The National Enquirer's parent company, American Media Inc., is under scrutiny from federal prosecutors regarding how it handled a story about an extramarital affair of Amazon.com Inc. (AMZN) founder, CEO and Chairman Jeff Bezos, Bloomberg reported, citing two people familiar with the matter.
Federal prosecutors in the Manhattan U.S. attorney's office are now reviewing whether American Media committed any crime, or violated an earlier agreement not to engage in criminal conduct, Bloomberg reported.
Bezos, who owns the Washington Post, has accused the National Enquirer of extortion, writing a blog post published Thursday that revealed email exchanges between executives at American Media and a lawyer for a private investigator Bezos had hired. The exchanges show AMI wanted Bezos to choose between two alternatives: either persist in pursuing a Washington Post story about how the Enquirer had obtained damaging emails about Bezos and see the new photos published in the Enquirer, or to abandon the pursuit of the story, in which case the Enquirer wouldn't publish the photos.
In December, American Media and federal prosecutors agreed to a non-prosecution deal in which the tabloid publisher admitted to paying $150,000 to former Playboy model Karen McDougal, to keep her story about an affair she said she had with Donald Trump from being published. The Enquirer, run by AMI CEO and Trump friend David Pecker, had published positive commentary on Trump's campaign during the election. The deal between AMI and the government centered on AMI agreeing not to engage in criminal activity.
"American Media believes fervently that it acted lawfully in the reporting of the story of Mr. Bezos," the company said in a press release today. "Further, at the time of the recent allegations made by Mr. Bezos, it was in good faith negotiations to resolve all matters with him. Nonetheless, in light of the nature of the allegations published by Mr. Bezos, the Board has convened and determined that it should promptly and thoroughly investigate the claims. Upon completion of that investigation, the Board will take whatever appropriate action is necessary."
A spokesman for the U.S. attorney's office declined to comment for the Bloomberg story.