October 7, 1998
Many persons who know of the multi-million dollar judgment against Willis Carto’s Liberty Lobby, publisher of the Washington, DC-based Spotlight tabloid, have expressed concern that the Liberty Lobby may not survive Carto’s continuing seemingly suicidal attacks on the IHR, and his most recent ploy to avoid paying the judgment: taking Liberty Lobby into bankruptcy. On the surface, these fears seem well founded.
As a result of the bankruptcy filing, the monthly business income and expenses of Liberty Lobby are posted each month as a public record. It is a dismal record. Despite the millions of dollars that have been raised by Liberty Lobby over the last three decades, the sworn statements of Liberty Lobby officials show almost no “real” assets. In fact, subscribers are owed close to $1,000,000.
Income is off, too. Liberty Lobby, which used to gross well over 4 million dollars a year, is now running at a rate of less than $800,000 per year (less than they used to gross in three months).
Even so, expenses are unabated. Each month for the last three months (since filing for bankruptcy), the Liberty Lobby has lost huge sums of money. Monthly reports show it getting deeper into debt with each passing day, the bulk of its income consisting of trusting new subscribers, and funds borrowed from other Carto-controlled entities such as Foundation to Defend the First Amendment (FDFA), Government Education Foundation (GEF), and Foundation for Economic Liberty (FEL).
As bad as this sounds, it turns out there is no need for alarm. Control of operations at The Spotlight seem to have passed into the hands of long-time Carto attorney Mark Lane and bankruptcy specialist Paul Pearlstein. These two “counsels for debtor,” who of course have the most intimate access to Liberty Lobby records, have made certain that their legal bills were promptly settled, even while other bills are going unpaid. For example, one recent legal effort by Mr. Pearlstein authorized the release to himself of $28,699 of Liberty Lobby funds as “compensation.” Liberty Lobby also seems able to continue paying thousands each month for “consultants” and “travel” expenses. Pearlstein and Lane are being assisted by Anatole G. Richman, a CPA hired in July to help manage Liberty Lobby assets since the filing of the bankruptcy.
Carto has also been running ads in The Spotlight seeking contributions to another of his front groups, Committee to Defend Liberty Lobby (CDLL), so it is possible these funds also will be funneled by Carto to Liberty Lobby, presumably in the form of loans.