News & Features

Judge’s Order Allows for Stokes’ Assets to be Liquidated

Stokes Bankruptcy

A federal bankruptcy judge ruled Monday that Kalispell radio station owner John Stokes must convert to Chapter 7 bankruptcy proceedings, a decision that will allow for the liquidation of most of his assets in order to pay his debts.

The ruling, by U.S. Bankruptcy Court Judge Ralph Kirscher, could spell the end of Stokes’ long-running and controversial radio talk show on his AM station Z-600, broadcast from KGEZ just south of Kalispell.

Kirscher overruled a motion by Stokes contesting the federal government’s change from a Chapter 11 filing to Chapter 7 filing, in a decision based largely upon Stokes’ failure to accurately disclose the value of his property during bankruptcy proceedings, despite swearing under penalty of perjury that his asset statements were accurate, as well as his failure to meet certain reporting requirements of the bankruptcy court or pay filing fees, according to court documents. Stokes has also failed to file state and federal income taxes for several years, Kirscher wrote in his decision.

“Literally millions of dollars of purported assets were omitted from the Schedules, including lawsuits, vehicles and at least one boat,” Kirscher wrote. “His declarations are not truthful.”

Stokes did not immediately reply to an e-mail request for comment Monday, and a call to his radio station was not answered.

Stokes filed for Chapter 11 bankruptcy protection March 4 after a Flathead County jury ordered him in late 2008 to pay $3.8 million to businessmen Davar and Todd Gardner, owners of a nearby recreational vehicle store and auction barn, for defaming them on his radio show. Kirscher’s decision also denied a request by Stokes to put a hold on bankruptcy proceedings until after he could appeal the Gardner decision to the state Supreme Court.

Under Chapter 7, a court-appointed trustee will investigate the nature and value of Stokes’ assets. In court proceedings Todd Gardner testified that the Gardners prefer Chapter 7 conversion, believing it is the only way they will get paid.

Stokes’ plan to repay his debts was based largely on winning an appeal against the Gardners and having the city of Kalispell pay him a large sum for the radio towers he owns which conflict with the airspace of the municipal airport. Kirscher was skeptical Stokes would be successful based on his previous legal actions.

“Stokes is not an attorney, and while he zealously argues his positions, the record of his unsuccessful results in litigation is uniform and speaks for itself,” Kirscher wrote.

Stokes’ attorney, Gregory Duncan of Helena, filed paperwork May 1 in U.S. Bankruptcy Court for Montana to argue against a change from Chapter 11 to Chapter 7. He said the U.S. Trustee’s office held an April 10 hearing on the Chapter 11 request even though it knew Stokes’ financial statements were incomplete.

The value of property Stokes listed in financial statements to the court varies widely between original and amended versions, according to Kirscher’s decision. While Stokes’ original statement listed $3.1 million in real property, his amended statement listed $10.7 million. The total value of personal property Stokes listed changed from $148,042 to $15.5 million between his original and amended statement.

Stokes’ major assets include his house on 80 acres in Bigfork, ownership of which he transferred to his daughter, Elizabeth Stokes-Pickavance; the KGEZ station, which sits on 6.5 acres; a mortgage on a 160-acre easement and the value of his operating license with the Federal Communications Commission.

At various court appearances Stokes’ declared his monthly income from running KGEZ at around $7,000 and that it just about breaks even, alternately denying that he lived off of donations from his audience, which Kirscher’s decision said disputed an earlier statement from Oct. 2007 where Stokes said his family lives on donations from his audience.

At an August meeting with creditors, Stokes testified that “he had never filed an income tax return for the State of Montana and that he has not filed a federal income tax return since 1985,” the decision read.

“Stokes testified that his real estate taxes remain delinquent, but that his bills are being paid,” Kirscher wrote. “He testified that he could sell his 6.5 acres for $1.5 million and move his studio, or he could sell everything he owns for $10.7 million and pay off all his creditors.”

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