Copyright Law

Court Rejects Bid to Silence Mortgage Watchdog Website

By Sam Bayard

The Mortgage Lender Implode-O-Meter, a mortgage watchdog website, announced on Friday that a federal judge denied a motion for a preliminary injunction against it filed by Global Direct Sales, LLC, the Penobscot Indian Nation, Christopher Russell, and Ryan Hill. The plaintiffs in the lawsuit operate the Grant America Program, a seller-financed down payment assistance program for low- to moderate-income homebuyers. The requested injunction would have barred the Implode-O-Meter and others from "disseminating untrue, false and/or misleading statements regarding Plaintiffs, their business and their business dealings."

Ruling from the bench, federal judge Deborah Chasanow found that the plaintiffs had failed to satisfy the ordinary requirements for issuance of a preliminary injunction, including a probability of success on the merits of their defamation claim and a showing of irreparable harm without the injunction.  The court also indicated that the likelihood of harm to the defendants and the public interest weighed against granting the injunction.  According to Implode-O-Meter's description of the ruling,

The Court found that such an injunction would chill speech of Defendants and others. She found this to be most troubling in light of the fact that there is perhaps no topic that has any greater public interest right now than the economy, including the home mortgage industry and its role in the troubles of the day. For that reason, she found that any injunction would harm Defendants and disserve the public interest. (source)

Given its ruling on these narrower grounds, the court did not reach Implode-O-Meter's First Amendment argument that the requested injunction would be an unconstitutional prior restraint on speech, also a strong argument against the sought-after relief. 

The case revolves around an article written by Krista Railey that criticized the Grant America Program and the business ethics of Global Direct Sales principals Christopher Russell and Ryan Hill. The Implode-O-Meter site hosts Railey's "FHA Mortgage Whistleblower" column, where the article appeared.  During the hearing on the motion for a preliminary injunction, the plaintiffs' attorney identified five allegedly defamatory statements in the article: 

(1) that the Plaintiffs are engaged in "laundering" money through their seller down-payment assistance program; (2) that Plaintiff Christopher Russell had made a "copycat" website of the AmeriDream website [AmeriDream was a charity founded by Russell and Hill]; (3) that Russell had tried to "extort" money from AmeriDream; (4) that the Grant America Program had not been "approved" by HUD; and (5) that the seller contributions to the program were a "concession."  (source)

The complaint lists additional allegedly defamatory statements, including that the Grant America Program was a "scam," and that Russell and Hill had treated a charity they founded "like their own personal piggy bank." Cmplt.¶ 37.  The plaintiffs filed suit in September against Implode-O-Meter, its operator Aaron Krowne, Railey, and others. The case is pending in the United States District Court for the District of Maryland. 

Railey, Krowne, and the other defendants maintain that the article was accurate and well documented through publicly available information. It looks like Judge Chasanow agrees, at least on the current state of the evidence.

You can monitor the progress of this lawsuit in our database entry, Global Direct Sales, LLC v. Krowne. 

Full post as published by Citizen Media Law Project on November 11, 2008 (boomark / email).