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MinM Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-12-11 05:51 PM
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6. Yet an earlier version of HackGate...

Floorgraphics v. News America
NBC News
updated 7/21/2011 8:04:08 PM ET

Justice Department prosecutors are reviewing allegations that News Corp.s advertising arm repeatedly hacked into the computers of a competitor in the United States as part of an effort to steal the rival firms business, according to a lawyer for the company.

Bill Isaacson, the lawyer for Floorgraphics, a New Jersey-based advertising firm, told NBC News he was contacted this week by two federal prosecutors and an FBI agent based in New York seeking information about claims that the firms computers were hacked by News America Marketing, the advertising division of Rupert Murdochs News Corp., seven years ago.

The allegations were first reported to the FBI in 2004 and prompted investigations at the time by the bureau, the Secret Service and the New Jersey Division of Criminal Justice, according to documents obtained by NBC News and congressional correspondence.

While never prosecuted, the claims became a key part of a civil lawsuit that Floorgraphics filed against News America. The case was resolved six days into a 2009 trial, when News America agreed to buy Floorgraphics' assets for $29.5 million as part of an out-of-court settlement.

The renewed interested in the incident appears to be part of a broader Justice Department probe into News Corp. ordered last week by Attorney General Eric Holder in the wake of disclosures of rampant phone hacking by reporters at the News of the World, the now-shuttered News Corp. newspaper in London. The claim made by Floorgraphics involves alleged computer crimes, not phone hacking, and is the only such allegation that has surfaced against News Corp. in the United States...

The inquiry into Floorgraphics could pose a problem for another of Murdochs top newspaper executives: Paul Carlucci, the publisher of the New York Post. Carlucci also has been the longtime chairman and chief executive of News America and has been accused in three lawsuits of creating a cut-throat competitive culture at the company, including showing his employees a scene from the movie The Untouchables in which the mobster Al Capone crushes a rivals head with a baseball bat.

Carlucci has denied the incident. Asked if Carlucci had any knowledge of the hacking of Floorgraphics computers, company spokeswoman Halpin said via email: Certainly not. No one at News America Marketing had any knowledge of the alleged incident until the claim was made that it had happened. ...

Floorgraphics was a relatively small start-up firm based in Princeton, N.J., at the time that the computer hacking allegations arose. The firm specialized in creating on-floor advertising displays at grocery store chains such as Safeway a line of business that put it in direct competition with News Americas own in-store ad business.

Testifying in another civil case two years ago, George Rebh, one of the two brothers who owned Floorgraphics, described a 1999 lunch with Carlucci in which the News America executive allegedly threatened to destroy his company.

According to the companys lawsuit, News America that year launched a deliberate and malicious campaign to do that by, among other actions, threatening retailers who did business with Floorgraphics, creating confusion in the marketplace by spreading rumors that it was about to go out of business and breaking into the firms password- protected computer system to acquire information about its past and future business contracts.

According to a forensic report that a computer security firm prepared for Floorgraphics as part of its civil case against News America, the security breach was traced to the IP address of a News America computer.

The hacker gained unauthorized access on 13 different occasions between Oct. 6, 2003 and Jan. 13, 2004, viewing floor ads that Floorgraphics had installed in retail customers stores as well as images, instructions and schedules for ads it was preparing to install in the coming months, according to the report.

FBI agents originally visited Floorgraphics offices to examine its computers in early 2004 and the case was initially assigned to a prosecutor working for Chris Christie, then the U.S. attorney in New Jersey and now the states governor. But its unclear how far it was pursued; a company source told NBC that the FBI agent assigned to the matter later told the firm that agents were too busy at the time working on security for the 2004 Republican convention in New Jersey...


NYT reporting on Carlucci and News Corps payments in US
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