State senator’s own words come back to bite him in defamation case

State Sen. Mike Schneider could have saved his insurance company $150,000 if only he'd been willing to utter six short but powerful words: "I was wrong, and I'm sorry."

But he wouldn't, and now he's labeled forever as a Democratic politician who maliciously defamed Danny Tarkanian, his Republican opponent in 2004, with falsehoods.

Schneider's political mail pieces said Tarkanian, through his legal representation of telemarketers, "helped criminals set up their crooked companies." But it was Schneider's own words during a televised debate that the jury found most offensive.

The jury awarded Tarkanian:

• $30,000 because Schneider said on "Face to Face with Jon Ralston" that his opponent was under investigation by a grand jury, set up fraudulent corporations for telemarketers and "went state's evidence to testify against his fellow telemarketers." (Not true.)

• $10,000 for fliers produced by consultant Gary Gray, including one that said, "Assisted by Danny Tarkanian, these crooks and 'co-schemers' cheated old people out of millions." (A stretch unless lawyers are liable for the misdeeds of their clients.)

• $10,000 for Schneider's false claims that Tarkanian's law license became "inactive" because he was going to be punished by the state bar. (False again.)

The jury was going to decide punitive damages, which could have reached $300,000, and settlement talks started, ending Monday when Schneider's insurer agreed to pay Tarkanian a total of $150,000.

Now Tarkanian is resurrected as a viable political candidate, while Schneider is tagged forever as a big mouth who speaks recklessly, maliciously and without regard for the truth.

It is true Tarkanian performed legal work setting up corporations for telemarketing companies and serving as their resident agent. And at least one company was prosecuted on fraud allegations.

Tarkanian's attorney Gus Flangas, in his first defamation case, argued to the jury that a resident agent has nothing to do with operating a company, so saying Tarkanian assisted crooks was defamation.

Flangas said the testimony that "turned the jury a little" was straight from Schneider's mouth when he admitted he understood that a resident agent has no control over a company and wasn't involved in day-to-day operations. He knew this because he'd hired resident agents for his own companies and voted on laws governing limited liability issues, so knew the limitations of a resident agent. "That struck a chord," Flangas said.

"If the case had just been based on the fliers, it would have been a close call," Flangas said. "But it comes a point in time when spin becomes an utter falsehood."

A who's who in the political world testified in the trial, including Schneider's consultants Helen Foley and John Cummings, Gray (who produced the fliers), his researcher Dick Cooper and private investigator David Groover.

For a public figure to prove libel, there must be evidence of actual malice or reckless disregard for the truth, not just negligence. Flangas said during the trial that Schneider wasn't able to prove where he was getting the information he spouted about the grand jury/cooperating witness allegations.

Flangas said he used Schneider's deposition to impeach his trial testimony because in the deposition Schneider admitted the race was close and he planned to portray Tarkanian as engaged in criminal activity and under grand jury investigation. "He said it was his intention to state these things as facts," Flangas recalled.

"If there's any message that can be taken from the Tarkanian trial, it's that you better have control of your campaign and you'd better realize there is a point of time where your spin can become a false statement of fact," Flangas said.

Despite the jury verdict, Gray, who has been running campaigns for more than 25 years, defended the fliers as "political discourse within the law."

"I had it fact-checked, and while it was hard-hitting, I believe the factual information was there. And the inference was left up to the voter," Gray said.

Sorry, Gary. That's not how these jurors saw it.

Political speech is protected free speech, but lies are not protected. That's why there are defamation laws.

The jurors established a standard that reflects voter disgust over distortion. The standard now seems to be that it's OK to call politicians liars, cheats and hypocrites, (Are you listening, Sen. Ensign?) but it's not OK to suggest they're criminals.

Unless it's true.

Jane Ann Morrison's column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call (702) 383-0275. She also blogs at lvrj.com/blogs/morrison.