Infowars Bankruptcy Auction Controversy

By Dietrich Knauth

NEW YORK (Reuters) – A losing bidder connected to conspiracy theorist Alex Jones challenged on Monday the Onion's purchase of Jones' Infowars website, claiming the Onion won a rigged bankruptcy auction and offered half as much cash as its bid.

First American United Companies, linked to Jones' dietary supplements businesses, asked U.S. Bankruptcy Judge Christopher Lopez in Houston to disqualify the Onion's bid and name its own $3.5-million bid as the winner.

Jones was forced to auction his assets, including Infowars, in bankruptcy, after courts ordered him to pay $1.5 billion for defaming families affected by the 2012 Sandy Hook massacre, claiming the shooting was staged.

First American United Companies argued in court that the auction was mishandled, alleging the bankruptcy trustee improperly credited the Onion for backing by Sandy Hook victims' families, whose lawsuits drove Jones into bankruptcy.

They stated, "Its effect is to depress and lower the amount the Onion would need to bid in cash to ensure that it was the winning bid," describing it as collusive bid rigging. The Onion's winning bid reportedly included $1.75 million in cash.

The Onion and the bankruptcy trustee did not immediately respond to requests for comment. A representative for some Sandy Hook families declined to comment.

On Thursday, the Onion announced it won the bankruptcy auction for Infowars' assets and pledged to replace the website's "relentless barrage of disinformation" with "noticeably less hateful disinformation."

Judge Lopez expressed concerns about the auction's transparency at a court hearing and scheduled a further hearing to gather more information before considering sale approval.

Infowars was briefly shut down after the sale announcement but was back online within a day. The bankruptcy trustee responsible for selling Jones' assets shut down the business to protect its assets until transfer to the Onion could occur.

If approved, the Onion will acquire Infowars' intellectual property, including its website, customer lists, inventory, certain social media accounts, and production equipment.

Families of Sandy Hook victims agreed to forgo some payment from defamation judgments to enhance the Onion's bid and prevent right-wing content creators from continuing conspiracy theories on Infowars.

Despite claiming for years the massacre was a hoax, Jones recognized it occurred, but families sued for defamation, alleging he profited from his lies. Courts in Connecticut and Texas found Jones intentionally defamed the families. Previous rulings indicated these judgments remain enforceable even after Infowars' sale.