Re: 5/17/00 - 'The Truthseeker' Faces Another Legal Tussle
May 17, 2000
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'The Truthseeker' Faces
Another Legal Tussle
By AARON ELSTEIN AND CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
A New Jersey mortgage banker known on Internet message boards as "The Truthseeker" is facing another wrinkle in a court fight stemming from his online posts about ZiaSun Technologies, an Internet holding company.
A California judge on Wednesday ordered Floyd Schneider to turn over information to lawyers for former ZiaSun President Bryant Cragun so that they could determine whether he violated a court order.
As part of a defamation case, state Judge Janis Sammartino had barred Mr. Schneider from publishing information about Mr. Cragun in a way that suggests he has engaged in criminal or unscrupulous activity.
Mr. Cragun's lawyers believe Mr. Schneider may have violated that order in corresponding with a reporter from The Wall Street Journal via e-mail, and by continuing to post on online message boards.
It's unclear how the lawyers found out about the e-mail correspondence, which they say in court papers had prompted the reporter to begin probing several companies with connections to Mr. Cragun.
They want to find out exactly what Mr. Schneider told the reporter and when, intending to use that along with the postings to get Judge Sammartino, who sits in San Diego, to issue a contempt citation.
The judge has given Mr. Schneider two weeks to comply with her order to provide information to Mr. Cragun's lawyers.
Mr. Schneider denies violating the court order. "I haven't posted anything specifically about Cragun that I'm not supposed to," he says. As for talking to reporters, he says he's free to speak privately with whomever he wants.
The court injunction against Mr. Schneider stemmed from a long-running defamation lawsuit filed May 1999 by Mr. Cragun against Mr. Schneider and three other relentless online critics of ZiaSun. Mr. Cragun seeks a court order permanently barring the critics from posting messages about him or companies connected to him, and restitution to those who have suffered financially due to the postings.
That case is still pending before Judge Sammartino. Daniel Pascucci, Mr. Cragun's lawyer, says he is still gathering evidence for the case. A hearing is scheduled for June 16.
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In pursuing evidence for a possible contempt action, Mr. Cragun alleges Mr. Schneider continues to post "false facts" on online message boards. Court documents cite a message on a Raging Bull board (www.ragingbull.com) in which Mr. Schneider explains "how some fraudsters carry out their scams."
Mr. Cragun also contends that he is being "irreparably harmed by a continuing manipulation campaign that has started spreading from the Internet to print media," referring to Mr. Schneider's correspondence with the reporter from the print Journal.
Mr. Schneider says the posting mentioning "fraudsters" -- one of several cited in court filings by Mr. Cragun's lawyers to support their contention ---- was copied directly from the Securities and Exchange Commission's Web site that advises investors how to identify possible fraud in tiny stocks.
Mr. Cragun had sued the online posters after they published numerous messages on the Internet suggesting he was trying to defraud investors in ZiaSun, a Solana Beach, Calif., holding company that owns Internet-related concerns in Asia and Online Investors Advantage, a Utah-based firm that teaches novices sophisticated investment strategies, such as options trading.
The other posters are Stephen Worthington of San Francisco, who Mr. Cragun contends is known as "Auric Goldfinger" online, Mike Morelock of Greenwood, Ark., also known as "C M Burns," and George Joakimidis of Athens, Greece, known online as "Alpine Sleuth."
ZiaSun also had sued Mr. Schneider in federal court in Seattle last year, along with many of the others Mr. Cragun is pursuing in California state court. But the federal case was dismissed because the judge ruled the case had been filed in the wrong court.
Write to Aaron Elstein and Carrie Lee at aaron.elstein@wsj.com and carrie.lee@wsj.com
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