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Defamation Claim Against Montana Blogger Hits Close to Home

[Ed. Note – copyrite image removed]

Cross Posted at Legal Schnauzer


Journalists are supposed to approach a story with an objective mindset. But I must admit that I have fallen short of that standard in  reporting on Crystal L. Cox, the Montana blogger who was hit with a $2.5-million defamation judgment earlier this month.


Cox apparently upset some powerful folks out west with her reporting on alleged corruption in bankruptcy courts and the real-estate industry. One of those powerful folks, an Oregon attorney who had served as trustee in a bankruptcy case, sued Cox.


The bankruptcy case involved a company with three executives who are facing federal fraud and money laundering indictments, so a powerful stench was in the air from the outset. But a federal jury found that Cox had published defamatory reports about Kevin Padrick, a lawyer/principal with Obsidian Finance Group of Lake Oswego, Oregon, and trustee in the bankruptcy case of Summit Accommodators.


Why have I struggled to maintain objectivity about the Crystal Cox case? Probably because it hits so close to home. As a citizen journalist myself, I pull for bloggers like Crystal Cox to shine light on corporate and governmental misdeeds–especially since the mainstream media has pretty much given up on its role as a watchdog. Also, I know what it’s like to incur the wrath of powerful forces who would prefer that their shady acts remain out of the spotlight. Such forces cost me my job at the University of Alabama at Birmingham (UAB) and even cheated my wife out of her job at a Birmingham insurance company–all because I have written accurately and aggressively about official misconduct in our area.


I even know what it’s like to face threats of a defamation lawsuit. Unlike Cox, I have not actually been sued, and I suspect that’s partly because I have supported my reports with public documents and citations to actual law and published reports. That’s where a bachelor’s degree in journalism and 30-plus years of professional experience come in handy.


In essence, the bad guys in our Legal Schnauzer posts know they are bad guys–and they know my reporting is accurate. That doesn’t mean they can’t sue me, but it does mean they can’t win, under the law–and they probably don’t welcome the enhanced scrutiny a lawsuit would bring.


My years of experience on the front lines of journalism give me an advantage that not all bloggers have. But I think citizen journalism needs reporters from all sorts of backgrounds. That’s why I wanted Crystal Cox to prevail in the lawsuit against her. And that’s why I’m trying to figure out why a jury, assuming it wasn’t tainted, went against her.


I’ve seen signs that the judge made several incorrect rulings leading up to the jury verdict. We also have seen reports that indicate Cox got sloppy in her reporting–and might have acted with questionable motives. We will address those issues in an upcoming post. But first, I want to examine the issues that caught Cox’ attention and show why they hit so close to home here in the Schnauzer household.


Cox has worked as a real-estate broker and says the industry is set up to protect agents and leave consumers holding the proverbial bag. “Boy, when something bad happens to a real-estate consumer,” Cox says in one video, “everybody runs, don’t they?” Cox says she wants to help ensure that consumers are protected in real-estate transactions and, ultimately, to get the National Association of Realtors (NAR) out of real estate.


Both of those sound like noble goals to me. Cox says NAR is a powerful lobbying presence that pushes for laws to protect agents and leave consumers vulnerable. In other words, it sounds an awful lot like the American Bar Association and its affiliate state bars, which are notorious for protecting lawyers and screwing clients who file complaints.


Why does all of this hit close to home? For Mrs. Schnauzer and me, our journey through legal hell started with a real-estate transaction that I have described as “curious” and “under the table.” Fred Yancey, the football coach at Briarwood Christian High School in Birmingham, sold his house to a guy named Mike McGarity, who just happened to have a substantial criminal record. This left us with a criminal for a next-door neighbor, setting off a series of events that has turned our lives upside down over the past 10-plus years.


A real-estate agent named Phyllis Tinsley was in the middle of the Yancey/McGarity transaction, and here’s how we described it in an earlier post:


Here’s a brief overview of what happened when Fred Yancey sold his house to Mike McGarity:


* There was never a for-sale sign in the yard;


* There was never an ad in the local newspaper or in our main area “shopper” publication;


* The house was never listed with the local Multiple Listing Service (MLS), according to an appraiser I consulted;


* Even though the house was never listed, a real-estate agent named Phyllis Tinsley was involved in the deal. At the time, Tinsley worked for Prudential Realty, but she now has her own real-estate company. Her husband, Roye Tinsley, is a real-estate appraiser.


* Phyllis Tinsley told my wife that she happened to see a for-sale-by-owner sign at McGarity’s house in Cahaba Heights and stopped to talk with him. That, Tinsley said, is how she found a prospective buyer. And how did she find a prospective seller? She happened to be in our neighborhood and knocked on Fred Yancey’s door. Lo and behold, he was looking to sell his house!


Maybe real-estate agents sell houses this way all the time. But it sure seems like a strange way to do it to me–awfully inefficient.


Did Ms. Tinsley just stumble upon Mike McGarity, without anyone telling her he was interested in buying, and then stumble upon Fred Yancey, without anyone telling her he was interested in selling?


Phyllis Tinsley’s version of events never has added up to us. We long have suspected that someone engineered the deal to keep Fred Yancey on the sidelines, winning lots of football games at Briarwood Christian School. If we had to suffer because of the criminal next door . . . well, it doesn’t appear Coach Yancey and his Briarwood benefactors really care about that.


I also don’t have a hard time buying Crystal Cox’ stories about corruption in bankruptcy courts. I am intimately familiar with a bankruptcy case involving a Birmingham attorney. Public documents show that one of the attorney’s former clients challenged the discharge of debts, and in the process, showed that the lawyer had filed a false bankruptcy petition. In short, the lawyer had hidden assets in a bankruptcy case, and this can be a federal crime. It’s covered under 18 U.S. Code 152.


The trustee in the case was Thomas E. Reynolds, an attorney with the Birmingham firm Haskell Slaughter. Overseeing the case was Thomas B. Bennett, chief judge of the U.S. Bankruptcy Court in the Northern District of Alabama. Did Reynolds or Bennett do anything about an apparent crime that took place under their noses? No, they did not. The attorney’s debts were discharged, post haste. And that little problem of hiding assets? Reynolds and Bennett looked the other way.


Does bankruptcy-related fraud happen often? An article from indicates it is pretty much rampant–and such crimes rarely are prosecuted.


Crystal Cox might have made some mistakes in her reporting. But our guess is that she was snooping into some dark corners that desperately needed light. And that’s why powerful forces wanted to shut her up.


(To be continued)


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