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The Cost of Standing in the Gap

The Southern Investigative Reporting Foundation needs your help.

After launching the foundation in 2012, the board of directors and I have sought at every step of the way to adhere to the mission statement:

“Our investigative foundation will produce substantive reporting infused with valuable information and a perspective quite distinct from the glossy outlook spun inside Wall Street’s promotion machine. We will mine corporations’ legal and financial documents and perform old fashioned shoe leather reporting to frame investigations that many media organizations are simply no longer equipped to pursue.”

I argue that we are meeting that goal. Moreover, the slate of coming investigations is sure to be the most high-profile work yet. Trust me on that. But a key aspect of our ability to constantly report out and write pieces that afflict the rich and powerful is having comprehensive insurance coverage in place.

That’s getting harder and harder to do.

Over the past several months, as I began to gather quotes prior to renewing our insurance coverage, something became brutally apparent to me: our approach to investigative reporting had scared the living tar out of insurance companies.

Our core insurance coverage has gone to an $8,000 annual premium from under $2,000 — and we are informed that number will increase. The deductible has gone to $50,000 from $10,000.

Consider that out of more than one hundred insurance companies that offer so-called custom liability policies like error and omission — more informally known in the press as “libel coverage” — only three said they would even consider extending a quote to the Southern Investigative Reporting Foundation. (Then and now it struck me that to insurance underwriters, North Korea’s airline and its shipping are acceptable risks, but a small investigative reporting outfit in North Carolina is simply too toxic.)

Ultimately only one company did manage to extend a quote, but only after the Institute for Nonprofit News’ then director Kevin Davis freaked out at its underwriters, threatening (in a truly memorable email thread) to pull several dozen INN member policies at once. When the huge premium increase was quoted, he ordered INN to write the check on the spot to cover it. I asked why he was doing this and he explained, bluntly, “What the fuck do I or INN exist for apart from standing in the gap for those who stand in the gap?”

I am confident that Kevin Davis gets what the Southern Investigative Reporting Foundation is trying to do.

Every Southern Investigative Reporting Foundation story bears the potential for legal threat and a good deal of them eventually result in one. When I worked for large media companies like Euromoney, News Corporation or Time Inc., I didn’t have to pay much attention to the amount of threats and subpoenas I received (and I got more than a few); editors and management seemed to like the fact that a reporter was stirring things up and it was generally perceived as being good for business.

A key requirement of the Southern Investigative Reporting Foundation’s insurance policy is that every legal threat has to be reported, no matter the source or how unlikely they are to ever follow through. Here’s an example of a legal threat that came from our Medbox series; here’s another from our Brookfield investigations. Don’t forget this unpleasant legal interlude last year that emerged from our reporting on inventor, investor and spaceman extraordinaire Anthony Nobles.

The world has changed. Think of the papers and magazines of your youth and then look closely at them now. Growing up in the ’70s and ’80s my parents always had a subscription to Time magazine and I read it religiously, thinking maybe one day I could be one of those reporters on Capital Hill or in places like Lebanon or Taiwan, reporting on the events that drove the world forward.

This is Time today, aggregating news that others reported (who themselves often rely on newswire stringers) on the view that your lingering a few more minutes to watch a funny video or click on a celebrity story can eventually be monetized in some fashion.

Let me ask you a question. Whatever else its attributes, do you think Time magazine’s current management would commit the resources to a yearlong investigation into Scientology that resulted in this article? The five-year legal battle with the Church of Scientology cost Time Inc. many millions of dollars in legal fees and subscriptions but its employees, lawyers and managers (broadly) considered it a badge of honor.

Those men and women are long gone from that building now.

The Southern Investigative Reporting Foundation is designed to have few friends and allies — outsiders and skeptics rarely do — but I’m asking those who value our work to consider using Paypal to make a tax deductible donation to help us meet our insurance premiums so we can continue to generate accountability-oriented investigations.

Standing in the gap, doing the reporting others can’t or won’t, is not supposed to be easy. There’s no real money in this — here’s our financial filings — and we win no awards and precious little acclaim. Filing a good story about what other didn’t see or didn’t know about is usually enough.

Our payment deadline approaches and we must meet it or we need to go away. The cost of standing in the gap is high and getting higher. It’s almost like someone or something doesn’t want us to do this work.

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SIRF Wins Lawsuit and Strikes a Sharp Blow for Journalistic Freedom

The Southern Investigative Reporting Foundation has successfully concluded a litigation arising from its September 2014 story on Southern California-based medical device entrepreneur Anthony Nobles.

Readers may recall that the investigation centered on Nobles, a high-profile Ferrari collector whose elaborate Halloween parties are regularly profiled in the press — and whose affluence allowed him to own multiple homes, make large charitable donations and buy a $200,000 ticket on Virgin Galactic‘s first commercial space flight.

Reporting by the Southern Investigative Reporting Foundation revealed that Nobles claimed a series of graduate degrees that were likely purchased from a notorious online diploma mill whose founder pleaded guilty to issuing fake diplomas and will be sentenced in November, according to a recent Department of Justice filing.

Additionally, the Southern Investigative Reporting Foundation reported that Nobles’ previous efforts with publicly traded companies were mired in controversy and investor litigation.

On Oct. 1 Nobles filed suit against the Southern Investigative Reporting Foundation and the two authors of the article, summer intern Keith Larsen and me, alleging defamation and libel per se. In the two weeks between the release of the investigation and the filing of his claim, Nobles never sought any corrections.

Amusingly, to support a claim that I was a reckless reporter, Nobles’ attorney, John van Loben Sels, cited Deep Capture, a website backed by founder Patrick Byrne. The website published a series of articles whose premise is that a wide-ranging conspiracy of hedge fund managers, well-known business reporters and corrupt public officials actively worked together to prevent the commercial success of a prostate cancer drug for the benefit of disgraced 1980s junk bond financier Michael Milken, himself a prostate cancer survivor; I and board member Bethany McLean are portrayed as conspirators.

It wasn’t the most fertile soil for planting a flag: Deep Capture, and Byrne are defending themselves in a Vancouver, Canada-based defamation suit from Ali Nazerali, a Vancouver stock promoter who Mark Mitchell — the site’s primary reporter, as well as a defendant in the suit — had fingered as a key al-Qaida financier. In June, the defense rested without calling any witnesses. The trial resumes in September.

On Nov. 3, Nobles filed a temporary restraining order motion that sought to have the article taken down.

The Southern Investigative Reporting Foundation, through its lawyers at Brooks, Pierce in Raleigh, North Carolina, filed a response to the motion on Nov. 5 that argued that Nobles’ filings didn’t meet any of the criteria for granting an injunction. The court agreed and on Nov. 7 United States District Court Judge Louise Flanagan denied Nobles’ motion.

For the next several months both sides waged a battle of legal filings — such as this memorandum of law in opposition to Nobles’ claim — that culminated in Judge Flanagan’s May 8 order bluntly dismissing all of Nobles’ claims, granting the Southern Investigative Reporting Foundation what appeared to be a remarkably broad victory. On June 8, however, Nobles’ filed his notice of appeal seeking review by the U.S. Court of Appeals for the Fourth Circuit. In response, the Southern Investigative Reporting Foundation cross-appealed the trial court’s denial of its legal fees.

In late July Nobles’ lawyer reached out to the Southern Investigative Reporting Foundation to settle the matter and an agreement was reached: Nobles dropped his appeal and the Southern Investigative Reporting Foundation dropped its attempt to collect its fees. Somewhat anticlimactically, it was over, albeit thousands of dollars and a great deal of stress later.