How Bloomberg Played Fast And Loose With A Wall Street Tale And Got Sued
On a cool Halloween evening in 2016, Bloomberg published its latest financial thriller, a story about a smooth talker that convinced bankers to invest $32 million and then vanished. Readers ate it up.
Less than three weeks later, Bloomberg would face a defamation and libel lawsuit that would come to haunt them for years.
For Bloomberg, it was a familiar formula, allege wrongdoing against a New York finance guy and sprinkle in some quotes about how he’s a crook. The man was Avery Stone, a former managing director of Global Merchant Funding Ltd. (GMF), the company that singlehandedly challenged regulators in Hong Kong over the legality of merchant cash advances there. After years of engaging in costly legal battles, the highest court in the land ruled in favor of GMF, paving the way for a burgeoning industry to set up shop and serve small businesses all across Hong Kong. But the fight had weakened GMF and it would no longer be in business by the time the ruling was issued. Soon after, something sinister would be suspected and the company’s shaky financial situation would cause Avery Stone to vanish.
Or so Bloomberg said.
Stone was actually situated in his own house, 45 minutes north of Midtown Manhattan in Rye, New York when the story was published, he claims. Bloomberg knew this, he says, because reporters from the publication showed up to his house twice before going live with it. Stone might be the only person in history to be considered vanished while at home in his living room, especially in a popular New York City suburb.
But Bloomberg had more damaging evidence, a quote from Stone’s father saying his son was a “low-life” and “a crook” who stole $400,000 in family savings, including a gun, a Lalique bowl, and a collection of watches upon his return from Hong Kong. That was ultimately put in to question when a federal agent, Griff Stone, Avery’s brother, testified under oath during a deposition in the defamation case that the man was 84-years old, not telling the truth, and suffering from dementia.
A police investigation into GMF brought on by a liquidator in Hong Kong, never resulted in any charges or an arrest. Nevertheless, Co-author Tracy Alloway is said to have shared a link online to her story with the following description, “how a predatory lending startup turned into a ponzi scheme & duped the who’s who of finance.”
Stone says he has received death threats as a result and that his life has been severely damaged. Bloomberg defended the reporting anyway and tried to dismiss the lawsuit, citing its 1st amendment rights.
The New York Supreme Court in Westchester County, however, said it could not dismiss the claims outright, prompting Bloomberg to appeal the decision.
Earlier this year in July, a four-judge panel found in favor of Stone, that he had adequately alleged the element of gross irresponsibility and that his lawsuit could continue to move forward.
That case is now proceeding through the court system and depositions are scheduled to be completed by December 7th.
Bloomberg’s reporting caused Stone additional problems when other news outlets picked up the story and ran their own versions of it. PYMNTS.com, for example, cited Bloomberg when they posted a similar story titled, “Fraudster Bilk Bankers Out of $32M.”
Stone has a separate lawsuit pending against PYMNTS.com in the New York Supreme Court for similar claims and another suit against the South China Morning Post in federal court.
In one of the suits, Stone’s attorney says that false statements have subjected Stone to humiliation, scorn and ridicule throughout the world and have falsely portrayed him as a crook, thief, and a fraudster who stole $32 million from investors before disappearing into thin air with millions of absconded monies, like an international fugitive from justice.
Bloomberg’s story is still up.Last modified: December 16, 2018