Gawker's mole at Fox News gets served with search warrant, under investigation for grand larceny

Via Drudge and Twitchy, just a reminder that your parents were right: what starts in laughter often ends in tears, or in this case, hefty legal bills.  Gawker’s Joe Muto decided to become a “mole” at Fox News and leaked raw video clips to his real employer.  That might sound like a joke to some, but to others — say, prosecutors — it sounds a lot like corporate espionage and grand larceny.  Muto got served this morning with a search warrant on suspicion of the latter charge and watched as his laptop, iPhone, and notebooks got hauled off.

Poynter and Twitchy have Muto’s tweets, and Poynter adds this:

At a talk earlier this month at UNC, Fox News CEO Roger Ailes said of Muto, “The mole shows a culture that believes in theft, a lack of loyalty, turning on his colleagues, lying to management, and there are some real, ethical, serious questions about it.”

In a letter to Gawker publisher Nick Denton dated April 12, lawyers for Fox News said, “Muto’s admissions are admissions of likely criminal and civil wrongdoing on both his and Gawker’s part, which will be the subject of further intensive investigation. … Gawker should immediately stop publishing information and videos that have been unlawfully obtained by or from Joe Muto and return them to Fox News.”

If you’re wondering how lifting a few unaired clips of video amounts to grand larceny, be sure to read last week’s analysis of the issue from Forbes’ Kashmir Hill.  Grand larceny requires that the theft amounts to more than $2500 in value, which might be tough to prove under ordinary circumstances for unaired video.  Unfortunately for Muto — and probably Gawker, too — they set the price themselves:

Lawyers for Fox News sent letters to both Muto and Gawker last week, warning them that their actions were “likely criminal,” and they may have a fairly strong case.

One charge that might be considered for Muto is “computer tampering.” Though Muto, as a (then) associate producer for The O’Reilly Factor had legitimate access to the Fox News outtake videos that he passed along to Gawker, New York law forbids “unlawful duplication of computer related material…[that] wrongfully deprives or appropriates from an owner an economic value in excess of $2,500.” Muto was fingered by Fox as the Mole because he had accessed two behind-the-scenes videos — of Newt Gingrichbeing groomed ‘like a circus walrus’ and Mitt Romney bantering with Sean Hannity — that wound up on Gawker in recent weeks. Gawker told my Forbes colleague Jeff Bercovici that it paid Muto $5,000 for his posts and for those videos, which, by my count, is indeed in excess of $2,500.

Grand larceny may not be the end of the charges, either:

“If I as a company hire someone to break into another company’s database, I could be charged with a crime,” says New York-based Joe DeMarco, a former federal prosecutor who works on Internet crime cases. He declined to talk specifically about the Gawker case, but was willing to speak generally about payments to employees for proprietary information. “Absent matters of public concern, i.e. legitimate whistle-blowing, purchases of inside information raise legal issues. When you’re paying an insider for live, real-time inside information, the chance that you’re committing a crime is pretty good.”

That has the possibility of exposing Gawker management to criminal charges, too.  The fact that both are media companies makes the liability even worse, one would imagine.

Will Fox pursue charges to their conclusion?  Perhaps, perhaps not.  Either way, this case demonstrates the need for media outlets to consult with lawyers before launching unprecedented operations against their competition or opposition.  That’s a lot less expensive than having to consult with the attorneys after the fact.

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