A federal bankruptcy judge on Thursday 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 Alex Jones over his allegations 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 Mr. Jones’s company, Infowars’s 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.
Judge Lopez said a new trustee appointed to oversee the liquidation of Mr. Jones’s personal assets now has control of Mr. Jones’s ownership in Free Speech Systems. Judge 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 Mr. Jones’s creditors, including other relatives of Sandy Hook victims who were awarded more than $1.4 billion in a similar lawsuit in Connecticut over Mr. Jones’s allegations about the shooting.
“I don’t think the state court was actually informed of all these issues,” Judge Lopez said.
Mr. Murray plans to shut down Infowars, the multimillion dollar money-maker Mr. Jones has built over the past 25 years by selling dietary supplements, survival gear, and other merchandise.
Mr. 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 Mr. Jones and his company did not immediately return messages seeking comment Thursday. Mr. 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 Ms. Lewis and Mr. Heslin’s efforts in Texas state court to get some of his assets were “illegal.”
Mr. Murray had filed a motion Sunday asking Judge Lopez to halt Ms. Lewis and Mr. Heslin’s collection efforts in state court, saying they would interfere with the shutdown and liquidation of Mr. Jones’s company.
Free Speech Systems, based in Mr. Jones’s 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 Ms. Lewis and Mr. Heslin. Mr. 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, Judge Lopez converted Mr. Jones’s 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, Judge Lopez also dismissed Free Speech Systems’s bankruptcy case after Mr. Jones and the families could not reach an agreement on a final plan.
The bankruptcies automatically froze efforts by the Sandy Hook families to collect on the state lawsuit awards. Lawyers for Ms. Lewis and Mr. 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 Ms. Lewis and Mr. 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 Ms. Lewis and Mr. 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.”
Ms. Lewis and Mr. 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 Mr. Jones’s 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 Mr. Jones in Connecticut.
The shooting in Newtown, Connecticut, killed 20 first graders and six educators. Not all of the victims’ families sued Mr. Jones.
The relatives said they were traumatized by Mr. Jones’s hoax allegations and his followers’ actions. They testified about being harassed and threatened by Mr. Jones’s 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.
Mr. 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.
