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Newsday Circulation Fraud Charges Seen

June 15, 2005|Robert E. Kessler | Newsday

Federal prosecutors plan to charge at least three former employees of Newsday and its sister publication Hoy with criminal fraud in connection with a scandal involving inflated circulation figures at both publications, sources familiar with the case said.

The charges, which could be revealed in federal court in Brooklyn as early as the next several days, are expected to be only the first growing out of the circulation scandal, the sources said. Sources would not confirm the identities of the former workers.

Newsday is owned by Tribune Co. of Chicago, which also publishes the Los Angeles Times.

The Long Island, N.Y.-based daily disclosed that its reported circulation was inflated by about 100,000 copies on weekdays and Sundays in the 12 months ended September 2003. Last year, the New York edition of the Spanish-language Hoy acknowledged that its reported daily circulation of 92,604 was inflated by about double for the same period.

Robert Nardoza, a spokesman for Roslynn Mauskopf, the U.S. attorney in Brooklyn whose office is heading the probe, declined to comment late Tuesday.

The charges against the three former employees result from the investigation by the Justice Department and the Securities and Exchange Commission, as well as other agencies, the sources said. Several other former Newsday and Hoy employees are in the process of completing plea bargains with federal prosecutors, the sources said. More than a dozen employees have been forced out as a result of the scandal.

Newsday reporters in the last year have detailed some of the ways in which circulation was allegedly inflated going back to at least 2001, including the rigging of computer records of papers supposedly delivered to subscribers and delivery of copies to people who had never asked for them.

Newsday spokesman Stu Vincent said, "We have cooperated fully with the government's investigation. While we don't have details about the status of the investigation we welcome the prosecution of any individuals who have defrauded Newsday, causing injury to the relationships we have with our readers, advertisers and employees."

Newsday is facing lawsuits from some advertisers in connection with the inflated circulation. Tribune also is the subject of several shareholder suits.

The federal investigation began with a probe into Newsday's circulation practices, but it has since spread to an examination of possible inflation of circulation numbers in the magazine industry, the sources said.

James T. Madore of Newsday contributed to this report.

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