On Wednesday, two Utah-based political organizations and their founders brought a defamation lawsuit against O’Leary and Fox News—where he made some of those comments—arguing his characterization of their alleged ties to the CCP had caused irreparable reputational harm.

In the suit, filed in Utah Federal District Court, the Alliance for a Better Utah and Elevate Strategies allege the Shark Tank star’s comments caused “devastating reputational harm, significant economic losses, severe emotional distress, and ongoing threats to their physical safety.” 

Joshua Kanter, founder of Alliance for a Better Utah, and Gabrielle Finlayson, a founder of Elevate Strategies, are the named plaintiffs in the suit. They are seeking compensatory damages to be determined at trial as well as “punitive and exemplary damages in an amount sufficient to punish Defendants and deter future misconduct.”

An attorney for O’Leary, Jeff Neiman, called the lawsuit a “cash grab” in a statement to Fortune, and said the organizations had used O’Leary’s comments as a catalyst to raise funds. In turn, Neiman noted, the lawsuit will open the organizations to further scrutiny. 

“The plaintiffs have put their operations, funding, and coordination squarely at issue. We welcome that, and we look forward to discovery and uncovering the facts related to the misinformation campaign against the data center in Utah,” Neiman said in the statement.

O’Leary’s comments

The lawsuit alleges that in at least 10 media appearances, O’Leary embarked on a “smear campaign” to link Alliance for a Better Utah and Elevate Strategies with the Chinese Communist Party.

In O’Leary’s first alleged attack, according to the lawsuit, he labeled the two organizations as “cells” that were organizing opposition to his data center project during an interview on the Mornings with Maria show. 

“These two cells, it’s the CPP [sic] at work here. There’s no question about it,” O’Leary said during the interview.

In another interview on The Tucker Carlson Show, O’Leary also alleged Alliance for a Better Utah and Elevate Strategies were “taking the content from the CPP [sic], repurposing it, and jamming it down the throats of people in Utah on my social media feed.”

The lawsuit claims he repeated similar statements in several other media appearances between May 11 and June 3.

In addition to O’Leary, the lawsuit named the Fox News Network as a defendant as it “repeatedly invited O’Leary onto its programs and allowed him to broadcast his false accusations to millions of viewers without any qualification.”

Fox News Media said in a statement to Fortune that it “publicly corrected the record on every program where on-air guest Kevin O’Leary’s comments were made, all of which was extensively publicized.”

Neiman in his statement said O’Leary clarified his remarks weeks ago and offered to speak with the organizations, which they refused.

“Recently I appeared on various news programs and would like to clarify that I have no evidence that Alliance for a Better Utah, Elevate Strategies, Gabrielle Finlayson, Taylor Knuth or Josh Kanter are funded by China or the Chinese Communist Party,” O’Leary posted in a statement on Instagram on June 25.

Still, Platkin LLP, the law firm representing the plaintiffs, said in a statement that O’Leary only clarified his remarks on Instagram after he received a legal demand from the plaintiffs. Fox News, the statement claimed, issued an apology and reported on O’Leary’s clarification shortly after he made his statement on social media.

“These efforts, which were intended to dissuade Kanter and Finlayson from asserting their legal claims, fail to address the harms that O’Leary and Fox News caused during their weeks-long smear campaign,” the statement from Platkin LLP read. 

While the Alliance for a Better Utah last month joined a lawsuit challenging the constitutionality of the Military Installation Development Authority, or MIDA, a state-created economic development body that initially approved O’Leary’s data center project, personally, Kanter and Finlayson, “they played virtually no role in any organized opposition to the project.”

The plaintiffs argue O’Leary’s focus on Kanter and Finlayson was misplaced. Although the Alliance and Elevate had published several posts criticizing the project, the complaint says Finlayson appeared in only one video about the project, while Kanter made no public statements about it and no longer holds a public-facing role with Alliance, though he remains on its board.

O’Leary’s data center plans

At the center of the data center drama is O’Leary’s Stratos Project, a data center complex that could eventually support up to nine gigawatts of AI computing capacity and is planning to take up tens of thousands acres of land in Box Elder County, Utah near the Great Salt Lake. 

The project has drawn opposition from Utahns concerned about the project’s environmental impact and its effects on the local water supply, among other issues. Opposition to the project boiled over during a packed public meeting on May 4 in which protestors shouted “Shame!” and “Cowards!” before the Box Elder County commissioners left the room and voted virtually to approve resolutions allowing the Stratos project to move forward, the Salt Lake City Tribune reported.

Since then, several politicians who advocated for the project have faced political costs. One of the biggest advocates for the project, Utah state senate president Stuart Adams, lost a reelection bid after 20 years in the state legislature last month. Two Box Elder County commissioners who voted to advance the project also lost their primaries.  

Under pressure, O’Leary last month introduced a reduced version of the data center project which cut its total footprint to 20,000 acres from an original 40,000 acres, with only 10,000 acres available for the development of data centers and other infrastructure. 

O’Leary’s battle with protestors over the Stratos project is part of a nationwide backlash against the sprawling data center campuses that are being built to enable the AI boom. Residents living near data centers across the country have mobilized to stop these projects over concerns about water and energy usage and the reshaping of their communities. A survey by Gallup published in May found seven in 10 Americans oppose having an AI data center built in their area. 

To be sure, data centers can in some cases bring economic benefits. Northern Virginia’s Loudoun County has among the highest concentration of data centers in the U.S. In this county, officials say the revenue from data centers has helped finance public services and allowed officials to lower the county’s real property tax rate.