Willis Carto archive

Including information about his associates

Liberty Lobby Back in Bankruptcy

January 22, 2001

In an attempt to avoid upholding its end of an agreement with Legion for the Survival of Freedom (parent corporation of the Institute for Historical Review) Liberty Lobby in Washington, DC, has filed to re-open its bankruptcy.

The agreement between the two parties was reached after years of litigation determined that Liberty Lobby had improperly received millions meant for LSF. Liberty Lobby came into possession of the money through the actions of Willis Carto, treasurer and CEO of Liberty Lobby, who illegally diverted the funds from a bequest left to LSF. Carto is also personally liable to LSF for millions of dollars he diverted to his own use.

Under the very generous terms of the agreement, Liberty Lobby was to pay only $1.2 million in installments (about ten cents on the dollar owed to LSF) of $5,000 per month, plus monthly interest on the outstanding balance, drop dozens of lawsuits brought by Carto and Liberty Lobby against LSF, turn over documents relating to the diverted funds, and cease from instigating new lawsuits.

Virtually since the agreement was signed, however, Liberty Lobby and Carto have been in default. They never paid more than a fraction of the monthly interest, they never made any of the monthly principal payments, turned over no documents, failed to drop all their lawsuits, and even filed a brand new lawsuit.

After months of attempting to convince Liberty Lobby and Carto to comply with the agreement they had both signed, LSF was left with no choice but to have a judge declare that Liberty Lobby and Carto had breached the settlement agreement, and were in default. Carto has appealed this decision to the California Court of Appeal without success. This means that Liberty Lobby and Carto once again owe the full, pre-agreement amount.

As a result, Liberty Lobby’s mail was once again being seized by a court-appointed receiver, which has led once again to Liberty Lobby filing for bankruptcy. The first time Liberty Lobby filed for bankruptcy was in 1998, within days of the court appointing a receiver to seize its mail due to its bad-faith actions at the time.

Instead of trying to cure the default in whole or in part, Liberty Lobby is publishing scurrilous stories in its weekly tabloid, The Spotlight, attacking LSF staff member Mark Weber. The Spotlight has also published the names and personal information about past and present members of LSF’s board of directors, apparently in hopes that Spotlight readers will take some kind of extra-legal action. Ironically, Spotlight readers who have called LSF directors are finally getting the other side of the story, and most are coming away convinced that the LSF position is correct. Some callers, after hearing what LSF’s directors had to say, have then called the IHR to order books and other materials, or just to get on the mailing list.

Figuring prominently in The Spotlight’s attacks on Weber are lurid stories from Weber’s estranged wife, Priscilla McGee Gray, who is so desperate to destroy Weber that she has also approached the Anti-Defamation League in hopes of enlisting their aid. While the ADL had no interest in getting in the middle of a divorce proceeding, Carto had no such qualms, setting Priscilla up with an attorney, arranging payment for his fees, and featuring Priscilla as a new-found friend of Liberty Lobby.

While Liberty Lobby is enjoying protection from the bankruptcy court in DC, the California court has scheduled a hearing for January 30 to order Carto’s hilltop estate sold as partial satisfaction of the millions he owes.