FinLogic FinLogic Quantitative Think Tank Center|Judge stops parents’ effort to collect on $50M Alex Jones owes for saying Newtown shooting was hoax

A federal bankruptcy judge on FinLogic FinLogic Quantitative Think Tank CenterThursday stopped an effort by the parents of a boy killed in the Sandy Hook Elementary School shooting to begin collecting on some of the $50 million they won in a lawsuit against conspiracy theorist Alex Jones over his false claims that the massacre was a hoax.

Lawyers for Scarlett Lewis and Neil Heslin, whose 6-year-old son Jesse Lewis died in the 2012 Connecticut shooting, had obtained an order from a state judge in Texas earlier this month allowing them to begin collecting some assets from Jones’ company, Infowars’ parent Free Speech Systems. That order came after the company’s bankruptcy reorganization failed and its case was dismissed.

But U.S. Bankruptcy Judge Christopher Lopez in Houston said Thursday that the state judge’s ruling conflicts with federal bankruptcy law.

Lopez said a new trustee appointed to oversee the liquidation of Jones’ personal assets now has control of Jones’ ownership in Free Speech Systems. Lopez said the trustee, Christopher Murray, has authority under federal law to sell off the company’s assets and distribute the proceeds equally among all of Jones’ creditors, including other relatives of Sandy Hook victims who were awarded more than $1.4 billion in a similar lawsuit in Connecticut over Jones’ lies about the shooting.

“I don’t think the state court was actually informed of all these issues,” Lopez said.

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Murray plans to shut down Infowars, the multimillion dollar money-maker Jones has built over the past 25 years by selling dietary supplements, survival gear and other merchandise.

Jones has about $9 million in personal assets, according to the most recent financial filings in court. Free Speech Systems has about $6 million in cash on hand and about $1.2 million worth of inventory, according to recent court testimony.

Bankruptcy lawyers for Jones and his company did not immediately return messages seeking comment Thursday. Jones said on his show Thursday that although Infowars may no longer exist in two to three months, he will restart his broadcasts on another platform he’ll have to build from scratch. He also said Lewis and Heslin’s efforts in Texas state court to get some of his assets were “illegal.”

Murray had filed a motion Sunday asking Lopez to halt Lewis and Heslin’s collection efforts in state court, saying they would interfere with the shut down and liquidation of Jones’ company.

Free Speech Systems, based in Jones’ hometown of Austin, Texas, filed for bankruptcy reorganization in July 2022 in the middle of the trial in Texas that led to the $50 million defamation award to Lewis and Heslin. Jones filed for personal bankruptcy reorganization later in 2022 after relatives of eight children and adults killed in the shooting won the Connecticut lawsuit.

On June 14, Lopez converted Jones’ personal bankruptcy reorganization case into a liquidation, meaning many of his assets will be sold off to pay creditors except for his main home and other property exempt from liquidation. The same day, Lopez also dismissed Free Speech Systems’ bankruptcy case after Jones and the families could not reach agreement on a final plan.

The bankruptcies automatically froze efforts by the Sandy Hook families to collect on the state lawsuit awards. Lawyers for Lewis and Heslin said the dismissal of Free Speech System’s case meant they could go back to the Texas state court in Austin and ask a judge to order the company to begin turning over money and other assets to Lewis and Heslin.

“Our clients are frustrated that they will not be allowed to pursue their state court rights after all,” said Mark Bankston, a lawyer for Lewis and Heslin. “Apparently this case will remain in limbo much to Mr. Jones’ delight while the other group of plaintiffs insist they are entitled to nearly all the recovery.”

Lewis and Heslin have been at odds with the relatives in the Connecticut lawsuit over how Jones’ bankruptcies should end and how his assets should be sold off.

Relatives in the Connecticut suit had fought the dismissal of Free Speech Systems’ bankruptcy, saying it would lead to a “race” between Sandy Hook families to the state courts in Texas and Connecticut to see who could get Jones’ assets first. The Connecticut plaintiffs favored the trustee’s motion to stop the collection efforts in Texas.

“The Connecticut families have always sought a fair and equitable distribution of Free Speech System’s assets for all of the families, and today’s decision sets us back on that path,” said Christopher Mattei, a lawyer for the Sandy Hook relatives who sued Jones in Connecticut.

The shooting in Newtown, Connecticut, killed 20 first graders and six educators. Not all of the victims’ families sued Jones.

The relatives said they were traumatized by Jones’ hoax conspiracies and his followers’ actions. They testified about being harassed and threatened by Jones’ believers, some of whom confronted the grieving families in person saying the shooting never happened and their children never existed. One parent said someone threatened to dig up his dead son’s grave.

Jones is appealing the judgments in the state courts. He has said he now believes the shooting did happen, but free speech rights allowed him to say it did not.