The Fraud of Liberty Lobby
Founded in 1955 and operating from a handsome three-story building in Washington, DC, just a few blocks from the US Capitol, is Liberty Lobby, probably the largest and best-funded “right wing” organization in America. For more than 20 years it has published a nationally-circulated weekly tabloid, The Spotlight, with a recent claimed circulation of about 90,000. Liberty Lobby claims that some 12,000 supporters regularly donate money as members of its “Board of Policy” (BOP). In legal documents filed in May 1998, Liberty Lobby declared an income of $4.14 million in 1997.
Although Liberty Lobby claims to reveal the hidden forces that secretly control the world, it never discloses just who runs this self-described “populist institution,” or how. Even the name is deceitful. Liberty Lobby does almost no lobbying.
In fact, Liberty Lobby is essentially a fraud. Although it claims to be directed by its “Board of Policy,” it is actually run from behind the scenes by Willis A. Carto — a shadowy 72-year-old whom a California court has found to be a crook and a liar.
Willis Carto fears accountability, and operates by insisting that others take legal and public responsibility for his actions. Letters sent out by Liberty Lobby appealing for money, and items in its Spotlight weekly on behalf of Liberty Lobby, are invariably put out in the name of, and often under a photograph of, Vince Ryan, who is identified as “Chairman” of the Liberty Lobby “Board of Policy.” Similarly, The Spotlight identifies Ryan as the paper’s “Senior Editor.”
In spite of his important-sounding titles, Ryan actually has no authority with Liberty Lobby or The Spotlight. He plays no role in day-to-day operations, and for more than a year has been living in semi-retirement in Raleigh, North Carolina. As every Liberty Lobby employee knows, Ryan fronts for the real boss: Willis Carto.
In fact, the “Board of Policy” is window dressing, and has never had any power or authority. Liberty Lobby has always been a tool of Carto, who decides every major policy issue, tightly controls finances, hires and fires employees, and sets every employee salary.
The “Chairman” of the Liberty Lobby “Board of Policy” is merely a puppet whom Carto can dismiss in an instant. In fact, that’s just what happened in at least two cases. When BOP “Chairman” Gardiner Rogers refused to obey Carto’s order to put his signature to a deceitful fund-raising letter Carto had drafted, Carto fired him that same day. Another BOP “Chairman,” Robert Bartell, was likewise perfunctorily fired by Carto. In spite of the prominent and adulatory coverage they had been receiving in The Spotlight, Rogers and Bartell abruptly disappeared from its pages, forever and without explanation.
In a recent Spotlight issue (August 11, 1997, p. 6), a “Liberty Lobby Reports” item under the name of Vince Ryan told readers: “The Spotlight is free of any control except our Board of Policy.” This is a lie. In fact, Willis Carto dictates the Spotlight’s editorial policy and carefully supervises each issue’s contents, often changing the layout, wording or punctuation of even the smallest items.
Although he tightly controls everything that appears in The Spotlight, his name never appears on the paper’s routine page two listing of staff members. Occasionally an item will appear under Carto’s own name, but generally he prefers to use one of his several pen names, including “Frank Tompkins,” “Samuel P. Foner,” and the pretentious “E. L. Anderson, Ph.D.”
Carto’s reputation as an unscrupulous “patriot for profit” was established years ago. In 1969 he pulled off one of his most brazen scams, when he mailed out an “emergency appeal” to Liberty Lobby supporters. It was signed by Curtis B. Dall, then serving as Carto’s Liberty Lobby front man. The pitch letter pleaded: “If we are unable to come up with the $55,000 by midnight of March 25, we will be evicted.” It added: “If … we can raise the $55,000 … we will own the Liberty Building and the land it sits on.”
Supporters responded generously, and the April 1969 issue of Liberty Letter (forerunner of The Spotlight) carried a photo of Curtis Dall presenting a check in the amount of $55,235.27 to the bank holding the mortgage. Liberty Letter added that Dall had “a tear in his eye” during the presentation. In fact, Liberty Lobby never did acquire the building. Instead, Carto diverted the supporters' donations to the “Government Educational Foundation” (GEF), another corporation he secretly controls, which then charged rent to Liberty Lobby to operate in the building it supposedly owned.
Carto cultivates an image of himself as an impoverished idealist. Thus, in an affidavit dated July 23, 1985, Carto stated under oath that he does not pay federal income taxes “for the reason that I am not required to file.” Actually, Carto and his wife are very well to do.
They reside in an impressive three bedroom, three bathroom house on a sprawling estate in Escondido, north San Diego country. The secluded hillside residence, complete with swimming pool, looks out on a serene valley and rugged mountains in the distance. It is surrounded by a gated fence topped with razor wire. The Cartos' own this estate through the “Hereford Corporation,” a dummy company based in Panama they secretly control. They have arranged for Liberty Lobby to pay the property taxes on their private home.
Similarly, their two automobiles, one of them a late model Cadillac, are owned by another dummy corporation they secretly control.
The law requires that Liberty Lobby, Inc., be controlled by a corporate Board of Directors whose members are legally responsible for overall finances and operations, as well as by corporate officers who are legally responsible for day-to-day operations.
But in running Liberty Lobby, Carto disregards corporate law. He packs the Liberty Lobby corporate Board with individuals who can be counted on never to ask awkward questions, but instead to approve without hesitation his every decision and action. These individuals include Vince Ryan, Tom Valentine, Carl R. Hottelet, Olive Snead, and Carto’s wife, Elisabeth.
Carto keeps these corporate directors in complete ignorance of Liberty Lobby finances and operations. At the same time, he takes care to keep “Board of Policy” members in the dark about even the identities of the Liberty Lobby corporate Board members and the Liberty Lobby corporate officers.
Two members of the Liberty Lobby corporate Board have acknowledged to this writer that Willis Carto tells them nothing about Liberty Lobby finances or internal operations. In spite of their legal responsibility, they admitted knowing nothing of Carto’s disposition of millions of dollars of Liberty Lobby funds, or even the identities of the Liberty Lobby corporate officers, whom they ostensibly elect.
Some months ago (July 7, 1997), “Chairman” Ryan told BOP members to stop sending donations to Liberty Lobby, and instead to start sending money to a “totally separate entity” called “Committee to Defend Liberty Lobby” (CDLL). True to form, BOP members and Spotlight readers are not told who is behind CDLL, and Carto keeps the persons who are legally responsible for CDLL in the dark about how he disposes of CDLL funds.
Some of Carto’s fraudulent activities came under scrutiny during a major trial in November 1996 in north San Diego county, where he resides. It arose from a lawsuit brought by Legion for the Survival of Freedom (LSF), parent corporation of the Institute for Historical Review (IHR). (Civil case No. N64584, LSF vs. Willis Carto, Liberty Lobby, et al).
After evaluating hundreds of pages of documents and days of on-stand testimony given under oath, including first-person testimony by Carto himself, the California Superior Court found that Carto, together with several colleagues, illegally diverted millions of dollars from LSF/IHR for his own use. In essence, the Court found that Carto is a crook and a liar.
The Institute for Historical Review is a revisionist history think tank best known for publishing books and articles showing that numerous World War II Holocaust claims are exaggerated or untrue. Since 1980 it has published the scholarly Journal of Historical Review. Carto’s ill-defined and often contentious relationship with the IHR/LSF as its “agent” was terminated by the LSF Board of Directors in September 1993 because he attempted drastically to change the Institute’s editorial policy, and as evidence was coming to light that he had taken LSF/IHR funds for his own use.
California Superior Court Judge Runston G. Maino found that $7.5 million from the estate of Jean Farrel, an American-born woman who died in Switzerland in 1984, belonged to plaintiff LSF/IHR, and that “all defendants have substantially interfered with the plaintiff’s property rights as to this $7.5 million.” The defendants “were grossly reckless and grossly negligent in their handling of the Farrel estate,” and their “interference was intentional and without any justification,” Judge Maino declared.
Judge Maino ordered Carto and the other defendants to pay LSF/IHR $6.43 million, plus ten percent annual interest from January 1991, and co-defendant Liberty Lobby to pay LSF/IHR $2.65 million, plus ten percent annual interest from January 1993. (The Judge had allowed a deduction of $1.07 million in “reasonable, necessary and provable” costs incurred by defendants in securing Farrel estate assets.)
True to form, members of Liberty Lobby’s Board of Directors contacted by this writer had no idea how or why Liberty Lobby became involved in the case, what the issues were, or why Liberty Lobby was found liable for millions.
Recovering the stolen funds has proven difficult — which should not be surprising given Carto’s record of deceit and hiding money.
In a detailed evaluation of the evidence presented in the trial, Judge Maino was scathing in his assessment of Carto. “I did not find him to be a witness who can be relied upon,” Maino wrote. “His demeanor when he testified was evasive and argumentative.”
Judge Maino continued: “I found that much of his [Carto’s] testimony made no sense; much of his testimony in court was different from his previous testimony; much of his testimony was contradicted by other witnesses or by documents. By the end of the trial I was of the opinion that Mr. Carto lacked candor, lacked memory, and lacked the ability to be forthright about what he did honestly remember.”
"Mr. Carto intentionally lied to the Furrs and other actual and purported members of the Board of Directors of the Legion so nobody would know of his illegal acts,” the Judge also declared. As evidence presented in the case made clear, these “illegal acts” include Carto’s forgery of fraudulent corporate documents, and his handling of corporate funds as if they were his personal property.
Carto’s “entire attitude” during the trial, the Judge wrote, was “one of arrogance, deceit, evasiveness, and convenient memory.”
Spotlight readers were predictably told that Judge Maino was biased and unfair; they were not told that “populist” Carto himself had decided to dispense with a jury trial, and instead let Judge Maino alone decide the case.
Although Carto and The Spotlight claim that the courts are biased against him and Liberty Lobby, Carto has never been reluctant to file lawsuits. Time and time again he brings suits in “biased” courts. In his dispute with the Institute for Historical Review, for example, he has filed or initiated eleven lawsuits against the LSF/IHR (or persons associated with it).
The most recent is a 148-page lawsuit filed by Willis Carto and Liberty Lobby in United States District Court in Washington, DC, on January 29, 1998. The Spotlight (Feb. 16, 1998) confidently predicted that, in spite of Carto’s repeated courtroom defeats in the past, this new “megasuit” against LSF/IHR “will vindicate Liberty Lobby” and “bring about a new day for Liberty Lobby.”
True to form, Carto and Liberty Lobby have rejected numerous offers peacefully to settle the costly LSF/IHR legal dispute. Thus, a front-page Spotlight article (Feb. 16, 1998) announced that there would be “No Compromise” with the LSF/IHR “conspirators.” It specifically declared that Liberty Lobby had “vetoed any out-of-court settlement.”
During the November 1996 California trial, Carto reluctantly admitted under oath that he had diverted $2.65 million from Liberty Lobby to Kayla, Inc., another entity he controlled. Under Carto’s direction, the for-profit Kayla corporation went bankrupt. Of course, Carto kept the corporate directors of Liberty Lobby (as well as Liberty Lobby “Board of Policy” members) in the dark about his diversion and squandering of $2.65 million from Liberty Lobby.
During that same trial, Carto was also obliged to acknowledge that he had given $750,000 (of LSF/IHR funds) to Swiss banker François Genoud. Carto also reluctantly acknowledged during the trial that he had given $250,000 (likewise LSF/IHR funds) to Henri Fischer, a mysterious French-born businessman who had fled from Australia in March 1976 after making off with $500,000 as an intermediary between Iraqi officials and representatives of the Australian Labor Party.
In addition to Liberty Lobby, Carto secretly controls several other dummy corporations. One of the most important of these is “Foundation to Defend the First Amendment” (FDFA), supposedly a not-for-profit corporation. Jim Tucker, a veteran Carto employee, acts as the FDFA front man, putting his name to the fund-raising letters sent out on FDFA letterhead. Other Carto-controlled corporations include the previously-mentioned “Government Educational Foundation” (GEF), the “Liberty Life Line Foundation,” and the “Foundation for Economic Liberty” (FEL).
An important piece of evidence considered during the November 1996 trial is a hand-written memo by Carto’s in-house accountant, Blayne Hutzel. Headed “Intercompany Balances,” and dated March 23, 1994, it details phony debts among various Carto-controlled corporations. It shows, for example, that on paper Liberty Lobby owed $741,828 to FDFA and $839,228 to FEL, that GEF owed $518,416 to FEL, and that GEF owed $202,284 to FDFA. This memo documents just how Carto and Hutzel create phony paper debts to give the impression that Liberty Lobby and other Carto-controlled corporations are bankrupt. Other evidence submitted during the trial further confirms how Carto and Hutzel “cook the books” of Carto-controlled corporations.
Not surprisingly, when Willis Carto was asked about Liberty Lobby finances during a court-ordered judgment debtor examination on April 10, 1998, he repeatedly “took the Fifth.” In refusing to answer questions, Carto cited a fear of criminal prosecution by authorities in both the United States and Switzerland. During another court hearing on May 19, 1998, Judge Maino sternly warned Willis Carto and his wife that he would send them to jail if they continue to defy court orders.
Then, in a desperate move to postpone the day of reckoning for their illegal diversion of funds, Carto and Liberty Lobby filed for bankruptcy. Liberty Lobby filed for bankruptcy in Washington, DC, on May 13, 1998, and Willis Carto and his wife filed for bankruptcy three weeks later in southern California. These court filings suggest that a bitter, drawn out legal dispute may at last be reaching an end.
Carto has a long track record of bitter feuding, especially with other “right wing” or “patriotic” figures. Over the years his lengthy “enemies list” has included “Bo” Gritz, Kirk Lyons, Bradley Smith, Ernst Zündel, Ed Fields, Revilo Oliver, Don Wassal, William Pierce, Tom Metzger, Lawrence Patterson, and Herman Otten.
These feuds typically turn ugly fast, with Carto resorting to vicious smears and costly lawsuits. He frequently slanders his adversaries as “Zionists” or “ADL agents.” For example, since November 1993 Carto and his weekly Spotlight have waged a vicious campaign against the Institute for Historical Review and persons associated with it — putting out the absurd lie that the IHR has been “taken over” and is now “controlled” by the Zionist Anti-Defamation League, the Israeli Mossad, and/or the Church of Scientology.
Carto has few personal friends, but perhaps his closest is Mark Lane, an East coast Jewish attorney who often represents Carto and Liberty Lobby in court. Lane has a long record of support for liberal and leftist figures, including Martin Luther King and Jim Jones (of Jonestown fame). According to legal documents filed by Liberty Lobby in May 1998, Liberty Lobby pays Lane an annual retainer of $92,500.
In spite of the millions of dollars it’s controlled over the years, Liberty Lobby has no measurable impact on the political life of the nation’s capitol. This is hardly surprising, however. Given the unethical way it’s run, Liberty Lobby is inherently incapable of achieving its stated goals, not least because it cannot hold the support of persons of integrity and discernment.
Willis Carto has been bilking well-meaning but credulous Americans for decades, and doubtless many naive people on his “sucker list” will continue to respond generously to urgent appeals for money signed by Ryan or other stooges. Still, and as ever more people learn the facts about how Liberty Lobby really works, and of Carto’s long record of scams, the day of reckoning for him and his empire may be coming at last.— Mark Weber