Willis Carto archive

Update on the Liberty Lobby bankruptcy

January 8, 1999

On November 18, 1998, the U. S. Bankruptcy Court in Washington, DC, rejected Liberty Lobby’s reorganization plan as illegal, and has directed Liberty Lobby to come up with a new plan by the end of January 1999 that treats all of its creditors equally. If its revised plan is accepted by the Court, Liberty Lobby must then divulge even more information about its assets and operations. If it can clear these two hurdles, Liberty Lobby would then finally begin repaying the Institute for Historical Review. Liberty Lobby owes $4,211,357.14 to the Institute for Historical Review and its parent corporation (Legion for the Survival of Freedom).

If Liberty Lobby’s attorneys Mark Lane and Paul Pearlstein cannot come up with a lawful reorganization plan, and a complete and honest accounting of Liberty Lobby assets and operations, the Court may well appoint a trustee to run Liberty Lobby, or force Liberty Lobby into involuntary Chapter 7 liquidation.

In December 1998, attorneys for LSF/IHR were granted access to the books and financial records of Liberty Lobby, including the mailing list for The Spotlight. This was one of the obvious and inevitable consequences of Liberty Lobby’s bankruptcy filing, which Carto chose as an alternative to complying with the November 1996 court order to repay LSF/IHR.

Preliminary reports show that several interesting transactions have come to light:

1. Large payments made to Carto’s personal attorneys in Switzerland and Panama;
2. An undeclared Nevada bank account for Elizabeth Carto; and
3. Thousands of dollars in checks made payable to Cash signed and counter-signed by Willis Carto.

These transactions seem to provide at least a partial explanation as to how Carto, who claimed under oath to be paid only one dollar a year by Liberty Lobby, can afford his jet-set lifestyle and expensive southern California estate.