Fresno Libel Suit : An Ominous Case Moves Near Trial

Libel suits have been filed against the media with unprecedented frequency in recent years, but no current libel case seems as bizarre--or as ominous--as a 3-year-old, $6-million suit moving slowly toward trial in Fresno.

The defendants: McClatchy Newspapers (publisher of the Sacramento Bee, Fresno Bee and Modesto Bee) and three of its reporters, one of them a Pulitzer Prize winner. The plaintiff: Edward M. Kashian, 55, a multimillionaire Fresno land developer who says the newspapers libeled him by publishing a story that attempted to link him (and many other Fresno businessmen) to organized crime and the bribery of public officials.

What makes this libel case so ominous?

Bee editors say the papers’ special investigative team has been forced to spend so much time and energy in pretrial preparation for this case (and for several other libel suits facing McClatchy newspapers) that the team has been dissolved, its four-year investigation of official corruption and organized crime in Fresno has been suspended--perhaps permanently--and the lead reporter on the team has, in effect, become a full-time litigator; he hasn’t written a story on anything for almost two years.

This is what journalists mean when they speak of the “chilling effect” of libel suits, and the McClatchy forces warn that, given the particular circumstances of this extremely complex case, a Kashian victory would be a severe blow to the free press in its attempts to cover everything from routine trials to government corruption.

Kashian, who has never been officially charged with any illegal activity, says the story that prompted his lawsuit has had an even more devastating effect on him, and he says that a McClatchy victory would leave innocent citizens everywhere vulnerable to crusading journalists who write damaging stories based on rumor.

A Nightmare, Kashian Says

Kashian depicts himself as a respected, civic-minded, law-abiding citizen whose happy daily routine of family, business, golf and friendships has been turned into an unending nightmare by the Bee story. Because he was mentioned briefly in the Bee story, Kashian says, he and his family have been embarrassed in the community he has lived in most of his life, and he is shunned by some city officials who formerly welcomed his development projects--most of which are highly regarded, even by those critical of him for other reasons.

Interviews with most of the principals in the case and an examination of more than 10,000 pages of documents (depositions, transcripts, exhibits and newspaper articles) make it clear that neither side is altogether blameless.

In his deposition and in interviews, Kashian seems a soft-spoken, mild-mannered man, someone who has filed suit more in sorrow than in anger. But even he concedes he is capable of aggressive, hard-nosed business practices, and the evidence strongly suggests that he has occasionally been guilty of, at the very least, bad judgment and a naivete that seems unlikely in so successful a businessman. Moreover, rumors about the connections of some of his business associates have long circulated in Fresno.

But the Bee’s handling of this story is far from a textbook case of good journalism. The most damaging charges against Kashian were based on 10-year-old law enforcement intelligence reports, for example--raw intelligence data stamped “confidential”--and the paper didn’t ask Kashian for his response to these charges before printing them.

Part of what helps make this case both ominous and bizarre, though, is that it’s not just a libel case but a rare “conspiracy to libel” case: The story that triggered the libel suit was a Bee report of testimony and supporting exhibits given in a pretrial deposition in another McClatchy libel case (Todisco vs. McClatchy Newspapers Inc.)--a case that itself has since been settled.

‘Privilege’ Claimed

The Bee contends that, like courtroom testimony, such testimony (and its supporting exhibits) is legally “privileged”--i.e., a witness can testify and a newspaper can provide a “fair and true” report of the proceedings and neither is vulnerable to libel action. But Kashian says McClatchy reporters and editors used the “privilege” of a deposition as a ruse to sneak into print a large number of inaccurate allegations that would have been patently libelous had they been published without the protection of privilege.

Bizarre?

- One of McClatchy’s witnesses is Aladena (Jimmy the Weasel) Fratianno, an admitted murderer, underworld informer and one-time Mafia chieftain to whom McClatchy Newspapers have paid $32,000--$12,000 in the Kashian case and $20,000 in the Todisco case--to give depositions as an expert witness on organized crime.

- One of Kashian’s witnesses is an attorney who represented McClatchy and the Bee reporters in the earlier Todisco libel suit and who, having been dismissed by one of those reporters (Denny Walsh) in that suit, testified for Kashian in this suit.

- One reporter originally sued by Kashian but subsequently dropped from the lawsuit countersued Kashian for malicious prosecution but was permitted by his editors to continue writing stories about Kashian for more than six months after suing Kashian (and for more than two years after Kashian had sued him).

The tortuous, tumultuous tale of Ed Kashian and the Bee newspapers has its roots in the McClatchy Newspapers’ decision, in 1978, to assign a three-man team of reporters to investigate longstanding reports of organized crime and corruption in Fresno.

As far back as the mid-1920s--when 13 Fresno police officers were indicted for bribery--and continuing into the 1940s and early ‘50s, Fresno was a wide-open town, filled with gambling, bookmaking, prostitution and the kind of official corruption-cum-sanction that makes possible such activities. Despite periodic attempts at reform, reports of such activities continued well into the 1970s--as the Bee investigative team subsequently documented in many stories.

$26-Million Suit

In one of those stories, published Aug. 19, 1979, the Bee described Fresno attorney Vincent J. Todisco as “a known associate and sometimes business partner of organized crime figures.”

Todisco denied the charges and filed a $26-million libel suit against McClatchy Newspapers, three Bee reporters and their editor. Four years later, the suit was resolved with no money changing hands and the Bee agreeing to publish a 320-word statement by Todisco denying the Bee’s charges and accusing the paper of “shoddy journalism based on hearsay statements, rumors and innuendo.”

But between the day Todisco filed his libel suit, in February, 1980, and the day the lawsuit was dismissed, in July, 1984, the name of Ed Kashian had quietly entered the increasingly murky picture.

On May 27 and May 28, 1982, during pretrial proceedings in the Todisco case, Todisco’s attorney took a deposition from Walsh, the lead reporter on the Bee investigative team.

A deposition is a traditional legal proceeding, conducted outside the presence of judge and jury, by which each side in a lawsuit tries to learn as much as it can of the other side’s case before the formal trial begins. Attorneys for both sides are present, but each side’s attorneys generally conduct most (if not all) of the questioning of the other side’s witnesses. As in a trial, witnesses are generally advised by their own attorneys to volunteer as little information as possible--to avoid giving away any more of their case than they are legally required to.

Volumes of Information

But when Walsh gave his deposition in the Todisco case, Walsh’s attorney, Thomas Kotoske, took over the questioning from Todisco’s attorney and asked Walsh question after question, eliciting volumes of information on the alleged infiltration of legitimate Fresno businesses by members of organized crime.

Under Kotoske’s prodding, Walsh listed about two dozen men he considered members of “the Fresno mob” (which Walsh defined as “people who enter into conspiracies to subvert our laws”). Then, almost 50 questions and answers after Walsh had finished his list, he said, “By the way, I would like to add Ed Kashian to the list of people in the Fresno mob.”

That was the only mention of Kashian’s name in Walsh’s two days of testimony--testimony that filled more than 300 pages of official transcript. (Kashian was also mentioned in two confidential reports of law enforcement investigations that were included in material Walsh submitted to support his contentions--more than 1,300 pages of exhibits, including letters, newspaper clippings, financial statements and assorted legal documents.)

Walsh completed his deposition on a Friday. The following Monday, the Fresno Bee published five stories--the first of which began at the top of the front page--based on the charges Walsh made in his deposition and on the material contained in his accompanying exhibits. The main story was also published the same day in the Sacramento Bee.

Kashian wasn’t mentioned until the eighth paragraph of the story, and he was only mentioned three times, each briefly, thereafter. In essence, these references reported charges, made in Walsh’s deposition and exhibits, that “some businesses with which . . . Kashian is associated” had “possibly” been “infiltrated” by organized crime and that Kashian himself was a member of “the Fresno mob.” (The Bee reported similar charges against many other Fresno businessmen, three of whom also sued the Bee and one of whom has since dropped his suit.)

Not Under Walsh’s Byline

Walsh’s byline did not appear on any of the stories, and McClatchy editors say he had nothing to do with their preparation or publication. McClatchy says Royal Calkins, a reporter for the Fresno Bee, did most of the work on the stories, with some help from Jeanie Borba, another Fresno Bee reporter. Their bylines were on the main story.

The vast majority of the material in the Bee stories was based directly on Walsh’s deposition and exhibits. McClatchy contends its coverage is thus legally “privileged” as what the law terms a “fair and true report . . . of a judicial, legislative or other public official proceeding.”

That’s not how Kashian sees it.

He and his attorney, E. D. Bronson, contend that Walsh and his investigative team had long wanted the Bee to publish these allegations of crime and corruption in Fresno but that the papers had been reluctant to do so because the charges could not be substantiated and would have rendered McClatchy vulnerable to libel action.

In his lawsuit--now scheduled to go to trial Jan. 21--Kashian charges that the Bee articles “were substantially written before that (Walsh) deposition occurred” and that McClatchy reporters and editors “conspired” to publish the articles “by having Walsh give testimony and produce documents which were not requested and which had no reasonable relation to (the) . . . Todisco lawsuit.”

Kashian and his attorney rightly point out that newspapers rarely cover depositions, and their suit says that in this instance, the newspapers did so only “to avail themselves of various privileges under California law regarding the publication of defamatory statements.”

The “obvious ulterior motive” of the papers should “nullify any such privilege,” the lawsuit says.

There is no evidence that the Bee stories were written in advance, as Kashian charges, though, and Walsh, C. K. McClatchy (president and editor of McClatchy Newspapers) and everyone else at McClatchy who was involved in the story, directly or indirectly, dismiss Kashian’s conspiracy theory as “ludicrous . . . insane . . . outrageous” in the words of Frank McCulloch, then executive editor of McClatchy newspapers and now managing editor of the San Francisco Examiner.

McClatchy, McCulloch, Walsh and Co. all say Walsh had never tried to write anything based on the information he gave in his deposition and did not write these articles, either before or after his deposition. The stories came about, they say, in an altogether routine fashion.

McCulloch says he alerted George Gruner, executive editor of the Fresno Bee, early in the week Walsh gave his deposition that the deposition might produce newsworthy disclosures. Walsh says he first heard there might be a story about his testimony when fellow Bee reporter James McClung told him of the possibility during a break in his testimony.

Calkins was assigned to the story, and--at McCulloch’s suggestion--Walsh later called Calkins to offer his help. Calkins said he didn’t need any help. But over the ensuing weekend, while preparing the story, Calkins called Walsh twice with questions--one of them generated by an editor’s inquiry when he saw Kashian’s name in Walsh’s deposition.

A prominent figure in Fresno, Kashian was a name well-known to Calkins and to his editors. Since Walsh had mentioned Kashian’s name so much later than he’d mentioned the names of other alleged members of the “Fresno mob,” Calkins says he called Walsh to be certain that Walsh had intended to include Kashian in his list and that “this was . . . not an idle afterthought.”

Naming Confirmed

Walsh told Calkins that he had, indeed, intended to name Kashian, but Walsh also told Calkins that he should drop Kashian’s name from the story if his editors were so concerned about it that they might not publish the article.

Walsh said Kashian was “so insignificant as a character in the deposition” that his inclusion “wouldn’t be worth fighting over.”

Why didn’t Calkins drop Kashian’s name? Had he heard, independently, allegations that Kashian might be dishonest?

Calkins declines to answer that question. But he does say, “I didn’t care what Denny thought about whether that (Kashian’s name) should go in the article or not. What I cared about was whether he meant it when he said it and whether he could support that. . . . Denny was the subject . . . of my story, not a collaborator. . . . He was somebody I was writing about, not with.”

That, of course, is the central point of Kashian’s libel suit: Was Walsh the subject of a legitimate news story or a collaborator in a conspiracy?

In pretrial proceedings, Kashian’s attorney took the deposition of one witness who says Walsh and McClung both told him several weeks before Walsh’s deposition that the paper would soon publish a story dealing with some of that material. If true, that could lend credence to Kashian’s conspiracy charge. But Walsh denies that such a conversation took place, and the witness--attorney George Carter--may have his own credibility problems:

- Carter had represented Walsh and two other Bee reporters in the Todisco case until he was dismissed by Walsh (and then withdrew as the McClatchy attorney) shortly before the story on Walsh’s deposition was published.

- Carter himself was identified in Walsh’s deposition, and in the resultant story, as someone whom a special agent of the California Department of Justice had described in a confidential report as one of “several individuals in the Fresno area whom I feel are involved in criminal activity and in corruption. . . “ (charges Carter denies).

- The day after Carter gave his deposition supporting Kashian in this case, another witness friendly to Kashian conceded under questioning that Carter’s “reputation is that he’s untruthful” (a charge Carter also denies).

Conspiracy is a difficult charge to prove in a court of law, and circumstances like these will make Kashian’s task more difficult.

Walsh’s explanation for the unorthodox and seemingly suspicious nature of his Todisco deposition--his attorney taking over the questioning and Walsh volunteering so much information--may also be difficult to refute: Walsh says he was simply using a strategy that has been effective for him in previous libel cases. He says that by putting a great deal of information on the record early, the opposition may be persuaded to abandon a weak case. In the Todisco case, Walsh says, once it became clear that Todisco’s attorney wasn’t going to ask the questions necessary to elicit the information Walsh wanted on the record, Walsh’s attorney took over.

Maneuvering Denied

Although Walsh vigorously denies improperly using the deposition process to maneuver the substance of his deposition into print under the cloak of legal privilege, Times’ inquiries show that this is not the first time he has been accused of using improper means to bring about publication of information he deemed important.

Walsh has long been a controversial figure in American journalism. Now 49, he has spent almost half his life as an investigative reporter, specializing in exposing corruption and organized crime; he says he’s been sued for libel more than 20 times without losing a single suit.

In 1968, while working at the St. Louis Globe-Democrat, Walsh and another reporter won a Pulitzer Prize for their “campaign against fraud and abuse of power” in the local Steamfitters Union. Walsh subsequently worked for Life magazine and, briefly, the New York Times before joining McClatchy in 1974.

Like many investigative reporters, Walsh is aggressive, crusading, determined to expose wrongdoing wherever he finds it. His prosecutorial approach to journalism has resulted in important stories, libel suits--and accusations of excessive and misguided zeal.

In the course of his investigation of the Steamfitters Union, for example, when the Globe-Democrat refused to publish one of his most important stories, a very similar story appeared on the front page of the Wall Street Journal; Walsh was accused of having leaked the story to the Journal.

Discussion Acknowledged

Walsh acknowledges having talked to a Journal reporter about the story but denies having given the story to him.

Six years later, at the New York Times, Walsh wrote a story questioning the veracity of the libel suit testimony given by then-San Francisco Mayor Joseph Alioto when he was questioned about longstanding allegations that he had Mafia connections. The New York Times found Walsh’s story unsatisfactory and didn’t publish it. Walsh says an editor at Rolling Stone heard about this impasse and asked him to send his story along for possible publication there.

Rolling Stone didn’t publish the story either, but when A. M. Rosenthal, executive editor of the Times, found out what Walsh had done, he fired him.

More recently, in 1980, the Sacramento Bee decided not to publish a story Walsh and two colleagues had written on charges that a prominent California grower had been involved in the attempted bribe of a public official. McClatchy officials said the story was killed--after having been written, edited and set in type--because their attorneys said that if the grower sued, “we probably would not prevail.” But because the grower was a shareholder in a company that had agreed to buy McClatchy’s Fresno television station, there was considerable speculation about whether that was the real reason the story was killed.

Wall Street Journal Story

Six months later, a story on this entire controversy--including material derived from full-page proofs of the Bee’s original but unpublished story--appeared on the front page of the Wall Street Journal.

Again, Walsh acknowledged having talked “at great length” to the Journal reporter who wrote the story, but again Walsh denied either initiating the contact or providing the reporter with copies of his original story.

Walsh seems to realize that these three incidents, combined with his reputation as a crusader, could hurt him (and his co-defendants) in the Kashian lawsuit. Kashian, he says, will probably try to “paint me as a schemer, a conspirator, a mastermind of secondary publication.”

But Walsh says such accusations are unfounded, and he insists that he expects to prove that in court.