Jury verdict finding Milwaukee alderman guilty of defamation could cost public $1.4M

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A jury last week found a Milwaukee alderman was liable for statements alleged to have caused an affordable-housing operator to default on a loan in a decision that could cost taxpayers $1.4 million.

A Milwaukee County jury delivered a 10-2 verdict on Thursday finding Milwaukee Ald. Bob Bauman responsible for Tri-Corp. Housing Inc.’s eventual default on a loan following his making a series of statements about the nonprofit group and lobbying officials to take regulatory action against it. The jury found the nonprofit group should be compensated $1.4 million after Bauman’s comments caused Tri-Corp. to default on a loan from the Wisconsin Housing and Economic Development Authority for West Samaria, a 92-unit dormitory-style facility serving residents with mental illness.

City taxpayers, however, could ultimately be responsible for paying up after the Milwaukee Common Council in 2020 passed legislation committing the city to cover expenses in the case.

The jury’s verdict last week followed 15 years of litigation that began when WHEDA filed a foreclosure suit against Tri-Corp. Bauman was ultimately left as the lone defendant in a counter-claim from Tri-Corp.

John Machluk, an attorney for the nonprofit group, said that Bauman, months after he was elected to the Common Council in 2004, initiated a “smear campaign” against West Samaria, which stood blocks from Bauman’s home in the city’s Historic Concordia neighborhood. The jury ultimately agreed with Tri-Corp.’s arguments that three statements Bauman had made amounted to defamation against the nonprofit group, eventually costing it county housing referrals and pushing it into foreclosure.

“It really took down the best low-income housing producer in the city,” Machluk said.

Though the city is not a party to the case, it could ultimately pay any settlement under legislation the city approved in 2020 requiring Milwaukee to cover “all losses or damages” against Bauman if a jury should rule against him.

As part of its decision, the jury considered whether three statements Bauman had made about Tri-Corp. amounted to defamation against the nonprofit.

After a West Samaria resident in 2007 was found dead in his room, Bauman emailed the city’s Department of Neighborhood Services and contended the death suggested West Samaria wasn’t complying with an operations plan approved by the city’s Board of Zoning Appeals. The jury found Bauman’s assertion untrue but contended he had not acted with reckless disregard for whether it was true.

In considering two other statements, however, the jury found Bauman had abused his First Amendment privilege, shown reckless disregard for the truth and not acted within the scope of his employment.

In a press release, Bauman said West Samaria “has repeatedly demonstrated that they are unwilling or unable to provide quality care to the mentally disabled residents who live there.” Bauman also accused West Samaria of having “bad design, bad location and bad operator,” while meeting with city, county and state officials to discuss what to do with the housing facility.

Bauman in an interview Monday said he was exercising his First Amendment rights in speaking out about West Samaria. He said the jury’s decision could prevent other public officials from speaking out on policy issues.

“They will clam up. They will let stuff go. They will not ask for accountability,” Bauman said.

Bauman said he disagreed with the jury’s decision and said he was “pretty confident” that the jury didn’t understand or didn’t follow its instructions in the case.

He said his attorney would ask Milwaukee County Circuit Judge Pedro Colon to dismiss the jury’s decision on First Amendment grounds. If Colon issues a judgement upholding the decision, an appeal is likely, Bauman said.

Bauman, who is an attorney himself, is represented by Matthew McClean of Davis Kuelthau. The city has authorized up to $240,000 in legal expenses.

Machluk said Bauman’s statements were just part of a series of actions the alderman took to undermine West Samaria.

Machluk praised the jury’s decision and said the $1.4 million verdict was a “conservative” sum that didn’t take into account the totality of damage Bauman’s statements had caused Tri-Corp. By 2004, the nonprofit group had gone from having a budget of just $13,0000 in the early 80s to being an organization with 65 employees and a $6.5 million budget. But the foreclosure case against West Samaria ultimately led to a “slow death” that forced Tri-Corp. out of business.

“If you have two politicians slugging it out, that’s no-holds-barred, Machluk said “Bauman was picking on a nonprofit that never threw itself into the ring. He was absolutely lying to get his way and shut them down.”