Sandy Hook Families’ Fight for Alex Jones’s Money Takes an Ugly Turn

A bankruptcy judge on Thursday put on hold an attempt by the parents of a Sandy Hook shooting victim to seize the business bank accounts of the Infowars broadcaster Alex Jones. The ruling by Judge Christopher Lopez was the latest turn in an increasingly acrimonious battle between two groups of Sandy Hook families in Connecticut and Texas fighting to be paid defamation damages from Mr. Jones.

“Let’s just do this with process and transparency,” Judge Lopez said in the hearing, held in Houston. “The last thing I want to do is start hashing out another dispute about two sets of families that have been through enough already.” He proposed to set another hearing in mid-July, when a court-appointed trustee newly in control of Mr. Jones’s personal and business accounts is expected to provide more information.

The families of eight victims who sued Mr. Jones in Connecticut had filed an emergency motion asking Judge Lopez to block a court’s ruling last week granting Neil Heslin and Scarlett Lewis, who sued Mr. Jones in Texas, the right to seize Mr. Jones’s business bank accounts, which contain roughly $2 million. Mr. Heslin and Ms. Lewis are the parents of Jesse Lewis, 6, who died at Sandy Hook.

Their court fight comes nearly a dozen years after 20 children and six educators died in the shooting at Sandy Hook Elementary School in Newtown, Conn., and Mr. Jones’s years of lies that it was a hoax and the families were complicit in the plot. The families suffered such online abuse and death threats that in 2018 relatives of 10 victims sued Mr. Jones for defamation and were awarded more than $1.4 billion in damages in trials in Texas and Connecticut.

Mr. Jones has nowhere near that money: He and his business have $9 million in assets. His company had declared bankruptcy after the judgments, as Mr. Jones had previously for his personal assets. On June 14, Judge Lopez ordered those personal assets to be liquidated and sold, with the proceeds distributed among the Sandy Hook families.

But the judge dismissed a separate bankruptcy for Mr. Jones’s business, Free Speech Systems, encouraging the families to pursue their rights to collect from Mr. Jones in state court, leading to Mr. Heslin’s and Ms. Lewis’s filing. The dismissal came after the Connecticut side rejected a multiyear potential settlement with Mr. Jones that would have paid out more money to the families, but which they said couldn’t be trusted.

The Texas families were happy with the judge’s dismissal, but the Connecticut families said it would create a free-for-all to file separate claims for money from Mr. Jones’s business, which is now the issue before Judge Lopez.

Lawyers for the families have been scrapping behind the scenes, accusing each other of trying to claim a disproportionate share of Mr. Jones’s meager assets. The conflict burst into the open during the June 14 hearing.

“Maybe one family will get all of it,” Kyle Kimpler, a lawyer for the Connecticut families, said in that hearing. “Maybe another family will get nothing.”

The trustee liquidating Mr. Jones’s personal assets, Christopher Murray, also objected to the Texas court’s seizure order.

“The specter of a pell-mell seizure of F.S.S.’s assets, including its cash, threatens to throw the business into chaos, potentially stopping it in its tracks,” he wrote in a court filing last week, using the abbreviation for Free Speech Systems. He asked Judge Lopez to pause legal actions targeting the business assets while he works on “an orderly wind-down” of Free Speech Systems’ operations.

Lawyers for the two sets of families issued dueling statements after Thursday’s hearing.

“The Connecticut families have always sought a fair and equitable distribution of Free Speech System’s assets for all of the families, and today’s decision sets us back on that path,” said Chris Mattei, a lawyer for the Connecticut families. “We are pleased that the bankruptcy court instructed the Chapter 7 trustee not to turn over F.S.S. property or bank accounts to any party at this time.”

Mark Bankston, a lawyer for the families who sued Mr. Jones in Texas, including Mr. Heslin and Ms. Lewis, said in his statement that “our clients are frustrated that they will not be allowed to pursue their state court rights after all.” He added, “Apparently this case will remain in limbo, all while one group of plaintiffs refuses to have all the plaintiffs treated equally.”

The Connecticut lawyers have said that the size of their clients’ jury award entitles them to a greater proportion of Alex Jones’s assets, writing in their emergency filing that they “hold more than 95 percent of liquidated claims.” But they are barred from seeking assets through state courts while Mr. Jones’s appeal of the $1.4 billion verdict proceeds.

The Texas side has said that any money recovered should be divided equally among the relatives. This week, Mr. Bankston said that the Connecticut lawyers had rebuffed the Texas lawyers’ offer — reiterated after the June 14 hearing dismissing the business bankruptcy — to share any money recovered through state courts equally among both sets of relatives.

“The attorneys for the Connecticut plaintiffs have consistently refused an equitable distribution,” he said. “They insist, despite the exceedingly small pool of recovery they caused to happen, that they are entitled to nearly all amounts collected from Jones.”

Mr. Mattei and his colleague on the case, Alinor Sterling, did not respond to questions sent to them and to Andrew Friedman, their public relations contractor.

Fueling the rancor is the lawyers’ discovery through bankruptcy filings that Mr. Jones’s empire — chiefly his online and radio show, and lucrative sales of diet supplements and survival gear — is worth far less than they believed when they won the damages.

Mr. Jones has only $9 million in personal and business assets combined. Divided equally among the families, that would net less than $500,000 each. That number could dwindle by up to one-quarter, because Mr. Jones’s substantial legal bills must be paid first. There is potentially more money if the families can claim ongoing revenue from Free Speech Systems.

Jack Begg contributed research.