Just as one of the oldest fact-checking sites seems to have hit its mainstream stride, it gets tangled in a dramatic legal mess, one that involves lots of finger-pointing, alleged backstabbing, and a contentious divorce.

It’s the kind of backroom drama that tends to play out in secret, until someone files a lawsuit. Now we have not one, but two lawsuits, and on Monday, a cry for help.

Snopes has launched a crowdfunding campaign to build a war chest. And it’s growing quickly. It says it needs the money because the site has been held “hostage” by a vendor, who is blocking access to its domain name, ad revenue, and backend code. But there’s more to it than that.  

So far, nearly $334,000 of its $500,000 goal has been donated by almost 12,000 people. The love for Snopes is strong. 

Snopes has become the go-to site for debunking urban legends and internet hoaxes since its inception two decades ago, but it became an even bigger player in the fact-checking world during the 2016 election. The site that started out with posts about whether Disneyland had a secret restaurant was competing with the big boys and girls of politics coverage. Its campaign-related posts even got it the attention of Facebook. After facing backlash for hosting fake news, the social media giant hired Snopes, along with the Associated Press and Politifact, as factcheckers. 

So far, nearly $334,000 of its $500,000 goal has been donated

Now, for the first time, Snopes has to ask its readers for money.

“It’s a little bit embarrassing having to go to the public to ask for money, but we’re kind of forced into the position. We didn’t have any other choice,” said David Mikkelson, who started Snopes in 1995. Snopes is now owned by a parent company called Bardav, which Mikkelson co-founded with his ex-wife in 2003.

The vendor allegedly holding Snopes hostage, Proper Media, purports it’s more than just a vendor — it says it’s part owner. The ad-tech and web development firm has sued Snopes’ parent company to keep its control. Its lawyers paint a picture of Mikkelson mismanaging tens of thousands of dollars by using Snopes’ money for non-business travel — allegedly including a honeymoon to Asia following his second marriage — after his ex-wife sold five Proper Media shareholders 50 percent of the company. 

Proper Media cut Snopes’ parent company, Bardav, a court-mandated $100,000 revenue check last week for expenses, but Mikkelson is barred from touching it.

“The court said David Mikkelson shall not use it so what does he do? He starts a GoFundMe campaign in his own name. You can draw your own conclusions as to what it will be used for,” said Karl Kronenberger, Proper Media’s attorney, claiming that Mikkelson is running this GoFundMe because he “is unable to operate Snopes profitably without Proper Media’s expertise and management.”

Not so fast, said Mikkelson. Proper Media’s just upset Snopes doesn’t want to do business with the company any more and so its representatives are making him look like the bad guy, he said. According to court documents, the Proper Media members who bought half of Snopes’ parent company took out a multi-million dollar loan to do so.

“Basically they’ve withheld every penny of advertising revenue that we’ve earned since February of this year. They’re claiming the fact that we have to get money from the public shows I’ve mismanaged the company,” Mikkelson said. “I would defy any person to operate a company indefinitely with zero revenue.” The GoFundMe money will cover operational and legal expenses, he said. 

How did we get here

Once the work of just Mikkelson and his ex-wife, whom he met on a folklore forum, Snopes now has a staff of 16 people. It’s one of the 1,000-most popular websites in the U.S., according to legal documents. 

So how did Snopes get here, apparently fighting for survival? 

Well, it’s a bit complicated, but bear with me. Before his ex-wife, Barbara, sold her share to Proper Media, Snopes hired the company to do a variety of things, including manage web hosting, content management, and ad revenue. Of the revenue, Proper Media was to pay expenses such as payroll, keep some for its services, and give the rest to Snopes’ parent company, Bardav. According to Bardav’s lawsuit against Proper Media, it would get up to $85,000 monthly plus half of anything above that baseline. So, doing the math, at minimum, between February and June, Bardav should’ve made $425,000 from Proper Media.

In July 2016, Mikkelson’s ex-wife sold her 50 percent equity in Snopes’ parent company to Proper Media. The way the deal was written, because of IRS reasons, leads to the next wrinkle. 

Proper Media’s five shareholders would get different-sized pieces of the pie from the deal, according to Bardav. For Mikkelson, this means they’re nothing more than shareholders who collect checks when the company is profitable — their shares range from 3.33 percent to 20 percent. 

But Proper Media claims that the five shareholders are to act as one for the benefit of Proper Media and therefore have just as much say as Mikkelson, who owns the other half of Bardav. And that sway allegedly would prevent Mikkelson from canceling their contract. 

“It’s kind of like saying, ‘Hey I’m sorry I stole your dog, but you can go to the pound and get another one’.”

To add more to the drama, one of those shareholders left Proper Media in February 2017 to join Snopes in a business development role, taking the keys to parts of the CMS and $10,000 worth of office equipment with him, according to court records. So Snopes can access its CMS to add content and retains editorial control (for now), but Proper Media still collects the ad money.

Proper Media attorney Kronenberger argues that Mikkelson can host the site wherever he likes, raising new ad revenue elsewhere, but he won’t be getting Proper Media’s tech, which he says optimizes the site for better performance. 

Mikkelson contests that though, saying Proper Media is blocking access to the site’s domain name, template, data storage, and code, in addition to its ad revenue.

“It’s kind of like saying, ‘Hey I’m sorry I stole your dog, but you can go to the pound and get another one,'” Mikkelson retorted.

Proper Media wants to kick Mikkelson out after he spent 22 years running the site. It wants Snopes to continue operating, without him in a director or officer role.

“We are going to figure out how much is owed and we will pay it so long as it doesn’t go to David Mikkelson,” Kronenberger said. 

Mikkelson sounds like he’s going to fight like hell, though. Both his and Proper Media’s lawsuits are chugging their way through San Diego Superior Court and both sides want the other to pay damages as determined by the court.

“If they just stood back and let the adults run the company they would accrue the benefits that come to shareholders … My interest is seeing Snopes run by people whose primary principal is the best interest in Snopes.” 



Source link