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Federal prosecutors reviewing Bezos’s extortion claim against National Enquirer, sources say

American Media denies claims that it used threats of lewd photos in an attempt to extort Amazon chief executive and Washington Post owner Jeffrey P. Bezos. (Video: Blair Guild/The Washington Post)

Federal prosecutors are reviewing accusations made by Amazon chief executive Jeffrey P. Bezos to determine if the National Enquirer’s parent company may have violated the terms of a non-prosecution agreement struck over a hush money payment meant to help Donald Trump’s chances in the 2016 election, according to people familiar with the matter.

Bezos — the founder of Amazon, the world’s richest man, and the owner of The Washington Post — on Thursday posted an extraordinary account accusing the Enquirer’s parent company, American Media Inc., of trying to extort him into issuing a public statement about the supermarket tabloid in exchange for the magazine not publishing embarrassing and sexually explicit photos of him.

Bezos accuses AMI of extortion

Bezos’s post suggested that AMI’s conduct, which he called “extortion and blackmail,” might be a violation of the non-prosecution agreement that the company signed with federal prosecutors in New York in September as part of the Justice Department’s investigation into campaign finance violations by Michael Cohen, President Trump’s former personal lawyer.

The deal requires AMI to “commit no crimes whatsoever” for a period of three years; if AMI breaks the terms of the deal, it could be charged with campaign finance crimes.

As part of the agreement, AMI admitted it paid former Playboy model Karen McDougal $150,000 before the 2016 election to silence her allegations about an affair with Trump.

“Assuming AMI’s continued compliance with the agreement, the office has agreed not to prosecute AMI for its role in that payment,” the prosecutors wrote in a letter spelling out the terms of the deal.

Two people familiar with the matter, who spoke on the condition of anonymity to discuss the review, said the office of the U.S. attorney in Manhattan is reviewing Bezos’s accusations to determine whether AMI’s conduct regarding his photographs amounts to a violation of the terms of that agreement. It’s unclear how long such a review might take. A spokesman for the U.S. attorney’s office declined to comment.

American Media Inc. insisted Friday that it had not broken any laws but pledged to thoroughly investigate the extortion claims.

“American Media believes fervently that it acted lawfully in the reporting of the story of Mr. Bezos. Further, at the time of the recent allegations made by Mr. Bezos, it was in good faith negotiations to resolve all matters with him,” said the statement from the board, which is chaired by AMI’s chief executive, David J. Pecker.

“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,” the statement said.

Bezos said Thursday that the Enquirer indicated it would publish the photos if he didn’t back off an investigation of the tabloid. The battle between the business titan and the supermarket tabloid had been building since January, when the Enquirer notified Bezos that it intended to publish text messages revealing his relationship with former TV anchor Lauren Sanchez.

About two days later, Bezos announced he was divorcing his wife, and the Enquirer’s story appeared shortly after that announcement. Bezos also hired investigators to find out how AMI had obtained the texts.

In a remarkable first-person post to the online publishing platform Medium, Bezos said AMI had recently threatened to publish salacious pictures unless he said publicly that he had no basis to suggest the Enquirer’s coverage was politically motivated.

To back up those accusations, Bezos shared emails he had received from one of AMI’s lawyers, Jon Fine.

In an email sent Wednesday, Fine wrote to offer terms of a proposed settlement — that the texts and photos would not be published as long as Bezos and his investigator issued a statement “affirming that they have no knowledge or basis for suggesting that AM’s coverage was politically motivated or influenced by political forces, and an agreement that they will cease referring to such a possibility.”

Bezos also shared a letter sent a day earlier in which AMI “emphatically rejects any assertion that its reporting was instigated, dictated or influenced in any manner by external forces, political or otherwise. Simply put, this was and is a news story. Yet it is our understanding that your client’s representatives, including The Washington Post, continue to pursue and to disseminate these false and spurious allegations in a manner that is injurious to American Media and its executives.”

It’s unclear if there were other messages sent by AMI, and Bezos did not publish the contents of any messages those working for him might have sent to AMI during that time period.

Jay Carney, Amazon’s senior vice president for global corporate affairs, declined to comment Friday.

Patrick Cotter, a former federal prosecutor now in private practice in Chicago, said prosecutors would want to see the entire conversation between the two sides, but said AMI’s demands could amount to a violation of the Hobbs Act, the federal law against extortion.

“You can’t use extortion to get anything of value from someone else, even if you feel that the thing you are getting is something to which you are legally entitled,” Cotter said. As an example, Cotter said it would be extortion for an employee who is owed back pay to threaten to burn down his boss’s house unless he is paid.

Extortion is the wrongful use of force or fear — including fear of economic harm — to obtain something of value from another.

Cotter said the threat in the Bezos matter could be economic harm to Bezos’s business, while the thing of value demanded is a public statement absolving the Enquirer of political motives.

“Under the law, it doesn’t even matter whether AMI believes the statement they are using extortionate threats to obtain is true or not. Nor does it matter if the pictures are real,” he said.

The Bezos matter carries echoes from another long-ago FBI investigation, in which a New York Post freelance gossip writer came under scrutiny after billionaire Ron Burkle accused him of trying to extort money in exchange for gentler coverage.

That 2006 case, which featured secretly recorded negotiations between the two sides, ultimately led to no charges being filed. The gossip writer accused Burkle of trying to entrap him because he was angry over what had been written.

The Bezos accusations against AMI come at a vulnerable time for the firm, as the conditions of their non-prosecution agreement will last until at least September 2021. The conditions for that deal include a promise that the company will “truthfully and completely disclose all information” requested by New York prosecutors. It also requires the company to make available any documents or witnesses that prosecutors request.

On Friday, deputy White House press secretary Hogan Gidley said he was “not sure” if the president is aware of Bezos’s allegations. “We’re not going to get into a conversation about something between Jeff Bezos and a tabloid magazine,” he said.

Sarah Ellison contributed to this report.