Newsweek Parent Co Defrauds Lenders In $10M Scheme

Newsweek’s former parent company has been charged with defrauding lenders out of millions of dollars in order to help the media organization stay in business.

According to the Wall Street Journal, the indictment comes after a more than yearlong investigation by the Manhattan District Attorney’s Office. IBT Media, which owned Newsweek during the alleged fraud but has since spun the publication off into a separate entity, is accused of partnering with Christian Media Corp., a faith-based online publisher in Washington, D.C., to carry out the fraud scheme.

The indictment states that top executives from both companies created fraudulent financial statements approved by a fake auditor to secure around $10 million in loans from three financial institutions, which they claimed were to be used to buy high-end computer servers. Instead, the money was then laundered through corporate bank accounts to support the daily operations at the media organization.

The 10-count indictment names IBT Media and its co-founder, Etienne Uzac; Christian Media and its former chief executive and publisher, William Anderson; and computer company Oikos Networks, as defendants. All were charged with money laundering, scheming to defraud, falsifying business records, and conspiracy. In addition, Christian Media and Anderson were charged with contempt for allegedly failing to turn over documents subpoenaed by a grand jury in the case.

The defendants are scheduled to surrender to authorities and be arraigned on Thursday (October 11).

IBT Media said in a statement that it “denies these allegations. The finance companies from which the company obtained the loans in question all were repaid in full and made whole. The company intends to defend against the allegations in court.”

Marc Agnifilo, a lawyer for Uzac, added that his client “steadfastly denies” the allegations. “No victim was defrauded or lost a dime. This is a made-up case that will be soundly repudiated.”