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Developer Scott Chappelle is suing East Lansing Info for libel and defamation

Scott Chappelle lawsuit against ELi and Alice Dreger
Posted at 7:26 PM, Jul 01, 2021
and last updated 2021-07-02 09:58:12-04

EAST LANSING, Mich. — East Lansing real estate developer Scott Chappelle is suing the nonprofit news organization East Lansing Info and its director Alice Dreger for libel over articles about Chappelle's indictment for tax evasion and bank fraud.

Chappelle is a developer who worked for years to get a project called Center City II off the ground in East Lansing. The project ultimately failed and the Graduate Hotel and the Abbot now stand on the downtown corner where it was meant to go.

The Graduate Hotel
The Graduate Hotel now stands on the corner where one of Chappelle's developments once stood; the Center City II district.

In June of 2020, a federal grand jury indicted Chappelle for tax evasion and bank fraud and Dreger published an article on ELi and an essay on Public Information. Those articles are the basis of Chapelle's complaint.

In June of 2020, a federal grand jury indicted Chappelle for tax evasion and bank fraud and Dreger published an article on ELi and an essay on Public Information. Those articles are the basis of Chapelle's complaint.

“The clear gist or saying of each publication was that plaintiffs were responsible and had caused years of blight in Michigan, East Lansing and Ann Arbor, cost the taxpayers millions of dollars due to fraudulent, criminal, corrupt, unethical and inept business practices,” said Chappelle's attorney Daniel Powell.

Powell said the article and essay "lightly gloss over the current indictment"

Powell said the article and essay "lightly gloss over the current indictment, and really just redirect the gist of the publication to seeking or claiming some sort of validation over their years-long effort to try and paint Mr. Chappelle in his companies in that way."

Brian Wassom, the attorney representing Dreger and East Lansing Info, said that's not the case.

Brian Wassom, the attorney representing Dreger and East Lansing Info, said that's not the case.

“East Lansing Info is doing its job as local reporters of keeping the local citizens informed on how this development project has been going and the various ins and outs and negotiations that went behind it,” Wassom said.

Wassom believes none of what was published by Dreger was false.

Wassom believes none of what was published by Dreger was false.

“No, it's it's nowhere near false. And if you if you read what it is that they've actually alleged to be actionable, it's not clear they even think it's false," Wassom said. "What's very evident, to me anyway, is that our reporters got under his skin, more so than all the other people criticizing him, I suppose.”

According to court documents, Chappelle failed to pay the IRS more than $830,000 in employment taxes that he'd withheld from employees. When the IRS tried to collect, he lied about his companies' financial situation, didn't disclose a vacation house on Lake Michigan that got passed between companies and bought property in names other than his own, the documents say.

Powell said the two publications drew misleading connections to things that had nothing to so with Chappelle's indictment.

Powell said the two publications drew misleading connections to things that had nothing to so with Chappelle's indictment.

“The current indictment has nothing to do with any development efforts by Mr. Chapelle, or his companies in Michigan, has nothing to do with any public-private financing deals, has nothing to do with the City Center II project or Park District project,” Powell said.

According to the court documents, statements in the ELi article that are listed as slander include:

  • "The blight downtown lasted for years before Chappelle's company finally lost the properties to foreclosure. Today, new buildings rise in this location and Chappelle has been indicted."
  • "Chappelle is known to many in East Lansing as the developer whose actions caused prolonged blight in East Lansing's downtown at the northeast corner of Abbot Rd. and Grand River Ave.

There was a third person involved in this case, Eliot Singer, who also posted on Public Response about Chappelle.

Charges against Singer were dismissed Thursday morning after he issued a retraction on his publication and a two-page apology to Chappelle saying in part, “If in my attempt to protect the interests of East Lansing taxpayers, I unintentionally caused harm to Mr. Chappelle, his family, his employees or others, and I apologize for doing so.”

Powell said they asked Dreger to retract her publications, but Wassom said that isn't necessary.

Powell said they asked Dreger to retract her publications, but Wassom said that isn't necessary.

“Journalism is for telling the truth and informing the people," Wassom said. "If the people who are the subject of that information don't like it, that's not a reason to take it back. It's not a reason to backpedal or soft-pedal the news.”

ELi sought to dismiss the case, which Washtenaw Judge Timothy Conners denied, but he did agree to move the case to Ingham County.

ELi sought to dismiss the case, which Washtenaw Judge Timothy Conners denied, but he did agree to move the case to Ingham County.

“The lawsuit is about Ingham County involving events in Ingham County," Wassom said. "That is the natural location for the lawsuit to be heard. The judge agreed with us so he didn't get to our arguments on dismissing the charges on their merits."

Chappelle is asking for damages in excess of $25,000.

Chappelle is asking for damages in excess of $25,000.

“He's seeking injunctive relief, you know, for any continued publication of defamatory statements against him by these defendants," Powell said. "He simply wants to be able to move on. He wants to be able to defend himself independently and the unrelated proceeding without any undue influence from people who claim to be journalists.”

There is no trial date set for this case, yet. Chappelle's tax evasion and bank fraud trial is set for September.

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Mikayla Temple

Mikayla Temple

1:39 PM, Jan 05, 2021

Your Neighborhood Reporter

Mikayla Temple