Within two months of legally taking over a neo-Nazi group, an African-American activist has handed over its documents to prosecutors and launched a $500 million lawsuit against the Nazis who tried to take it back.

The National Socialist Movement is a Michigan-based neo-Nazi group. James Hart Stern is a black civil-rights activist from California. But when legal pressure against the group escalated in January, its longtime leader Jeff Schoep signed over all its leadership positions to Stern, in a bid to avoid a court case. Now Stern is taking a legal sledgehammer to the organization. And while neo-Nazi members say they’ve wrested control from him, Stern claims their efforts are opening them up to new civil cases.

Jeff Schoep was stressed. Schoep, a Michigan Nazi, had led the NSM since 1994. But now he was approaching the end of a deadline in a serious lawsuit, and the end of his rope with the group. Schoep expressed his frustrations in a January phone conversation with Stern, the activist told The Daily Beast.

The phone call between a neo-Nazi and a black activist wasn’t as unlikely as it seemed. Stern says he’s sometimes referred to as the “race whisperer.” While serving time for wire fraud from 2010 to 2011, Stern was housed in the same cell as a notorious former Ku Klux Klan leader who, by Stern’s telling, signed over the rights of his KKK branch. Stern used those rights to dissolve the branch in 2016. His connection with the former KKK head also led to a 2014 “race summit” with Schoep. The two men kept in limited contact over the years, with Stern convincing him to drop the swastikas from the NSM logo. They reconnected in December to discuss another summit.

But when Schoep called in January, “he was concerned and scared,” Stern said. “He told me he was having problems ... He told me for the first time about the lawsuit going on in Virginia.”

It’s an expensive time to be a fascist.

The NSM was among a group of white supremacists that marched en masse in Charlottesville, Virginia in 2017. But what racists planned as a coming-out moment turned deadly when a neo-Nazi drove a car into a crowd of anti-racist protesters, killing one. The ensuing years have become a legal nightmare for the riot’s main participants, with more than a half-dozen white supremacists convicted for attacks in Charlottesville, and dozens of racist individuals and organizations named as defendants in Sines v. Kessler, a sprawling lawsuit by powerhouse lawyer Roberta Kaplan.

Schoep is named in the lawsuit as an individual, and implicated again in his capacities with the NSM and fascist supergroup Nationalist Front, both of which are also defendants.

The looming lawsuit, as well as pressure from activists who counter-protest white supremacist rallies and drive them off crowdfunding sites, has upended multiple racist groups or sent their leaders scrambling for cash. Integrity First for America, a group backing the plaintiffs in Sines v. Kessler, says the legal pressure can act as check against future neo-Nazi rallies.

“ He said the lawsuit would destroy his livelihood, take his house and his financials. ”

“This suit is about bringing the two dozen defendants to justice and holding them accountable for their conspiracy to commit violence, period,” IFA executive director Amy Spitalnick told The Daily Beast. “But I would also say that it’s about creating a deterrent to future violence, making clear that conspiracies to plan and execute racially motivated violence has no place on American streets… This case also has the potential to dry up financial support for the white supremacist and neo-Nazi movements.”

When Schoep called Stern in January, “He said the lawsuit would destroy his livelihood, take his house and his financials,” Stern said. Stern said Schoep talked of a plan to avoid the lawsuit by legally dissolving the NSM.

“That scared me because if he dissolved it, someone else could pick it up and reincorporate it, and carry on the same shenanigans he’s been doing the past 25 years,” Stern said. “So I made a comment to him. I said: ‘You know what? You want to prove you don’t want to use this organization any more? Give it me. I’ll take it.’”

Schoep ended the call. “Just hung the phone up. I said okay, so much for that idea. The next day I get a phone call from him. He said, ‘Are you serious about taking over the organization? Letting me sign it over to you?’ I said yeah. He said, ‘You want to do it, go for it.’”

On January 14, Michigan records show, the NSM legally named Stern its president, treasurer, secretary, and the sole member of its board of directors. The 54-year-old activist had legally taken over the group.

Schoep disputes Stern’s version of events.

“This press release is to officially inform the NSM membership, supporters and both national and international media outlets that Mr. James Hart Stern is NOT affiliated with the National Socialist Movement in any capacity, nor does he represent the NSM or its interests,” Schoep announced in a press release last week. “After serving the Party for over two decades, the time has come for me to retire and appoint a successor. I have officially appointed former Chief of Staff, Burt Colucci, as Commander of the National Socialist Movement.

“ I’m trying to cut ties in such a way where I’m done, I’m done with this movement. ”

“Mr. James Stern of Moreno Valley, California, used what he called ‘deception’ and ‘manipulation’ to gain presidency of the NSM. Some of the media outlets have painted this individual as a civil rights crusader who took over the National Socialist Movement in an attempt to destroy the organization. The erroneous and reckless statements made by James Stern have purposefully and irreparable damaged both my personal reputation and that of the National Socialist Movement.”

But affidavits, court transcriptions, and recorded calls suggest Schoep was in on the plan.

After Schoep signed over the rights to the NSM, Stern asked him to sign an affidavit explaining the decision.

“I Jeff Schoep having a desire to be removed from a legal proceeding [ Sines v. Kessler ] I feel I have no fault in, have come to the following conclusion,” the affidavit, reviewed by The Daily Beast reads.

“[Due] to the opposite views of James Hart Stern on Nationalism I have turned both the Non-Profit 501(c)(3) tax exempt corporation, National socalist [sic] Movement and the domain website NSM88.org to him. In this way I am assuring everyone that this is not an un-sincere move to inactivate this group. James Hart Stern has assured me he will not carry on the organization as it was [due] to his polar opposite views. If I dissolve the corporation someone else could reincorporate it and carry on as normal, but by giving it to James Hart Stern this will not happen. I have sincere motives, and this was not just a stunt.”

Stern also shared phone calls with Schoep, which he says he recorded with Schoep’s knowledge.

“ If he gains control of the site, he said wants it to stream the Holocaust film 'Schindler’s List.' ”

“I’m trying to cut ties in such a way where I’m done, I’m done with this movement,” Schoep said in one call shortly after Stern’s takeover. Later in the call, they discussed the affidavit Schoep signed, and how Sines v. Kessler was forcing Schoep to take responsibility for the actions of members of his group at Charlottesville.

“I can’t, I can’t, I can’t anymore,” he said of the new burden. “It’s not good for me. It’s affecting my health.”

Schoep also participated in a March 1 hearing in Sines v. Kessler in which Stern described himself as the NSM’s new leader, court transcripts reveal. In the small hearing, for which only Stern, Schoep, a judge and lawyers were present, Schoep let Stern handle the NSM’s business as its president, interjecting only to ask technical questions about the legal proceedings.

“He had no objections to it because it’s true,” Stern said. “You don’t hear Jeff [Schoep] disagreeing with anything.”

A Schoep spokesperson, who declined to give her full name confirmed to The Daily Beast that “on March 1, 2019 James Stern was the president,” although she and Schoep contend that Stern is no longer the group’s legal leader.

Since taking over, Stern has agreed to surrender NSM documents for the discovery process (lawyers for the plaintiffs previously accused NSM of stalling the discovery process) and filed a motion for summary judgement “which was basically me asking the judge to rule in favor of the plaintiffs and against my organization, the National Socialist Movement which I now took over. Basically we were pleading guilty.”

But Stern’s quiet January takeover of the NSM went public when he started filing court motions on their behalf. Angry NSM members filed to change the group’s legal papers, and on March 6 they succeeded in replacing Stern with three white supremacists in documents on file with Michigan authorities.

Burt Colucci, the NSM member who declared himself president, posted a picture of Hitler on the Russian social media site VK in celebration. “That face you make when you just legally ousted a n----r from your ranks and took over the largest White Nationalist organization in America,” he wrote.

Schoep’s spokesperson said the move was valid, because the paperwork that made Stern president did not list the minimum of three people required to sit on a Michigan nonprofit’s board of directors, making the initial filing irrelevant.

Stern says the group had no legal basis to file the changes to a group in which he controlled all officer positions. He said he plans to press criminal charges of fraud, theft, and perjury against the group’s new officers. Meanwhile, he’s already filed a $500 million lawsuit against Schoep and the three new officers, accusing them of fraud, theft, slander, defamation of character, and personal injury.

In the suit, Stern accuses the new officers of causing him damages by harassing him to the point at which he cannot maintain their website, which contains a reference to Hitler in its URL. Although the group’s Nazi members currently control the site, Stern said he’s using his legal power as the group’s president to contact the site’s domain registrar. If he gains control of the site, he said wants it to stream the Holocaust film Schindler’s List.

“What I’m doing this week has got them totally upset,” Stern said. “I’m naming to the board, the number two and three guys are going to be a Jew and a Muslim.”

Correction: This article previously stated that Stern surrendered documents.