A federal judge in Mississippi last week threw out an $85 million defamation lawsuit brought by a politically connected corporation against a Virginia journalism non-profit. The procedural ruling drew little attention, and it could still be appealed. Even so, the dismissal represents a nice first-round victory for a news organization whose real crime was probably that it looked too closely at the business dealings of Virginia’s new Democratic Gov. Terry McAuliffe.
Before he ran for governor, McAuliffe was co-founder and chairman of GreenTech, a maker of “neighborhood electric vehicles” — golf-cart-sized two-seaters that max out at 35 miles per hour and sell for about $16,000. While campaigning for governor of Virginia in 2013, McAuliffe cited the company frequently as evidence of his business acumen.
|The dismissal represents a nice first-round victory for a news organization whose real crime was looking too closely at Terry McAuliffe's business dealings.|
GreenTech sued the Franklin Center for Government and Public Integrity in April 2013 after Franklin's watchdog.org website published two investigative stories on GreenTech. The stories highlighted GreenTech's use of the federal EB-5 visa program, which awards visas to foreign investors who make substantial investments in U.S. companies.
Critics of EB-5 say it is often used by private U.S. companies to sell green cards to wealthy foreigners. According to news accounts, GreenTech attracted at least $45.5 million in EB-5 investment for its factory in Mississippi through a separate company run by Anthony Rodham, youngest brother of former Secretary of State Hillary Clinton.
GreenTech's lawsuit said the Franklin Watchdog articles accused the company of “fraud” and stated falsely that it was under investigation. Watchdog maintained that the pieces never intended to accuse GreenTech of fraud. Then in May 2013, the month after the lawsuit was filed against Franklin, the U.S. Securities and Exchange Commission subpoenaed GreenTech records as part of a federal investigation into the company's use of the EB-5 program.
Two months after that, emails among Virginia state economic development officials from 2009 were released in response to a freedom of information request. The emails made clear that when GreenTech tried to set up in the Old Dominion in 2009, officials at the Virginia Economic Development Partnership were skeptical because the company's business plan was shaky and it seemed to rely too heavily on the EB-5 program.
“I can’t get my head around this being anything other than a visa-for-sale scheme with potential national security implications,” longtime VEDP director Liz Povar wrote to her VEDP colleagues in November 2009.
The lawsuit against the Franklin proceeded anyway. U.S. District Court Judge Michael Mills dismissed it on jurisdictional grounds. GreenTech (which has since merged with another company) could still appeal the ruling or file the same lawsuit in Virginia — although such a public case could create political complications if Hillary Clinton runs for president in 2016.
So now the ball is squarely in GreenTech's court. The company will have to decide whether it wants to focus on manufacturing impractical tiny cars for which there is little market demand or on a lawsuit that some might well think was designed to intimidate anyone thinking about publishing the wrong thing about the wrong politician.