April 13, 2007

Shannon Terry Is Pissed Off, Threatens Lawsuit Against TechCrunch

Michael Arrington

145 comments »

I just received the letter below by email, in reference to my previous post on Shannon Terry and Rivals.com. I’m not going to make a statement on this just yet - our lawyers are involved and have advised me to keep quiet for now.

I’ll say this much, though. Rivals is no longer my favorite sports news site.

Update (11:42 pm PST 4/13/08): I am still not prepared to respond directly to the letter below. However, I do want to reach out directly to Shannon Terry and say this: I offer you the opportunity to to respond in writing to my initial post and refute any fact or opinion that is stated in that post. I will publish your unedited response here on TechCrunch, giving it full and equal publicity to the original post. In fact, I’ll leave it up on the top of page one for a full 24 hours, and you can choose the day you would like it published. It will remain permanently on TechCrunch and will have a distinct URL. It can be any length you feel is appropriate, and you can link to whatever supporting documents you like.

Sphere It

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Comments

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dc

April 13th, 2007 at 2:00 pm

Amazing.
steve

April 13th, 2007 at 2:05 pm

Good Luck to her

A Curse on Inflammatory Shock Journalism
veritas

April 13th, 2007 at 2:06 pm

Wow… I can feel the righteous indignation all the way over here!
Mjdgard

April 13th, 2007 at 2:07 pm

freedom of speech anyone?
anoncritic

April 13th, 2007 at 2:08 pm

So, were you wrong or what?
DoubleUTF

April 13th, 2007 at 2:13 pm

what’s most shocking about all this is that….Shannon Terry is a dude.
Aziz

April 13th, 2007 at 2:14 pm

Wow! Thats one hell of a lawsuit! No probs Mike, even if you accede to their demands, I know what my favorite sports site is .. rather I know what my fav sports site isnt
robert

April 13th, 2007 at 2:15 pm

Man that was fast…

I wish I had lawyers like that. He must be paying them good $$$
Jorel

April 13th, 2007 at 2:15 pm

He’s pissed off? That sounds defamatory too!
CB

April 13th, 2007 at 2:17 pm

this site is becoming dramacrunch
Andy

April 13th, 2007 at 2:19 pm

Is it too late to write this article up as the “Worst TechCrunch Article” and win those tickets to the show?
yaacov

April 13th, 2007 at 2:21 pm

he’s using the same lawyer he had 10 years ago http://www.businessweek.com/1997/24/b353114.htm
hmmm

April 13th, 2007 at 2:24 pm

Another recent SEC enforcement action could end up setting legal boundaries for actions against online newsletters. In mid-May, the agency alleged in a lawsuit that Shannon Terry, a writer for another Internet newsletter, SGA Goldstar Research, ran afoul of the securities laws by netting $850,000 in free stock for touting Systems of Excellence–whose former chairman was recently jailed for stock fraud–as well as 17 other stocks. Terry’s lawyer, S. Lawrence Polk, says that he is vigorously contesting these allegations.

If the Terry case is litigated, it might well resolve a crucial issue–how much people can say about investments on the Internet without running afoul of the law. Chelekis and SGA both disclosed that companies pay to get their names on their Web sites. But the SEC has asserted that newsletters must disclose the specific payments they receive for each stock. ”The SEC has never issued regulations saying exactly what you have to disclose,” Polk maintains. Despite the SEC’s actions against Chelekis and SGA, other newsletters on the Web often fail to disclose how much they get from companies that they feature on their Web sites.
Johnny 5

April 13th, 2007 at 2:24 pm

I was wondering about this when I first read the post. This was very very fast though.
Tom

April 13th, 2007 at 2:25 pm

Mjdgard - freedom of speach doesn’t apply to defamatory statements, ask your lawyer if you don’t know that. The evening news anchor can’t just go around calling people crooks because it’s their own personal opinion.

If you blogger “reporters” want your work to be treated like real news, then you better learn how to do it right or this will continue to be what it currently is - amature hour.
hmmm

April 13th, 2007 at 2:26 pm

” An employee of SGA Goldstar Research, Shannon Terry, was found to have violated the anti-touting and antifraud provisions of securities laws by a U.S. District judge. The court ordered Terry to disgorge $828,000 of trading profits.”

http://www.bizforward.com/wdc/.....-07/deals/
ggmike

April 13th, 2007 at 2:27 pm

After reading the letter, I kind of have to agree with what’s said.

I mean, what was the point of the original article anyways if it wasn’t a strategically timed attempt to ruin the potential deal with Yahoo?

Unless he/she HAD kept the information from Yahoo and it HAD screwed up the deal, I don’t see anything newsworthy about that article - nothing happened so what are you reporting on?

Arrington - stick to reporting whats actually happening and quit using your soapbox to influence people’s decisions / opinions. Sometimes its better to just let sleeping dogs lie.
worth

April 13th, 2007 at 2:28 pm

I like item #4 in the letter, where the lawyer says “no such allegation was ever made against Mr. Terry in 1998.” Can you say “ever” and “in 1998″ in the same statement? Why stipulate “in 1998″? No get on with the business of “governing yourself” (???), pronto!
Also, in item #1, I saw no implication whatsoever in your piece titles that the acts were committed while he was the Rival CEO; titles merely stated that the Rival CEO, which he is, had some kind of connection to securities fraud, which it appears he did. If publishers can in fact be sued for misleading or ambiguous titles or leads (the purpose of which is ALWAYS to generate enough interest on the reader’s part to continue with the entire article), I would have to surmise that almost every publication in America would no longer be in business.
hmmm

April 13th, 2007 at 2:28 pm

“On November 7, 1996, the Commission
filed a Complaint and obtained emergency relief against Huttoe and twelve
other defendants, including SGA Goldstar Research, Inc., which disseminated
a tout sheet over the internet, and its principals, Theodore R. Melcher,
Jr. and Shannon B. Terry. See SEC v. Huttoe, Et Al., 96-CV-02543
(GK)(D.D.C.). Kraft was responsible for introducing Huttoe to SGA
Goldstar. The Complaint alleged a massive ongoing market manipulation
orchestrated by Huttoe in which he executed an unregistered distribution of
tens of millions of SOE shares. The Complaint further alleged that Huttoe
artificially inflated the price for those shares by issuing materially
false press releases about nonexistent multimillion dollar sales of SOE
products, filing false periodic reports with the Commission, and bribing
with SOE stock persons to tout SOE stock, including Melcher and Terry. As
a final part of the scheme, Huttoe, Melcher, and Terry then took advantage
of the inflated market by dumping shares on unwitting investors. On
January 29, 1997, the Commission amended the Complaint to allege that in
addition to touting SOE stock, SGA Goldstar, Melcher, and Terry engaged in a systematic practice of publishing promotional coverage for other issuers
in exchange for compensation…The actions against SGA
Goldstar, Melcher, and Terry are pending.
Zoli Erdos

April 13th, 2007 at 2:32 pm

“Yahoo walks from Rivals deal; acquires TechCrunch instead”

(before I get sued, this is a joke)
Anon

April 13th, 2007 at 2:34 pm

Mike - so if the Rivals sale to Yahoo falls through does that mean you’ll have to pony up $100M? We could start a collection.
WTF

April 13th, 2007 at 2:36 pm

#6 DoubleUTF–I just want you to know that I spewed coffee from-ith my mouth all over my brand new, beautiful Apple 23″ flat screen when I read your “dude” comment! Thanks for the laugh. But you suck for ruining my flat screen.
warren

April 13th, 2007 at 2:37 pm

mike, maybe you should quickly sell techcrunch to doubleclick, on the strength of your new, as of yet not launched ad content unit, the crunchAD. Then you’d be set when the $3.1 Billion deal goog’s announcing for doublelick closes.
scott

April 13th, 2007 at 2:44 pm

ouch — those comments sited in the letter. it amazes me how effortlessly people will type comments like that and hit “submit” when they really aren’t informed and they may be further damaging someone’s reputation. people do bad things (note to Shannon’s attorney: I’m not implying that Shannon did bad things, just “people” in general). And, sometimes people change (Michael Milken anyone?).

One should not toss around character assassinations as if they are picking lint from their belly button. There’s a big difference.

That said, it is interesting to read between the lines as to what Shannon’s attorney didn’t have a problem with — notably the statements that his past employment at a company that had employees seemingly involved in a scam might have torpedoed past deals.
Luca

April 13th, 2007 at 2:47 pm

Man, Friday the 13th definately ain’t lucky for you Michael!
BigDeal

April 13th, 2007 at 2:50 pm

This makes you officially the Perez Hilton of Tech
Josh

April 13th, 2007 at 2:50 pm

Truth is a defense in defamation cases. I hope your facts are right, mike.
kmz

April 13th, 2007 at 2:51 pm

DoubleUTF - funny.
Neil J. Squillante

April 13th, 2007 at 2:55 pm

Andy (11), thank you for the laugh. Does Tennessee law apply to TechCrunch? I’m not up-to-date on my blog civil procedure. Juridiction aside, it’s difficult for a public figure to prove defamation. Does Tennesee have an easier standard of proof than actual malice?
patricia

April 13th, 2007 at 2:56 pm

Well, I don’t necessarily think TechCrunch is the reason why Terry’s background might have killed the deal with Yahoo. It sounds like Terry handled that one all on his own.
pallet jack

April 13th, 2007 at 2:57 pm

Mich please stand up - Your doing great I hope you can hold up - and keep that post up as long as possible-

- I think - as long as his points are correct; his actions were his own defamations.

- I wish they would have quoted me saying “Can felons have guns” .. Cause that guy shoudnt be allowed to have big business relations
john caddidy

April 13th, 2007 at 2:58 pm

OUCH!!!!!!
Joe Duck

April 13th, 2007 at 2:58 pm

Hey, thanks for sharing the legal notice - really interesting and good luck.
Luckily you didn’t call Mr. Terry a “nappy headed ho” or you’d be out of a crunch job!?!
jeneane

April 13th, 2007 at 2:59 pm

dang.
Jay

April 13th, 2007 at 3:05 pm

Is there any way to avoid some controversy by not publishing this kind of information on TechCrunch? I ask only because I read your blog every single day and have done so for quite a while. Please correct me if I’m wrong; but I feel that the most relevant news is about exciting startups and new technologies. The information about lawsuits, especially when it generates a lot of controversy, just ends up being drama. I’m sure TechCrunch loyals would be up in arms when I say this: Can you really make a concerted effort to not disclose this kind of information? The style of presenting this information also makes it seem very dramatic and as if you’re breaking news. And indeed, the incident itself may be dramatic and you may be breaking news; but is it really worth it? Not for readers like me — and I think considering your readers’ feelings on this is important although it is your blog and you can write whatever you want. Just a request …
Shannon Is A Tard

April 13th, 2007 at 3:13 pm

I just went through the letter. Let’s take these one by one:

1. says you are saying that the fraud was in connection with his job at Rivals. Wrong. You were clear about the facts. Note that the lawyer admits to the fraud in that paragraph.

2. saying he wasn’t actually legally found to be involved in a pump and dump scheme. Ok, change “was found to have been involved” to “was involved” since he clearly was.

3. he was an employee, not a principal. Ok, change to employee.

4. just change to “was found to have violated the anti-touting and antifraud provisions of securities laws by a U.S. District judge. The court ordered Terry to disgorge $828,000 of trading profits.” which is a quote from one of your links.

5. say that the others were sentenced to prison terms. Let everyone figure out on their own why he was the only one who didn’t go to prison.

6. a link to an SEC thing that names Shannon is wrong. Please.

7. you say you have a source for this, and you are relying on that source. so…

This guy is (or was) a major crook. He should be hiding in shame, not quibbling over details.
Michael Mertz

April 13th, 2007 at 3:14 pm

The potential lawsuit is not as shocking as the fact that Tennessee has a legal code. Michael, you’re screwed!
Adam Kalsey

April 13th, 2007 at 3:16 pm

I find it interesting that the letter takes some of the comments out of context.

“If a CEO’s past is sinking any potential acquisition deal (assuming that acquisition is a possible goal for the company) then it’s time to get a new CEO.”

I didn’t bother to hunt for the other comments. But the removal of the context of this quote makes it appear that the author is stating that Rivals.com needs a new CEO. Instead, the comment is a general statement that if a CEO is reducing shareholder value, that CEO needs to be replaced. The statement doesn’t call out Rivals.com, Yahoo, Apple, or anyone else.

It’s a perfectly valid point and doesn’t seem to reflect specifically on Mr. Terry.

I wonder how much the lawyer is reaching on the other allegations as well?
Rockwell

April 13th, 2007 at 3:17 pm

Somehow I took a wrong turn and ended up at the Player Hater’s Ball.

@#37, congrats, you just added yourself to a defamation lawsuit…
Mike (not Arrington)

April 13th, 2007 at 3:33 pm

@#15; “If you blogger “reporters” want your work to be treated like real news, then you better learn how to do it right or this will continue to be what it currently is - amature hour.”

The irony is astonishing…
gilltots

April 13th, 2007 at 3:37 pm

that’s odd, I thought Terry’s lawfirm was Dewey, Cheatham, and Howe.

wocka wocka wocka
Scott Yates

April 13th, 2007 at 3:39 pm

ggmike - “what was the point of the original article anyways if it wasn’t a strategically timed attempt to ruin the potential deal with Yahoo?”

You gotta learn to read these lawyer letters with a grain of salt. They are supposed to sound convincing. But for you or anyone to buy the line that somehow TC was trying to manipulate the deal by reporting on it is to buy that line of reasoning without stepping back to ask an important question: “Could TC somehow benefit by the deal not going through.”

TC has gone out of the way to present full disclosure in all other posts, and if I recall Arrington has a law degree, so we hope he would be smart enough not to ruin all that he has built by doing something so stupid as somehow trying to make a quick buck of a deal collapsing. And besides, how can someone profit on a deal _not_ happening when the target company isn’t public?

It’s interesting that the lawyer who penned that letter appears — in my opinion… don’t sue me — to be operating from a context that anything published must be done so for the purpose of manipulation of a market, and can’t understand the idea of publishing just for the point of illumination. I guess if you spend all day defending clients accused of manipulating markets, it would be easy to see how that might become your world view.

That’s just my constitutionally protected opinion.
Isn't this America?

April 13th, 2007 at 3:39 pm

Last I knew, this was America, and our freedom of speech and of the press was, you know, protected and such. All this BS is is pretty much politics, and someone throwing a fit. Jeez, get over it. Is it really worth it? Really? =\
Dr. G

April 13th, 2007 at 3:44 pm

Mind your own business.
ChandraB

April 13th, 2007 at 3:47 pm

Shannon Terry…you sir are an ass.
Real Law

April 13th, 2007 at 3:48 pm

I thought we divested Tennessee from the union to the French.

Boy, don’t you love lawyers:)

Who wins here? Answer, Larry the lawyer. He can now go home and tell his wife that he can log another 50 hours @ $300 per hour and get a step closer to making Partner.

Lawyers, lawyers…..
Remember the joke - what’s 1,000,000 lawyers at the bottom of the ocean? Answer, a good start!
Kelly Smith

April 13th, 2007 at 3:48 pm

This letter just makes me want to have an early Friday martini. What a pain in the ass.
Bilal Hameed

April 13th, 2007 at 4:00 pm

For TechCrunch’s sake I would pray that they actually sue TC. It will make this blog mainstream overnight.

Imagine a blog having the potential to make or break deals Thats power
Netmuse

April 13th, 2007 at 4:04 pm

Exactly what #8 said!
what a loser

April 13th, 2007 at 4:04 pm

Mike you missed the best stuff in your original post. See

http://classaction.findlaw.com.....15153.html

” revenue projections for SOE that were
without any basis. The Complaint also alleges that as further
efforts to inflate the price of SOE securities, Huttoe caused SOE
to fail to file required periodic reports and to file false
periodic reports with the Commission, and bribed SGA with stock
to recommend SOE to subscribers to SGA’s electronically
disseminated tout sheet. The Commission alleges that Huttoe
caused unregistered but free trading shares to be issued to
Melcher and Terry, SGA’s principals, some of which were issued in
the names of Alpha and Dunbar, entities they control.”

and (this is good):

“Complaint further alleges that as the third step in the scheme,
Huttoe, Melcher, and Terry then took advantage of the inflated
market for SOE stock that they had created by dumping their own
SOE stock on unwitting investors. The Commission alleges that
those sales were timed to take advantage of the false news
concerning SOE, and were heaviest when SOE stock reached its
highs in June, 1996. The Commission alleges that as a result of
this scheme, the defendants obtained illegal proceeds of more
than $10 million.”

- then it talks about the “massive coverup” attempt afterwards.
Greg Andrew

April 13th, 2007 at 4:05 pm

Michael’s assumption that Terry cooperated with authorities does appear to be wrong. The question over whether Terry was a principal is really about the meaning of principal. The SEC clearly states that Terry was a principal of Goldstar, but that does not mean he had an ownership position in the company; he was indeed an employee. You can find the exact details of what Terry was and wasn’t guilty of on page 136 at http://www.secinfo.com/duwTa.52Zc.p.htm
Anonymous Coward

April 13th, 2007 at 4:05 pm

I could write a better C&D with one paralegal tied behind my back.
what a loser

April 13th, 2007 at 4:06 pm

I wonder who’s paying this lawyer - Rivals or Shannon? My bet is Rivals is picking up the tab.
Shannon Clark

April 13th, 2007 at 4:14 pm

Shannon is NOT a girls name.

I should know, I am a Shannon as well - and a man, have been all of my life.

Like many names Shannon is a gender neutral name - though it was mostly a MALE name in Ireland and the use of it as a male or female name seems to vary by geographic regions of the US.

But yes, at least once a month - often more than once a month - someone assumes that I am female.

Shannon
Jeff C.

April 13th, 2007 at 4:14 pm

“The SEC alleges that Terry violated SA ss. 17(a), SEA ss. 10(b), and
SEC Rule 10b-5 when he (1 touted publicly traded securities to potential
investors in articles he wrote for the Whisper Newsletter in return for
undisclosed compensation from the issuers of those securities, (2 traded his
personal share holdings in stocks even as he was writing articles in the Whisper
Newsletter recommending their purchase, and (3) failed to disclose either of
these practices when he solicited subscriptions to the Whisper Newsletter. The
SEC also alleges that Terry violated SA ss. 17(b) when he failed to disclose to
subscribers that he received consideration in exchange for writing and
publishing article promoting stock.

Terry deposited the proceeds he received for the articles in Dunbar
Holdings. The SEC requests that Terry and Dunbar Holdings disgorge payments for
promoting stocks, trading profits, and subscription commissions, as well as
prejudgment interest on all illegal profits. The SEC also seeks to permanently
enjoin Terry and Dunbar Holdings from participating in further violation of the
securities laws

Moreover, there is no question that Terry acted with requisite scienter
to violate SA ss. 17 (a) (i) , SEA 10 (b) and Rule 10b-5. Scienter is reflected
in the Defendant’s pattern of “touting stock” for more than two years. Terry
admits that he and Melcher received stock in return for promoting the issuer of
the stock and that he knew that the “disclaimer” appearing in the Newsletter did
not state that the staff received stock in return for promoting the issuer in
the Newsletter. The ineffectiveness of the Newsletter’s disclosure was not
merely negligent. These statements were so likely to mislead subscribers that it
either known to the defendant or [was] so obvious that the actor must have been
aware of it.” SEC v. Steadman, 967 F.2d at 641-42. Clearly Terry must have known
that the footnote in the Newsletter could not have adequately alerted
subscribers to the fact that he and Melcher received free stock for promoting
the companies they urged subscribers of the Newsletter to buy.

Terry raises a number of defenses to the SEC’s allegations. First, he
responds that the information appearing in the Whisper Newsletter was not “in
connection with” the offer or sale of securities within the meaning of the
securities laws. In support of this argument, Terry directs the Court to
language in the Newsletter’s disclaimer which states “This material is not
deemed as a solicitation for the purchase or sale of a security or

commodity.” Notwithstanding the disclaimer, it is clear that the stocks promoted
by Terry and the Whisper Newsletter were designed to provide subscribers with
information that would cause “a reasonable investor to buy or sell securities in
reliance thereon”, SEC v. Savoy Industries Inc., 587 F.2d at 1171, and were
therefore, “in connection with” the offer or sale of securities. (See P1’s
Stmt.P.P. 12-27.)
Second, Terry argues that he did not commit fraud because he wrote only
some of the articles appearing in the Whisper Newsletter and because Melcher
exercised final editorial control over its content.1 Yet, Terry concedes that he
was responsible for selling subscriptions, writing and preparing the Newsletter
for distribution, and distributing the Newsletter to subscribers by facsimile
and the Internet. Terry further concedes that he was paid stock in those
companies for which he was writing promotional articles in the Newsletter The
fact that Melcher committed fraud would not excuse the fraud committed by
Defendant Terry

Having found that Terry engaged with extreme recklessness in the frauds
of touting and scalping stocks over a two year period, the Court must also find
that Terry’s failure to disclose these practices when soliciting subscribers is
a “practice” and “course of business which operates as a fraud or deceit upon”
prospective subscribers to the Newsletter. SEC Rule 10b-5(3).

For the foregoing reasons, the Court deems it appropriate to grant the
SEC’s request for a permanent injunction against both Shannon Terry and Dunbar
Holdings, Ltd.
Josh

April 13th, 2007 at 4:15 pm

He could’ve just left a comment.
Pat

April 13th, 2007 at 4:17 pm

I completely concur with the comments from Jay and ggmike, above.

Report actual news on startups and established Tech sites.

Slow day? Go ahead and report on a shitty startup.

Real news. No gossip. No drama. Real, reliable news.
hmmm

April 13th, 2007 at 4:19 pm

And what did the article have to do with startups ?
WTF

April 13th, 2007 at 4:20 pm

#55 Shannon–perhaps it’s not the name. Perhaps it’s the skirt and high heels you always wear that cause the confusion. And damn it, stop using so much tape to hide your package. And stop shaving your arse–guys have hairy arses. geesh!
Danny

April 13th, 2007 at 4:22 pm

If all this information is public and this really happened. It will all come out next week and words will be retracted!
Paul

April 13th, 2007 at 4:24 pm

I’m like most - I read the article, looked over what the attorney wrote - and the two just don’t correlate. You used refrence material which does state he was a ‘pinciple’ (this from a Government SEC paper!), you cite ’sources’ and use ‘reportedly’ repeatedly - - following the protocol necessary to ensure you are reporting - not writing an opinion piece (the end sentence clearly speaks for you and it’s noted) - - the fact that someone earlier caught the attorney taking simple COMMENTS out of context to use against you should speak volumes about where this stems from. Your attorneys should do quite well in ripping this piece of junk threat into shreads. Tort reform is needed - loser pays - case in point.
dumbfounder

April 13th, 2007 at 4:25 pm

nice!!! my comment got in there too!! good thing anyone can post these and there is no way you can really prove that I wrote that. because I didn’t. I swear.

I also didn’t write this:

This guy is obviously a scumbag.
Vijay Chakravarthy

April 13th, 2007 at 4:25 pm

One could potentially respond with lawyer jokes (note that the previous statement is opinion, and should not be construed, interpreted, or otherwise mistaken to be legal advice):

What do you say when you see three lawyers neck deep in cement?

We need more cement..
desik

April 13th, 2007 at 4:29 pm

Get over yourself Shannon your lame lawyers Sutherland, Asbill and Brennan , make you look a far bigger crook than anything else posted on this blog does.
Vik

April 13th, 2007 at 4:30 pm

I would agree with the attorney on the point that the title of Mike’s post is very misleading.

But since Mike was a transactional attorney, I can expect such dumb mistakes from him. No litigator would take such a foolish risk
Seocracy

April 13th, 2007 at 4:36 pm

“…the publication of the publication of….”

That lawyer needs to fire whoever is taking his dictations.
Jason M. Lemkin

April 13th, 2007 at 4:46 pm

Mike, I’m just glad you didn’t take on Imus or something, imagine what the effects there could have been.
B S meter

April 13th, 2007 at 4:48 pm

another lawyer blowing smoke at $500/hour. not worth the paper it’s written on. just get some good liability insurance.

sounds like the Yahoo deal is dead as a doornail to me…

btw, why don’t you sue me too Shannon.
Andrew

April 13th, 2007 at 4:53 pm

You should never get involved with shady people. Don’t even write about them.
John Doe

April 13th, 2007 at 5:23 pm

It don’t like it either, but it is called ACCOUNTABILITY …
eeek

April 13th, 2007 at 5:24 pm

TN is not the venue you want to have to defend a defamation suit for potential damages in.

Also you do not want to F around with southern attorneys in a southern venue, just not a good idea.
Tom

April 13th, 2007 at 5:27 pm

@#41 - Look up the definition of Irony before you try to use it in a sentence.

Hey Mike, are you going to tell us, once and for all, what TC is really about? Is it about *real* startup news, or whatever drama you feel like writing about to get the readership up? If I want drama, I’ll watch Oprah.

News or tabloid Mike? What’s it going to be?
L

April 13th, 2007 at 5:33 pm

A terrible Friday the 13th for TechCrunch!
Greg

April 13th, 2007 at 5:54 pm

This is a perfect example of why I love and hate the internet. A lawyer sends out a Cease and Desist letter over a defamation suit, and in the user comments to it, people defame the guy even more (30, 67).

Not that I really think this will go anywhere, at least I hope it doesn’t - I think it’s just a boilerplate letter, that sites like Gawker and Something Awful get hit with all the time - they rarely, if ever, have to pull anything.

If the facts are slightly inaccurate, whatever, change them, but please don’t pull the article. I hate when people run to their damn lawyers, and I hate seeing them “win”, by getting the content removed.
Nick

April 13th, 2007 at 6:00 pm

This is nothing that was not said 8-10 years ago.
http://www.businessweek.com/1997/24/b353114.htm
http://www.bizforward.com/wdc/.....-07/deals/
Jeff Clavier

April 13th, 2007 at 6:10 pm

I am not clear what is actually more risky to the potential deal that Yahoo! is contemplating: the publication of facts that are obviously public in the SEC records, are 10 years old and would be unearthed in any background checks run during the legal due diligence, or the clear demonstration that Mr Terry is fast at pulling the legal trigger - even targeting one of, if not THE, largest consumer Internet blog that has been involved so many times in covering Yahoo new and existing products, and even co-organized/presented Yahoo events.
Sundarlal Chuddha

April 13th, 2007 at 6:22 pm

I, Sundarlal Chuddha, shall stand as witness to your honour and integrity Mr. White Om Malik.
Will

April 13th, 2007 at 6:27 pm

The lawyer said “no such allegation was ever made against Mr. Terry in 1998.” According to the SEC filing, the accusation was made, but in 1996 instead of 1998. The lawyer is saying that getting the date wrong is defamatory.

That claim alone undermines all the other claims in the letter.
trevo

April 13th, 2007 at 6:28 pm

@Greg, you’re right, most of these C&D things go nowhere.

Basically in America, you can usually get away with calling people a lot of things… scumbag, cheat, swindler… just don’t call anyone “Nappy Headed Ho’s” or “Macaca”. LOL.
Mike D.

April 13th, 2007 at 7:21 pm

I’m sorry but comment 67 is just hilarious.
Scabby McDooDooHead

April 13th, 2007 at 7:25 pm

@ Tom #74
>>@#41 - Look up the definition of Irony before you try to use it in a sentence.

What, you don’t think it’s ironic that you were complaining about the lack of standards among bloggers while misspelling the word amateur?

Not only is that ironic, but also it’s funny!
Greg

April 13th, 2007 at 7:26 pm

84: I’ll leave the rest of your points alone, but what we say doesn’t matter, inasmuch as their case against TechCrunch - DMCA safe harbor to the rescue! It’s a whoooooole seperate thing if they want to go after anybody in the comments. Arrington’s only involvement would be getting subpoenaed for everyone’s Email address and IP.
Axon77

April 13th, 2007 at 7:44 pm

Yes, Comment 67 is hilarious.

And, yes, Shannon Terry is, officially, a douchebag.
Doosh Bag

April 13th, 2007 at 7:49 pm

I am shannon terry’s lawyer..

I want to make an official apology to Michael Arrington and all the staff here at Tech Crunch. My client mrs.terry actually was a huge part of a security fraud and was proud of it.

sincerely,
bag
haha

April 13th, 2007 at 8:41 pm

“Rivals is no longer my favorite sports news site.”

Yeah except you have just given them more exposure than they would ever have gotten in the last year.

I can “really tell” they arent your favourite.
John B

April 13th, 2007 at 8:54 pm

Don’t you just love it when people who aren’t your parents, (if you’re young), or your boss tell you to “Please govern yourself accordingly?”
wtf bbq

April 13th, 2007 at 9:18 pm

what a bitch
peter

April 13th, 2007 at 9:18 pm

Lee,

its a pump and dump scheme. . . no if and buts about it . . . I read it and it is still what it is
Jorge

April 13th, 2007 at 9:21 pm

IANAL, but my civil procedure law professor is, and he was interested in this case. Hear goes:

1) Tennessee law does not apply to Tech Crunch. Since TC is based in CA, Mike must have satisfy the “minimum contacts” test for TN. He doesn’t, unless, of course, Mike purposefully does significant business with people in TN.
9th Circuit precedent (but not 6th Circuit) holds that a website is not enough, even if it’s interactive, if the site isn’t selling anything, to establish minimum contacts sufficient for out-of-state jurisdiction. However, to the best of my knowledge, the 6th Circuit has no such precedent.

2) Personal jurisdiction comes via tort, because this lawsuit alleges defamation. Since Shannon was presumably based in TN *at the time of the posting of the original article*, TN courts would have jurisdiction, because torts against state citizens give them jurisdiction over out-of-state residents.

3) Likelihood of defamation claim succeeding = low
If it’s true, it’s not defamation. It’s that simple. Furthermore, for a PUBLIC FIGURE like Shannon Terry, a *much higher standard* applies, so he has to additionally show malicious intent on Mike’s part. That doesn’t appear to be the case, except for the title…so, a jury could find for ST.

4) Likelihood of a 12(b)(6) = high
Jesus. I could write a better complaint than that. I mean, come on. You don’t use conclusory statements. You don’t put multiple factual assertions in a single paragraph. You don’t say things without proving them when the evidence is in your possession. That’s just asking for the judge to throw your case out.
But Seriously

April 13th, 2007 at 10:40 pm

Asssbill? Am I the only one that thinks that law-firm name is hysterical???
Shannon Terry

April 13th, 2007 at 10:43 pm

Hey Mike:- Listen up. This is the real Shannon T.
You know what! You just peeled the top crust of dried shit…

So make sure you are prepared for some foul smell.

And for all you haters out there. Let me tell you. “im Still rolling!!!”
Jim

April 13th, 2007 at 11:21 pm

To CEO of Rival: Shannon Terry,

Defamatory is very excellent word to use in Techcrunch. Uhm, when you become CEO of Rival.com — What college do you go to? Do they still teach you how to write “im Still rolling!!!” in English 101-102?

I’ve dropped out college way back in horrible years. I’ve passed all ENG 99-102 and flunked 2 times with rebellious hippie professors. I’ve complete all subjects. I have disability — “Dyslexia” — meaning learning disability which causes difficulty with reading and writing.

Now, I still see mike as professional journalist. In case, your infamous word — “im Still rolling!!!” Can I have your job as CEO?

Be more professional next time because my rebellious hippie professors will most likely laugh at your writing skills.
grant

April 13th, 2007 at 11:28 pm

Wait, among all these self-claimed “Shannon Terry”, who the hell is the real one?

Mike can you tell us by revealing the original email which is required? If not, there must be an opportunity for another web2.0 startup, haha.
Madalin Matica

April 13th, 2007 at 11:38 pm

Mike, I hope you got a good lawyer. Even if all the informations posted in your blog are 100% right and you can prove them it will be a nightmare.
Been there, done that. Painfull.
I saw you didn’t post any comments and this is good. “anything can and will be used…” this one I learned my the hard way.
Hopefully this will remains just a letter and will not become a trial. They made our point and they tried to fight back your article for the sake of PR. Yes, this letter will not restore theor credibility but.. they can argue and somehow they can recover their image losses.
Unfortuanatelly my lawyer are useless for you ( European civil code is not the same as in US) but I hope you got very good lawyers.
Good luck and don’t get scared. Sh*t happens all the time.
Special Touch

April 13th, 2007 at 11:40 pm

Michael,

I’ve been an avid reader of your site for sometime. I’ve almost always found the info you provide on your site to be accurate, relevant, and timely.

After reading more of the background on Terry and SGA, your previous article on Terry seems just as accurate and well-researched.

I hope the threatened (impending?) legal action doesn’t deter you from continuing to bring us the same breadth and quality of journalism you have written in the past.

Thank you!
jon ogden

April 14th, 2007 at 12:53 am

Amazing how easy it is to get a whore to write a letter. I’m wondering if it is possible to be a practicing lawyer and not be a scumbag
Tor

April 14th, 2007 at 1:30 am

I dont like any side of this issue.

Please remember that there is such a thing as redemption; you should not, the press should not, and normal people should not hold past sins against someone for all eternity.

I can certainly see why the guy feels a little railroaded by this story — even if there is such a thing as free speech. Which any serious journalist knows is _not_ the same as _duty to publish_
Paul

April 14th, 2007 at 1:31 am

I hate the American wimp suing culture.
sean percival

April 14th, 2007 at 1:47 am

Hey look the TC commenters got a nod in the C&D

Thanks for sharing the letter
DJ

April 14th, 2007 at 2:07 am

Sorry if someone has already mentioned this, but

To sue for defamation you first must have a good reputation.
StartUpCrunch

April 14th, 2007 at 2:22 am

.

I still stand by what I wrote a few weeks ago:

“One of the problems I have with reading TC is that its like sitting at a table listening to a bunch of greedy young upstart lawyers gossiping about how much money they will make in the coming year while in the next breath laughing about who was just made redundant, then reaffirming to themselves why they are so smart. But that’s lawyers for you!”

That said, this legal assault is clearly an abuse of the law.

When crooks abuse the law in this way they should be subject to counter proceedings for assault.

Further, I think the crooks that spam you with their bogus stock tips are the scum of the internet!

Shannon Terry posted ’so-called’ stock tips (LIES) in a ‘newsletter’ (SPAM) and then SCAMMED the READERS into buying stocks that he was indirectly offloading!

Is Shannon Terry a tosser?

YES…

.
StartUpCrunch

April 14th, 2007 at 2:27 am

.

I still stand by what I wrote a few weeks ago:

“One of the problems I have with reading TC is that its like sitting at a table listening to a bunch of greedy young upstart lawyers gossiping about how much money they will make in the coming year while in the next breath laughing about who was just made redundant, then reaffirming to themselves why they are so smart. But that’s lawyers for you!”

That said, this legal assault is clearly an abuse of the law.

When crooks abuse the law in this way they should be subject to counter proceedings for assault.

Further, I think the crooks that spam you with their bogus stock tips are the scum of the internet!

Shannon Terry posted ’so-called’ stock tips (LIES) in a ‘newsletter’ (SPAM) and then SCAMMED the READERS into buying stocks that he was indirectly offloading!

Crook and spammer plain and simple.

.
SEO Mash

April 14th, 2007 at 2:32 am

To think that Yahoo could have had Facebook for $800mil and instead they are about to spend $100mil on this steaming pile of cr@p.
Deniz

April 14th, 2007 at 3:12 am

Mike,
The essence of your post is the truth, and this is clearly an attempt of corporate intimidation of independent media.

Companies when they buy each other will not be steered away by unsubstantiated claims — thus if the claims where false, there would be no need for him to get scared and try suing you.

Thank you for making that great post, and I hope you brought this to Yahoo’s attention, and please don’t let intimidation like this prevent you from making original posts like these.

Also, please check out the Berkman Center at Harvard Law School, you might find their resources useful (especially their clinical practice).
Bob

April 14th, 2007 at 5:22 am

I like the update message - this basically says:
“we want your message Mr. Terry so it can sit here on TC forever and you can have everyone link to it and more people will come here to TC. We will gain important non-tech links and visitors.”

Great idea!
skydog

April 14th, 2007 at 5:43 am

For everyone complaining that the original story doesn’t somehow fit in with the mandate of the site, I quote from TC’s About page :

“TechCrunch, founded on June 11, 2005, is a weblog dedicated to obsessively profiling and reviewing new Internet products and companies. In addition to new companies, we will profile existing companies that are making an impact (commercial and/or cultural) on the new web space. ”

Clearly, the original story involved existing companies that make an impact commercially and culturally on the new web space individually, yet alone combined.

As for avoiding the story because of the “trouble” involved, just what kind of wimps are you and what kind website do you want to read?
D-E-F-A-M-A-T-I-O-N Fast Lane

April 14th, 2007 at 6:03 am

Yes I can spell it out just like I can walk it out. Nothing you can ever say about me is true. Even though you probably witnessed everything, and I know that you know that I know that you think I know that I know what I did was wrong, but apparently it isn’t wrong. Or it never happened at all — Touche (I really can spell, it’s french). So I can live with that. I just hate it when people make all these things up about me that aren’t true. But wait, maybe they are true because why would someone “know about something” if it didn’t happen? Look, I don’t know where you get your information from, but it never happened. Period. I don’t care if you have people that can “back you up.” I have my rights, and if you can’t prove it, than it never happened.
kingharvest

April 14th, 2007 at 6:08 am

What I love about such legal actions, I did not read the original post, don’t give a hoot about Shannon Terry, now I know all about him!
Don Imus

April 14th, 2007 at 6:09 am

Sorry Mike, I think I know how you feel, dam knappy heads!
Pierre

April 14th, 2007 at 6:55 am

Don’t stop writting Michael. Stay a free man.

Being in Europe, I’m not afraid of defamatory lawsuits. I mean it: Shannon Terry and his lawyers are downright **** and they **** as well.
Rob

April 14th, 2007 at 7:18 am

I’m pretty sure bloggers aren’t really able to be convicted of libel simply because blogging is not a “trusted” form of the news. Anyways, Terry is somewhat of a public figure, which means it’s harder to be convicted of libel. You must have said something untrue (check), you must have actually damaged the party’s reputation (doubtful) and there must be proof of malicious intent (doubtful as well).

I wouldn’t be too worried. But for gods sakes retract the article
Brian

April 14th, 2007 at 7:24 am

Keep it up Michael - people are so happy to contact attorneys for everything these days…
Thierry

April 14th, 2007 at 7:53 am

This just shows once again how broken the American law system is.
I live in Europe and it has its problems, but corruption and legal abuse seem to be a big problem in America.
Still Im thinking about moving there, but seriously, American law is a joke. More like a legal way of extortion.
CB

April 14th, 2007 at 8:09 am

“I’m pretty sure bloggers aren’t really able to be convicted of libel simply because blogging is not a “trusted” form of the news.”

But can’t tabloid mags be convicted of libel?

“This guy is (or was) a major crook. He should be hiding in shame, not quibbling over details.”

I agree #37!
Anand

April 14th, 2007 at 8:13 am

No publicity is bad publicity!
Manoj

April 14th, 2007 at 8:53 am

A lawyer hiring another lawyer?
Garrett

April 14th, 2007 at 9:01 am

What are the “damages?” Are they suing you for the inflated lawyer fees to write the letter? That’s so self-serving. Aren’t lawyers great? He should have just given you a call; I’m sure you could have come to some understanding.
Simon

April 14th, 2007 at 9:43 am

Mike,

Just becuase you think startups are mostly unoriginal and uninteresting now shouldn’t mean you stop writing about them as much - please try and stick to format. Techcrunch got it’s power from providing interesting indepth news and reviews about companies that is hard to get from other websites. Please don’t turn Techcrunch into a series of Google (PR dept) stories (ala Om Malik) or a bland rumour mill.

OTH - Shannaon Terry may well have screwed up in the past and I bet you’re right on most points. Sometimes injournalism it’s better to write about the smoke you see than the fire you can’t. Anyway, hold on to your guns until he writes a detailed account addressing your allegations.
Mort

April 14th, 2007 at 10:06 am

I agree with #117.

Just retract and move on. You’ve made a point, you’ve made a splash. You won’t “lose face” by retracting because most rational business types will look at a retraction as good business. A lawsuit is a major distraction - you don’t want to be distracted.

You’ve got too much to accomplish. Next!
Amit Chowdhry

April 14th, 2007 at 10:17 am

Perhaps a lawsuit is an overreaction. I found this interesting article on BusinessWeek recently:

http://www.businessweek.com/ma.....han=search

How to cope when bloggers attack:
1.) Engage critics — create a blog of your own and respond
2.) Be Vigilant — Know what influencers are saying about you at all times. Hire a team for that
3.) Jump in and Open Up — Address anything that could turn into a bonfire immediately. Be transparent.
4.) Don’t Overreact — Let tiny spasms of venom go.
5.) Stay Professional — Respond to personal attacks for strategic reasons, not for psychological ones.
Drude

April 14th, 2007 at 10:38 am

I love it when these letters end with:

“Please govern yourself accordingly.”

It’s like my Mum telling me to go to my room when I was 7.

….. looks to me as if you’ll either be eating humble pie by the 18th or you’ll be in Court in a couple months.
Dawn

April 14th, 2007 at 10:50 am

Funny that almost everybody here isn’t giving their full name!! Don’t want to be the next targets, I suppose.

Looks to me like you probably crossed the line, Michael. You should just take back the things you don’t know to be fact, apologize and be done with it.
Mark S

April 14th, 2007 at 11:24 am

No worries Mike…it’s all good. i’ve been sued about 14 times in my business career and it never amounts to anything too bad. You’ll live and we’ll still read TC.
nomadicalloy

April 14th, 2007 at 11:29 am

this is silly, you can find all these information about shannon from google. so why should techcrunch be blamed for this?
Sam

April 14th, 2007 at 11:37 am

I know that the majority of these comments are about the story posted about Shannon Terry’s shady past, but what about the pending deal with Yahoo? 100 million for this dog? 5x revenues for this POS?

Another genius move by the folks that passed on Google and bought Inktomi. Oh yeah, Broadcast.com, too. Brilliant.

What can we learn here? ==== Short Yahoo!
sc

April 14th, 2007 at 1:13 pm

Mike,
Thank you for bringing out the truth. There are many such shady businessmen in the entrepreneurial world, and I appreciate and support any effort to expose them before they repeat what they’re really good at.
Mort

April 14th, 2007 at 1:20 pm

Right. now I agree with #110 not #117.
Tim

April 14th, 2007 at 1:44 pm

Here are some relevant links and quotes:

http://sec.edgar-online.com/19.....tion9.asp#

“SOE issued the unregistered stock to recipients controlled by Huttoe, and
to accounts controlled by Theodore R. Melcher, Jr., and Shannon Terry, SGA
Goldstar’s principals.”

http://www.secinfo.com/dsvrp.9676.c.htm

“SHANNON B. TERRY is SGA’s only other employee. Terry, personally and through his nominee Dunbar Holdings Ltd., received unregistered SOE stock as undisclosed compensation for promoting SOE’s stock in the Whisper stock report.”

http://www.sec.gov/litigation/.....r15906.txt

“The Securities and Exchange Commission (”Commission”) announced that on September 14, 1998, the United States District Court for the District of Columbia granted the Commission’s motion for summary judgment against Shannon B. Terry (”Terry”) and Dunbar Holdings, Ltd., (”Dunbar”), two defendants in the case arising out of the manipulation of the market for the securities of Systems of Excellence, Inc. (”SOE”). The Court found that Terry and Dunbar, Terry’s wholly owned Bahamian shell company, violated the antitouting and antifraud provisions of the securities laws by touting and scalping the securities of SOE and seventeen other microcap issuers. The Court ordered Terry and Dunbar to disgorge trading profits of $828,448 and certain other compensation, together with prejudgment interest on that amount, and permanently enjoined them future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.”
kylareign

April 14th, 2007 at 2:05 pm

Good Luck Mike!

All I know, because of the threat, your website will be more famous than ever. It’s about controversy
Sherwin

April 14th, 2007 at 2:23 pm

Didn’t Arrington go to law school? I thought maybe you’d know what you’re doing. Welcome to real business… once you go big, you get the lawsuits too.
James

April 14th, 2007 at 3:50 pm

Hey, at least if TC does get sued, they won’t be alone. I expect mister lawyer dood to drop a C and D letter on Techdirt for this article within 48 hours.
Don Clark - AtlantaGA

April 14th, 2007 at 5:57 pm

No doubt ab