Claiming 'embarrassment,' developer files defamation suit against local news site

Lawsuit: East Lansing Info published ‘false and defamatory’ statements

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FRIDAY, June 11 — An East Lansing real estate developer has filed suit against the local news site East Lansing Info and its publisher, Alice Dreger, alleging that a series of “false and defamatory” statements have humiliated him and his company and jeopardized his business relationships.

But Dreger is also pushing back, maintaining that she was just doing her job as a journalist.

“Just to be clear, anyone can file a lawsuit, whether or not it has legal merit,” Dreger said in a recent ELi report. “But this kind of suit can be a serious drain on resources for a small local news organization like ELi, which is a nonprofit and runs on a $175,000-per-year budget.”

The case stems from ELi’s reporting of a federal indictment against developer Scott Chappelle, the owner of Chappelle Development Co. and Strathmore Real Estate Group. Last June, Chappelle was charged with tax evasion, filing false documents with and making false statements to the IRS and mortgage fraud, ELi reported. The article, penned by Dreger, also reported Chappelle as the cause of prolonged statewide blight through development projects “mired in failures and questionable practices,” claims that Chappelle has argued to be false.

In response to the April complaint, which was filed in Washtenaw County, Dreger’s attorney filed a motion late last month to have the case dismissed, labeling Chappelle as a “another disgruntled criminal defendant using state defamation and tort law as a weapon to retaliate against journalists doing their duty to keep the public informed on matters of public concern.”

Chappelle is also suing Dreger over an essay that was published on Public Response. The litigation also names Traverse City resident Eliot Singer as a defendant, claiming that he also allegedly made false statements in the online comment section in response to Dreger’s piece.

Among Chappelle’s claims: Dreger and Singer’s comments lack “factual accuracy,” according to the 28-page complaint. The reports have also exposed Chappelle and his company to “scorn, hatred, embarrassment, ridicule, shame and contempt” within the community, the suit states.

As a result, Chappelle now claims to have suffered reputational harm, mental anguish, embarrassment, humiliation, distress, other emotional harm — and more than $25,000 in financial damages. The lawsuit also describes potential trouble with banking and lending relationships, including concerns expressed by Premier Bank after the reports were published.

According to reports in ELi, Chappelle is a long-time real estate developer whose companies have included Strathmore Development Company and Terra Holding, among others. He was also reportedly involved with the failed “City Center II” project in downtown East Lansing.

Those Grand River Avenue properties once owned by Chappelle were reportedly foreclosed in 2015 and have transitioned to the current site of The Abbot and The Graduate Hotel near MSU.

After Chappelle’s indictment, his attorneys reportedly demanded ELi retract its coverage just as the federal criminal case appeared headed to trial. The lawsuit alleges four specific claims, including defamation, invasion of privacy, injurious falsehood and interference with business relationships. Dreger’s attorney, Brian Wossom, however, said those claims are not actionable.

“Rather, the reports are accurate accounts of public records, substantially true, non-actionable opinion and/or otherwise protected by the First Amendment. Further, Chappelle’s ‘tag-along’ claims are barred by the same privileges and constitutional protections,” Wossom told ELi. “It also strains credulity to the point of absurdity to assert that it is the defendant's news reporting, and not Chappelle’s federal indictment for mortgage fraud, that has caused his lender concern.”

Chappelle’s fraud trial has reportedly been pushed back to late July. The civil suit is ongoing. Dreger and Chappelle couldn’t immediately be reached for additional comment on the litigation.

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