Off Topic: The Chelekis trial... a case study in libel
Note: I hope Mr. Du Plessis (who recently posted on this thread) is understanding that I thought his story important enough to cut and paste it (including the copyrights).
Source:
inx.de
(BW)(MARKET-NEWS-PUBLISHING) RE: Apology to David Baines and Southam from Market News Publishing
Business Editors
VANCOUVER, BRITISH COLUMBIA--(BUSINESS WIRE)--Sept. 12,
1997--Market News Publishing On September 29, 1994, Market News Publishing Inc. disseminated an article that made allegations that Vancouver Sun business writer David Baines was trading against his column. This article was written by George Chelekis, a stock tipster from Clearwater, Florida.
he allegations against Mr. Baines were completely false. We sincerely apologize to Mr. Baines and The Vancouver Sun for disseminating this material and for any inconvenience or embarrassment this may have caused.
--30--bk/ny*
CONTACT: Market News Publishing Inc.
Robert Shore, 604/689-1101
======
Vancouver Stock Exchange -
Southam traps Shore with his own libel
Vancouver Stock Exchange VSE
Shares issued 0 1899-12-30 close $0
Friday Sep 12 1997
See Southam Inc (STM) Street Wire
INSURANCE LAWYER AMBUSHED BY HIS OWN CLIENT
by Stockwatch Business Reporter
The libel, slander and bad feelings trial between Southam Inc and David Baines as plaintiffs and Robert Shore, David Robinson and George Chelekis as defendants continued in BC Supreme Court on Thursday, September 11, 1997.
Resuming his testimony before Mr Justice John Rowan was Robert Shore, the owner, publisher and admitted libeler at Market News Publishing Inc. Mr Shore and Market News are accused of distributing two of Mr Chelekis's articles and a press release that impugned the integrity and honesty of Vancouver Sun business reporter David Baines and Howe Street investigator Adrian du Plessis.
Neither Mr Chelekis nor David Robinson, publisher of the Florida-based tout sheet Bull & Bear, are represented in court, though both attempted unsuccessfully to derail their trial. Mr du Plessis is pursuing a separate legal action over the libelous allegations that he conspired with Mr Baines and unnamed short sellers to profit from driving down the price of a number of VSE companies over a six-year period. In addition, Mr Chelekis told about 150 people at a May 1996 investment conference in Vancouver that Mr Baines was HIV positive and had not told his wife.
Under cross-examination by Southam counsel Barry Gibson, Mr Shore said the first time he met Mr Chelekis was when Howe Street habitue, David Elrix, brought to him the August 1994 edition of the Bull & Bear, which contained allegations of impropriety on the part of Messrs Baines and du Plessis. Mr Elrix thought Mr Shore ought to meet Mr Chelekis, and helped set up a meeting with its author. Mr Shore then met Mr Chelekis -- for the first time ever, he told the court -- at the Four Seasons hotel in late July or early August 1994.
Asked why Mr Chelekis was in town, Mr Shore said he believed the Florida-based writer was attending one of the many roadshows organized by newsletter writers and similar species to promote their products and generate subscribers. "Did he indicate that he was a journalist for hire?" Mr Gibson asked, meaning that he was paid specifically to write the kind of articles that promoters of penny-stock companies wanted to read. "At that point, no," Mr Shore replied. "I believe this was a loss leader for him, to get subscribers for his newsletter."
Mr Shore said he could not recall when he figured out Mr Chelekis accepted money or stock for his articles. Asked if he knew by late August or early September 1994 that Mr Chelekis accepted shares in the various companies for which he wrote nice things, Mr Shore said: "I'm not sure."
Mr Gibson also wanted to know whether Mr Shore inquired as to who was paying for Mr Chelekis's trips to Vancouver, which consisted of himself, the "research assistant" Lisa Petrella and high-class accommodation. Mr Shore replied he did ask, but that Mr Chelekis said that no one but himself was picking up the tab.
Mr Shore said he subsequently met with Mr Chelekis one or two more times.
Mr Gibson spent considerable time enquiring whether or not Mr Shore made efforts to verify the veracity of the material he accepted for publication and possible publication. (Mr Shore acknowledges disseminating the August Bull & Bear story and a press release tipping the October 1994 Bull & Bear story. However, he claims the second story was sent out inadvertently and without his authorization.)
Mr Shore replied that he asked Mr Chelekis for the names of the sources for specific allegations contained in the August story and was assured credible people gave him the information; both that and the subsequent October Bull & Bear stories offered no attributions. Mr Gibson pressed Mr Shore, demanding to know the names of one -- even one -- individual, gleaned from his several meetings with the writer, that formed the basis of the allegedly defamatory
material in the first article. Mr Shore said names were mentioned, but his memory had gone blank: "I don't remember any of the names."
"Did you take notes?" Mr Gibson asked. "No," replied the electronic journalist.
Mr Gibson pressed further: "I just want you to name for the court one name as a source for the first article." Replied Mr Shore: "I can't say he'd named any specific people . . . only that he'd spoken with a number of people."
Mr Gibson then wanted to know about the $2 fee he charged Mr Chelekis for publishing the articles. "I was under the mistaken impression that he'd been very careful about the material and that I could rely on him for the veracity of the material," Mr Shore testified. From that, Mr Gibson posited that Mr Shore knew the material was "pretty dangerous stuff" and that he needed to take measures to protect himself from libel, which he thought he did by charging Mr Chelekis $2 for publishing the material and by printing three disclaimers on the articles absolving himself from responsibility for their content.
"You wanted to transfer all responsibility to Mr Chelekis?" Mr Gibson asked. "No, I wouldn't say that," Mr Shore replied.
Mr Gibson read aloud the laborious disclaimers that were transmitted with the electronic version of the October story sent out over the Star Data and Bloomberg news-wire services: "Distribution of this article has been paid for by the author, and as such the text is carried in full and unedited. Distribution of this material has been paid for by the author, who takes full responsibility for its contents. Opinions expressed here are solely those of the author and do not necessarily reflect the opinions of the publisher or distributor."
Mr Shore said he had never before charged to distribute a bylined article, nor had he ever before placed such a disclaimer on a story.
"Didn't you ask the names of sources for specific allegations" in the second story? Mr Gibson asked.
Mr Shore replied, "I was told there were sources for the allegations."
"I just want to know any of the sources for the second article," Mr Gibson demanded. "Which did you check on?"
Mr Shore replied, "Some of the people that Adrian du Plessis traded with on the floor . . . and I don't remember their names."
"Did you ask for the sources for allegations that Baines was trading on his column?" Mr Gibson asked.
"Yes, I asked," Mr Shore told the court. "I relied on the assurance he had a source."
"Didn't you make any independent effort to verify" allegations Mr Baines traded against his column and kept his short-selling riches in Panamanian banks, Mr Gibson asked.
"I didn't know how," Mr Shore replied.
Mr Gibson then levelled a hitherto unmentioned charge that Mr Chelekis was planning a third article - this time bringing into the alleged short-selling conspiracy Stockwatch owner and publisher John Woods. This was presaged in an Internet posting which referred to Mr Woods and Mr Baines as two of Vancouver's "terrible trio" of stocks reporters (Mr du Plessis was the third).
"Did you encourage him to add Woods into it?" Mr Gibson said. Mr Shore replied only that Mr Woods may have been a subject for discussion. "That's possible," he said. "I don't recall."
Mr Gibson then wondered aloud whether Mr Shore understood that an article of this kind could spell the end of Mr Baines's career. "Mr Chelekis assured me he had sources" for all of his allegations, Mr Shore countered.
The Southam counsel then returned to his line of questioning about the third story that may have been planned but not written. "The first two take out David Baines and Adrian du Plessis and the third would take out John Woods," Mr Gibson said. Mr Shore denied the statement.
Mr Gibson then pressed Mr Shore on his motives for taking such a risk in publishing the Chelekis material. "What I want to know is, what was in it for Robert Shore?" Mr Gibson asked. "We were attempting to get more information, to expand the company, to get more news (from the US)," Mr Shore said. In addition, if Mr Chelekis was right, he added, that meant Mr Chelekis had "something significant to offer the industry."
"But what about Bob Shore?" Mr Gibson demanded.
"I'm not really sure there was anything in it for me, except to gain more information and to make contact with companies in the US," he said.
Mr Shore also confirmed he had later travelled to a gold show in Florida and had stayed overnight as a guest in Mr Chelekis's home, adding that he subsequently met with the tipster-cum-promoter "a couple of times" when he visited Vancouver, and talked many times over the phone.
Mr Shore was sued by Mr Baines and Southam in May 1995. Mr Gibson then asked whether Mr Shore took any steps at that time to "find out facts" from Mr Chelekis about the story and who provided information on the specific allegations. Mr Shore replied that he did, and that Mr Chelekis assured him the sources were solid and that he should not worry.
"Did you worry?" Mr Gibson asked. "Oh, I worried," Mr Shore replied.
Mr Shore said he tried to ensure that Mr Chelekis would appear in court to defend himself and provide information about his sources, adding he last spoke to Mr Chelekis "eight to 10 weeks ago, possibly longer." (In fact, Mr Chelekis didn't appear, claiming through a lawyer he hired by cell phone on September 5 that he didn't know about the court date. Lawyer Andrew Davis requested a delay of proceedings on September 8, but Mr Justice Rowan denied the request, agreeing with Mr Gibson that he should have known about the date because it was set in late 1995.)
After the June discovery hearings, Mr Shore tried to contact Mr Chelekis but was told his numbers had been disconnected. That followed Mr Chelekis's plea of no contest on February 25, 1997 to charges by the SEC that he was touting shares in an illegal fashion and was fined US$162,000. After that, his presence on the Internet ended.
Mr Shore, the self-proclaimed computing expert, had spent much effort the day previous and again today patiently trying to help the gathering of computing neophytes understand the computing intricacies of the Bloomberg news system. According to Mr Shore, Bloomberg's mainframe news computers work like a great big wheel. The news enters the big wheel (really a buffer), and then when the wheel is full, all news that is not filed with a recognized stock exchange ticker symbol is dropped. It is simply a matter of how long it takes for news stories to fill the big wheel. Two days, maybe four, definitely not five, was Mr Shore's evidence. Then, poof goes the story into the ether, providing it was filed without a recognized symbol. Since the libel, which Mr Shore variously said he did distribute, did not distribute or was not sure (depending on when he was asked) had no recognized symbol attached, it would have disappeared into the ether in 2-4 days. In other words, none of it could possibly have been available on Bloomberg for more than four days, even if it was distributed in August and September and October of 1994.
Mr Gibson then yanked the carpet out from under his quarry, the way courtroom lawyers do it in the movies. "Well then Mr Shore, what is this?," he asked, placing in front of the witness a copy of the offending libel. Up jumped the defendant's lawyer, Bryan Baynham, who headed for the witness box. After a long, pained look, the ambushed Mr Shore answered the question with, "How'd you get this?"
Plaintiff Baines had pulled the libel off his Bloomberg terminal minutes before heading to the courthouse that morning. Mr Gibson handed copies of them to Mr Shore and asked for an explanation. "I gave instructions to have it deleted," he said, apparently not remembering much of his previous evidence.
In addition, Mr Gibson produced a fax of the story that indicated it was faxed from Market News's office on October 24, 1994 - nearly three weeks after he received notice from the Vancouver Sun that its parent company intended to sue over the October Bull & Bear story. Mr Shore said the makeup of the fax indicated it was an "internal document" not meant for distribution. As for who sent it out, "I would assume it was an employee who is no longer with us," he said.
Asked if he was considering an apology for his 1994 libeling of Adrian du Plessis, Mr Shore replied: "I haven't had an opportunity to discuss that with my attorney."
Mr Gibson again questioned the sincerity of Market News's apology to Mr Baines which was sent out two working days before the trial. Mr Gibson also pointed out that it didn't come from Mr Shore personally, but from Market News. "Anyone seeing this wouldn't know you're the one issuing the apology," Mr Gibson stated.
In addition, Mr Gibson produced evidence the apology was distributed shortly before 10 pm. "How many brokers are in their offices at that time?" he inquired. Mr Shore testified his office had been the victim of a power breakdown around 5 pm that night, just before it was due to go out. Besides, said Mr Shore, it makes little difference when transmissions are made; brokers could access the material when they arrived at work. "That was not at all the intention," he said of the after-dark distribution. "We had a major scramble and we put it out when the power came back on."
In summary arguments, Mr Gibson turned the Chelekis conspiracy theory on its head. Instead of Messrs Baines and du Plessis - and possibly Mr Woods - being in on a scheme to drive down the value of stocks, the conspiracy lay with Mr Chelekis, Mr Robinson's Bull & Bear, Mr Shore's Market News, and unnamed figures on Howe Street backing the deal in a bid to bring down their enemies in the press. "There is simply no other explanation for his conduct," he said.
Mr Gibson painted a picture of a writer with no visible means of support, coming to Vancouver with an assistant, and staying in one of the city's finest hotels, and having enough money to hire private investigators to snoop on Mr Baines. "In spite of his efforts, he found absolutely nothing," Mr Gibson adds. "He certainly found a host of VSE promoters who did not like David Baines or Adrian du Plessis. But he found no evidence whatsoever of
wrongdoing."
Nor could Mr Chelekis find evidence Mr Baines lived extravagently. At the time, Mr Baines drove a 1980 Volkswagen, living with his wife and three children in a middle-class Richmond neighbourhood.
As a result, Mr Chelekis decided to make it all up, the counsel stated. In the August Bull & Bear story, he tried to dislodge Messrs Baines and du Plessis without resorting to clear libel, with statements such as "together, Baines and du Plessis connived to create a pipeline of disinformation."
When that didn't have the desired effect, Mr Gibson adds, he went quite a bit further, making "sensational allegations" in the October Bull & Bear story, alleging the conspiracy to short sell and trade on his column, and that the two had fat overseas bank accounts. Mr Chelekis also wrote Mr Baines "casually altered facts or manufactured outright lies" to drag down share values.
But Mr Chelekis needed a better vehicle for his lies than the Bull & Bear, Mr Gibson continued. "George Chelekis found the perfect ally in Robert Shore." Mr Shore could feed material to electronic news services worldwide, and he himself was looking to boost his own reputation and credibility both on Howe Street and around the world. "Best of all, Robert Shore has his own reasons to dislike David Baines and Adrian du Plessis - they are close associates of
John Woods, his competitor and adversary."
Mr Gibson said the fallout for Mr Baines has been significant and lasting. "While David Baines had enemies, he nevertheless enjoyed a good reputation," he told the court. "He had won numerous awards for his coverage of the VSE. Most important, even his enemies didn't question his honesty."
Mr Gibson continued: "George Chelekis's attack on David Baines could have ended his career. The one thing that saved him was the support of Southam Inc." But despite that support, Mr Baines became the subject of a vicious and obscene fax campaign. Furthermore, other news outlets picked up the affair for their publications, repeating the allegations in publications such as Vancouver Magazine and the Globe and Mail.
"In fact, it's still going on, on the Internet," Mr Gibson added.
Mr Gibson stated the awards for damages should rival that of a recent case involving the Church of Scientology, which tallied $1.6 million in punative, general and compensatory damages.
The trial continues.
(c) Copyright 1997 Canjex Publishing Ltd.
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