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Prosser Judge Lets Senators Sue V.I. Daily News

As the bankruptcy case involving Jeffrey Prosser, former owner and CEO of Innovative Telephone, slowly winds down, two of its many elements seem to be settled.

Recent court documents indicate that U.S. Bankruptcy Judge Judith Fitzgerald has allowed two V.I. senators—one leaving office and one returning after several terms out of office—to continue their suits against the Virgin Islands Daily News and its insurance company over old disputes, so long as the results of the cases do not impact the Prosser estate.

Both lawsuits are brought by elected public officials unhappy with critical news coverage in the V.I. Daily News, which belonged to Prosser when the senators filed suit against the newspaper.

Retiring Sen. Adlah “Foncie” Donastorg is suing the Daily News for libel, slander, and defamation of character for purportedly false claims made in editorials and news stories about him. While Donastorg acknowledges some claims to be accurate, he alleges them as being improper nonetheless.

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The complaint alleges, for instance, that the Daily News published a story in January 2002 saying Donastorg was behind on mortgage payments and about to be foreclosed.

“This story was written before the foreclosure law suit had even been served,” the complaint alleges, acknowledging the accuracy of the report to which it objects.

Donastorg’s complaint also alleges the Daily News investigated and publicly criticized the senator in retaliation for his unsuccessful efforts in 2002 to have the special Economic Development Commission tax status revoked for Vitelco, another Prosser company.

Sen. Alicia “Chucky” Hansen, who is returning to office next year after a several-term hiatus, is suing the Daily News for its reporting of federal public corruption charges against the elected public official. Hansen was acquitted of the charges in 2007.

Those V.I. Superior Courts suits were stalled in the bankruptcy proceedings until Hansen’s and Donastorg’s lawyers apparently decided that it was to their interest to withdraw claims against the Prosser estate and confine their suit to the insurance company that covered the Daily News at that time.

In order to do so, the senators’ legal team needed the permission of Judge Fitzgerald, who granted the two orders last Friday.

Libel suits brought by elected officials against newspapers are rare and rarely successful since the 1963 U.S. Supreme Court decision in New York Times Co. v. Sullivan. In that case, the New York Times was sued for defamation for factual errors in its negative coverage of the Alabama police’s treatment of Martin Luther King.

The court established that in order to collect damages a public official must prove “actual malice,” as well as either knowledge that what was printed was false or a complete disregard to its truth or falsity.

In the second development regarding Prosser, the long-standing disagreement between the Prosser interests and the Pension Benefit Guarantee Corporation (a federal government agency) has ended.

One of the multimillion dollar debts of Prosser’s corporations was to pension plans for his former corporations’ employees; these plans were protected by the Pension Benefit Guarantee Corporation, an arm of the U.S. Department of Labor. The court-appointed trustees have been paying down these debts in recent years and earlier this month that agency filed a paper with the court formally withdrawing its claims numbered 10 through 15 against the estate.

It was not immediately clear that these were the only claims under dispute. (Claim number 12, the only one with a stated dollar value on the withdrawal document, was alone worth $9.6 million.)

Meanwhile, another major Prosser-related controversy, once apparently settled, has become undone.

As the Source reported last month, there was an (unnamed) person or entity that had agreed to buy the Prosser mansion in Palm Beach for $7.95 million, provided certain conditions were met.

James P. Carroll, the court-appointed trustees in charge of Prosser’s personal (as opposed to corporate) debts, had filed a motion asking the court to confirm the sale.

Something went awry, however, and on Dec. 3 Carroll asked that the motion confirming the sale be withdrawn.

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As the bankruptcy case involving Jeffrey Prosser, former owner and CEO of Innovative Telephone, slowly winds down, two of its many elements seem to be settled.

Recent court documents indicate that U.S. Bankruptcy Judge Judith Fitzgerald has allowed two V.I. senators—one leaving office and one returning after several terms out of office—to continue their suits against the Virgin Islands Daily News and its insurance company over old disputes, so long as the results of the cases do not impact the Prosser estate.

Both lawsuits are brought by elected public officials unhappy with critical news coverage in the V.I. Daily News, which belonged to Prosser when the senators filed suit against the newspaper.

Retiring Sen. Adlah “Foncie” Donastorg is suing the Daily News for libel, slander, and defamation of character for purportedly false claims made in editorials and news stories about him. While Donastorg acknowledges some claims to be accurate, he alleges them as being improper nonetheless.

The complaint alleges, for instance, that the Daily News published a story in January 2002 saying Donastorg was behind on mortgage payments and about to be foreclosed.

“This story was written before the foreclosure law suit had even been served,” the complaint alleges, acknowledging the accuracy of the report to which it objects.

Donastorg's complaint also alleges the Daily News investigated and publicly criticized the senator in retaliation for his unsuccessful efforts in 2002 to have the special Economic Development Commission tax status revoked for Vitelco, another Prosser company.

Sen. Alicia “Chucky” Hansen, who is returning to office next year after a several-term hiatus, is suing the Daily News for its reporting of federal public corruption charges against the elected public official. Hansen was acquitted of the charges in 2007.

Those V.I. Superior Courts suits were stalled in the bankruptcy proceedings until Hansen’s and Donastorg’s lawyers apparently decided that it was to their interest to withdraw claims against the Prosser estate and confine their suit to the insurance company that covered the Daily News at that time.

In order to do so, the senators’ legal team needed the permission of Judge Fitzgerald, who granted the two orders last Friday.

Libel suits brought by elected officials against newspapers are rare and rarely successful since the 1963 U.S. Supreme Court decision in New York Times Co. v. Sullivan. In that case, the New York Times was sued for defamation for factual errors in its negative coverage of the Alabama police's treatment of Martin Luther King.

The court established that in order to collect damages a public official must prove “actual malice,” as well as either knowledge that what was printed was false or a complete disregard to its truth or falsity.

In the second development regarding Prosser, the long-standing disagreement between the Prosser interests and the Pension Benefit Guarantee Corporation (a federal government agency) has ended.

One of the multimillion dollar debts of Prosser’s corporations was to pension plans for his former corporations’ employees; these plans were protected by the Pension Benefit Guarantee Corporation, an arm of the U.S. Department of Labor. The court-appointed trustees have been paying down these debts in recent years and earlier this month that agency filed a paper with the court formally withdrawing its claims numbered 10 through 15 against the estate.

It was not immediately clear that these were the only claims under dispute. (Claim number 12, the only one with a stated dollar value on the withdrawal document, was alone worth $9.6 million.)

Meanwhile, another major Prosser-related controversy, once apparently settled, has become undone.

As the Source reported last month, there was an (unnamed) person or entity that had agreed to buy the Prosser mansion in Palm Beach for $7.95 million, provided certain conditions were met.

James P. Carroll, the court-appointed trustees in charge of Prosser’s personal (as opposed to corporate) debts, had filed a motion asking the court to confirm the sale.

Something went awry, however, and on Dec. 3 Carroll asked that the motion confirming the sale be withdrawn.