The families of students and adults killed in the 2012 attack at Sandy Hook Elementary have gained a key ally in their legal fight against Austin-based conspiracy theorist Alex Jones – the US Department of Justice.
On Friday, a Justice Department official joined the families’ fight, urging U.S. Bankruptcy Judge Christopher Lopez to reject the federal bankruptcy filing of three companies linked to Jones and his InfoWars media system so that the cases of defamation of Sandy Hook can return to state court for jury trials. to determine how much Jones owes pay in damages.
Jones wants to use the federal bankruptcy system to pay off Sandy Hook family members after state courts in Austin and Connecticut find he defamed them by labeling the mass shooting, which made 20 children and six adults dead, a hoax intended to fuel a government campaign. to limit gun rights.
The families oppose the bankruptcy, saying it is an improper attempt to limit Jones’ financial exposure.
More importantly, they say, the lawsuits are not about a passive division of assets, but rather about attempts to hold Jones accountable for the heartbreak — and harassment of his followers — his words have produced.
In a court filing, Kevin Epstein, a U.S. Justice Department administrator, accused Jones of abusing the bankruptcy system to protect assets held by him and his main company, Free Speech Systems, and to minimize the amount of money he will have to pay. the Sandy Hook families.
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“The strategy employed here … is a new and dangerous tactic that is abusive and undermines the integrity of the bankruptcy system,” wrote Epstein, who oversees the bankruptcy system in the West and South Texas districts for the department.
“These are classic bad faith filings for two main reasons: these cases serve no valid bankruptcy purpose and were filed to gain a tactical advantage in the Sandy Hook lawsuits,” Epstein added, noting that three companies owned by Jones who hold little to no assets – InfoW LLC (formerly known as InfoWars LLC), IWHealth and Prison Planet TV – filed for bankruptcy protection, while Jones and Free Speech Systems did not.
The situation, the Connecticut families’ attorneys added, allows Jones to enjoy the benefits of bankruptcy without having to make any financial or business disclosures.
Judge sets up hearing on Alex Jones’ bankruptcy filing dismissal
At a status conference Friday afternoon in his Houston courtroom, Lopez said he would consider petitions to dismiss bankruptcy filings submitted by Epstein and the Sandy Hook families at a hearing. May 27.
“The parties have to be prepared to go late. We’re just going to go until we’re done,” the judge said, adding a promise to rule as quickly as possible.
“I realize a lot depends on that decision. It may be that day, or I may take a while, depending on the evidence,” Lopez said.
Lawyers for Jones and Free Speech Systems disputed claims that the bankruptcies were filed in bad faith.
“I’ve heard a lot of emotion. I understand that,” attorney Ray Battaglia told the judge, adding that the bankruptcy route was taken to ensure the assets would be fairly distributed.
“If the desire here is to find a mechanism to pay people for their legitimate claims, that’s what this program offers,” he said. “Other attorneys have talked a lot about bad faith, and that’s not how I come here today. I came here to try to pay claims that someone tells me are the proper claims.”
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The alternative is to deplete assets by spending millions of dollars on lawsuits in Austin and Connecticut, Battaglia said, adding, “If I understand all the facts that have been presented to me, it will go to zero enough rapidly.”
But in a court filing, attorneys for the Sandy Hook families argued the bankruptcy is being used to ‘force victims at the settlement table into a disadvantageous position’ with a plan they won’t have a vote. to approve or reject.
They also objected to Jones filing for bankruptcy on April 18, a week before the start of the first trial in Austin, resulting in a postponement.
“Jones dipped into his bag of legal tricks and tactics in an extra effort to avoid facing justice,” the lawyers argued in a motion to dismiss the bankruptcy filings. The families “are victims of the intentional efforts of Alex Jones and his entities to spread lies and conspiracy theories while earning millions of dollars from the suffering of others.”
Alex Jones claims ‘questionable’ $54m debt as he tries to limit payment to Sandy Hook litigants
Bankruptcy papers show Jones hopes to limit its liability to about $10 million, or about $500,000 per litigant, but acknowledge that “additional consideration may be negotiated during the course of the bankruptcy filing.”
In March, before bankruptcy proceedings began, 13 family members of children and adults killed at the school in Newtown, Connecticut, rejected Jones’ offer of $120,000 by no one to settle their lawsuit in Connecticut, calling it “a transparent and desperate attempt to escape public trial.”
The Connecticut cases are due for trial in August. The Austin trial that was postponed last week has not been reset, while a second Sandy Hook trial is scheduled, at least for now, for June.
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The bankruptcy documents also provided additional details about the source of the $10 million, which would be paid into a litigation settlement trust:
• $7 million from Jones and Free Speech Systems, with $2 million paid upfront and $250,000 paid quarterly for five years.
• $2 million in royalties from the sale of Youngevity products—primarily dietary supplements and books—on the InfoWars website over five years.
• $725,000 that was added to the trust following the recent sale of Jones’ home.
An additional $800,000 would cover four months’ fees for attorneys and the bankruptcy restructuring manager.
Court documents in the Texas cases show that the InfoWars online store has sold over $165 million in herbal supplements, videos and other products in three years from 2016. Additionally, Jones has listed over $6.2 million in assets, including three properties worth approximately $2.35 million plus approximately $458,000 in the bank. He also said he owned $206,000 in cryptocurrency, $150,000 in vehicles and an exchange trust with $3.1 million from a November home sale.
But in a separate lawsuit filed in Travis County in early April, several Sandy Hook relatives accused Jones of hiding assets by fraudulently diverting millions of dollars to himself and front companies.
The lawsuit alleged that the illegal transfers included $18 million paid directly to Jones, in addition to an annual salary of more than $600,000, from 2018-21 – payments that began the same year the parents sued him. for defamation.
Jones also listed $54 million in “doubtful” debt owed to PQPR Holdings, a Nevada-registered company that is owned “directly or indirectly by Jones, his parents, and his children through an alphabetical soup of fictitious entities,” according to the court case.
This trial is still in its early stages.
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