February 09, 2019
The publisher of the National Enquirer is facing questions about whether it violated a cooperation agreement with federal prosecutors after allegations from Amazon CEO Jeff Bezos that the tabloid tried to blackmail him.
Sources on Friday told Bloomberg News that federal prosecutors with the Southern District of New York are looking into publisher American Media Inc.'s (AMI) conduct, raising the prospect of new legal problems for the company.
National Enquirer faces new legal woes after Bezos claims
At stake is an agreement AMI entered into with federal prosecutors to gain immunity in the probe into possible campaign finance violations in President Trump’s 2016 campaign. As part of the agreement, AMI admitted to paying former Playboy model Karen McDougal $150,000 to suppress her claims of an affair with Trump.
The non-prosecution agreement is exceptionally broad, including language barring AMI from committing any criminal activity for three years. That could make it easier for prosecutors to identify laws AMI might have broken in its dealings with Bezos, legal experts told The Hill.
"[The] agreement to refrain from prosecuting AMI and [the company’s CEO David Pecker] was because the prosecutors saw some value that their investigation would receive based upon truthful information coming from AMI and Mr. Pecker," Jeff Tsai, a former federal prosecutor, told The Hill.
"However, the value of AMI and the value of Mr. Pecker becomes severely tarnished or diminished if they are themselves continuing to engage in criminal activity or saying incorrect or untruthful information."
Bezos, the head of Amazon and owner of The Washington Post, dropped a bombshell on Thursday night, accusing the National Enquirer of "extortion and blackmail" in an online post. Bezos said the tabloid threatened to publish intimate photos of him unless he dropped a private investigation into the tabloid. Bezos also suggested the Post's coverage of the killing of Saudi journalist Jamal Khashoggi had angered AMI CEO David Pecker.
"Rather than capitulate to extortion and blackmail, I’ve decided to publish exactly what they sent me, despite the personal cost and embarrassment they threaten," Bezos wrote.
AMI in a statement on Friday said it “believes fervently” that the tabloid "acted lawfully,” but pledged to promptly investigate Bezos’ claims.
But the fallout threatens the company with new legal problems because of its non-prosecution agreement.
Under the terms of the agreement, AMI shall “commit no crimes whatsoever” or else "be subject to prosecution for any federal criminal violation of which this Office has knowledge, including perjury and obstruction of justice.”
And the non-prosecution agreement gives prosecutors broad authority to investigate any potentially illegal behavior that may have violated the terms.
“AMI and Mr. Pecker ... are prohibited by the terms of their own agreement to commit any crimes, without qualification,” Tsai said, noting this could include federal crimes as well “a crime that is state law in nature, or even local or municipal in nature.”
Legal experts, though, are split over whether the situation alleged by Bezos describes "extortion and blackmail," mainly because federal definitions of those crimes are narrow.
One of the main federal extortion statutes, the Hobbs Act, defines extortion as threats made in return for "property."
"The U.S. Supreme Court ... basically construed the term 'property' under the Hobbs Act to refer specifically to money or other economic, other goods of economic value," legal expert Stuart Green told The Hill. "In this case, they’re not asking him for any money, [and] not asking Bezos to write a recommendation for them.
"I don’t think that that is enough to satisfy the federal extortion statute," Stuart said.
But Elie Honig, a former federal prosecutor, in a CNN op-ed argued that “property” does not have to be defined as “monetary, or worth more than a nominal amount, or even tangible.”
“I'd be comfortable arguing to a jury that this goes well beyond legally acceptable boardroom hardball,” Honig wrote.
Paul Cassel, a former federal judge, told The Hill that he believes the emails in question amount to extortion or blackmail under a separate section of the U.S. criminal code overseeing interstate communications.
"The transmission by email appears to be a federal crime," Cassel said. "It seems to me all elements of the extortion or blackmail statute are very well satisfied by the transmissions in question."
The chain of events began when the Enquirer earlier this year published a series of exposés about Bezos having an extramarital affair. Bezos shortly after said that he was investigating how the Enquirer obtained texts between him and his girlfriend.
The lead investigator hired by Bezos made multiple public comments alleging the exposés in the National Enquirer might have been politically motivated. Pecker is a longtime friend of President Trump, who has railed against Bezos over his ownership of The Washington Post.
AMI executives at that point reached out to Bezos, demanding that he make a public statement saying he has "no knowledge or basis for suggesting that AMI’s coverage was politically motivated or influenced by political forces."
Though AMI maintains it did nothing illegal, the broad language in their agreement could put it on thin ice and give prosecutors more leverage over the company in the investigation into Trump’s associates.
AMI's actions will now be closely scrutinized by federal prosecutors.
“I think there is at least enough there for further investigation of potential extortion,” former federal prosecutor Glen Kopp told The Hill.
“When you have an agreement with the government that says you can’t commit crimes, then the government is going to be particularly sensitive to allegations.”
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