Newsweek's former parent company indicted in fraud and money laundering case

The co-founder of Newsweek's former parent company has been indicted on fraud and money laundering charges i...

Posted: Oct 11, 2018 11:33 AM
Updated: Oct 11, 2018 11:33 AM

The co-founder of Newsweek's former parent company has been indicted on fraud and money laundering charges in New York Supreme Court.

Etienne Uzac and IBT Media are accused of conspiring with two other companies to defraud lenders out of money that the media organization used to keep itself in business, according to an indictment that was unsealed Wednesday. Uzac denied the allegations and said he intends to defend himself "vigorously" against the charges.

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Prosecutors allege that IBT Media worked with Christian Media Corporation and Oikos Networks to pull off the scheme.

The indictment alleges IBT and Christian Media convinced equipment lenders that they needed financing to buy computer equipment. They received the funds — but instead of using the money to buy computer servers, the indictment says the companies funneled it into other parts of their business.

The court documents claim that IBT Media and Christian Media Corporation concealed details about the money by creating a fictitious auditor, faking an audit and submitting false financial statements.

The indictment also implicates a third company, Oikos Networks. Prosecutors claim Oikos provided computer equipment that was of poorer quality than what was shown on equipment lists and lending agreements.

Instead of using it to buy the servers that lenders thought the money was being used for, Oikos is alleged to have given nearly all of the money to accounts controlled by Uzac, IBT Media, Christian Media Corporation and its CEO William Anderson, among other conspirators that were not indicted and not named in court documents.

Prosecutors say executives at IBT Media and Christian Media Corporation used some of the money received from lenders to pay back financing that they had previously received.

Prosecutors claim that the crimes alleged in the indictment happened between early 2015 and late 2016. The indictment suggests that the companies fraudulently secured several million dollars in financing during the time the scheme took place.

IBT Media bought Newsweek in August 2013, and owned the publication until last month. Newsweek announced in mid-September that it is now operating separately as a standalone entity.

IBT Media still owns other media brands, including the International Business Times, Medical Daily and Latin Times.

IBT Media, Christian Media Corporation and Oikos are all listed as defendants. The indictment also names Uzac, IBT Media's co-founder, and Anderson, who was the CEO of Christian Media Corporation when prosecutors say the crimes happened.

In a statement Wednesday night, Uzac said he "flatly" denied the allegations and claimed the investigation against him was "fueled by retaliation." Uzac claimed that the Manhattan District Attorney's office was "badly bruised" after the International Business Times reported in October 2017 that prosecutors declined to press charges against Harvey Weinstein, the famous Hollywood producer who has been accused of sexual assault and abuse, which he denies.

"The equipment lenders in question have been repaid in full along with interest and fees," Uzac said in the statement. "There were no victims, and my intention never was to harm anyone. The fact that the Manhattan DA are inserting themselves where they should not and are defending financial institutions who themselves are not pressing any charges nor have expressed any issues, is a clear case of government power abuse."

Uzac stepped down from the company early this year.

Oikos and Christian Media could not be reached for comment.

An attorney for Anderson did not immediately return a request for comment.

The investigation into Newsweek's former parent company has been going on for quite some time. The newsroom was thrust into chaos early this year when the Manhattan District Attorney's office raided the company's office.

Newsweek itself reported around that time that the raid was part of an investigation into the company's finances.

Shortly afterward, Newsweek's editor-in-chief and executive editor were both fired. A reporter who had written articles about the district attorney's investigation and financial issues at the magazine was also let go.

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