Snopes, the fact-checking website that once focused on debunking flimsy internet rumors but has expanded into a 16-person operation that calls out political leaders for dishonesty, is locked in a legal battle that it says has drained the money it needs to survive.
The site, which gets all of its revenue from advertising, created a crowdfunding page on Monday, seeking $500,000 from readers to remain operational indefinitely. It says that Proper Media, the vendor that runs its advertising services, has withheld the site’s revenue and has refused to relinquish control of the site. That leaves Bardav — the company that owns and operates Snopes — with no way of moving the site to a new host or installing its own ads, said David Mikkelson, a founder of the site.
“We have had no income whatsoever for the last several months,” Mr. Mikkelson said in an interview on Monday.
When asked how long the site could last without a successful fund-raising drive or legal victory, Mr. Mikkelson responded: “Not a whole lot longer.”
Proper Media and its lawyers tell a starkly different story. They say that Snopes employees will continue to be paid from the advertising revenue, and that Mr. Mikkelson should be removed from the company because of wasteful spending.
The two sides, which have sued each other in separate claims, present entirely conflicting descriptions of who owns the company and what is being withheld from whom. The earliest chance for resolution appears to be a court hearing scheduled for next week.
Whether the squabbling will affect Snopes’s ability to produce its popular mythbusting remains to be seen, but the disputes are unlikely to be settled until there is legal clarity on the underlying structure of the company.
Proper Media considers itself an owner of Bardav, not a vendor. As Proper Media tells it, Barbara Mikkelson, Mr. Mikkelson’s ex-wife, sold her 50 percent share to Proper Media in 2016, but for tax purposes it was bought in the name of its individual members “for the benefit of Proper Media.” Two Proper Media officers, Drew Schoentrup and Christopher Richmond, would get 20 percent stakes in Bardav, while three others would own 3.33 percent stakes.
Proper Media said the deal included Mr. Schoentrup taking a seat on a two-person board alongside Mr. Mikkelson.
But Mr. Mikkelson, who owns the other 50 percent of the Bardav shares, said that Mr. Schoentrup does not sit on the board, and that the five shareholders should be viewed individually, as opposed to collectively, giving Proper Media equal ownership.
Mr. Schoentrup’s on or off status on the board is crucial in Mr. Mikkelson’s decision to cancel Bardav’s contract with Proper Media, which handles many of the technological and advertising services for Snopes. In March, Bardav gave Proper Media a 60-day notice that it would be terminating the contract, effective May 8. Mr. Mikkelson said the contract was agreed to when Snopes was a much smaller company, but now it had its own business-focused employees and other services “can be obtained much more cheaply from other vendors.”
Karl Kronenberger, a lawyer for Proper Media, said in an interview on Monday that Mr. Mikkelson cannot cancel the contract without calling a board meeting — which, in Proper Media’s view, would include Mr. Schoentrup. The company has continued as if the contract remained valid.
Last week, the sides agreed in court that Proper Media, which cannot directly pay Snopes employees, would release $100,000 of the advertising revenues to Bardav, on the condition that the money be used for expenses and not be paid to Mr. Mikkelson, according to Mr. Kronenberger. Proper Media sued Mr. Mikkelson in May, accusing him of mismanaging the company’s funds and abusing his position.
Mr. Kronenberger said Mr. Mikkelson has locked Proper Media out of Bardav’s bank accounts and “key databases it needs to do its job,” and he disputed that Proper Media had locked Bardav out from making technological changes.
“Mr. Mikkelson has absolute control of this domain name,’’ Mr. Kronenberger said. “He can move it within minutes.”
As for the advertising revenue, “Our position is nothing is being wrongfully withheld,” he said.
But on the crowdfunding page, Mr. Mikkelson wrote that “although we maintain editorial control (for now), the vendor will not relinquish the site’s hosting to our control, so we cannot modify the site, develop it, or — most crucially — place advertising on it.”
Both sides hope a court hearing scheduled for Aug. 4 will begin to bring some clarity. Proper Media hopes the judge will remove Mr. Mikkelson from the company, while Bardav is hoping the judge requires Proper Media to hand over the rest of the advertising revenue, including some money from before the contract termination took effect.
For more than 20 years, Snopes has been a destination for batting down the urban legends and viral misinformation all too commonly found on the internet, first in email forwards and later in popular but misleading articles. At first run entirely by David and Barbara Mikkelson, it developed a reputation as an authority on declaring simply whether such tidbits could be believed.
In recent years, the site added staff as it took increasing aim at the routine falsities of the political process. In December, Facebook made Snopes a key part of its efforts to combat fake news, including it in a group of fact-checkers that would be alerted if enough users flagged an article as fake.
On Monday, Snopes used its website and social media accounts to promote its crowdfunding effort, and had succeeded in raising more than $328,000 as of 9:15 p.m.
“We’re just trying to pick a number that we’re sure we can continue operations for, let’s say, through possibly the end of the year, or at least the next several months while all this is happening,” Mr. Mikkelson said.
