A Double Standard For News Corp. Justice?

Blog ››› ››› ERIC BOEHLERT

Two weeks after getting fired from Fox News for being a "mole" dishing dirt on Rupert Murdoch's news channel, Joe Muto reported that on Wednesday he received an early morning visit from New York County District Attorney officials who arrived with a warrant and left with his phone, laptop and notebooks. They were responding to News Corp.'s allegations that Muto had committed larceny when he shared his inside-Fox News account, complete with in-house video from the channel's servers, with Gawker in a series of controversial posts.

This week's swift law enforcement response to the relatively minor criminal case stands in stark contrast to when competitors to a News Corp. subsidiary, News America, spent years beseeching law enforcement agencies to fully investigate claims that News America employees had illegally hacked into a competitor's secure website and stolen proprietary information in an effort to steal away clients and "destroy" the company, according to one of its owners.

At the time, federal investigators at the New Jersey U.S. Attorney's office, overseen then by Chris Christie, refused to take the Murdoch-related case seriously and no criminal charges were ever filed. That, despite the fact that years later as part of a civil case, a News Corp. attorney admitted in open court that the company's computers had been used to hack into a competitor's website. (News Corp. insisted it couldn't determine who did the hacking; evidence suggests the company didn't dig very deep to find out.)

In the wake of the "mole" story there's certainly a sharp contrast in terms of how quickly the story about Muto's mid-level mischievousness sparked a criminal investigation, as compared to how the much more serious allegations of corporate corruption within the suites of Murdoch's American empire went mostly untouched for years.

The computer hacking background: A New Jersey start-up company, Floorgraphics (FGI), was created to sell large advertising decals placed on the floors of grocery stores. Early on, FGI's founders, Richard and George Rebh, met with Paul Carlucci who at the time was CEO of News America Marketing, an in-store advertising division of News Corp. At the lunch, after the Rebhs rebuffed Carlucci's offer to buy the company, he allegedly threatened to destroy FGI.

Years later company executives discovered FGI's secure website had been broken into nearly a dozen times and confidential information had been obtained. They alleged Murdoch's company was spreading lies about FGI and using its proprietary information to damage the company. Floorgraphics founders, with help from their Congressmen, then tried to persuade law enforcement to investigate their charges.

As David Carr reported in the New York Times last year, in a column examining the "soft power" Murdoch enjoys in the United States:

According to correspondence that has been forwarded to members of the New Jersey Congressional delegation, Mr. Rebh also got in touch with the F.B.I., which sent two special agents to the Floorgraphics offices in 2004. One of the agents, Susan Secco, followed up with an e-mail in which she commented on the evidence Floorgraphics had compiled.

"I believe I have all I need to conduct interviews, as there is an excellent paper trail," she wrote.

She then got in touch with the United States attorney in New Jersey and, after an initial burst of interest, the case died a slow death.

Six years ago Jonathan Weil, then a reporter for the Wall Street Journal, looked into FGI's allegations. He told company executives he'd cover their case if he could confirm federal investigators were actively working on the charges leveled against News Corp., otherwise their battle wasn't newsworthy enough. (This was before Murdoch purchased the Journal.) But he could never find any evidence investigators cared about the computer hacking case.

Last year Weil wrote, "Maybe federal investigators had dropped the ball. Perhaps there hadn't been enough evidence. Or maybe they didn't want to take on a sister company of Rupert Murdoch's Fox News."

A New Jersey probe was launched on the state level, but investigators never contacted Floorgraphics and no charges were ever filed against News Corp.

The News America allegations sparked so little interest that nobody from law enforcement ever interviewed Robert Emmel about the News Corp. misconduct. He's the plugged-in whistle blower, and former New America executive, who claimed to have witnessed all kinds of illegal, anti-business practices at the company. Emmel served as a key witness in the FGI civil case against News America, as well as two similar cases brought against Murdoch's company. News Corp. eventually settled all three lawsuits at a cost of $655 million. (Only more recently, in the wake of the sweeping phone hacking scandal in Britain, have U.S. officials belatedly looked into the computer hacking allegations as part of a larger News Corp. investigation, and have reached out to Emmel.)

The fact is several years ago, a Murdoch competitor had News Corp. dead-to-rights on corporate espionage allegations in the United States. But no U.S. investigators would pursue the case. By contrast, within days of the story breaking, News Corp. had much more success getting a criminal case initiated against its bothersome "mole."

News Corp.
Rupert Murdoch
Paul Carlucci
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