Blood and Politics (83 page)

Nevertheless, Pierce still ran the National Alliance as a one-man dictatorship. He appointed every unit and regional leader, decided what the leaders could say and do on behalf of the organization and what they could not say and do. To further his process, Pierce instituted a biannual leadership meeting in West Virginia. Approximately sixty handpicked members attended a session, lasting several days, where they got the chance to interact directly with their ideological master. Pierce used these occasions as an opportunity to cull the group for new leaders, promoting a few to middle management positions.
¹³

Almost twenty-five years after he had incorporated the National Alliance and begun publishing the first serial installments of
The Turner Diaries
, William Pierce finally possessed a sizable, stable, professionally administered, and increasingly active organization of white nationalist revolutionaries. It was still primarily a propaganda outfit, not a party vying directly for political power, but it had other credits to its name. It had spun off or inspired killers and bombers from Robert Mathews to Timothy McVeigh. It had influenced other organizations and personalities, from David Duke’s Knights of the Ku Klux Klan to George Burdi and the Hammerskin Nation.

With Resistance Records now fully transferred into his possession, Pierce turned toward recruiting the twenty-somethings that populated the white power music scene. He acquired Nordland, a Scandinavian music enterprise that had mirrored Resistance Records in style and substance.
¹⁴

Pierce arranged for publication of
Resistance
, no. 9, the first issue to appear since before the Michigan tax raid in 1997.
¹⁵
He wrote the lead editorial and praised music to which he did not listen as the stuff of “rebirth and renewal.” An ad for the National Alliance and other less obvious blandishments filled those pages not assigned to puff reviews and band promotions. Oddly, several articles insulted skinheads for their tattoos and lack of discipline, but otherwise the magazine looked much like previous issues. In retrospect, perhaps the most important piece was an interview with Erich Gliebe. At that moment Gliebe still served as the alliance’s Ohio regional coordinator. Pierce soon promoted him to a full-time position as Resistance Records’ manager and editor of its magazine. Gliebe still preferred ethnic folk dancing to mosh pit thrashing. “While moshing is a great way to relieve stress and can be fun,” he told
Resistance
magazine, “it is a much manlier thing to lead a lady in your arms across the dance floor than running into some sweaty drunk in the mosh pit.”
¹⁶
Despite this gap in musical tastes, Pierce hired him to edit the magazine, and Gliebe was glad to do it.

Resistance
’s skinhead readership, however, took umbrage at Gliebe’s remarks about manhood. They undoubtedly admired his “Aryan Barbarian” side, but otherwise he seemed out of sync with many of the subculture’s other values. This tension between the National Alliance’s straitlaced lifestyle and the wild-in-the-streets attitudes of the young white powerniks continued to bedevil Gliebe. As the company’s manager and the magazine’s editor he soon apologized for not understanding the “subtle nuances of the skinhead subculture.”
¹⁷
At that point Gliebe had to act as if he cared. Simply put, he could not impugn the tattooed beer-soaked norms of skinheads and successfully sell them hundreds of thousands of dollars in music and paraphernalia at the same time.

Gliebe was also forced to make further amends after the appearance of an article critical of Bob Mathews and The Order. Mathews was still considered a heroic martyr more than a dozen years after he had been killed in an FBI shoot-out, particularly by those who read this particular magazine. The author of that article, a top National Alliance cadre and former Special Forces officer, argued that The Order had violated every law of clandestine warfare and committed several major political mistakes as well. After publication, a stream of protests arose from readers, and most problematic of all, members of The Order wrote the magazine
from their prison cells, demanding a retraction and an apology. Gliebe provided both. “We realize that we are not going to win anybody’s support by criticism and name-calling,” he wrote in an editorial response.
¹⁸

Despite this rocky beginning, Gliebe settled into the job while working from his home in Ohio. The music distribution business grew like a Silicon Valley start-up, and over the next three years increased sales, combined with an expanding National Alliance membership dues base, funded an expansion at headquarters in West Virginia. New staff was hired, and a new building constructed. Resistance Records focused on its task: reaching postadolescent males, fifteen to nineteen years old. For three decades Pierce’s yearly organizational budget had lagged far, far behind Carto’s. Now Pierce, Gliebe, and company were successful enough that the National Alliance’s rising economic fortunes more closely rivaled the Liberty Lobby complex’s declining assets.

July 1, 1999.
Room 24 in Washington, D.C.’s Federal Bankruptcy Court looked spare, bleak, and bureaucratic. Behind a well-worn double gate sat six spectator benches. Instead of a jury box, a dozen seat stumps stood like silent sentinels truncated by debt and misfortune. A witness stand was fixed in front of two glass-topped tables—on one side the debtor, on the other the creditors. At the front of the long, narrow room sat Judge Martin Teel, the third judge to rule upon the fate of Willis Carto and Liberty Lobby on one side and Mark Weber and the Legion for the Survival of Freedom–Institute for Historical Review on the other. Teel’s purpose that day was to hear a motion to fix a bankruptcy court’s special trustee over Liberty Lobby’s day-to-day finances.
¹

Understanding Liberty Lobby’s route to Courtroom 24 is a somewhat difficult task, requiring a fair amount of knowledge of the twists and turns taken since Carto tried to relitigate issues decided first by Judge Polis in 1993 and again by Judge Maino in 1996. In a lawsuit filed in Texas, where the IHR’s parent Legion for the Survival of Freedom had first been incorporated, Carto once more unsuccessfully alleged that his status as the legion’s “substitute incorporator” gave him virtual ownership of the IHR. He filed another lawsuit in D.C., alleging that Mark Weber and others had engaged in racketeering. At each point, Judge Maino’s ruling stood. Carto and his codefendants still owed legion-IHR the balance of the Farrel estate money, over six million dollars.
²

Meanwhile, Weber’s legion-IHR pressed for a court-appointed receiver to speed collection of money it was owed. Finally, on March 27, 1998—eighteen months after his initial decision—Judge Maino had ordered a receiver to begin collection.
³
The pace of events quickened after the receiver began seizing Liberty Lobby’s mail, which contained its
lifeblood—contributions, subscriptions, and other income, funds that the judge had decided now belonged to legion-IHR. In response, Liberty Lobby filed a bevy of new motions aimed at stopping the receivership. All failed. If it did not want to lose control of its own mail (and income), only two options were tenable: either begin payments to legion-IHR or declare bankruptcy. On May 13, 1998 Liberty Lobby filed in D.C. a Chapter Eleven reorganization bankruptcy. Willis Carto filed personally in California a Chapter Seven liquidation bankruptcy. Liberty Lobby hoped to continue operating while it supposedly paid off its debts. Carto wanted to escape the judgment altogether. After these filings, Judge Maino’s collection process came to a temporary halt.
⁴

The years of litigation had taken a toll on both Willis Carto and Liberty Lobby. After keeping his personal and business affairs out of the public domain during a lifetime of litigation, his most intimate financial arrangements were now subject to intense examination. Carto dragged and delayed in every venue. At one point he invoked the Fifth Amendment in a disclosure hearing because, he said, of a pending criminal investigation in Switzerland. Another time he wouldn’t tell the court who or what owned the house he lived in or what his wife’s middle name was.
⁵

For its part, Liberty Lobby’s annual income slipped from about four million dollars before Weber’s coup to eight hundred thousand five years later.
The Spotlight
subscriptions fell (further), from 90,000 to 60,000. It was a paradoxical situation. Liberty Lobby still maintained the biggest list of supporters among white nationalist outfits. But the whole operation was becoming smaller and less salient. When the Populist Party had been formed in 1984, for example,
The Spotlight
claimed 150,000 subscribers. Now Liberty Lobby had neither an electioneering adjunct to call its own nor a stable market for its merchandising. Only its
Barnes Review
magazine seemed to thrive.
⁶

Rather than end the collection process, bankruptcy pushed affairs from bad to worse. Chapter Eleven is a reorganization bankruptcy, in which a United States trustee develops a court-approved plan in conjunction with the creditors and the debtor. Presumably, the plan allows the debtor to continue operating. But it also requires complete disclosure by the debtor, which must file monthly reports of its financial activities, hold supervised meetings with its creditors, and adhere to the plan—once it is approved.

As part of the process, the court convened a meeting at which Liberty Lobby’s comptroller, Blayne Hutzel, answered questions. In contrast with Carto, Hutzel was direct and forthcoming. At least four different corporations employed twenty-five people at the Independence Avenue headquarters: Liberty Lobby, Inc., Government Education Foundation, Foundation
for Economic Liberty, and Foundation to Defend the First Amendment. These four corporations were not the only ones that Carto operated, but they were the most important. Liberty Lobby paid rent to the Government Education Foundation, which owned the office building (and the computers and other office equipment). The rent was not a fixed amount; it varied from month to month, depending on Liberty Lobby’s revenue. Similarly, the employees all supposedly worked varied amounts of time for the four corporations, but all received their payroll checks from Liberty Lobby, which then allocated the payments on the books of the four corporations. Like the rent, the allocations were neither fixed by prior agreement nor determined by the numbers of hours worked for each entity. Instead, payroll allocations varied according to the revenues received by each corporation.
⁷

Book sales were handled in a similar fashion. A department of Liberty Lobby ostensibly sold the books. But the books were actually owned by the Government Education Foundation, which then supposedly paid Liberty Lobby a commission for its role as the merchandiser. No cash ever actually changed hands. Hutzel’s description of the accounting was no doubt honest, but it was still virtually indecipherable. “At the end of the month book sales are debited and the loan account for GEF is credited to the book sales,” he testified. “On GEF’s records, the loan account with Liberty Lobby is debited and book sales show up in GEF. That is done by journal entry.” While this system may have made perfect sense to Willis Carto, it ensured that an outside observer would never find the pea under the shell. Only the most accomplished accountant could penetrate the bookkeeping maze. This method also maximized the debt standing on Liberty Lobby’s books, while minimizing its assets.
⁸

At that point, Liberty Lobby and legion-IHR had still not agreed on a bankruptcy payment plan. While Liberty Lobby tried to avoid paying the judgment debt, the courts slowly shut down its avenues of escape. Each month that Liberty Lobby filed a financial report brought the day of reckoning closer. Finally, on June 11, 1999, the United States trustee petitioned for appointment of a special Chapter Eleven trustee to take over Liberty Lobby’s day-to-day finances. According to the motion, the shell game of moving money from one entity to another had not been properly reported. “This prevents creditors from having sufficient financial information to make an informed decision in voting on the plan,” according to the trustee’s motion. And the debtor’s conduct “raises serious questions concerning the veracity of the information” already reported.
⁹

Judge Teel called the hearing in Room 24 on July 2 to resolve the matter. The long road appeared (although appearances can be deceiving) to
have come to an abrupt end. Once again Liberty Lobby asked for a delay, as its bankruptcy attorney tried to withdraw from the case. The request was denied. Liberty Lobby’s attorney then argued against appointment of a special trustee. He acknowledged that the relationships between the various corporate entities might not be “pure.” Still, his clients did not want an outsider looking at their books. In any case, he said, the bookkeeping bungling did not constitute fraud.
¹⁰

The counterargument belonged to legion-IHR, whose attorneys aimed at demonstrating fraud in Liberty Lobby’s finances. If the judge concurred, the appointment of a special Chapter Eleven trustee was virtually guaranteed. Collecting the Farrel estate millions would presumably be one step closer. IHR’s first witness was Todd Blodgett, the advertising huckster who negotiated the sale of Resistance Records to William Pierce. Blodgett told the court that he had sold advertising for
The Spotlight
, bought and sold mailing lists, and raised funds from large contributors. He worked both in-house, he said, and at his own agency up on Connecticut Avenue. He testified that Carto directed large donors to make their checks payable to the Foundation for Economic Liberty or the Foundation to Defend the First Amendment, rather than to Liberty Lobby. Both were nonprofit corporations, and donations were tax-deductible, according to the IRS. Some donors also received advertising space in
The Spotlight
for their supposed tax-deductible contributions, Blodgett said.