Re: Silicon Investor Deletes Posts In ZiaSun Cyber-Libel Case
Silicon Investor Deletes Posts In ZiaSun Cyber-Libel Case
By AARON ELSTEIN
THE WALL STREET JOURNAL INTERACTIVE EDITION
In the latest twist in a groundbreaking cyber-libel case, Silicon Investor took the unusual step of removing three postings from an Internet stock message board at the request of a company that has sued the writer for defamation.
Silicon Investor, a stock-discussion Web site which ordinarily doesn't delete postings without the writer's consent unless legally ordered to do so, said it honored the request last week from ZiaSun Technologies to remove the postings by Floyd Schneider because of an unusual legal circumstance.
ZiaSun had recently won a preliminary injunction against Mr. Schneider -- one of ZiaSun's fiercest Internet critics -- ordering him to stop publishing "false statements" about the company. The injunction stemmed from a libel lawsuit the company had filed in U.S. District Court in Seattle against Mr. Schneider and seven other online critics. A trial is set for later this year.
Before the injunction, ZiaSun had tried to get Silicon Investor to remove messages by Mr. Schneider that it considered defamatory. But the Web site had refused, citing its policy.
"To my knowledge, this is the first time we've been presented with an injunction and removed postings," said Ethan Caldwell, general counsel at Go2Net of Seattle, which owns Silicon Investor.
Silicon Investor (www.siliconinvestor.com) notified Mr. Schneider Feb. 2 about its decision to remove the three messages posted several months ago about the Solana Beach, Calif., Internet holding company. Mr. Caldwell said ZiaSun originally asked Silicon Investor to remove the same messages last spring.
Mr. Caldwell said that since a judge decided there was sufficient evidence that Mr. Schneider had posted defamatory statements about ZiaSun to issue the injunction, Silicon Investor decided to remove messages. Mr. Caldwell added that Silicon Investor will wait until the lawsuit is resolved before deciding whether to suspend or terminate Mr. Schneider's membership. The Web site's rules prohibit the posting of libelous material.
Mr. Schneider, a mortgage banker in Saddle River, N.J., who has posted thousands of messages about ZiaSun and other companies using the aliases "The Truthseeker" and "Flodyie," said he was surprised the messages had been removed. "If they took off three, I guess that means the rest are right," he said.
Mark Harris, a spokesman for ZiaSun, disagreed. "The statements removed may be the ones that ZiaSun officers took greatest offense to," he said. "There may be others that go beyond the judge's determination of what he may publish." He said the messages that were removed had referred to ZiaSun executives as "criminals."
Blake Bell, a New York attorney who specializes in Internet securities cases, said he couldn't recall an instance of a message board ever deleting a posting at a company's request. He said message-board participants have agreed to have their messages removed as a part of settlements with companies.
But he added that it's unlikely that Silicon Investor's decision to delete Mr. Schneider's messages would quell ZiaSun's critics. "After all, messages get copied all the time and posted other places," Mr. Bell said. "I wouldn't be at all surprised if they appear somewhere else."
The federal judge's decision to grant ZiaSun's request to restrict what Mr. Schneider could publish had surprised many legal experts, who said it's unusual for such restraints to be granted in cases where freedom of speech is an issue. Judges generally are reluctant to grant preliminary injunctions because of concerns about violating First Amendment rights.
Mr. Schneider said he wasn't present in court to refute ZiaSun's charges and doesn't plan to appear at future hearings. His attorney, Bob Weinberger of North Palm Beach, Fla., didn't immediately return phone calls Monday.
The lawsuit and Jan. 21 injunction aren't the only problems for Mr. Schneider in his tussle with ZiaSun.
Mr. Schneider also was accused of defamation in a lawsuit filed in a California state court by Bryant Cragun, a major ZiaSun shareholder and former president of the company. The lawsuit stemmed from a press release Mr. Schneider published on his Web site, TheTruthseeker.com (www.thetruthseeker.com), on Jan. 1., and from messages he posted on Silicon Investor about Mr. Cragun.
In the press release, Mr. Schneider had alleged Mr. Cragun was engaged in fraudulent dealings involving a ZiaSun solicitation to overseas investors. In the release, Mr. Schneider rated ZiaSun shares a "strong sell" and called the company "an old penny stock trick" because he alleged it illegally marketed a private equity placement to overseas shareholders as an initial public offering.
On Jan. 31, Judge Janis Sammartino of the California Superior Court in San Diego ordered Mr. Schneider to retract the press release. Ms. Sammartino also issued a temporary restraining order barring Mr. Schneider from posting any statements that "state, suggest, or imply" that Mr. Cragun had engaged in "criminal behavior."
Mr. Cragun's attorney, Daniel Pascucci, said his client filed his suit because Mr. Schneider had personally targeted him and his family in his online messages and distorted facts to tarnish his reputation.
In the retraction ordered by the court, Mr. Schneider said the release "was not based on objective analysis of ZiaSun's stock and value" and contained statements that "were false or implied false facts."
Mr. Pascucci said a hearing for preliminary injunction against Mr. Schneider is scheduled for Feb. 15.
Mr. Schneider did not appear at the court in San Diego to defend himself and says he does not have a lawyer working on that case.
Write to Aaron Elstein at aaron.elstein@wsj.com.
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Related stories:
Net Firm Wins First Round in Battle With Online Critic (Jan. 26)
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ZiaSun Sues Its Online Critics as Posts Get Nasty and Personal (Aug. 13, 1999)
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Banker Is on a Mission to Become "Truth Police" (Nov. 3, 1999)
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