Dallas investment firm sues WSJ reporter with lawyers from Dominion-Fox News case

Beneficient, a Dallas financial services company, has hired the same law firm that represented Dominion Voting Systems in the high-profile lawsuit against Fox News to file a defamation lawsuit against a Wall Street Journal reporter.

Lawyers from Clare Locke on Friday filed a defamation lawsuit in U.S. District Court in East Texas on behalf of Beneficient and its founder and CEO Brad Heppner asking for undisclosed compensatory and punitive damages over a Tweet and series of articles published over the past year in the newspaper by staff writer Alexander Gladstone.

The Wall Street Journal published a story on Friday that quoted private documents it viewed that showed Beneficient was using a faulty accounting method that would misstate revenue and showed payments went to Heppner’s nearly 1,500-acre ranch in East Texas. The Journal said that in 2019, chief financial officer Tiffany Kice, made the discoveries and left the company. Three board members and other c-suite executives left the company within months.

GWG Holdings, a company that invested in Beneficient, defaulted on $2 billion in debt last year and filed bankruptcy, leaving individual investors with as much as $1.3 billion in potential losses, the article reported.

The Wall Street Journal is owned by Rupert Murdoch’s News Corp. and Murdoch is chairman of Fox News Corp. which settled a two-year lawsuit in April by paying Dominion $787 million, believed to be a record settlement in a media case, to end the legal battle over the network spreading lies about the 2020 election.

Beneficient said in its complaint that “Gladstone has purposefully disregarded critical facts, distorted critical timelines and cherry-picked the information he has received to promote an overarching, pre-ordained conclusion: Brad Heppner, through his control of Beneficient and other companies, engineered self-serving transaction to enrich himself – and maintain a so-called ‘lavish lifestyle’ – at the expense of vulnerable and elderly ‘retail’ investors.”

The complaint went on to say that Heppner can prove the statement is false and that Gladstone published his stories with “malice.”

Gladstone hasn’t responded to a request for comment and The Wall Street Journal declined to comment. Beneficient declined to comment.

A Tweet from Gladstone a year ago called out Heppner’s ranch in Anderson County saying its debt was funded by transfers from Beneficient and its former parent company, GWG Holdings, which is in the process of a bankruptcy court-led reorganization.

Other prominent Twitter accounts piled on with likes and replies, according to Beneficient’s lawsuit.

“Gladstone’s Twitter audience — and others in the community — have taken Gladstone’s allegations at face value and now believe that Heppner and Beneficient acted improperly,” the lawsuit said.

Heppner purchased the Bradley Oaks Ranch in 2003, according to the lawsuit, which noted that was 16 years before GWG started investing what ended up being a total of $230 million in Beneficient.

Beneficient disclosed in its annual filing that on June 29 the Securities and Exchange Commission notified the company and Heppner that the agency’s staff had made a preliminary determination to recommend that the SEC file a civil enforcement action against the company, alleging SEC violations relating to Beneficient’s association with GWG.

Heppner said in the filing that he and the company intend “to vigorously defend himself and contests any allegations of wrongdoing.”

Beneficient had a partnership with GWG before separating into an independent company in November 2021, the lawsuit said. Heppner joined the GWG board in April 2019 as chairman, but the lawsuit says that he was not a member of the special committees that decided to invest in Beneficient.

GWG, which issued high-yield bonds that financed the purchase of life insurance policies on the secondary market, filed for bankruptcy in April 2022 after it missed interest payments to bondholders. GWG had previously disclosed that the Securities and Exchange Commission was investigating its accounting practices, according to regulatory filings.

Current and former Beneficient and GWG board members are high-profile individuals including two former Federal Reserve Bank district presidents. Former Dallas Cowboys quarterback Roger Staubach who built a large commercial real estate company is no longer a board member.

Former Dallas Fed Bank president Richard Fisher, former Atlanta Fed president Dennis Lockhart and leverage buyout financier Tom Hicks are current Beneficient directors.

Friday’s article in the Wall Street Journal said Fisher, Lockhart and others have been accused in court filings of “of facilitating a Ponzi scheme orchestrated by Heppner.”

Beneficient went public in June after it was acquired last year by Avalon Acquisition with the intention of taking it public through its SPAC, or special purpose acquisition company structure. Beneficient ended up raising about $8 million from the IPO, according to the WSJ.