May 27, 2013
Posted by Ryan Lizza
The case of James Rosen took an odd turn over the weekend. Rosen is a reporter for Fox News who had his e-mail searched and phone records subpoenaed in the course of a Department of Justice investigation into who provided him with classified information about North Korea in 2009.
The search warrant for Rosen’s e-mail account is the most troubling aspect of the case. Many of the facts surrounding the warrant became known when court filings were recently unsealed. In the government’s application for the warrant, prosecutors alleged that there was probable cause to believe that Rosen violated the Espionage Act of 1917. In another filing, prosecutors argued they should be allowed to keep the warrant secret from Rosen because they might need to monitor his e-mail account indefinitely. While the Nixon and George W. Bush Administrations talked about the possibility of holding journalists criminally liable for reporting classified information, Obama’s is the first Administration to make the argument in federal court. While the Justice Department didn’t indict Rosen, it carefully laid out the legal case for charging him as spy, a dangerous precedent that will undoubtedly tempt future prosecutors.
Separately, prosecutors in the case issued subpoenas—as opposed to search warrants—for records pertaining to over thirty telephone numbers, including five numbers belonging to Fox News. According to Justice Department guidelines, D.O.J. is required to inform a news organization when its phone records are subpoenaed—generally beforehand, but at least afterward. (That’s why the Associated Press finally learned that the records for several A.P. phone lines had been seized in another leak case; though it was too late for them to go to court and try to quash the subpoena.)
One of the mysteries of the Rosen case has been why Rosen and Fox News were not informed of D.O.J.’s seizure of their phone records. When I first learned that Fox’s phone records had been subpoenaed, a spokesperson told me the network had no knowledge of it. Last week, Fox News anchors, reporters, and guests repeatedly criticized the Obama Justice Department—rightfully so, in my opinion—for this lack of disclosure.
Finally, after a week of media outcry, the Obama Administration on Saturday leaked word that Justice did indeed inform News Corp, the parent company of Fox, about the subpoenas back in August of 2010. Here’s what an official told CNN:
“In the investigation that led to the indictment of Stephen Kim, the government issued subpoenas for toll records for five phone numbers associated with the media,” a law enforcement source told CNN. “Consistent with Department of Justice policies and procedures, the government provided notification of those subpoenas nearly three years ago by certified mail, facsimile and e-mail.”
What was even more surprising than this anonymous comment, was News Corp.’s response to it. The company agreed it had received the notification—and explained that it had failed to pass on the information to Fox News. Here’s how the Times reported the story:
On Saturday, a Fox News executive said that the notice had gone to News Corp., its parent company, on Aug. 27, 2010, but that Fox News was not told until Friday. The executive said they were still trying to sort out how the notice fell through the cracks.
But there was one person who was not satisfied with this account: Lawrence A. Jacobs, who was the actual legal counsel for News Corp. back in 2010 when Justice allegedly sent the notification. Almost immediately, Jacobs went public with a story that contradicted the account being peddled jointly by Justice and News Corp.
He told NPR, the Los Angeles Times, and the New York Times that he never received the notification, and that if he had he would have immediately told Roger Ailes, the head of Fox News. On Monday, Jacobs told me the same thing.
“If I had seen it, I would remember having seen it, even though it was three years ago. The first thing I would have done is call Roger Ailes,” Jacobs said. “What possible motive would I have to sit on this? If the Justice Department really wanted to make sure Fox News was aware of it, why didn’t they send it to Fox News and why didn’t they follow up with the company they sent the fax to? I’m not calling them liars and I’m not saying they didn’t send it. I’m just saying I never saw it. I can’t believe I wouldn’t remember receiving a certified letter from the Justice Department.”
Privately, Jacobs and News Corp had heated conversations over the weekend in which the company’s former lawyer demanded that News Corp. clarify its position on the matter. Perhaps there was a letter and fax and e-mail; by Sunday, though, News Corp. had reversed course and issued a new statement, first reported by the Los Angeles Times yesterday afternoon. But even then, News Corp.’s response was surprisingly deferential to Eric Holder’s Justice Department: “While we don’t take issue with the DOJ’s account that they sent a notice to News Corp., we do not have a record of ever having received it. We are looking into this matter.”
Why would News Corp., which is not often soft on the Obama Administration, be so quick to agree with the Justice Department in this case, especially when Justice’s leak seemed designed to undercut some of the outrage emanating from Fox News?
Here’s one theory: News Corp.’s deference to Justice is related to the phone-hacking scandal, centered in the U.K., that has engulfed the company since 2011, when the story broke. While there has been little attention paid of late to any legal liability News Corp. might face here in the United States, Bloomberg Businessweek recently noted the following:
In the U.S., the Department of Justice continues to investigate News Corp. under the Foreign Corrupt Practices Act (FCPA), a law that makes it illegal for U.S. companies to offer gifts or payments to government officials overseas to gain a competitive edge. “Certainly, within News Corporation, there remains a persistent, if not a paranoid, fear that the Department of Justice is going to move against them,” Wolff says. “The ultimate resolution has yet to take place.”
In 2011, News Corp. hired D.C. law firm Williams & Connolly to handle the FCPA investigation. In March, the Wall Street Journal reported that in addition to looking into the phone-hacking and police bribery charges in London, the DOJ has also been investigating allegations that Journal employees in China gave gifts to government officials in exchange for information. According to the Journal, the federal probe is nearing completion—possibly setting the stage for Williams & Connolly and the government to begin negotiating a settlement. “You hire Williams & Connolly because it says, ‘We are local, we get the game, and we are innocent. Oh, and by the way, if we’re not, we can work out a deal,’” says Levick, the crisis management fixer in Washington.
Nathaniel Brown, a spokesperson for News Corp., declined to comment on the status of its talks with Justice over the hacking case, and Justice did not return a call for comment on this aspect of the case Monday evening. But if News Corp. is indeed in the middle of settlement negotiations with Justice, Fox News going to war with Holder could put the two companies in an awkward situation. News Corp. would need the indulgence of prosecutors presumably trying to extract enormous sums of money from Rupert Murdoch’s company, while holding over his head the potential of prosecution under the Foreign Corrupt Practices Act. At the same time, Fox News has every incentive—as well as a responsibility—to be harshly confrontational with a Justice Department that has crossed a dangerous legal line with one of its reporters, a line no other recent Administration has been willing to cross.
The confusing volley of statements this weekend suggests that what we witnessed was a collision of interests between Fox News and News Corp. Fox reporters, especially Rosen, have to hope that any settlement negotiations between News Corp. and Justice won’t distract Fox from pursuing legitimate questions about how Rosen has been treated. Monday evening, News Corp. declined to comment, as did the Department of Justice.
Photograph by Stephen Lovekin/Getty.