Manhattan, N.Y., prosecutors charged IBT Media Inc., the former parent company of Newsweek, of running a scheme to defraud lenders out of millions of dollars, The Wall Street Journal reported Oct. 10, citing sources briefed on the investigation.
According to the report, top executives at IBT Media and Christian Media Corp., a faith-based online publisher based in Washington, D.C., created fake financial statements that were approved by a fictitious auditor to secure about $10 million in loans from three financial institutions.
The companies had claimed to have borrowed the amount to buy high-end computer servers, worth nearly $180,000 each, but instead the money was laundered via corporate bank accounts to support day-to-day operations at the media organization, prosecutors alleged. The companies, however, did buy lower-end servers worth less than $10,000 apiece.
The loans were paid off and IBT Media, which reportedly owned Newsweek when the scheme was initiated, has denied these allegations. The scheme ran March 2015-October 2016.
A 10-count indictment unsealed in Manhattan Supreme Court named IBT Media and its co-founder, Etienne Uzac; Christian Media and its former CEO and publisher, William Anderson; and a computer company called Oikos Networks Inc., as defendants.
IBT received more than $8.6 million in cash through the scheme, while the Christian Media Corp. bagged about $1.5 million.