Figures don't lie but Liars can figure

The MSM has another credibility problem and it is getting very little press attention. In addition to questions of bias and fraudulent reporting, now allegations are starting to surface over inflated circulation numbers in the Newspaper business.

Why is this an issue? Simple, because the advertising rates these publications charge is based on the paper's circulation. If advertisers are being deliberately misled as to how many people see their advertisements, they are being defrauded.

Two years back The Dallas Morning News quietly settled with some advertisers when accusations began to surface. Just this week three former New York Newsday employees were arrested as part of a SEC/Federal investigation into bogus circulation numbers involving that Long Island based newspaper.

It doesn't surprise me in a bit that some in the Newspaper industry see the need to inflate t heir circulation numbers. Because these publications make their living based on such sales and lower circulation obviously hurts their bottom line. People just don't read newspapers as much as they used to. With reason, you can go to the internet and read these same newspapers without having to pay. Why should someone pay for the same service. I think the MSM is finding out that the internet is turning into a curse for them.

Another issue with this story is its total lack of coverage by the MSM. Other than Newsday itself, very few people are following it. My guess is because it hits too close to home for the MSM and they rather bury their heads in the sand in regards to this problem. They have enough issues with their subscribers as is due to people now questioning how reliable their reporting truly is.

Hat Tip to Ed at Captain's Quarters(http://www.captainsquartersblog.com/) for alerting me to this story.

The entire Newsday article can be read at- http://www.newsday.com/business/ny-bzcirc0616,0,6014118.story?coll=ny-top-headlines

Arrests made in Newsday circulation scandal
BY ROBERT E. KESSLER
STAFF WRITER
June 16, 2005

Federal agents made the first arrests Wednesday in Newsday's yearlong circulation scandal, charging that three former officials at Newsday and its sister publication Hoy were involved in schemes to inflate the publications' circulations, costing advertisers millions of dollars.

Investigators detailed some of the methods used to inflate the number of copies reported sold, including dumping papers, arranging for phony sales by street hawkers to fool auditors and coaching distribution agents to lie to auditors.

The three officials, who were arrested in early morning raids at their homes, were Edward Smith, 65, of Hicksville, who was most recently an independent circulation consultant to Newsday and before that administrative manager of circulation; Robert Garcia, 42, of Queens Village, who was the sales and distribution manager for Hoy and was Newsday's circulation manager in New York City; and Richard Czark, 53, now of Bluffton, S.C., who was senior vice president of circulation for Hoy and before that worked in various advertising and circulation jobs at Newsday.

Each was charged with conspiracy to commit mail fraud.Newsday has admitted that it had inflated its circulation by about 100,000 copies on weekdays and Sunday for the 12 months ended September 2003; Hoy's circulation was inflated by 45,000 copies during the same period.

Parent Tribune Co. has set aside $90 million to reimburse advertisers who paid for fraudulently inflated circulation. In addition, nearly two dozen employees have left the papers as a result of the investigation.

"Today's arrests ... are intended to restore transparency and fairness to the newspaper and magazine advertising marketplace," U.S. Attorney Roslynn Mauskopf said.

Sources familiar with the case have said that the arrests are just the first growing out of the investigation into the circulation practices at Newsday and Hoy by the federal Postal Inspection Service and the Criminal Investigation Division of the Internal Revenue Service. Several other former Newsday executives are negotiating plea bargains with prosecutors, the sources said.

The affidavit filed in the case said four people in addition to those charged are expected to enter guilty pleas. The federal prosecutors heading the investigation, Elaine Banar and Jed Davis, declined to comment.

Smith and Garcia were taken in handcuffs to U.S. District Court in Brooklyn, where Magistrate Steven Gold released them each on $250,000 bail, pending future hearings. Both declined to comment, as did Smith's attorney, Megan Brackney.

Garcia's attorney, Margaret Shalley, said her client "is not guilty of any charges.Czark was brought before a federal magistrate in South Carolina and released, pending a future hearing in Brooklyn, officials said.

The mail-fraud complaint filed by postal inspectors said the three were involved in schemes between 2002 and 2004 to illegally inflate circulation.