Fraud charges filed against IB Times owner in US over alleged part in $35m laundering scheme with Christian university
The parent company of news website the International Business Times has been charged in connection with an alleged $35m fraud which prosecutors say saw funds laundered through an evangelical Christian university.
IBT Media, formerly Newsweek Media Group, and its co-owner Etienne Uzac each face two counts of money laundering, four counts of falsifying business records, and one count of scheming to defraud and conspiracy.
The charges were announced by Manhattanâ€™s district attorney following a two-year investigation into the media group, which in September split into two separate companies: Newsweek and IBT Media.
Newsweek includes the US print and digital versions of the magazine, its international editions in Europe and Asia and the website Newsweek.com.
IBT Media consists of the International Business Times, gaming website Player.One, the Latin Times, Fashion Times and Medical Daily.
The charges on the indictment refer to “IBT Media, also known as Newsweek Media Group”.
Uzac is alleged to have worked with Christian Media Corporation chief executive William Anderson to obtain loans to “purportedly purchase sophisticated computer servers”, valued at up to $180,000, from March 2015.
In order to secure the funding, Uzac and Anderson allegedly overstated the financial health of both Newsweek and CMC to prospective lenders, provided false financial statements and created a fictitious auditor to make these appear legitimate, the DA’s office said in a statement.
IBT Media, Uzac, Anderson, CMC and vendor Oikos are accused of fraudulently obtaining $10m in financing which they then laundered through a network of corporate bank accounts.
District Attorney Cyrus Vance said: â€œAs alleged in the indictment, the defendants used the name of a storied Manhattan-based media company to further their financial criminal activity.
â€œEtienne Uzac and his co-defendants are charged with conspiring to secure millions in funding that never would have come had they been honest about Newsweekâ€™s financial health.
â€œThe defendantsâ€™ brazen attempts to disguise the fraud â€“ by creating a fictitious auditor, and laundering their transactions through a series of corporate accounts â€“ were unravelled by my Officeâ€™s Major Economic Crimes Bureau, which remains committed to ensuring the integrity of New Yorkâ€™s core industries and financial marketplace.â€�
Vance yesterday revealed the scheme allegedly involved private Christian institution the Olivet University, its chairman of the board of trustees Andrew Lin and its finance director Lingyi Xiao. Anderson is also an Olivet trustee.
They are accused ofÂ fraudulently obtaining at least $25m in financing under Olivetâ€™s name and laundering the money in order to obscure its origins and fund the universityâ€™s operations.
Anderson, Xiao, Olivet and co-conspirators not named on the charge sheet allegedlyÂ transferred the funds through multiple accounts to mask their origin and disguise the fact that they werenâ€™t being used to buy equipment.
The money was actually being used to purchase real estate, fund Olivetâ€™s day-to-day operations, and for other purposes unrelated to the stated purpose of the financing, the DA has claimed.
In some cases, funds received for fraudulent Olivet loans were sent to IBT Media. In other cases, funds received from fraudulent Newsweek loans were sent to Olivet, the DA said.
â€œAfter unmasking the scheme to keep Newsweek and Christian Media Corporation afloat, my Officeâ€™s Major Economic Crimes Bureau skilfully followed the money, revealing an even larger scheme to defraud lenders throughout the country, and cycle the ill-gotten gains through a maze of corporate bank accounts,” Vance said.
The investigation remains ongoing.
IB Times said in a statement that it denies the allegations against it and intends to defend them in court.
It said: “The finance companies from which the company obtained the loans in question all were repaid in full and made whole.”
Uzac said in a statement that he believed the investigation was launched in response to IB Times coverage of the way New York’s attorney general responded to the Harvey Weinstein scandal.
“The firestorm that ensued badly bruised the DAâ€™s office, led to his office to be investigated by the New York Attorney General and almost cost him his re- election.
“Within 60 days of IBT publishing the story, the DA ordered that our server room be raided.
“For the government to dare raid a media companyâ€™s servers no matter what the circumstances is crossing a line and a violation of the First Amendment and the Freedom of Press.
“As a matter of fact, I believe this is the first time in US history that the government has raided a media companyâ€™s server room.
“The equipment lenders in question have been repaid in full along with interest and fees. 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. And is reminiscent of the Abacus Bank case.
“I flatly deny the DAâ€™s allegations against me and intend to defend myself vigorously in court against what I see as government overreach and power abuse.”
Ronn Torossian, a spokesperson for Olivet, said:Â “Olivet University denies the charges brought by the District Attorney’s Office and will vigorously defend itself against these unsupported allegationsâ€”including the puzzling claim that lenders that have been fully repaid with interest were somehow victimised.
“Olivet stands strongly by the individual members of its team who have been wrongfully accused.Â Olivet is a Christian institution dedicated to providing educational and spiritual opportunities to students around the globe.”
Source: Digital Journalism