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Bankruptcy Deal Turns KGEZ Over to Gardners

By Beacon Staff

Local conservative radio talk show host John Stokes will lose his station, the easement upon which his transmission towers stand and his federal broadcasting license as part of a bankruptcy settlement approved by a judge last week.

As part of the settlement, Todd and Davar Gardner, owners of a nearby recreational vehicle dealership and auction barn, agreed to pay $875,000 in cash for the KGEZ station property along U.S. Highway 93 south of Kalispell, including the towers and the license. That sum is part of deal reducing the amount the Gardners were owed by Stokes, based on a 2008 judgment that they were defamed by the radio host, from roughly $4 million down to $1.5 million.

“It was worth it to our family to put some finality and hopefully some closure to it,” Todd Gardner said. “We were never going to see a dime of that judgment anyway.”

The deal will also pay $787,500 to a party known as the Boone Group, which is comprised of members of a profit-sharing trust with priority claims of $1 million against Stokes’ property from prior loans.

Reached Monday, Stokes said his attorney has advised him not to talk to the press, but called the settlement, “totally one-sided,” and “not really a settlement at all.”

Stokes added that his attorney, Bob Barr of Atlanta, has “already prepared the appeal” of the court decision. That appeal could either be filed in U.S. District Court or the Bankruptcy Appellate Panel for the 9th Circuit Court.

Reached at his law office, however, Barr would not confirm whether Stokes would appeal the settlement.

“We’re very disappointed in it and we’re very actively exploring our options,” Barr said. “The property really was never valued or assessed.”

Barr, a nationally known conservative attorney, represented Georgia as a congressman for eight years, served as a former federal prosecutor and was the Libertarian Party presidential nominee in 2008. He traveled to Montana several times as part of the bankruptcy proceedings.

Judge Ralph B. Kirscher, of the U.S. Bankruptcy Court’s Montana District, also denied a motion by Stokes that would have allowed his appeal of the 2008 Gardner defamation judgment to proceed to the state Supreme Court – the aspect of the case Barr said he was hired to handle. Nor does the settlement prevent Stokes’ creditors from going after his home near Bigfork in Lake County.

Stokes’ broadcasting license, through the Federal Communications Commission, is set to expire Sept. 23 and any transfer of the license must have FCC approval. As part of the settlement, Gardners reserve the right to assign the license, and will put $125,000 in escrow pending its transfer. If the license is transferred, the Boone group receives $50,000 and $75,000 goes to the KGEZ estate, which is currently managed by a court-appointed trustee. If the license doesn’t transfer, the Gardners get their money back and the Boone group retains a security interest in it. Todd Gardner said there are “several” people interested in purchasing the station or its parts, and he is “fairly confident” the license will be sold before expiring.

In an objection to the settlement agreement, Stokes’ other attorney, Edward Murphy of Missoula, called the deal a “give away to the Gardners.” The objection criticized management of the KGEZ property since it was converted to a trustee, saying no attempts have been made to put it on the market to determine its highest value, nor have there been any attempts to sell the KGEZ license.

“The entire focus since the conversion has been to sell the land to the Gardners and no attempt has been made to obtain a higher price elsewhere,” Murphy wrote. “There is no reason why this deal could not have been presented to the court in January or February, long before the license was at risk and the Gardners should not be allowed to benefit from their delay in making the offer.”

Kalispell City Attorney Charles Harball testified during the bankruptcy proceedings on whether the city is close to purchasing the KGEZ radio towers that conflict with municipal airport space. Harball said he told the court, based on the expiration of an environmental assessment of any airport expansion or improvements, that the city is likely years away from making a decision on the towers.

“It doesn’t really impact us at all other than perhaps we might have different parties to deal with in the future,” Harball said of the settlement.

The court decision marks another turn in the years-long saga of Stokes’ legal battles. In September authorities seized KGEZ, ejecting Stokes and his staff from the property, following a ruling by Kirscher converting Stokes’ bankruptcy proceeding from Chapter 11 to Chapter 7, which allows for the liquidation of the debtor’s assets. Stokes filed for Chapter 11 bankruptcy proceedings in March 2008 after a jury ordered him to pay the Gardners $3.8 million as part of a defamation lawsuit.

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,” according to the September 2009 decision. Stokes also owed money on several mortgages and loans.

Stokes has long been a controversial figure in the Flathead for his criticism of environmentalists on his radio show and public displays like burning a green swastika on the station’s front lawn. In recent years his radio show has been less provocative as the tensions between environmentalists and the timber industry have waned, but he retained a small and loyal audience.

That audience will get to hear Stokes again, despite his legal entanglements, since he said he is set to begin broadcasting a nationally syndicated show for the Rense Radio Network, a satellite station, from 12 p.m. to 2 p.m. weekdays, beginning July 26. The Rense radio website lists Stokes among its hosts, saying, “the veteran patriot talk show legend John Stokes brings his unique and searing truths to Rense Radio SOON!”

Stokes said his show will be similar to KGEZ, though he acknowledged it is likely to contain more commercials because he is, “getting a lot of national advertisers.”

“It’s going to be the same format,” he added. “We’re going global now.”

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