US Newspapers Execs Arrested

16 June 2005

Three former circulation managers for major US newspaper publisher, the Tribune Company, have been arrested on fraud charges.

The trio have been questioned over their alleged part in last year's circulation scandal at Tribune dailies Newsday and Hoy. It is claimed they participated in schemes between 2002 and 2004 that overstated paid circulation data and cost advertisers millions of dollars in inflated fees.

The company has set aside around $90 million (€74m; £49m) to compensate advertisers who were overcharged.

Edward Smith and Robert Garcia pleaded not guilty in Brooklyn federal court on Wednesday to one charge each of conspiracy to commit mail fraud, which is punishable by up to 20 years in prison. Richard Czark, the third defendant, was arrested in South Carolina and will appear in court today (Thursday).

In one scheme listed in the complaint, Newsday employees convinced a New York distributor to purchase and destroy thousands of copies of the paper. Newsday then reported to the Audit Bureau of Circulations that the distributor was selling as many as 30,000 papers on weekdays and 50,000 on weekends when the actual figures never exceeded 7,000 and 10,000, respectively, say prosecutors.

As a result of the scandals, which also separately involved media giant Belo's Dallas Morning News and Hollinger International's Chicago Sun-Times, the ABC has had to work hard to restore confidence in its figures [WAMN: 15-Nov-04].

Data sourced from Financial Times Online; additional content by WARC staff