Willis Carto archive

Including information about his associates

U.S. Trustee Suspects Bad Faith in Liberty Lobby Bankruptcy Filing

Thursday, June 14, 2001

At an emergency hearing in bankruptcy court in Washington, DC, this morning, U.S. trustee Dennis Early made an oral motion asking Judge Martin Teel to rule that Liberty Lobby’s latest Chapter 11 bankruptcy filing was made in bad faith. Teel did not rule on the motion, but instead instructed Early and counsel for Institute for Historical Review’s parent corporation (Legion for the Survival of Freedom) to submit motions in writing on this matter. A hearing has been set for June 27.

Liberty Lobby had requested today’s hearing to gain court approval to issue payroll for its employees. Teel denied the motion, on the grounds that LSF/IHR has liens on all Liberty Lobby assets. Teel also informed Liberty Lobby’s attorney that Liberty Lobby’s failure to file UCC1 forms to perfect the liens was grounds for preventing its re-entering bankruptcy. Finally, Teel informed Liberty Lobby that it cannot use cash-on-hand as collateral in its new bankruptcy plan, because that cash is legally encumbered by LSF/IHR liens.

This second bankruptcy filing puts Liberty Lobby in grave danger. Unless Willis Carto, who controls Liberty Lobby, divulges the whereabouts of the millions he illegally diverted from LSF/IHR, Liberty Lobby could be sold to the highest bidder. Any of the groups that Carto has mendaciously attacked in articles in his weekly tabloid, The Spotlight, could buy Liberty Lobby, The Spotlight, and their mailing lists, for use in any purpose whatsoever. We warned of this possibility after Liberty Lobby’s first bankruptcy filing in 1998. We were able to prevent the dissemination of the Liberty Lobby mailing list during the first bankruptcy, but this may not be possible again.

In related news, Brian Urtnowski, California attorney for Liberty Lobby and Willis Carto, says that Carto will not show up on or before June 15 to turn over documents and answer questions about his assets, as ordered, because he will be attending a conference in Washington, DC. This did not shield his wife, Elisabeth, from being deposed, however. Elisabeth, who has been married to Carto for decades, who works for Liberty Lobby, and who has been named as a member of the Liberty Lobby board of directors, claimed not to know anything about her husband’s or Liberty Lobby’s finances. This is reminiscent of Carto’s claim under oath during a judgment debtor’s examination in February 1998 not to know his own wife’s maiden name.