Inside Karen Velie’s Frivolous Lawsuit Scam

Six years ago, my former employer told me that CalCoastNews co-founder Karen Velie personally told her that she “made income” filing lawsuits.

These comments were made during a time when Velie attempted to blackmail my employer. The implication was fairly clear: if I wasn’t fired for my job, Velie was going to harass my employer and her family through a lawsuit, specifically a “class-action defamation lawsuit.” Since then, Velie has pulled similar stunts against her perceived adversaries. In the case of Arroyo Grande businessman Charles Tenborg, Velie has threatened litigation if she didn’t pay him the amount of damages that she owed him.

Since she lost the libel lawsuit filed against her and CalCoastNews in 2017, Velie has personally filed, re-filed and appealed a number of lawsuits that she has not routinely failed to disclose to readers. These are lawsuits that are either retaliatory in nature, based largely on insufficient evidence and conjecture or have no probability of prevailing.

VELIE v. HILL

In 2017, Velie filed a federal lawsuit against then-Supervisor Adam Hill and SLO County. The lawsuit was based on her conspiracy theory that Hill personally retaliated against her and threatened to destroy her website, causing emotional distress and loss of advertising revenue. She alleged that Hill and several of his alleged proxies or “agents” were ordered to smear her personal and professional reputation. Velie also alleged that her civil rights were essentially violated because she was denied interview requests with government officials and access to government documentation. Her exhibits included a cornucopia of random and oftentimes anonymous commentary that she claimed, in various declarations, that Hill was somehow involved in. Velie alleged the County was responsible for Hill’s proven and unproven conduct since Hill was supervisor during the time he was “conspiring” with his “co-conspirators.”

Here are some of the conspiracies that Velie alleges that Hill was either involved in or orchestrated. The following was deemed either unsubstantiated or inadmissible hearsay by the court:

  • Having a business associate hire a hitman. Velie referred to an email reportedly sent by controversial SLO County developer Ryan Wright, who Velie claimed without evidence was Hill’s business partner.
  • Having an “agent” threaten her on the social bookmarking site Reddit. In 2014, San Luis Obispo resident Kenny McCarthy wrote about Velie, “I hope I never meet her in public because it probably won’t end
    well for her.” Velie alleged without evidence that McCarthy made this comment at Hill’s behest. Under an anonymous account likely run by Velie herself, Velie falsely accused McCarthy of working with me.
  • Having me “threaten” to throw bleach in her daughter’s eyes. In 2016, I responded to a comment made by a user referencing one of Velie’s daughters. In reference to the mental image he conjured in my mind, I replied, “Not enough bleach for the eyes.” The court correctly ruled that I never threatened Velie nor was directed by Hill to make that comment. Despite the court ruling, Velie personally harassed me with a fake account with that false claim in tow and falsely claimed I was “served with a restraining order” on that basis on Wikipedia. This is part of Velie’s false claim that I’m a “paid critic” or paid by Hill and various co-conspirators to hurt her reputation.
  • “Stealing” Karen Velie’s grandchildren. In 2013, CalCoastNews reported that Velie’s grandchildren were taken into Child Welfare Services custody as an attempt to silence her, quash official investigations and reporting. The court found that she provided no evidence to substantiate these claims.
  • Having people leave dead animals on her doorstep. Velie has claimed on a few occasions that as a result of Hill’s alleged coaxing, people have poisoned her dog and left mutilated cats on her porch. Velie recently revised her conspiracy claim to include “dead animals.” In 2014, Velie told my former employer that I was associated with such activity. CalCoastNews co-founder Daniel Blackburn would later tout that conspiracy theory in his 2016 op-ed.

In 2018, Velie’s federal case was dismissed with prejudice but not before being appealed to the 9th Circuit Court of Appeals. Across the board, federal judges ruled that she had no cause for action and that Hill’s constitutionally protected views alone barred her from making a valid retaliation or civil rights complaint. However, the federal court did recommend that she file in SLO County Superior Court as that was a more appropriate venue for her legal action.

Velie would re-file her lawsuit in 2018, doubling down on the conspiracy theory allegations she was unable to substantiate with her federal case and amending her complaint with more exhibits and declarations. Her revised lawsuit focused more on the intentional interference of contractual relationships and intentional infliction of emotional distress. According to her declarations and exhibits, Velie pointed to comments made by me and others who have commented on my social media and falsely claimed those comments were made at Hill’s direction. Hill admitted to being critical of Velie’s reporting publicly and privately, but his remarks were constitutionally protected free speech. In her 2019 ruling, Judge Ginger Garrett was more thorough in her review of Velie’s assertions and exhibits, going over each specific conspiracy theory claim. Judge Garrett found no evidence that Hill was involved in the various acts she claimed she committed to hurt her business and cause emotional distress.

In 2019, Velie filed an appeal with the California 2nd District Court of Appeal. There’s currently no public record available indicating what the appeal is based on. But according to two sources familiar with appeal proceedings, Velie is reportedly reintroducing her conspiracy theory claims. Since Hill passed away in August 2020, the case has shifted focus onto the county as the sole defendant. And according to one county official familiar with litigation involving Velie, despite being unable to comment on any specifics about the case, they did say their taxpayer-funded expenses to fund three years worth of legal defense against Velie is around $250,000. That’s a lot of money to spend against a litigious, self-proclaimed “investigative reporter” that decries taxpayer waste.

VELIE v. TENBORG

Remember in 2019 when CalCoastNews announced that a documentary about their case with Arroyo Grande businessman Charles Tenborg would be coming soon? Though they promised to release it in early 2020, “Lying in Trash” wasn’t released. Neither CalCoastNews nor the oddly anonymous documentary filmmakers have posted any updates.

According to clips and the trailer for “Lying in Trash,” CalCoastNews was promoting the conspiracy theory that the successful libel lawsuit filed against them by Tenborg was part of a conspiracy to “bury” them.

“LYING IN TRASH probes the origin of the lawsuit — the reckless efforts of a local politician named Adam Hill, and a handful of his governmental co-conspirators who plotted destruction of the two journalists and the news site,” the documentary website claims. The claims they’ve cited thus far were addressed and adjudicated in Velie v. Hill as inadmissable hearsay or unsubstantiated: a fact that’s omitted from the publicly available documentary information.

The “Lying in Trash” filmmakers also wrote, “A subsequent libel lawsuit initiated by that contractor, Charles K. Tenborg, (and backed by Worrell and certain IWMA board members) led to an eye-popping $1.1 million judgment against two journalists in March 2017. It was only later that the truth would be unearthed — layer upon layer of carefully coordinated lies had resulted in a patently fraudulent judgment.”

In 2018, while she was appealing the $1.1 million judgment against her and CalCoastNews, Velie filed a lawsuit against Tenborg alleging that he committed fraud on the court by allegedly “inject[ing] false information, misrepresentations and perjurious testimony into the judicial process of the trial.” Velie further alleged that Tenborg “engaged in a systematic and pervasive scheme through the fabrication of evidence and testimony and the skillful suppression of evidence, despite [his] knowledge of material evidence totally contradictory to the evidence and testimony proferred in court.”

Velie points to findings and conclusions made by Carl Knudson, who alleged in a report that Tenborg committed perjury during the 2017 libel trial and was more likely than not involved in the destruction of public records. She used the report to indicate that she was prevented from mounting a proper defense during the libel lawsuit trial, though the “fraud” she claims Tenborg perpetuated was immaterial to the article she was being sued for. For example, Velie claimed Tenborg was fired in the mid-90s from his job at SLO County (evidence and testimony showed he wasn’t). She claimed Tenborg did not have the proper licensing to handle hazardous waste (he did). She alleged Tenborg conspired with local authorities to “skirt” the law (Velie offered no evidence).

The court recognized that her legal action was an unauthorized motion to vacate the 2017 judgment against her. Judge Garrett, who previously ruled in Velie v. Hill, ruled that Velie did not have sufficient evidence to prove that Tenborg committed fraud on the court. The ruling also stated that she didn’t have the probability to prevail on a claim that the court clearly recognized was an attempt to overturn the judgment against her. Velie would later appeal the ruling this year.

VELIE v. EVERYONE ELSE

In 2018, Velie filed a lawsuit against the attorneys representing her during the Tenborg trial. Local attorney David Vogel and San Jose-based attorney Berndt Ingo Brauer were sued by Velie for legal malpractice and negligence. She claimed both attorneys failed to properly represent her and present her case. Both attorneys have denied any wrongdoing and countered her arguments, claiming that her own false testimony and conduct torpedoed her case. According to two sources familiar with this particular case, the lawsuit remains active.

Therein lies the issue with Velie’s lawsuits. The underlying theme with these cases is Velie blaming everyone else but herself for the situation she’s in. All these lawsuits stem from her inability to correct and clarify details in her “reporting.” The thing about reporting the truth is that people may not like the facts being reported and uncovered, but it’s an absolute defense. And when mistakes are made or published claims are countered with verifiable records or documentation, there’s nothing to prevent you from correcting and revising the story to more accurately report the truth as is.

I’d argue that Velie — who claims a bunch of people have conspired to shut her down through harassment and intimidation — is engaging in the kind of conduct she now claims to resent.

Velie is clearly engaging in malicious prosecution. She’s forcing defendants to spend time, money and resources to defend themselves against conspiracy theory claims that she cannot prove. And she knows she cannot prove them.

And in all her cases, her attorneys have reportedly mentioned that she’s “homeless” and impoverished. That is the alleged reason for her not showing up to court for case management conferences of her own lawsuits. Assuming that reason is actually true, how is Karen Velie able to financially support three simultaneous lawsuits with their respective appeals for three years and counting? She may allege that government and various “co-conspirators” are backing efforts to shut down her business. But if she is as impoverished as her attorneys claim she is, wouldn’t that indicate someone or some people are underwriting her legal entanglements?. For someone who defends transparency and unfettered access from people she’s reported on and targeted, Velie has clearly shown no intent to practice what she preaches by disclosing her financial backers.

Karen Velie’s lawsuits are nothing more than illegitimate, exploitative and malicious abuses of the judicial process for financial gain.

On a personal note: It was recently brought to my attention by sources familiar with all her lawsuit proceedings that Velie continues to use my name, my likeness, social media posts, comments and even my book in her frivolous legal endeavors. She continues to believe that everything I say, write or do that’s not favorable to her is done at the behest of other people as part of a vast conspiracy to “shut down” CalCoastNews.

Though I’ve become accustomed to her constant lying about me, I continue to receive harassment and threats from people she’s communicated these conspiracy theories to. Last month, I’ve contacted law enforcement and security over a threat personally communicated to me and my family by someone clearly inspired by Velie’s defamatory statements and efforts to have her proxies confront my family at my home. This is unacceptable.

It doesn’t matter how many times I’ve vehemently denied her allegations to her personally, in my columns or in my book. Frankly, I’ve stopped trying. We are dealing with a malignant narcissist and pathological liar with obscene delusions that forever disqualify her from the journalism profession. Nothing I say or do — not even a cease and desist letter, lawsuit or restraining order — will quell her mental instability or her followers’ individual pursuits.

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