A Former Owner of Newsweek Pleads Guilty in a Fraud Scheme

The Manhattan district attorney’s office seized 18 computer servers from the headquarters of Newsweek magazine in Lower Manhattan on Jan. 18, 2018. On Friday, the raid yielded guilty pleas to fraud and money-laundering charges from two publishing executives in Manhattan Criminal Court.

Etienne Uzac, a former co-owner of IBT Media, the onetime owner of Newsweek, and William Anderson, a former chief executive of Christian Media, both pleaded guilty to one count of each charge, said the Manhattan district attorney, Cyrus R. Vance Jr.

Credit…Chester Higgins Jr./The New York Times

The pleas followed a yearslong investigation of ties between IBT Media and David Jang, a South Korean pastor, and Olivet University, a small Bible college he founded in Southern California.

Mr. Vance and a team of investigators working under him, including members of the Major Economics Crimes Bureau, uncovered misrepresentations of Newsweek’s finances that included a fictitious accounting firm called Karen Smith L.L.P., prosecutors said. Money ostensibly borrowed for office equipment was used for other purposes, according to the charges.

Journalists at Newsweek, including two top editors and a reporter, were fired in 2018 after they looked into IBT Media’s financial dealings and legal troubles in the weeks after the raid. Several others resigned. The district attorney’s office filed criminal charges against Mr. Uzac and Mr. Anderson in October 2018, accusing them of a multimillion-dollar fraud and money-laundering conspiracy.

The charges also named IBT Media, which bought Newsweek from IAC/InterActive in 2013. IBT Media pleaded guilty on Tuesday and agreed to forfeit $30,000.

In a statement on Friday, Mr. Vance called the crime “a massive fraud scheme through which a group of sophisticated criminals illegally moved tens of millions through our Manhattan marketplace by brazenly overstating the financial health of their companies.”

Attorneys for Mr. Uzac, Mr. Anderson and IBT Media did not immediately reply to requests for comment.

Newsweek was founded in 1933 as a newsweekly to rival Henry Luce’s Time. In 1961, it was bought by The Washington Post Company. At its peak 30 years later, it had a circulation of more than 3.3 million. As late as 2007, it had 10 international bureaus.

In 2010, The Washington Post Company offloaded it — for $1 — to the billionaire investor Sidney Harman, who also assumed $40 million in liabilities. He merged it with The Daily Beast, the IAC web publication. Newsweek was sold to IBT Media for an undisclosed price.

The sentencing trial for Mr. Uzac and Mr. Anderson is scheduled for April 20.