarding the removal of funds and of profiting from those funds although the question involving those funds was not before the court in the case in which the attorney represented his clients.
489. Defendants Allan, Berg and Curry filed false complaints against Howard Singleton, a member of the bar of the State of Texas, who had been retained by Carto during July, 1994, to represent the Incorporators of the Legion for the Survival of Freedom, Inc., [a Texas corporation] against Andrew E. Allen, et al.
490. Defendants falsely asserted without any basis that Singleton profited from the embezzlement
of $6.5 million dollars and submitted a newspaper clipping which said that a bequest may have been embezzled.
491. In fact, the case before the court was unrelated to the distribution of the bequest, the bequest had been distributed years before Singleton was retained by Carto and years before Singleton had even met Carto, and Singleton had been paid only normal
and regular attorney’s fees pursuant to the contract he had entered into with his clients. 492. He had never been paid any sum from the estate in question.
493. All of the charges referred to above were rejected by the relevant authority and every allegation that Singleton had profited from an embezzlement or had in any fashion been involved in embezzling funds were dismissed.
494. During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised part of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendants mailed the documents in envelopes bearing the name and address: Institute for Historical Review Post Office Box 2739 Newport Beach, CA 92659. USA
495. The documents were unsigned and indicated that a group named In Loco Parentis had created the document on May 1, 1994. These documents were published on the Internet and were internationally circulated at that time and thus remain available to residents of the District of Columbia and elsewhere at the present time. The telephone number which followed the title In Loco Parentis upon the letterhead was (714) 63 11490,
which is the telephone number of the IHR and defendant LSF and the office telephone of defendants Weber and Raven. Upon information and belief it is alleged that the defendants created the document during 1994.
496. It is clear that the defendants widely published the document during November, 1997. Indeed, defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
497. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted.
498. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that their. Those statements are both false and defamatory.
499. The document published by the defendants falsely asserted that Carto moved to San Francisco to escape the consequences of the theft and jailing referred to above.
500. The defendants also falsely asserted that Carto secretly was employed by the ADL, and that Mark Lane, the attorney for Liberty Lobby, was assigned by the ADL to control Carto.
501. Each allegation referred to above is false and defamatory and was made with actual malice. The defendants further stated that Lane is paid per case by Liberty Lobby and that he, serving as a conduit for the ADL, then transfers those fees to the ADL. Those allegations are also entirely false.
502. In fact, Mark Lane has been a member of the bar of the State of New York for approximately forty-seven years, is a member of the bar of the District of Columbia, is a member of the United States Supreme Court Bar and has tried cases in approximately half of the states of the United States. He has never represented the ADL, has never sought to control
Carto for the ADL or any other entity and has never transferred fees to the ADL from Carto or from any other client.
503. The blatantly false accusations entirely fabricated by the defendants and made against counsel for the plaintiffs form a pattern of racketeering activity comprised of extortion for the purpose of frightening counsel for the plaintiffs into withdrawing as counsel for the plaintiffs and thus enhancing the financial prospects of the defendants by denying to their adversaries effective and knowledgeable legal assistance and counsel.
504. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity,
including robbery.
505. After defendant Hulsy, accompanied by defendant Raven, who wielded a loaded pistol, as well as by other defendants, broke into the LSF offices by force, they seized personal property belonging to Carto and to Liberty Lobby.
506. Subsequently, the defendants improperly secured 200 c9pies of a book entitled Best Witness. The defendants converted those books and have refused to return them in spite of requests that they do so.
507. Carto had regularly requested the return of his property which the defendants had seized beginning with requests made on October 16, 1993.
508. Most of Carto’s personal property has not been returned and a conversion suit has been filed by Carto against defendants Weber and Raven who are now believed to be in control of these items. That suit is still pending in court in California.
509. Among the property stolen by the defendants and not returned by them are several rare books, hundreds of valuable books, valuable autographed pictures, back files of magazines and other publications published by Carto and others, lamps, tables, and chairs.
510. An arbitrator assigned to a relevant case concluded in his ruling: I strongly suggest, therefore, that LEGION make every effort to return any possession of WILLIS CARTO which it may have.
(Arbitrator’s Statement of Decision, dated June 17, 1994, page 4)
511. Thereafter, on or about November 7, 1994, during a deposition in an unrelated matter defendant Raven admitted being in possession of Carto’s personal property. During the deposition, Raven personally, and through counsel for defendant Weber and the Legion, agreed to return any personal property of [the Cartos] which is not Legion property.
This oral agreement was later memorized in writing in the form of a deposition transcription executed under penalty of perjury by defendant Raven.
512. Despite repeated demands for the return thereof, defendants Raven and Weber have refused and continue to refuse to return the Cartos’ personal property and, on information and belief, have thereby converted the same and/or breached their oral and written agreements to return the same.
513. While Carto was not at Liberty Lobby headquarters in Washington, D.C. and was working out of the office at 711 West 17th Street in Costa Mesa, Liberty Lobby employees, including its comptroller Blayne Hutzel, frequently sent Carto large parcels via Priority or Express U.S. Mail containing personal mail sent to Carto in care of Liberty Lobby, business memoranda to Carto from Liberty Lobby employees, private Liberty Lobby business records, including bank statements, mailing lists and orders for materials that had to be processed as well as letters to Liberty Lobby from supporters of both Liberty Lobby and the IHR who were requesting further information about the events that had taken place at the IHR. When Carto received the latter inquiries he would send out pertinent materials presenting his view.
514. During March 1994, one large-sized Priority U.S. Mail envelope containing the documents referred to hereinabove arrived at the U.S. Post Office in Costa Mesa and was inadvertently sent to the new IHR office under the control of the defendants. At that time, defendant Marcellus unlawfully opened the mail in question, cognizant of the fact that it had been sent from Liberty Lobby to Carto and unlawfully appropriated that mail for use by himself and the LSF in furtherance of their continuing efforts to disrupt the work of Liberty Lobby. This mail, taken illegally by Marcellus, has never been returned to Liberty Lobby or Carto. These acts violate the provisions of Title 18, Section 1702 and Title 18, Section 1708. The defendants had entered into a conspiracy to violate Title 18, Section 1702 and Title 18, Section 1708 and then did, in fact, violate those statutes.
515. An enterprise
under Title 18, U.S.C. Section 1961(4) is defined as any individual, partnership, corporation, association or other legal entity … or group of individuals associated in fact although not a legal entity.
516. The organization operated by the defendants known as The Legion for the Survival of Freedom [LSF], at all times pertinent to this Complaint, is and has been a corporation with activities that affect interstate commerce.
517. Therefore the LSF, at all times pertinent to this case, was and is an enterprise
as defined by Title 18, U.S.C. Section 1961(4).
518. The defendants were at all pertinent times and remain persons associated with or employed by the LSF in violation of Title 18, U.S.C. Section 1962(b), (c) and (d), by formulating an illegal scheme consisting of bribery, extortion and robbery of the plaintiffs.
519. By and through the pattern of racketeering activity engaged in by the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs treble damages, jointly and severally, against all of the defendants and others to be identified later, due to the pattern of racketeering activity engaged in by the defendants;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $2,500,000.00; and
c. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
520. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 519 of this Complaint, inclusive, as if fully set forth herein.
521. The defendants were engaged among themselves and with others through contracts, combinations and conspiracy to cause unreasonable restraint of trade and commerce among the several states, all in violation of Title 15 U.S.C. Section 1.
522. The defendants engaged in concerted action to effect unreasonable restraint on trade.
523. The restraint was unreasonable in that it was intended to harm and unreasonably restrain competition and the restraint actually did harm competition.
524. The given marketplace as is defined above is limited and the defendants sought to destroy their competition in that marketplace.
525. The actions of the defendants have had a substantial effect upon the interstate commerce involved.
526. The defendants intentionally, willfully, wantonly, purposely, unjustifiably, unlawfully and illegally interfered with the plaintiffs' contractual and business relationships with their subscribers, supporters, advertisers, suppliers, readers and donors through wills and trusts, attorneys, prospective subscribers, prospective supporters, prospective advertisers, prospective suppliers, prospective readers, prospective donors through wills and trusts and prospective attorneys.
527. The defendants' tortious conduct aimed at interfering with plaintiffs' contractual and business relationships included, but is not limited to, the following acts of the defendants:
a) Defendant Countess wrote a series of harassing letters to at least three Liberty Lobby employees, Vince Ryan, Trisha Katson and Piper, attacking Carto and Liberty Lobby, urging the employees to engage in disloyal activities for the purpose of removing their employer, Carto, as chief executive officer of Liberty Lobby. Defendant Countess harassed Liberty Lobby employee Piper, in particular, stating that he too, deserved to serve time in prison alongside Carto for refusing to be disloyal to his employer. Defendant Countess also stated in writing that Elisabeth Carto would also spend time in prison for her purported misfeasance and malfeasance in the administration of LSF affairs.
b) During 1994, Marcellus, acting on behalf of himself and his fellow defendants, offered to pay $5,000 to John Henry Nugent to arrange to bribe a person employed by Liberty Lobby in order to secure the valuable Liberty Lobby Board of Policy membership and Spotlight newspaper subscriber lists. Liberty Lobby had expended millions of dollars to develop and maintain those mailing lists. Marcellus knew that Nugent was a longtime consultant to and former employee of Liberty Lobby. Nugent then telephonically contacted William G. Sweet, a Liberty Lobby employee whom Nugent knew was responsible at that time for the computerized maintenance of the Liberty Lobby lists that Marcellus and the other defendants hoped to obtain through bribery. Nugent offered Sweet $5,000 if Sweet were to make the list available. Sweet refused the bribe and promptly advised Carto, his immediate superior, of the bribery attempt. Subsequently, Nugent himself made contact with Carto and confessed his role as an intermediary on behalf of Marcellus who later admitted, under oath, that he had initiated Nugent’s actions.
c) During 1995, defendants made another bribery attempt. Defendant Berg offered $1,000 to former LSF director Tom Kerr if he would sign a legal document endorsing defendants' takeover of LSF and repudiating his earlier support for Carto and the original LSF board of which Kerr had been a member. Subsequently defendant Berg admitted under oath that he and defendant Allen had offered to pay $1,000 to Kerr.
d) In an effort to interfere with the relationship which existed between the plaintiffs and their bank, The National Capital Bank, during 1994, defendant Raven, on behalf of the defendants, made false and serious accusations in writing to an officer of that bank accusing the plaintiffs of having committed unlawful acts.
e) After defendant Raven, armed with a loaded weapon, accompanied by defendants Hulsy, Marcellus, Weber and O’Keefe, assaulted Carto and his wife Elisabeth Carto, at the offices of the LSF on October 15, 1993, officers from the Costa Mesa Police Department arrived. Carto attempted to resolve the matter by advising the police officers that he and his associates, although injured, would agree to refrain from filing criminal complaints. Hulsy stated, on behalf of himself and those who had accompanied him in the assault, including defendants Raven, Marcellus, Weber and O’Keefe, that he would agree not to press criminal charges against Carto and his wife Only if Carto turns over all the assets and complete control of the Legion.
Carto responded that he would not yield to a blatant extortion attempt, particularly when the criminal act of extortion was being practiced by his former attorney to secure advantage for himself.
f) During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised part of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendant Raven,' on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
and that his many roommates
have been homosexuals. These allegations were published by the defendants who know.that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory.
g) After defendant Hulsy, accompanied by defendant Raven, who wielded a loaded pistol, as well as by other defendants, broke into the LSF offices by force, they seized personal property belonging to Carto and to Liberty Lobby. Subsequently, the defendants improperly secured 200 copies of a book entitled Best Witness. The defendants converted those books and have refused to return them in spite of requests that they do so. Carto had regularly requested the return of his property which the defendants had seized beginning with requests made on October 16, 1993. Most of Carto’s personal property has not been returned and a conversion suit has been filed by Carto against defendants Weber and Raven who are now believed to be in control of these items. That suit is still pending in court in California.
h) During March 1994, one large-sized Priority U.S. Mail envelope containing the documents referred to hereinabove arrived at the U.S. Post Office in Costa Mesa and was inadvertently sent to the new IHR office under the control of the defendants. At that time, defendant Marcellus unlawfully opened the mail in question, cognizant of the fact that it had been sent from Liberty Lobby to Carto and unlawfully appropriated that mail for use by himself and the LSF in furtherance of their continuing efforts to disrupt the work of Liberty Lobby. This mail, taken illegally by Marcellus, has never been returned to Liberty Lobby or Carto. These acts violate the provisions of Title 18, Section 1702 and Title 18, Section 1708. The defendants had entered into a conspiracy to violate Title 18, Section 1702 and Title 18, Section 1708 and then did, in fact, violate those statutes.
i) In early February, 1994 defendants used the LSF/IHR/Noontide Press mailing lists to send letters to IHR supporters in which they attacked Carto.
As a proximate result, many supporters of the IHR and of Liberty Lobby expressed serious doubts about Carto and Liberty Lobby in written and telephonic communications and vowed that they would no longer support Liberty Lobby because of the allegations published by defendants.
j) During April of 1994, a monthly publication known as Criminal Politics, published in Cincinnati, Ohio by Lawrence T. Patterson, hereinafter referred to as Patterson, published a lengthy article entitled Willis Carto’s Campaign Against the Institute for Historical Review.
This article was written by Weber. The article contained numerous false, malicious and defamatory statements about Carto and his administration of the affairs of LSF, IHR and Liberty Lobby. Immediately after this issue of Criminal Politics was released, its publisher Larry Patterson used the U.S. Postal Service to mail to unknown numbers of individuals around the United States who were not subscribers to Criminal Politics copies of the April 1994 issue of his magazine. Accompanying the issue of the magazine was a letter urging the recipients to subscribe to Patterson’s magazine. Based upon subsequent telephonic and written inquiries addressed to Liberty Lobby from those who received this mailing, it was determined, beyond question, that a large number of those who had received this mailing were longtime supporters of Liberty Lobby who had never subscribed to Criminal Politics and some of whom had never actually even been on the mailing lists of the LSF/IHR/Noontide Press. It was also determined that Liberty Lobby subscribers who had received this issue of Criminal Politics had also received a special edition of the magazine different from the regular issue mailed to its regular subscribers; specifically, on the issue that they received had been affixed on the cover of the magazine a special brightly colored gummed sticker approximately two-inches square with text directing them specifically to the article by Weber attacking Carto, beginning on page 26 of the magazine. This was clearly a deliberate and calculated attempt to sully the reputation of Carto and to diminish support for Liberty Lobby. It was further determined that many of those who had received this special mailing had been among those whose letters and names had been sent to Carto by Liberty Lobby in the stolen U.S. Priority Mail package after they had written Carto and Liberty Lobby in Washington requesting Carto’s response to the allegations that had previously been made by defendants in regard to the events that had taken place at the IHR. The defendants had secured the unlawfully obtained correspondence and had passed the names of the correspondents on to Carto’s competitor Patterson, who, in turn, used those names to mail the special copies of his magazine to those recipients.
k) On information and belief, it is alleged that during October, 1997, the defendants arranged for the distribution to advertisers in The Spotlight of various documents asserting that Carto had decided to ignore the law as well as his legal and financial obligations, that Carto was dishonest, that Carto, through The Spotlight, has published false statements about these issues, and that the advertisers should not reward Carto’s dishonesty by advertising in The Spotlight. These documents were sent to the advertisers anonymously and were accompanied by a defamatory letter signed A Concerned Patriot,
who claimed to be an advertiser in The Spotlight. The letter was accompanied by copies of a number of documents which had been in the possession of the defendants and which had been exhibits in cases involving the defendants including a copy of a letter sent by the court to counsel for the defendants in this case. The documents referred to above republished a newspaper article dated April 2, 1995, stating, in its headline, that the Farrel funds may have been embezzled. The documents included a newspaper article dated June 16, 1995, that stated that plaintiffs Carto and Fischer may be embezzlers. These documents were sent to advertisers in The Spotlight long after the court had ruled, and the defendants herein had declined to appeal that ruling, that Carto and Fischer had not embezzled any funds. Other documents sent to the advertisers included press clippings which the defendants had previously circulated to others. Upon information and belief the defendants sought to gain unfair competitive advantage and to secure financial and economic benefits for themselves through their efforts to cause The Spotlight to cease publication through the loss of advertising and thus create an opportunity for the publications produced by the defendants. These letters and documents were sent via mail to residents and businesses located in the District of Columbia and elsewhere, were purposefully directed toward the residents and businesses in the District of Columbia and elsewhere with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia, including plaintiff Liberty Lobby and plaintiff Carto.
1) During 1997 and prior thereto, defendant Weber, on his own behalf and on behalf of the other defendants, made numerous telephone calls and sent numerous letters to Andrew Gray, the copy editor of The Barnes Review, hereinafter TBR, a publication organized by plaintiff Carto and a publication which Carto served as publisher at its inception and which Carto continues to serve as publisher. Carto established TBR after the defendants had exercised control over the defendant LSF and its publication, Journal, a publication which Carto had also established. TBR was established for the purpose of providing an historical perspective without regard to accepted legend and in that regard is a business rival of the Journal. Defendant Weber, the editor of the Journal, in numerous letters and telephone calls placed to Andrew Gray, an editor of TBR and a resident of the District of Columbia where TBR is also edited and published, defamed the plaintiffs and urged Gray to disassociate from TBR in the same fashion that advertisers were urged to disassociate from Liberty Lobby. Weber directed his letters and telephone calls to Gray in the District of Columbia with the foreseeable hope and intention that Gray would weaken TBR and strengthen its rival publication, the Journal by leaving TBR. Weber’s letters and telephone calls were purposefully directed to a resident of the District of Columbia with the foreseeable intent and hope of causing serious injury, including financial harm, to TBR which was published by plaintiff Carto, a resident of the District of Columbia and TBR, a publication edited and published in the District of Columbia. Carto has provided free subscriptions to TBR to all branches of the District of Columbia library system. Each of the statements made by the defendants and referred to above and below were intentionally made by the defendants and were intentionally designed to discourage subscribers, advertisers and others from associating with the plaintiffs by defaming the plaintiffs and by disparaging the plaintiffs and their businesses.
m) Defendant Weber, on behalf of his co-defendants including LSF, sent defamatory material about Carto to Piper and other employees of Liberty Lobby. These mailings were sent from 1993 until December, 1997. That material charged Carto with illegal actions. Some of this material was mailed by Weber to Piper at Piper’s home address in the District of Columbia. Piper was at all relevant times employed by Liberty Lobby as an editor and marketing executive.
n) Defendant Weber, on behalf of the LSF and the other defendants, has made telephone calls and has sent letters to Paul Croke. Croke, an editor of plaintiff Liberty Lobby, received both the telephone calls and letters at his place of employment in the District of Columbia. Weber stated to Croke as recently as during November, 1997, that Carto was a criminal, that Carto had committed crimes and could be sent to jail, that Carto might be planning to flee to Europe and that Liberty Lobby had no future. In conversations with Croke, Weber defamed Piper and Carto. The statements made by Weber to Croke in the District of Columbia were purposefully made to residents and representatives of business in the District of Columbia with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia and to destroy the business of Liberty Lobby by unfair competition and other unlawful means in violation of the laws of the District of Columbia and of the United States.
o) The defendants, in an effort to prevent the plaintiffs from securing and maintaining effective counsel filed blatantly and entirely fabricated charges and made entirely false and fabricated accusations of disloyalty against counsel for the plaintiffs.
528. Defendants have engaged in a pattern of unlawful activity through extortion by making blatantly false claims against counsel for the plaintiffs in an effort to constrain counsel to withdraw from representing their clients.
529. Defendants sought improperly to secure unfair advantage against the plaintiffs by embarking upon a campaign to intimidate and frighten counsel for the incorporators (voting members) of the LSF in the lawsuit then pending in the 11th Judicial District Court of Harris County, Texas, and by taking other extra-legal actions in that matter.
530. Among other actions defendants have implied or stated that they would attempt to file criminal charges against plaintiffs' counsel if he continued to represent his clients and, in fact, did file a complaint against the attorney, stating or implying that he, the attorney who actually met Carto for the first time during 1994, had been responsible for the removal of millions of dollars from Switzerland, an event which had transpired some years previously, and by accusing the attorney of covering-up the facts regarding the removal of funds and of profiting from those funds although the question involving those funds was not before the court in the case in which the attorney represented his clients.
531. Defendants Allan, Berg and Curry filed false complaints against Howard Singleton, a member of the bar of the State of Texas, who had been retained by Carto during July, 1994, to represent the Incorporators of the Legion for the Survival of Freedom, Inc., [a Texas corporation] against Andrew E. Allen, et al.
532. Defendants falsely asserted without any basis that Singleton profited from the embezzlement
of $6.5 million dollars and submitted a newspaper clipping which said that a bequest may have been embezzled.
533. In fact, the case before the court was unrelated to the distribution of the bequest, the bequest had been distributed years before Singleton was retained by Carto and years before Singleton had even met Carto, and Singleton had been paid only normal and regular attorney’s fees pursuant to the contract he had entered into with his clients. 534. He had never been paid any sum from the estate in question.
535. All of the charges referred to above were rejected by the relevant authority and every allegation that Singleton had profited from an embezzlement or had in any fashion been involved in embezzling funds were dismissed.
536. During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised pan of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendants mailed the documents in envelopes beating the name and address: Institute for Historical Review Post Office Box 2739 Newport Beach, CA 92659. USA
537. The documents were unsigned and indicated that a group named In Loco Parentis had created the document on May 1, 1994. These documents were published on the Internet and were internationally circulated at that time and thus remain available to residents of the District of Columbia and elsewhere at the present time. The telephone number which followed the title In Loco Parentis upon the letterhead was (714) 6311490,
which is the telephone number of the IHR and defendant LSF and the office telephone of defendants Weber and Raven. Upon information and belief it is alleged that the defendants created the document during 1994.
538. It is clear that the defendants widely published the document during November, 1997. Indeed, defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
539. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted.
540. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory.
541. The document published by the defendants falsely asserted that Carto moved to San Francisco to escape the consequences of the theft and jailing referred to above.
542. The defendants also falsely asserted that Carto secretly was employed by the ADL, and that Mark Lane, the attorney for Liberty Lobby, was assigned by the ADL to control Carto.
543. Each allegation referred to above is false and defamatory and was made with actual malice. The defendants further stated that Lane is paid per case by Liberty Lobby and that he, sewing as a conduit for the ADL, then transfers those fees to the ADL. Those allegations are also entirely false.
544. In fact, Mark Lane has been a member of the bar of the State of New York for approximately forty-seven years, is a member of the bar of the District of Columbia, is a member of the United States Supreme Court Bar and has tried cases in approximately half of the states of the United States. He has never represented the ADL, has never sought to control
Carto for the ADL or any other entity and has nev.er transferred fees to the ADL from Carto or from any other client.
545. The blatantly false accusations entirely fabricated by the defendants and made against counsel for the plaintiffs form a pattern of racketeering activity comprised of extortion for the purpose of frightening counsel for the plaintiffs into withdrawing as counsel for the plaintiffs and thus enhancing the financial prospects of the defendants by denying to their adversaries effective and knowledgeable legal assistance and counsel.
546. As a direct and proximate result of the unethical, unlawful and illegal conduct of the defendants, the plaintiffs have suffered very substantial damage, including costs and attorneys' fees.
547. Defendants, and each of them, committed the acts set forth above maliciously, fraudulently and oppressively, with the wrongful intention of injuring plaintiffs, and acted with an improper and evil motive amounting to malice, and in conscious disregard of the rights of the plaintiffs' rights. Because the acts taken toward the plaintiffs were carried out in a despicable, deliberate, cold, callous and intentional manner, with malice in order to injure and damage the plaintiffs, the plaintiffs are entitled to recover punitive damages from each and all of the defendants.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $2,500,000.00;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $5,000,000.00;
c. An Order enjoining the defendants from further tortious interference in the business activities of the plaintiffs; and
Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
548. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 547 of this Complaint, inclusive, as if fully set forth herein.
549. During September, 1997, defendant Weber, acting on behalf of the LSF, the IHR, and in concert with the other named defendants, and with actual malice, defamed Carto by publishing letters to persons who comprised part of the market which Weber and the other defendants sought to capture by degrading Carto. Although Weber knew that Carto had never been convicted of the crime of embezzlement and, in fact, had not been charged with that crime by any authority in spite of the numerous and continuous efforts of the defendants to bring about such a charge and in spite of the fact that any allegation of embezzlement had been rejected by the Superior Court which had tried the civil case referred to above, Weber asserted in his letters that Carto embezzled millions.
Indeed, Weber falsely implied in that letter that Judge Maino had determined that Carto was guilty of embezzlement. In that letter Weber made numerous other false and defamatory allegations against Carto including the statement that Carto is widely recognized as a liar and crook,
that Carto illegally
controls two corporations, that Carto has been dishonest
and takes illegal actions
and that Carto lies.
550. In publishing these and other false and defamatory charges, defendant Weber has employed stationary bearing the names of defendants Marcellus, O’Keefe, Raven, Berg, Countess and others including some, upon information and belief, who were unaware that the defamatory letter had been written under the name of the LSF and the IHR. Each of the allegations in the letter and referred to above is false and defamatory and each such allegation was made by the defendants with actual malice.
551. The actions of the defendants, acting with actual malice, in willfully, falsely and maliciously publishing defamatory statements and remarks that have made plaintiffs appear odious, infamous and ridiculous constitute defamation and libel.
552. The defendants have published this defamatory material to third parties including subscribers to The Spotlight and others including Walter Joseph Knapp.
553. The defamatory published statements were intended to and did injure the individual plaintiffs in their trade, business and profession and lowered their standing within the community.
554. The published statements falsely and maliciously accused the plaintiffs of acts they had not committed and was understood by persons who read it to mean and to represent, and in fact portrayed plaintiffs to be corrupt and dishonest.
555. At all times pertinent, the individual defendants, through an organization which they control and hold out to be the LSF, sought to impute dishonesty and corruption to the plaintiffs.
556. Defendants' publication concerning plaintiffs was and is willfully and maliciously false and defamatory and known to be such by defendants when defendants made it, was made through hatred, ill will, and malicious design and purpose on the part of defendants to injure plaintiffs' reputation as writers, lobbyists and publishers and fund-raisers.
557. Defendants injured plaintiffs in their social standing and their reputations in general.
558. By and through the defamatory actions of the defendants and others, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business. the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $1,000,000.00;
Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $3,500,000.00; and
Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
559. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 558 of this Complaint, inclusive, as if fully set forth herein.
560. During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised part of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendants mailed the documents in envelopes bearing the name and address: Institute for Historical Review Post Office Box 2739 Newport Beach, CA 92659. USA
561. The documents were unsigned and indicated that a group named In Loco Parentis had created the document on May 1, 1994. These documents were published on the Internet and were internationally circulated at that time and thus remain available to residents of the District of Columbia and elsewhere at the present time. The telephone number which followed the title In Loco Parentis upon the letterhead was (714) 6311490,
which is the telephone number of the IHR and defendant LSF and the office telephone of defendants Weber and Raven. Upon information and belief it is alleged that the defendants created the document during 1994.
562. It is clear that the defendants widely published the document during November, 1997. Indeed, defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
563. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted.
564. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory.
565. The document published by the defendants falsely asserted that Carto moved to San Francisco to escape the consequences of the theft and jailing referred to above.
566. The defendants falsely asserted that Carto secretly was employed by the ADL, and that Mark Lane, the attorney for Liberty Lobby, was assigned by the ADL to control Carto.
567. Each allegation referred to above is false and defamatory and was made with actual malice. The defendants further stated that Lane is paid per case and that he, serving as a conduit for the ADL, then transfers his fees to the ADL. Those allegations are also entirely false.
568. Each of the allegations made in the document referred to above are entire fabrications, are false and defamatory and were made by the defendants with actual malice.
569. The defamatory letter referred to in Count II of this Complaint was sent by the defendants via United States mail to numerous persons and organizations, including individuals residing in the District of Columbia and organizations based within the District of Columbia as well as to persons residing in Maryland, Virginia, Massachusetts, California, Arkansas, Illinois and elsewhere.
570. Among the recipients of the letter referred to above, who received the letter at their homes or offices are Gregory Douglas, John Nugent, Mrs. LaVonne D. Furr, Olive Snead, Joe Fields, Joseph M. Keith, George Kadar, Media Placement Service, and TAB Agency.
WHREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $5,000,000.00;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $15,000,000.00; and
c. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
571. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 570 of this Complaint, inclusive, as if fully set forth herein.
572. During 1997 and prior thereto, defendant Weber, on his own behalf and on behalf of the other defendants, made numerous telephone calls and sent numerous letters to Andrew Gray, the copy editor of The Barnes Review, hereinafter TBR, a publication organized by plaintiff Carto and a publication which Carto served as publisher at its inception and which Carto continues to serve as publisher
573. Carto established TBR after the defendants had exercised control over the defendant LSF and its publication, Journal, a publication which Carto had also established. TBR was established for the purpose of providing an historical perspective without regard to accepted legend and in that regard is a business rival of the Journal.
574. Defendant Weber, the editor of the Journal, in numerous letters and telephone calls placed to Andrew Gray, an editor of TBR and a resident of the District of Columbia where TBR is also edited and published, defamed the plaintiffs and urged Gray to disassociate from TBR in the same fashion that advertisers were urged to disassociate from Liberty Lobby. Weber directed his letters and telephone calls to Gray in the District of Columbia with the foreseeable hope and intention that Gray would weaken TBR and strengthen its rival publication, the Journal by leaving TBR. Weber’s letters and telephone calls were purposefully directed to a resident of the District of Columbia with the foreseeable intent and hope of causing serious injury, including financial harm, to TBR which was published by plaintiff Carto, a resident of the District of Columbia and TBR, a publication edited and published in the District of Columbia. Carto has provided free subscriptions to TBR to all branches of the District of Columbia library system.
575. The statements made by Weber to Gray included the all.egations that Carto had embezzled funds, that Carto was a criminal, that Carto was without principle and that Carto was dishonest.
576. Each of the statements made by Weber, in writing and in telephone conversations, were false and defamatory and were made with actual malice.
577. Each of the statements made by the defendants and referred to above in Count III of the Complaint were intentionally made by the defendants and were intentionally designed to discourage subscribers, advertisers and others from associating with the plaintiffs by defaming the plaintiffs and by disparaging the plaintiffs and their businesses.
578. These statements comprise the tort of trade libel or business disparagement and injurious falsehoods consisting of the deliberate and knowing publication of false matter derogatory to the plaintiffs' reputation and to the plaintiffs' business of a kind calculated to prevent others from dealing with the businesses of the plaintiffs and otherwise interfering with the relations of the plaintiffs and their businesses with others, to the detriment and harm of the plaintiffs and their businesses.
579. These statements have already caused very substantial injury to the reputation of the plaintiffs and their businesses and have already caused severe financial losses to the plaintiffs' businesses including, but not limited to, loss of subscription and loss of income from advertising and are likely to cause further severe financial losses in the future.
580. The actions of the defendants, acting with actual malice, in willfully, falsely and maliciously publishing defamatory statements and remarks that have made plaintiffs appear odious, infamous and ridiculous constitute defamation and libel and slander.
581. The defamatory published statements were intended to and did injure the individual plaintiffs in their trade, business and profession and lowered their standing within the community.
582. The published statements falsely and maliciously accused the plaintiffs of acts they had not committed and was understood by persons who read it and heard it to mean and to represent, and in fact portrayed plaintiffs to be corrupt and dishonest. The published statements referred to above in Count III of this Complaint were made with actual malice.
583. At all times pertinent, the individual defendants, through an organization which they control and hold out to be the LSF, sought to impute dishonesty and corruption to the plaintiffs.
584. Defendants' publication concerning plaintiffs was and is willfully and maliciously false and defamatory and known to be such by defendants when defendants made it, was made through hatred, ill will, and malicious design and purpose on the part of defendants to injure plaintiffs' reputation as writers, lobbyists and publishers and fund-raisers.
585. Defendants injured plaintiffs in their social standing and their reputations in general.
586. By and through the defamatory actions of the defendants and others, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $1,000,000.00;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $1,500,000.00; and
c. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
587. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 586 of this Complaint, inclusive, as if fully set forth herein.
588. On or about October 15, 1997, and both prior to and subsequent to that time period, the defendants, upon information and belief, both caused to be published and published letters and other documents to persons and entities which had previously placed advertisements in The Spotlight, a publication of plaintiff Liberty Lobby, for the express purpose of encouraging advertisers to cease and desist from placing advertisements in The Spotlight.
589. The letters were signed A Concerned Patriot
and the authors of the letter asserted I am not a supporter or representative of the Legion [the Legion for the Survival of Freedom].
The letter asserted that the signer of the letter was an advertiser.
590. The letter asserted that Carto was dishonest,
that he illegally
utilized funds which did not belong to him and quoted selectively from the decision of the Superior Court.
591. The letter concluded that dishonesty
should not be rewarded and urged advertisers in The Spotlight to refrain from placing advertisements in that newspaper in the future.
592. The letter was accompanied by copies of a number of documents which had been in the possession of the defendants and which had been exhibits in cases involving the defendants including a copy of a letter sent by the court to counsel for the defendants in this case.
593. Other documents sent to the advertisers included press clippings which the defendants had previously circulated to others.
594. Among the material sent to most, if not all, of the advertisers in recent publications of The Spotlight were newspaper clippings dated April 2, 1995, and June 16, 1995, stating in headlines that the plaintiffs may be embezzlers.
595. The defendants knew before they circulated the material to the advertisers in The Spotlight that, in spite of their own efforts to have the plaintiffs charged with embezzlement by numerous law enforcement agencies, each agency had rejected that claim.
596. The defendants knew that when they themselves charged Carto with embezzlement in the Superior Court of California, the court rejected that charge and that the defendants in this case did not appeal that ruling.
597. Each of the allegations made in the documents referred to above are entire fabrications, are false and defamatory and were made by the defendants with actual malice.
598. Among the recipients of the defamatory letter referred to in Count IV of this Complaint were the majority of advertisers in The Spotlight, including but not limited to, American Eagle Publications, John Ellis, Runic Enterprises, Brooke Laboratories, DWM Enterprises and Alvin Durboraw.
599. These letters and documents were sent via mail to residents and businesses located in the District of Columbia and elsewhere, were purposefully directed toward the residents and businesses in the District of Columbia and elsewhere with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia, including plaintiff Liberty Lobby, The Spotlight and plaintiff Carto.
600. As a result of the actions of the defendants set forth above, plaintiffs suffered serious and substantial losses including the loss of advertising income from recipients of the letters and documents referred to above.
601. The actions of the defendants, acting with actual malice., in willfully, falsely and maliciously publishing defamatory statements and remarks that have made plaintiffs appear odious, infamous and ridiculous constitute defamation and libel.
602. The defamatory published statements were intended to and did injure the individual plaintiffs in their trade, business and profession and lowered their standing within the community.
603. The published statements falsely and maliciously accused the plaintiffs of acts they had not committed and was understood by persons who read it to mean and to represent, and in fact portrayed plaintiffs to be corrupt and dishonest.
604. At all times pertinent, the individual defendants, through an organization which they control and hold out to be the LSF, sought to impute dishonesty and corruption to the plaintiffs.
605. Defendants' publication concerning plaintiffs was and is willfully and maliciously false and defamatory and known to be such by defendants when defendants made it, was made through hatred, ill will, and malicious design and purpose on the part of defendants to injure plaintiffs' reputation as writers, lobbyists and publishers and fund-raisers.
606. Defendants injured plaintiffs in their social standing and their reputations in general.
607. By and through the defamatory actions of the defendants and others, all published with actual malice, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $5,000,000.00;
Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $20,000,000.00; and
Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
608. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 607 of this Complaint, inclusive, as if fully set forth herein.
609. Defendant Weber, acting on behalf of all of the defendants, sent unsolicited defamatory documents to Piper.
610. The documents asserted that Carto was an embezzler; that Carto was dishonest. The documents asserted that Carto was guilty of illegal actions.
611. The documents referred to in Count X of this Complaint were sent by Weber to Piper at Piper’s home address in the District of Columbia.
612. Piper was at all times relevant to the statements made in Count X of this Complaint, employed by Liberty Lobby and reported in the course of that employment to Carto.
613. Piper was at all relevant times employed by Liberty Lobby as an editor and marketing executive.
614. The mailings referred to above were personally addressed by Weber and mailed by Weber from California.
615. The mailings were sent by Weber to Piper during October, 1993 and since that time up until and including a mailing sent by Weber to Croke during December, 1997.
616. The actions of the defendants, acting with actual malice, in willfully, falsely and maliciously publishing defamatory statements and remarks that have made plaintiffs appear odious, infamous and ridiculous constitute defamation and libel.
617. The defamatory published statements were intended to and did injure the individual plaintiffs in their trade, business and profession and lowered their standing within the community.
618. The published statements falsely and maliciously accused the plaintiffs of acts they had not committed and was understood by persons who read it to mean and to represent, and in fact portrayed plaintiffs to be corrupt and dishonest.
619. At all times pertinent, the individual defendants, through an organization which they control and hold out to be the LSF, sought to impute dishonesty and corruption to the plaintiffs.
620. Defendants' publication concerning plaintiffs was and is willfully and maliciously false and defamatory and known to be such by defendants when defendants made it, was made through hatred, ill will, and malicious design and purpose on the part of defendants to injure plaintiffs' reputation as writers, lobbyists and publishers and fund-raisers.
621. Defendants injured plaintiffs in their social standing and their reputations in general.
622. By and through the defamatory actions of the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
623. The false statements made by Weber to Piper were intended to induce Piper to leave his employment at Liberty Lobby and to unfairly and unlawfully disrupt and interfere with the activities of the plaintiffs in order to secure unfair competitive advantage for the defendants.
624. Each of the statements referred to hereinabove was false and defamatory
and was with actual malice by Weber on his own behalf as well as on behalf of each of the other defendants.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $1,000,000.00;
Awarding each of the plaintiffs punitive damages against all of the defendant s, and each of them in the amount of $1,500,000.00; and
Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
625. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 624 of this Complaint, inclusive, as if fully set forth herein.
626. Defendant Weber, acting on behalf of all of the defendants, sent unsolicited defamatory documents to Paul Croke.
627. The documents asserted that Carto was an embezzler; that Carto was dishonest, and that Carto was a criminal. The documents asserted that Carto was guilty of illegal actions.
628. The documents referred to in Count XI of this Complaint were sent by Weber to Croke at Croke’s office address in the District of Columbia.
629. Croke was at all times relevant to the statements made in Count XI of this Complaint, employed by Liberty Lobby and reported in the course of that employment to Carto.
630. Croke was at all relevant times employed by Liberty Lobby as an editor.
63 1. The mailings were sent by Weber to Croke during October, 1993 and since that time up until and including a mailing sent by Weber during December, 1997.
632. The actions of the defendants, acting with actual malice, in willfully, falsely and maliciously publishing defamatory statements and remarks that have made plaintiffs appear odious, infamous and ridiculous constitute defamation and libel.
633. The defamatory published statements were intended to and did injure the individual plaintiffs in their trade, business and profession and lowered their standing within the community.
634. The published statements falsely and maliciously accused the plaintiffs of acts they had not committed and was understood by persons who read it to mean and to represent, and in fact portrayed plaintiffs to be corrupt and dishonest.
635. At all times pertinent, the individual defendants, through an organization which they control and hold out to be the LSF, sought to impute dishonesty and corruption to the plaintiffs.
636. Defendants' publication concerning plaintiffs was and is willfully and maliciously false and defamatory and known to be such by defendants when defendants made it, was made through hatred, ill will, and malicious design and purpose on the part of defendants to injure plaintiffs' reputation as writers, lobbyists and publishers and fund-raisers.
637. Defendants injured plaintiffs in their social standing and their reputations in general.
638. By and through the defamatory actions of the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
639. The false statements made by Weber to Croke were intended to induce Croke to leave his employment at Liberty Lobby and to unfairly and unlawfully disrupt the activities of the plaintiffs in order to secure unfair competitive advantage for the defendants.
640. Each of the statements referred to hereinabove was false and defamatory and was with actual malice by Weber on his own behalf as well as on behalf of each of the other defendants.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $1,000,000.00;
Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $1,500,000.00; and
Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
641. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 640 of this Complaint, inclusive, as if fully set forth herein.
642. Defendant Weber, acting on behalf of all of the defendants, placed unsolicited telephone calls to Paul Croke.
643. During those calls Weber asserted that Carto was an embezzler; that Carto was dishonest, that Carto was a criminal and that Carto was guilty of illegal actions.
644. The telephone calls referred to in Count X/I of this Complaint were made by Weber to Croke at Croke’s office address in the District of Columbia.
645. Croke was at all times relevant to the statements made in Count XII of this Complaint, employed by Liberty Lobby and reported in the course of that employment to Carto.
646. Croke was at all relevant times employed by Liberty Lobby as an editor.
647. The telephone calls were made by Weber to Croke during October, 1993 and since that time up until and including telephone calls made by Weber to Croke during December, 1997.
648. Weber stated to Croke that Carto was a criminal and that Carto had committed crimes and could be sent to jail. As recently as during November, 1997, Weber stated to Croke that Carto might be planning to flee to Europe and that Liberty Lobby had no future. In conversations with Croke, Weber defamed Piper and Carto.
649. The actions of the defendants, acting with actual malice, in willfully, falsely and maliciously publishing defamatory statements and remarks that have made plaintiffs appear odious, infamous and ridiculous constitute defamation and slander.
650. The defamatory published statements were intended to and did injure the individual plaintiffs in their trade, business and profession and lowered their standing within the community.
651. The published statements falsely and maliciously accused the plaintiffs of acts they had not committed and was understood by persons who read it to mean and to represent, and in fact portrayed plaintiffs to be corrupt and dishonest.
652. At all times pertinent, the individual defendants, through an organization which they control and hold out to be the LSF, sought to impute dishonesty and corruption to the plaintiffs.
653. Defendants' publication concerning plaintiffs was and is willfully and maliciously false and defamatory and known to be such by defendants when defendants made it, was made through hatred, ill will, and malicious design and purpose on the part of defendants to injure plaintiffs' reputation as writers, lobbyists and publi.shers and fund-raisers.
654. Defendants injured plaintiffs in their social standing and their reputations in general.
655. By and through the defamatory actions of the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
656. The false statements made by Weber to Croke were intended to induce Croke to leave his employment at Liberty Lobby and to unfairly and unlawfully disrupt the activities of the plaintiffs in order to secure unfair competitive advantage for the defendants.
657. Each of the statements referred to hereinabove was false and defamatory and was with actual malice by Weber on his own behalf as well as on behalf of each of the other defendants.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $1,000,000.00;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $1,500,000.00; and
c. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
658. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 657 of this Complaint, inclusive, as if fully set forth herein.
659. The defendants intentionally, willfully, wantonly, purposely, unjustifiably, unlawfully and illegally interfered with the plaintiffs' contractual and business relationships with their subscribers, supporters, advertisers, suppliers, readers and donors through wills and trusts, attorneys, prospective subscribers, prospective supporters, prospective advertisers, prospective suppliers, prospective readers, prospective donors through wills and trusts and prospective attorneys.
660. The defendants' tortious conduct aimed at interfering with plaintiffs' contractual and business relationships included, but is not limited to, the following acts of the defendants:
a) Filing blatantly and entirely fabricated charges and making entirely false and fabricated accusations of disloyalty against counsel for the plaintiffs. The specific instances referred to have been set forth in detail above and incorporated by reference here.
b) Defendant Countess wrote a series of harassing letters to at least three Liberty Lobby employees, Vince Ryan, Trisha Katson and Piper, attacking Carto and Liberty Lobby, urging the employees to engage in disloyal activities for the purpose of removing their employer, Carto, as chief executive officer of Liberty Lobby. Defendant Countess harassed Liberty Lobby employee Piper, in particular, stating that he too, deserved to serve time in prison alongside Carto for refusing to be disloyal to his employer. Defendant Countess also stated in writing that Elisabeth Carto would also spend time in prison for her purported misfeasance and malfeasance in the administration of LSF affairs.
c) During 1994, Marcellus, acting on behalf of himself and his fellow defendants, offered to pay $5,000 to John Henry Nugent to arrange to bribe a person employed by Liberty Lobby in order to secure the valuable Liberty Lobby Board of Policy membership and Spotlight newspaper subscriber lists. Liberty Lobby had expended millions of dollars to develop and maintain those mailing lists. Marcellus knew that Nugent was a longtime consultant to and former employee of Liberty Lobby. Nugent then telephonically contacted William G. Sweet, a Liberty Lobby employee whom Nugent knew was responsible at that time for the computerized maintenance of the Liberty Lobby lists that Marcellus and the other defendants hoped to obtain through bribery. Nugent offered Sweet $5,000 if Sweet were to make the list available. Sweet refused the bribe and promptly advised Carto, his immediate superior, of the bribery attempt. Subsequently, Nugent himself made contact with Carto and confessed his role as an intermediary on behalf of Marcellus who later admitted, under oath, that he had engaged in this activity although he claimed to have forgotten the amount he had offered.
d) During 1995, defendants made another bribery attempt. Defendant Berg offered $1,000 to former LSF director Tom Kerr if he would sign a legal document endorsing defendants' takeover of LSF and repudiating his earlier support for Carto and the original LSF board of which Kerr had been a member. Subsequently defendant Berg admitted under oath that he and defendant Allen had offered to pay $1,000 to Kerr.
e) After defendant Raven, armed with a loaded weapon, accompanied by defendants Hulsy, Marcellus, Weber and O’Keefe, assaulted Carto and his wife Elisabeth Carto, at the offices of the LSF on October 15, 1993, officers from the Costa Mesa Police Department arrived. Carto attempted to resolve the matter by advising the police officers that he and his associates, although injured, would agree to refrain from filing criminal complaints. Hulsy stated, on behalf of himself and those who had accompanied him in the assault, including defendants Raven, Marcellus, Weber and O’Keefe, that he would agree not to press criminal charges against Carto and his wife Only if Carto turns over all the assets and complete control of the Legion.
Carto responded that he would not yield to a blatant extortion attempt, particularly when the criminal act of extortion was being practiced by his former attorney to secure advantage for himself.
f) During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised part of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
and that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory. This letter was sent to LaVonne Furr in violation of a protective order entered by the 152nd Judicial District Court of Harris County, Texas, prohibiting the publication to Mrs. Furr of such material by the defendants in that case. The order, signed by Hon. Harvey Brown, was issued on March 7, 1997.
g) After defendant Hulsy, accompanied by defendant Raven, who wielded a loaded pistol, as well as by other defendants, broke into the LSF offices by force, they seized personal property belonging to Carto and to Liberty Lobby. Subsequently, the defendants improperly secured 200 copies of a book entitled Best Witness. The defendants converted those books and have refused to return them in spite of requests that they do so. Carto had regularly requested the return of his property which the defendants had seized beginning with requests made on October 16, 1993. Most of Carto’s personal property has not been returned and a conversion suit has been filed by Carto against defendants Weber and Raven who are now believed to be in control of these items. That suit is still pending in court in California.
h) During March 1994, one large-sized Priority U.S. Mail envelope containing the documents referred to hereinabove arrived at the U.S. Post Office in Costa Mesa and was inadvertently sent to the new IHR office under the control of the defendants. At that time, defendant Marcellus unlawfully opened the mail in question, cognizant of the fact that it had been sent from Liberty Lobby to Carto and unlawfully appropriated that mail for use by himself and the LSF in furtherance of their continuing efforts to disrupt the work of Liberty Lobby. This mail, taken illegally by Marcellus, has never been returned to Liberty Lobby or Carto.
i) In early February, 1994 defendants used the LSF/IHR/Noontide Press mailing lists to send letters to IHR supporters in which they attacked Carto. As a proximate result, many supporters of the IHR and of Liberty Lobby expressed serious doubts about Carto and Liberty Lobby in written and telephonic communications and vowed that they would no longer support Liberty Lobby because of the allegations published by defendants.
j) During April of 1994, a monthly publication known as Criminal Politics, published in Cincinnati, Ohio by Lawrence T. Patterson, hereinafter referred to as Patterson, published a lengthy article entitled Willis Carto’s Campaign Against the Institute for Historical Review.
This article was written by Weber. The article contained numerous false, malicious and defamatory statements about Carto and his administration of the affairs of LSF, IHR and Liberty Lobby. Immediately after this issue of Criminal Politics was released, its publisher Larry Patterson used the U.S. Postal Service to mail to unknown numbers of individuals around the United States who were not subscribers to Criminal Politics copies of the April 1994 issue of his magazine. Accompanying the issue of the magazine was a letter urging the recipients to subscribe to Patterson’s magazine. Based upon subsequent telephonic and written inquiries addressed to Liberty Lobby from those who received this mailing, it was determined, beyond question, that a large number of those who had received this mailing were longtime supporters of Liberty Lobby who had never subscribed to Criminal Politics and some of whom had never actually even been on the mailing lists of the LSF/IHR/Noontide Press. It was also determined that Liberty Lobby subscribers who had received this issue of Criminal Politics had also received a special edition of the magazine different from the regular issue mailed to its regular subscribers; specifically, on the issue that they received had been affixed on the cover of the magazine a special brightly colored gummed sticker approximately one-inch square with text directing them specifically to the article by Weber attacking Carto, beginning on page 26 of the magazine. This was clearly a deliberate and calculated attempt to sully the reputation of Carto and to diminish support for Liberty Lobby. It was further determined that many of those who had received this special mailing had been among those whose letters and names had been sent to Carto by Liberty Lobby in the stolen U.S. Priority Mail package after they had written Carto and Liberty Lobby in Washington requesting Carto’s response to the allegations that had previously been made by defendants in regard to the events that had taken place at the IHR. The defendants had secured the unlawfully obtained correspondence and had passed the names of the correspondents on to Carto’s competitor Patterson, who, in turn, used those names to mail the special copies of his magazine to those recipients.
k) On information and belief, it is alleged that during October, 1997, the defendants arranged for the distribution to advertisers in The Spotlight of various documents asserting that Carto had decided to ignore the law as well as his legal and financial obligations, that Carto was dishonest, that Carto, through The Spotlight, has published false statements about these issues, and that the advertisers should not reward Carto’s dishonesty by advertising in The Spotlight. These documents were sent to the advertisers anonymously and were accompanied by a defamatory letter signed A Concerned Patriot,
who claimed to be an advertiser in The Spotlight. The letter was accompanied by copies of a number of documents which had been in the possession of the defendants and which had been exhibits in cases involving the defendants including a copy of a letter sent by the court to counsel for the defendants in this case. The documents referred to above republished a newspaper article dated April 2, 1995, stating, in its headline, that the Farrel funds may have been embezzled. The documents included a newspaper article dated June 16, 1995, that stated that plaintiffs Carto and Fischer may be embezzlers. These documents were sent to advertisers in The Spotlight long after the court had ruled, and the defendants herein had declined to appeal that ruling, that Carto and Fischer had not embezzled any funds. Other documents sent to the advertisers included press clippings which the defendants had previously circulated to others. Upon information and belief the defendants sought to gain unfair competitive advantage and to secure financial and economic benefits for themselves through their efforts to cause The Spotlight to cease publication through the loss of advertising and thus create an opportunity for the publications produced by the defendants. These letters and documents were sent via mail to residents and businesses located in the District of Columbia and elsewhere, were purposefully directed toward the residents and businesses in the District of Columbia and elsewhere with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia, including plaintiff Liberty Lobby and plaintiff Carto.
1) During 1997 and prior thereto, defendant Weber, on his own behalf and on behalf of the other defendants, made numerous telephone calls and sent numerous letters to Andrew Gray, the copy editor of The Barnes Review, hereinafter TBR, a publication organized by plaintiff Carto and a publication which Carto served as publisher at its inception and which Carto continues to serve as publisher Carto established TBR after the defendants had exercised control over the defendant LSF and its publication, Journal, a publication which Carto had also established. TBR was established for the purpose of providing an historical perspective without regard to accepted legend and in that regard is a business rival of the Journal. Defendant Weber, the editor of the Journal, in numerous letters and telephone calls placed to Andrew Gray, an editor of TBR and a resident of the District of Columbia where TBR is also edited and published, defamed the plaintiffs and urged Gray to disassociate from TBR in the same fashion that advertisers were urged to disassociate from Liberty Lobby. Weber directed his letters and telephone calls to Gray in the District of Columbia with the foreseeable hope and intention that Gray would weaken TBR and strengthen its rival publication, the Journal by leaving TBR. Weber’s letters and telephone calls were purposefully directed to a resident of the District of Columbia with the foreseeable intent and hope of causing serious injury, including financial harm, to TRB which was published by plaintiff Carto, a resident of the District of Columbia and TBR, a publication edited and published in the District of Columbia. Carto has provided free subscriptions to TBR to all branches of the District of Columbia library system. Each of the statements made by the defendants and referred to above and below were intentionally made by the defendants and were intentionally designed to discourage subscribers, advertisers and others from associating with the plaintiffs by defaming the plaintiffs and by disparaging the plaintiffs and their businesses.
m) Defendant Weber, on behalf of his co-defendants including LSF, sent defamatory material about Carto to Piper and other employees of Liberty Lobby. These mailings were sent from 1993 until December, 1997. That material charged Carto with illegal actions. Some of this material was mailed by Weber to Piper at Piper’s home address in the District of Columbia. Piper was at all relevant times employed by Liberty Lobby as an editor and marketing executive.
n) Defendant Weber, on behalf of the LSF and the other defendants, has made telephone calls and has sent letters to Paul Croke. Croke, an editor of plaintiff Liberty Lobby, received both the telephone calls and letters at his place of employment in the District of Columbia. Weber stated to Croke that Carto was a criminal and that Carto had committed crimes and could be sent to jail. As recently as November, 1997, Weber stated to Croke that Carto might be planning to flee to Europe and that Liberty Lobby had no future. In conversations with Croke, Weber defamed Piper and Carto. The statements made by Weber to Croke in the District of Columbia were purposefully made to residents and representatives of business in the District of Columbia with the foreseeable hope, purpose and intent of causing injury and harm to business organizations and residents of the District of Columbia and to destroy the business of Liberty Lobby by unfair competition and other unlawful means in violation of the laws of the District of Columbia and of the United States.
661. As a direct and proximate result of the unethical, unlawful and illegal conduct of the defendants, the plaintiffs have suffered very substantial damage, including costs and attorneys' fees.
662. Defendants, and each of them, committed the acts set forth above maliciously, fraudulently and oppressively, with the wrongful intention of injuring plaintiffs, and acted with an improper and evil motive amounting to malice, and in conscious disregard of the fights of the plaintiffs' fights. Because the acts taken toward the plaintiffs were carried out in a despicable, deliberate, cold, callous and intentional manner, with malice in order to injure and damage the plaintiffs, the plaintiffs are entitled to recover punitive damages from each and all of the defendants.
WHEREFORE, the plaintiffs pray the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding each of the plaintiffs compensatory damages against all of the defendants, jointly and severally, in the amount of $2,500,000.00;
b. Awarding each of the plaintiffs punitive damages against all of the defendants, and each of them in the amount of $5,000,000.00;
c. An Order enjoining the defendants from further tortious interference in the business activities of the plaintiffs; and
d. Awarding the plaintiffs the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
The plaintiffs complain against the defendants as follows:
663. The plaintiffs repeat, re-allege and incorporate by reference paragraph 1 through paragraph 662 of this Complaint, inclusive, as if fully set forth herein.
664. Willis A. Carto, hereinafter Carto, is a resident of the District of Columbia. He is a plaintiff in this action. He is the founder, treasurer and chief executive officer of Liberty Lobby, Inc., based in Washington, D.C. In 1966 he was appointed a voting member of the Legion for the Survival of Freedom, hereinafter LSF, at which time he began directing its operations until on or about October of 1993. At all times between 1966 and October, 1993, Carto was both publicly and privately known as the prime mover, controlling force and chief fund-raiser for the LSF and was responsible for its management and operation, including the initiation of the LSF subsidiary, the Institute for Historical Review, hereinafter IHR.
665. The Legion for Survival of Freedom [LSF] is a non-profit corporation that was incorporated in Texas in 1952. It is a defendant in this action. Beginning in 1966, Carto assumed control and management of the LSF as a voting member of the corporation. In 1966, Carto brought an outside entity, the Noontide Press, under LSF’s control as a wholly-owned subsidiary. In 1979, Carto established the IHR as a wholly-owned subsidiary of the LSF. At all times between 1966 and October, 1993, Carto was both publicly and privately known as the prime mover, controlling force and chief fund-raiser for the LSF and was responsible for its management and operation, including all activities of the LSF’s subsidiaries.
666. On April 14, 1952 the LSF was incorporated in Texas by Frances Whalen Clark and Jason and Marcia Matthews. The LSF was chartered as a non-profit educational organization.
667. At that time Carto had become active in conservative political affairs shortly after leaving the military service as a decorated combat veteran of World War II. Carto, by the mid-1950's, achieved prominence in his chosen political sphere and was involved in establishing several publishing and educational ventures.
668. In 1955, then based in San Francisco, Carto founded Liberty Lobby as a grass-roots citizens' lobby. The purpose and plan was to provide American citizens with a conservative
or populist
or right wing
political philosophy and with an action-oriented lobbying institution in the nation’s capital. Carto also envisioned his efforts as creating a national clearing house for grass-roots efforts by both complementing and uniting the efforts of others with similar political evaluations.
669. During the next several years Carto engaged in an ambitious fund-raising and organizing effort and established Liberty Lobby in Washington, D.C. as a high-profile political entity with support from a broad range of persons of like persuasion, with the participation of numerous prominent individuals, including, among others, former Governor Charles Edison of New Jersey, son of the American inventor, Thomas Edison.
670. Beginning in 1960, under Carto’s direction, Liberty Lobby began publishing a newsletter, entitled Liberty Letter, which brought an increasing audience to the efforts of Liberty Lobby. Soon, Liberty Lobby was emerging as a leading voice among Americans who styled themselves as political conservatives. Carto was known as not only the treasurer and founder of Liberty Lobby but also as its driving force, although Carto deliberately attempted to maintain a low profile in order to institutionalize Liberty Lobby.
671. As part of his efforts to promote the work of Liberty Lobby, Carto was constantly associated with others active in political affairs and soon cemented a friendship and close working relationship with those affiliated with the LSF, based in Texas.
672. In 1962, the LSF purchased control of The American Mercury magazine which had been founded in the 1920’s by H. L. Mencken, a well known journalist and author, but which had gone through the hands of several owners.
673. On November 30, 1964 Jason Matthews, the sole surviving member and incorporator of the LSF died in McAllen, Texas. Mrs. LaVonne D. Furr, the LSF office manager, assumed management of the LSF’s activities and continued to maintain the publication of The American Mercury. During this period General Edwin Walker, retired, known for his outspoken conservative political views, joined Mrs. Furr as a member of the LSF board of directors. In addition to being a director, Mrs. Furr was a substitute incorporator
or voting member of LSF, along with Marcia Hoyt, daughter of Marcia Matthews.
674. Beginning in 1964, Liberty Lobby, under the direction of Willis Carto, played a major part in the Goldwater-for-President campaign, which many historians have stated energized the rightist
movement in America.
675. Dr. Sara Diamond, an instructor of sociology and journalism at several California universities, has studied, from a critical perspective, the growth of Liberty Lobby and other organizations and publications which constitute what she generally describes as right wing movements
in the United States. In her 1995 book, Roads to Dominion, Dr. Diamond summarizes Liberty Lobby’s growth between 1964 and 1966: … Circulation of the Lobby’s monthly Liberty Letter soared from 26,000 copies in 1964 to more than 90,000 in 1965, and 174,000 in 1966. Liberty Letter enjoyed a wider circulation than any political publication, including National Review and Human Events, which each published about 95,000 copies in 1966.
676. However, during that same time frame, unlike Liberty Lobby, the LSF was sliding into bankruptcy and as a consequence was unable to continue publishing its monthly American Mercury magazine which comprised its primary educational project.
677. At that time, Mrs. Furr, approached Carto and asked him if he would take control of LSF, assuring both the survival of the LSF and continued publication of The American Mercury. Carto believed that continued publication of The American Mercury was vital to the best interests of the American conservative
cause and considered the offer.
678. After negotiation with Mrs. Furr and Marcia Hoyt, it was agreed that in return for Carto arranging to pay off the debts of the LSF that he would assume absolute control of the corporation. Carto made available approximately $20,000 of his own funds that provided for payment of the LSF debts and saved the corporation from bankruptcy.
679. The Houston attorney handling this transaction was Kenneth Graham, Esq., who has remained the Texas attorney of record for the LSF until the present.
680. In the perception of leaders of the American right wing
movement at that time, Willis Carto was then acknowledged as the person who controlled or was in control of the LSF and its activities. Numerous published scholarly histories of the American right wing,
many of which were unfriendly to Carto, and the survival of LSF, have asserted this unequivocally and regularly.
681. As a direct and proximate result of Carto’s timely financial intervention and involvement in the activities of the LSF, The American Mercury’s survival was assured and the monthly magazine continued regular publication under Carto’s control for thirteen more years.
682. Under Carto’s management the assets and outreach of the LSF expanded considerably.
683. On or about June 15, 1966 Carto brought the popular semi-monthly Washington Observer newsletter under the control of the LSF. This newsletter, which had been established on or about August 15, 1965, continued to remain in publication under LSF auspices for an additional ten years until its issue of September 15, 1976, at which time it was incorporated as a regular insert into the monthly American Mercury.
684. During 1966, Carto brought the independent, California-based Noontide Press, hereinafter referred to as Noontide, a small publishing concern, under the LSF umbrella. All then current Noontide publications, including several which are, or were until recently, still available through LSF, became the property of the LSF. Sales of Noontide publications provided additional financial benefits to the operations of the LSF.
685. Noontide functioned as another of the LSF’s growing means of educational outreach to the American reading public in furtherance of the LSF’s goals as stated in its charter.
686. During this same period, Willis Carto continued to focus his efforts upon the expansion of Liberty Lobby, although he continued to function in a regular decision-making capacity in the editorial and business affairs of the LSF, working closely with LaVonne Furr, the LSF office manager, who also served as editor of The American Mercury.
687. In September of 1975, Carto in his capacity as chief executive officer of Liberty Lobby decided to cease publication of Liberty Lobby’s monthly newsletter. In its place he launched publication of a weekly, national, tabloid-sized newspaper, The Spotlight, as the official voice of Liberty Lobby.
688. Within several years The Spotlight had attained paid circulation of 330,000 and emerged as the most widely read publication identified as a voice of the right
movement in America.
689. In 1979, Carto sold The American Mercury, the LSF’s quarterly magazine.
690. The LSF continued its educational endeavors through the publication of books issued through the outlet of the LSF subsidiary, Noontide.
691. Beginning in late 1978, Carto laid the groundwork for what was ultimately established as an Institute for Historical Review,
hereinafter referred to as IHR. The IHR was a wholly functioning division of the LSF, a Texas, non-profit corporation, and it, like the LSF, was directed by Carto.
692. The LSF’s mission was never solely limited to the IHR’s historical research or to one issue. Instead, the IHR was only a subdivision of the multi-faceted LSF which had existed as an entity for some 27 years before the IHR was established.
693. Marcellus, Weber, O’Keefe, Raven and others, during April of 1993 it is now known that the defendants actively began conspiring to take control of the LSF and its two divisions, the IHR and the Noontide Press, and to remove Carto from any position of authority over the corporation. During this time the IHR employees were in regular contact with LSF attorney Hulsy, who offered legal advice for a fee about the planned takeover of the board of directors which he was ostensibly serving.
694. On October 15, 1993, with Carto, his wife and associates at the offices of the LSF, Hulsy, Marcellus, Weber, O’Keefe and Raven, the latter wielding a loaded gun, broke a lock on the main door, forced their way into the building and began violently to eject the Cartos and their friends. The Cartos refused to leave and both Carto and Elisabeth Carto were assaulted and injured.
695. The husky O’Keefe and the muscular Marcellus were particularly forceful in their physical attacks upon Mr. and Mrs. Carto. O’Keefe and Weber repeatedly hit Elisabeth Carto on the head and face.
696. Defendant Raven, standing side by side with the attorney Hulsy, aimed his loaded semi-automatic 9mm pistol at Elisabeth Carto’s face, screaming at her to get out or that he would kill her.
697. Ultimately Elisabeth Carto was physically thrown out of the building. Carto positioned himself between the door and the frame, with the heavy steel and glass door being pulled shut against him.
698. Attorney Hulsy pulled at Carto and shouted, He’s a wiry son of a bitch,
while Marcellus and others pummeled Carto from the inside of the office. Carto, who was bruised and bloodied, let go and was pulled into the street by Hulsy and was thus removed from the headquarters of the institute that he had worked so hard to establish by the attorney he had hired to represent the LSF and himself.
699. The Costa Mesa Police Department was summoned. Upon the arrival of the authorities, the competing parties began explaining their versions of what had taken place.
700. Carto advised the police that Raven had drawn a weapon. Although the gun was then not in sight, the police searched the building and discovered the pistol hidden in Raven’s desk where it had just been secreted by Marcellus and Raven. The gun was loaded with a round in the chamber; the weapon was confiscated as evidence. Raven was immediately arrested, handcuffed, and taken away in a police car.
701. At this point attorney Hulsy and the other defendants began swearing out arrest warrants against Mr. and Mrs. Carto.
702. The police officers asked if the Cartos wished to swear out arrest warrants. Attempting to settle the matter, Carto advised the police that if Hulsy and his clients would abandon their arrest warrants that he would do likewise.
703. Hulsy refused. Only if Carto turns over all the assets and complete control of the Legion,
he yelled. Carto stated that he was not about to yield to obvious extortion of his former attorney.
704. As a consequence, several arrests were made, including both of the Cartos who were handcuffed, taken to police headquarters, and placed in cells under $50,000 bail each and held for eight hours. No charges were ever filed.
705. The defendants knew that Carto had devoted much of his life to the development of the LSF, the IHR, the publication of the Journal of the IHR and the organization and development of Liberty Lobby and its publisher, The Spotlight.
706. The defendants knew that Carto, denied access to the Journal, then initiated and published The Barnes Review.
707. The defendants knew that Carto had a continued and intimate relationship with the organizations and publications referred to hereinabove, that he had devoted his energy, reputation and talents for most of his adult life to enhance and develop those entities.
708. The defendants knew that Carto had been accused falsely over the years of various acts of misconduct, that he had been repeatedly defamed by those who held political views in opposition to his views as well as the stated views of the defendants and that, therefore, he was particularly sensitive to the false charges and outrageous actions taken subsequently by the defendants.
709. Knowing of Carto’s particular sensitivity, the defendants engaged upon a program to destroy him. This program included the commission of crimes, including extortion, bribery and perjury and robbery, as well as the tort of defamation, as more fully set forth below.
710. During 1994, Marcellus, acting on behalf of himself and his fellow defendants, offered to pay $5,000 to John Henry Nugent to arrange to bribe a person employed by Liberty Lobby in order to secure the valuable Liberty Lobby valuable Board of Policy membership and Spotlight newspaper subscriber lists. Liberty Lobby had expended millions of dollars to develop and maintain those mailing lists.
711. Marcellus knew that Nugent was a longtime consultant to and former employee of Liberty Lobby.
712. Nugent then telephonically contacted William G Sweet, a Liberty Lobby employee whom Nugent knew was responsible at that time for the computerized maintenance of the Liberty Lobby lists that Marcellus and the other defendants hoped to obtain. Nugent offered Sweet $5,000 if Sweet were to make the list available
713. Sweet refused the bribe and promptly advised Carto, his immediate superior, of the bribery attempt. Subsequently, Nugent himself made contact with Carto and confessed his role as an intermediary on behalf of Marcellus who later admitted, under oath, that he had initiated Nugent’s actions.
714. During 1995, defendants made another bribery attempt. Defendant Berg offered $1,000 to former LSF director Tom Kerr if he would sign a legal document endorsing defendants' takeover of LSF and repudiating his earlier support for Carto and the original LSF board of which Kerr had been a member.
715. Subsequently defendant Berg admitted under oath that he and defendant Allen had offered to pay $1,000 to Mr. Kerr.
716. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity
including extortion.
717. After defendant Raven, armed with a loaded weapon, accompanied by defendants Hulsy, Marcellus, Weber and O’Keefe, assaulted Carto and his wife Elisabeth Carto, at the offices of the LSF on October 15, 1993, officers from the Costa Mesa Police Department arrived. Carto attempted to resolve the matter by advising the police officers that he and his associates, although injured, would agree to refrain from filing criminal complaints. Hulsy stated, on behalf of himself and those who had accompanied him in the assault, defendants Raven, Marcellus, Weber and O’Keefe, that he would agree not to press criminal charges against Carto and his wife Only if Carto turns over all the assets and complete control of the Legion.
718. Carto responded that he would not yield to a blatant extortion attempt, particularly when the criminal act of extortion was being practiced by his former attorney to secure advantage for himself.
719. Defendants have also engaged in a pattern of racketeering activity through extortion by making blatantly false claims against counsel for the plaintiffs in an effort to constrain counsel to withdraw from representing their clients.
720. Defendants sought improperly to secure unfair advantage against the plaintiffs by embarking upon a campaign to harass, intimidate and frighten counsel for the original incorporators of the LSF in the lawsuit then pending in the 11th Judicial District Court of Harris County, Texas, and by taking other extra-legal actions in that matter.
721. Among other actions defendants have implied or stated that they would attempt to file criminal charges against plaintiffs' counsel if he continued to represent his clients and, in fact, did file a complaint against the attorney, stating or implying that he, the attorney who actually met Carto for the first time during 1994, had been responsible for the removal of millions of dollars from Switzerland, an event which had transpired some years previously, and by accusing the attorney of covering-up the facts regarding the removal of funds and of profiting from those funds although the question involving those funds was not before the court in the case in which the attorney represented his clients.
722. Defendants Allan, Berg and Curry filed false complaints against Howard Singleton, a member of the bar of the State of Texas, who had been retained by Carto during July, 1994, to represent the Incorporators of the Legion for the Survival of Freedom, Inc., [a Texas corporation] against Andrew E. Allen, et al.
723. Defendants falsely asserted without any basis that Singl.eton profited from the embezzlement
of $6.5 million dollars and submitted a newspaper clipping which said that a bequest may have been embezzled.
724. In fact, the case before the court was unrelated to the distribution of the bequest, the bequest had been distributed years before Singleton was retained by Carto and years before Singleton had even met Carto, and Singleton had been paid only normal and regular attorney’s fees pursuant to the contract he had entered into with his clients.
725. He had never been paid any sum from the estate in question.
726. All of the charges referred to above were rejected by the relevant authority and every allegation that Singleton had profited from an embezzlement or had in any fashion been involved in embezzling funds were dismissed.
727. During November, 1997, and both before and after that period, the defendants published to numerous persons who comprised pan of the market which the defendants sought to capture by degrading plaintiff Carto and plaintiff Liberty Lobby, documents which contained false and defamatory allegations about both Carto and Liberty Lobby. Defendants mailed the documents in envelopes bearing the name and address: Institute for Historical Review Post Office Box 2739 Newport Beach, CA 92659. USA
728. The documents were unsigned and indicated that a group named In Loco Parentis had created the document on May 1, 1994. These documents were published on the Internet and were internationally circulated at that time and thus remain available to residents of the District of Columbia and elsewhere at the present time. The telephone number which followed the title In Loco Parentis upon the letterhead was (714) 63 11490,
which is the telephone number of the IHR and defendant LSF and the office telephone of defendants Weber and Raven. Upon information and belief it is alleged that the defendants created the document during 1994.
729. It is clear that the defendants widely published the document during November, 1997. Indeed, defendant Raven, on December 1, 1997, admitted to Gregory Douglas, a recipient of the document, that he had sent the defamatory document to him.
730. The defamatory document consisted of three pages and contained not merely false and defamatory allegations, but entirely fabricated accusations intended to outrage and inflame the recipient. The invented charges went far beyond the limits of decency and included assertions that Carto is a homosexual, that he lusts for Blacks,
that his many roommates
have been homosexuals. These allegations were published by the defendants who know that Carto has been married for almost forty years, that his only roommate
has been his wife, that he is not homosexual and that his association with Dick Gregory, offered by the defendants as proof of the accuracy of their false allegations, has been limited to inviting Gregory to address a public meeting, an invitation that Gregory accepted.
731. The document published by the defendants falsely asserted that Carto had stolen money from a collection agency and had been placed in jail for that theft. Those statements are both false and defamatory.
732. The document published by the defendants falsely asserted that Carto moved to San Francisco to escape the consequences of the theft and jailing referred to above.
733. The defendants also falsely asserted that Carto secretly was employed by the ADL, and that Mark Lane, the attorney for Liberty Lobby, was assigned by the ADL to control Carto.
734. Each allegation referred to above is false and defamatory and was made with actual malice. The defendants further stated that Lane is paid per case by Liberty Lobby and that he, serving as a conduit for the ADL, then transfers those fees to the ADL. Those allegations are also entirely false.
735. In fact, Mark Lane has been a member of the bar of the State of New York for approximately forty-seven years, is a member of the bar of the District of Columbia, is a member of the United States Supreme Court Bar and has tried cases in approximately half of the states of the United States. He has never represented the ADL, has never sought to control
Carto for the ADL or any other entity and has never transferred fees to the ADL from Carto or from any other client.
736. The blatantly false accusations entirely fabricated by the defendants and made against counsel for the plaintiffs form a pattern of racketeering activity comprised of extortion for the purpose of frightening counsel for the plaintiffs into withdrawing as counsel for the plaintiffs and thus enhancing the financial prospects of the defendants by denying to their adversaries effective and knowledgeable legal assistance and counsel.
737. The defendants have violated Title 18, U.S.C. Section 1961 by engaging in racketeering activity,
including robbery.
738. After defendant Hulsy, accompanied by defendant Raven, who wielded a loaded pistol, as well as by other defendants, broke into the LSF offices by force, they seized personal property belonging to Carto and to Liberty Lobby.
739. Subsequently, the defendants improperly secured 200 copies of a book entitled Best Witness. The defendants converted those books and have refused to return them in spite of requests that they do so.
740. Carto had regularly requested the return of his property which the defendants had seized beginning with requests made on October 16, 1993.
741. Most of Carto’s personal property has not been returned and a conversion suit has been filed by Carto against defendants Weber and Raven who are now believed to be in control of these items. That suit is still pending in court in California.
742. Among the property stolen by the defendants and not returned by them are several rare books, hundreds of valuable books, valuable autographed pictures, back files of magazines and other publications published by Carto and others, lamps, tables, and chairs.
743. An arbitrator assigned to a relevant case concluded in his ruling: I strongly suggest, therefore, that LEGION make every effort to return any possession of WILLIS CARTO which it may have.
(Arbitrator’s Statement of Decision, dated June 17, 1994, page 4)
744. Thereafter, on or about November 7, 1994, during a deposition in an unrelated matter defendant Raven admitted being in possession of Carto’s personal property. During the deposition, Raven personally, and through counsel for defendant Weber and the Legion, agreed to return any personal property of [the Cartos] which is not Legion property.
This oral agreement was later memorized in writing in the form of a deposition transcription executed under penalty of perjury by defendant Raven.
745. Despite repeated demands for the return thereof, defendants Raven and Weber have refused and continue to refuse to return the Cartos’ personal property and, on information and belief, have thereby converted the same and/or breached their oral and written agreements to return the same.
746. While Carto was not at Liberty Lobby headquarters in Washington, D.C. and was working out of the office at 711 West 17th Street in Costa Mesa, Liberty Lobby employees, including its comptroller Blayne Hutzel, frequently sent Carto large parcels via Priority or Express U.S. Mail containing personal mail sent to Carto in care of Liberty Lobby, business memoranda to Carto from Liberty Lobby employees, private Liberty Lobby business records, including bank statements, mailing lists and orders for materials that had to be processed as well as letters to Liberty Lobby from supporters of both Liberty Lobby and the IHR who were requesting further information about the events that had taken place at the IHR. When Carto received the latter inquiries he would send out pertinent materials presenting his view.
747. During March 1994, one large-sized Priority U.S. Mail.envelope containing the documents referred to hereinabove arrived at the U.S. Post Office in Costa Mesa and was inadvertently sent to the new IHR office under the control of the defendants. At that time, defendant Marcellus unlawfully opened the mail in question, cognizant of the fact that it had been sent from Liberty Lobby to Carto and unlawfully appropriated that mail for use by himself and the LSF in furtherance of their continuing efforts to disrupt the work of Liberty Lobby. This mail, taken illegally by Marcellus, has never been returned to Liberty Lobby or Carto.
748. An enterprise
under Title 18, U.S.C. Section 1961(4) is defined as any individual, partnership, corporation, association or other legal entity … or group of individuals associated in fact although not a legal entity.
749. The organization operated by the defendants known as The Legion for the Survival of Freedom [LSF], at all times pertinent to this Complaint, is and has been a corporation with activities that affect interstate commerce.
750. Therefore the LSF, at all times pertinent to this case, was and is an enterprise
as defined by Title 18, U.S.C. Section 1961(4).
751. The defendants were at all pertinent times and remain persons associated with or employed by the LSF in violation of Title 18, U.S.C. Section 1962(b), (c) and (d), by formulating an illegal scheme consisting of bribery, extortion and robbery of the plaintiffs.
752. By and through the pattern of racketeering activity engaged in by the defendants, the plaintiffs have suffered, and will continue to suffer, substantial loss of income, profits and valuable business.
753. The defendants also defamed Carto by repeatedly and falsely asserting that he was an embezzler
and a criminal
and that he was dishonest.
754. The defendants published such allegations to advertisers in The Spotlight in an effort to destroy each entity that Carto was involved with.
755. The defendants published defamatory statements about Carto to subscribers to The Spotlight, in an effort to destroy each entity that Carto was involved with.
756. The defendants made false and defamatory allegations about Carto to valued executive employees of Liberty Lobby.
757. Defendant Weber, acting on behalf of all of the defendants, placed unsolicited telephone calls to Paul Croke.
758. During those calls Weber asserted that Carto was an embezzler; that Carto was dishonest, that Carto was a criminal and that Carto was guilty of illegal actions.
759. The telephone calls referred to in Count XII of this Complaint were made by Weber to Croke at Croke’s office address in the District of Columbia.
760. Croke was at all times relevant to the statements made in Count XII of this Complaint, employed by Liberty Lobby and reported in the course of that employment to Carto.
761. Croke was at all relevant times employed by Liberty Lobby as an editor.
762. The telephone calls were made by Weber to Croke during October, 1993 and since that time up until and including telephone calls made by Weber to Croke during December, 1997.
763. Weber stated to Croke that Carto was a criminal and that Carto had committed crimes and could be sent to jail. As recently as November, 1997, Weber stated to Croke that Carto might be planning to flee to Europe and that Liberty Lobby had no future. In conversations with Croke, Weber defamed Piper and Carto.
764. The false statements made by Weber to Croke were intended to induce Croke to leave his employment at Liberty Lobby and to unfairly and unlawfully disrupt the activities of the plaintiffs in order to secure unfair competitive advantage for the defendants.
765. Each of the statements referred to hereinabove was false and defamatory and was with actual malice by Weber on his own behalf as well as on behalf of each of the other defendants.
766. In combination, these acts by the various defendants were extreme and outrageous, especially considering Carto’s particular sensitivity to baseless defamation and the intimate role he played in creating and building the entities referred to hereinabove.
767. The acts of the defendants were made with the intent to cause Carto severe emotional distress or with a reckless disregard of the motional distress which their acts would engender.
768. As a result of the defendants' extreme and outrageous acts, Carto has suffered severe emotional distress, including extreme mental suffering and mental anguish.
769. As is set forth hereinabove, the defendants acts with malice, gross negligence and reckless indifference to the plaintiffs fights, entitling the plaintiff Carto to punitive damages.
WHEREFORE, the plaintiff Carto prays the Court for the entry of judgment against the defendants and others to be identified, jointly and severally:
a. Awarding plaintiff Carto compensatory damages against all of the defendants, jointly and severally, in the amount of $1,000,000.00;
b. Awarding plaintiff Carto punitive damages against all of the defendants, and each of them in the amount of $3,500,000.00; and c. Awarding plaintiff Carto the costs and expenses of this suit including, but not limited to, attorneys' fees and such other and further relief as is just.
Plaintiffs hereby demand a trial by jury as to all issues so triable.
Respectfully submitted,
Mark Lane, Esq. D.C. Bar Number 445988 105 Second Street, N.E. Washington, D.C. 20002 (202) 547-6700
Dated: January 28, 1998
Frazer Walton, Jr., Esq. D.C. Bar Number 374301 1003 K Street, N.W. Suite 510 Washington, D.C. 20001 (202) 639-0790