News Corp. Hacking Allegation in the U.S. as DOJ Review Begins
Posted 21 July 2011 - 08:46 AM
Lautenberg originally wrote a letter in 2005 bringing this case to the attention of Attorney General Alberto Gonzales after a small New Jersey marketing company called FLOORgraphics alleged that News America Marketing engaged in illegal computer espionage by breaking into password protected computer systems and obtaining confidential information.
“As the Department of Justice and FBI examine the recent hacking allegations involving News Corp. and its subsidiaries more closely, I wanted to make sure that you were fully aware of the case of FLOORgraphics and News America, as it may be relevant to your current investigation,” Lautenberg wrote.
A copy of today’s letter is copied below.
July 20, 2011
The Honorable Eric H. Holder, Jr.
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, D.C. 20530
Director Robert S. Mueller, III
Federal Bureau of Investigation
J. Edgar Hoover Building
935 Pennsylvania Avenue, NW,
Washington, DC 20535
Dear Attorney General Holder and Director Mueller:
I understand from reports that the Federal Bureau of Investigation (FBI) has begun a preliminary review into allegations that News Corporation (News Corp.) may have sought to illegally access phone records or hack into the voicemails of victims of the 9/11 terrorist attack.
In connection with the FBI’s review of News Corp.’s conduct, I wanted to bring to your attention the attached letter that I wrote to Attorney General Alberto Gonzales in June 2005 regarding another incident involving News Corp. and allegations of illegal conduct. Specifically, FLOORgraphics, Inc. (FLOORgraphics), a corporate constituent of mine based in Princeton, New Jersey, provided in-store advertising on behalf of manufacturers of major food, health, and household items selling products in grocery stores throughout the country. One of FLOORgraphics’s competitors in this business was News America Marketing (News America), which is owned by News Corp.
At the time of my letter in 2005, I was informed by FLOORgraphics that the U.S. Attorney’s Office for the District of New Jersey, the FBI and the U.S. Secret Service initiated an investigation into allegations that News America illegally gained access to FLOORgraphics’s password-protected computer system and obtained FLOORgraphics’s confidential data. In response to my letter, the Department of Justice informed me that, as a matter of policy, it was not in a position to confirm or deny the existence of an investigation into News America’s conduct, but that the Department of Justice took all allegations of criminal conduct very seriously.
As the Department of Justice and FBI examine the recent hacking allegations involving News Corp. and its subsidiaries more closely, I wanted to make sure that you were fully aware of the case of FLOORgraphics and News America, as it may be relevant to your current investigation. Please do not hesitate to contact me for any further information my office may be able to provide about FLOORgraphics’s allegations, as appropriate.
Thank you for your attention to this matter and I look forward to your timely reply.
Posted 21 July 2011 - 08:51 AM
One major division of the company is SmartSource iGroup, formed in 2000 from acquisitions and investments. It publishes SmartSource Magazine, a weekly consumer-branded newspaper insert offering advertising and coupon promotions, delivered in over 1,600 newspapers in the U.S. The SmartSource brand began in 2008.
In the fiscal year ending June 2005, the company had 28% operating margins, the highest of all News Corporation businesses. Its annual revenues were $1.1 billion, an increase of 9% from the prior year. As of 2007, News America produced the majority of revenues for News Corporation's magazines and inserts division, and it controlled an estimated 50% to 60% of the insert market and as much as 90% of the in-store business.
In 2005, Theme Promotions, a merchandising firm, won a $6.8 million jury verdict against News America. The California jury found News America guilty of violating civil antitrust and unfair-competition laws.
In 2006, the state of Minnesota accused News America of engaging in unfair trade practices. The company settled in 2008 by agreeing to pay costs and not to falsely disparage its competitors.
Between 2009 and 2011, the News Corporation paid out about $655 million to settle charges of corporate espionage and anticompetitive behavior by News America.
In 2009, a federal case in New Jersey brought by a company called Floorgraphics went to trial, accusing News America of hacking into Floorgraphics’s password-protected computers. Much of the lawsuit was based on the testimony of Robert Emmel, a former News America executive who had become a whistle-blower. After a few days of testimony, the News Corporation settled with Floorgraphics for $29.5 million; several days after that, it bought Floorgraphics.
In 2010, the News Corporation paid $500 million to settle a case brought against it by Valassis Communications, after that company had won a $300 million verdict in state court in Michigan. The lawsuit by Valassis was based on claims that News America had gained market share by forcing its packaged-goods customers to sign long-term insert contracts or risk huge price increases on their in-store advertising displays. The settlement included News America entering into a 10-year shared mail distribution agreement with Valassis Direct Mail, a Valassis subsidiary.
At the beginning of 2011, in a case in Minnesota brought by Insignia Systems, News America faced more than $600 million in fines. The News Corporation paid out $125 million to settle the allegations of anticompetitive behavior and violations of antitrust laws. This was the third time that the two companies had been involved in lawsuits. In August 2000, Insignia was sued by News America regarding exclusive promotional agreements with several major supermarket retailers, a suit that was settled confidentially in November 2002. In November 2003 Insignia was sued again, regarding Insignia's right to market in-store advertising and promotional services.
Posted 21 July 2011 - 10:03 AM
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Posted 22 July 2011 - 07:06 AM
The scandal has now caused two high profile resignations at the Metropolitan Police (Scotland Yard).
On Sunday Sir Paul Stephenson, commissioner of Metropolitan Police Service, resigned from his post, taking responsibility for the agency's failure to investigate all alleged criminal acts by reporters of News of the World and for the implied close relationship between the police and Murdoch's papers. The investigation of the complaints of phone hacking made by the Royal Family in 2006 was never fully pursued. He was also criticized for hiring former deputy editor of the NotW Neil Wallis as a media consultant. Wallis was arrested last week for his part in the scandal.
Assistant commissioner John Yates' resignation followed Stephenson's, after it emerged he had inappropriately fostered the hiring of the daughter of his friend Wallis, and failed to pursue an investigation of the NotW in 2009. Yates labelled this action "a pretty crap one".
Last night, it was reported that Sean Hoare, a whistleblower who worked for former NotW editor Andy Coulson and was the first to allege a high ranking-editor had known about phone hacking at the NotW, was found dead at his home. Police say the death is not categorized as "suspicious" although it is unexplained. The BBC reported that Hoare had suffered from an unspecified illness. He was let go from NotW in 2005 for problems related to substance abuse.
The revelations are the latest in a growing scandal that has so far led to the resignations of a number of News Corporation executives, including Les Hinton, the publisher of the US newspaper The Wall Street Journal, on Friday. The scandal has also led Murdoch to close the NotW and drop his bid to take full control of broadcaster BSkyB. Pressure grew on Murdoch when it was alleged journalists at the NotW had hacked into the phone of missing schoolgirl Milly Dowler, British families of victims of the 9/11 terrorist attacks and relatives of British soldiers killed in Afghanistan.
David Cameron, the British prime minister, is scheduled to return from his trip to Africa two days early in order to deal with the scandal that has shaken the public's trust in the police, journalists and politicians. Cameron has been under pressure to apologise for his appointment of Coulson—who was arrested two weeks ago—as a media adviser after his resignation as editor of the NotW. Cameron has also been criticized for taking a trip to Africa at this time; a Conservative party member said it seemed as if the prime minister was "fleeing the country".
Rupert Murdoch and his son James, an executive in the Murdoch news empire, and Rebekah Brooks appeared before parliament on Tuesday to answer questions about their knowledge of the phone hacking issues.
Posted 23 July 2011 - 04:33 AM
I am sure Mr. Murdoch regrets hiring Cameron as Prime Minister.
If you do not like what News Corporation is doing, then stop supporting the Fox syndicate that is polluting our culture and destroying our values. No organization should have this large of a monopoly on our media.
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Posted 08 August 2011 - 03:03 PM
BROOKS’S in Mayfair is one of the oldest and most reputable gentlemen’s clubs in the country, founded in 1764 by four Dukes and with a cast list of former members that includes William Pitt the Younger and Lionel de Rothschild.
As you can imagine, joining the ranks of the exclusive all-male preserve is not straightforward. First, would-be members must be proposed by a member and seconded by another, then ten more members must sign to agree to their inclusion.
Next, the secretary and the club managers hold a “scrutiny meeting” to remove any undesirables; finally, the candidate is put to the vote among the 1,400 members in an old-fashioned ballot. All in all, says The Capitalist’s man at the bridge table, the process takes about two years.
So it is unfortunate for News Corp heir James Murdoch – who was first put forward to the club bearing the name of his father’s favourite red-top two years ago – that the final stages of his membership application coincide with the phone hacking episode.
Posted 20 August 2011 - 03:51 AM
James Desborough, an award-winning former reporter at the News of the World, has been arrested by officers investigating the phone-hacking scandal.
Desborough was arrested on suspicion of conspiring to intercept communications, contrary to section 1 ( 1 ) of the Criminal Law Act 1977, after arriving at a south London police station at 10.30am. He had arrived by appointment for questioning about criminal activities at the defunct paper.
The allegations are believed to relate to events before Desborough was promoted to be the NoW's Los Angeles-based US editor in April 2009, less than a month after winning a British Press Award for showbusiness reporter of the year.
His move to the US makes his arrest, the 13th made by Operation Weeting, particularly significant. If Desborough was involved in hacking while in Britain, it raises the question of whether he practised those techniques in the US – and if so, whether he was the first and only News of the World journalist in the US to do so.
Posted 25 August 2011 - 11:51 AM
U.S. Attorney General Eric Holder told the families of 9/11 victims today that he will investigate reports that Rupert Murdoch's News Corp. hacked into their phones, or tried to. One of those family members, Diane Horning, joined Keith Olbermann to discuss the investigation.
Posted 18 October 2011 - 11:29 AM
As News Corp. shareholders prepare to meet later this month, fallout continues. This week, a top executive resigned amid allegations that The Wall Street Journal's European edition used underhanded methods to increase circulation.
Now, one of News Corp.'s U.S.-based subsidiaries is drawing attention with allegations of corporate espionage, computer hacking and threats to destroy its competition.
When former News Corp. competitor Antonia DeMatto heard news of the British newspaper phone-hacking allegations, she said she thought it was all too familiar.
"It was a little bit like reliving it. It brought back to mind all the times that we'd been through, trying to compete and finding ourselves competing with someone who was competing completely unfairly," DeMatto told CNN.
DeMatto was vice president of marketing for a New Jersey start-up called Floorgraphics, which placed ads on the floors of supermarkets and retail outlets. The company was competing against News America Marketing, a subsidiary of News Corp., which handles consumer advertising and promotions in the United States.
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