Probe of News Corp.'s U.S. Hacking May Depend on Statute of Limitations

Last Updated Jul 22, 2011 4:51 PM EDT

The chances of the federal probe into News Corp. (NWS)'s alleged hacking of a U.S. ad agency computer resulting in an actual prosecution are slim: Although offenses against the federal Computer Fraud and Abuse Act carry up to five years in prison, there is also a two-year statute of limitations on bringing actions under the statute, at 18 U.S.C. § 1030 (g). (The alleged acts allegedly occurred in 2003 and 2004. Allegedly.)

Other than that, what News' supermarket coupons unit, News America Marketing Group, did to rival Floorgraphics Inc. fits the bill for such a prosecution. NAM was based in Connecticut and FGI in New Jersey, so the hacking may have crossed state lines, making it a federal violation. The acts also allegedly did FGI more than $5,000 in damage -- the company lost most of its business once News had gotten access to its clients' advertising plans and sales records, the lawsuit alleged at the time. News Corp. even confessed that the hacking occurred to Bloomberg yesterday:

Suzanne Halpin, a spokeswoman for News America Marketing, said in a statement that the accessed website "was available to hundreds, if not thousands, of Floorgraphics retailers, representatives of consumer packaged goods companies and Floorgraphics employees."
"There is considerable employee movement within this industry, and we believe it was someone with an authorized password" who was using a News America Marketing computer, she said. "News America Marketing condemns such conduct, which is in violation of the standards of our company."
Three federal investigations
NBC reported that FGI's lawyer, Bill Isaacson, was contacted this week by two federal prosecutors and an FBI agent about the hacking claims. The probe is the third known into the U.S.-based dealings of News. Sen. Frank Lautenberg (D-N.J.) also wrote again to the U.S. attorney general asking that he probe the hacking of FGI.

BNET first reported News' hacking of FGI in 2009. At the time, in 2005, an assistant to former New Jersey U.S. Attorney Chris Christie said the FBI was looking into it (Christie is now the governor, of course). But nothing seems to have come of the probe -- until now.

There is one reason that News America CEO (and current New York Post publisher) Paul Carlucci (pictured) isn't yet in the clear. Although the statute of limitations is just two years, FGI did act to report the hacking to the feds within the two-year period. It also sued News Corp. within that period. Those actions may -- just -- toll the statute limitation. In which case, News' admission that the hacking occurred ought to prove quite controversial among its management, because Carlucci and News CFO David DeVoe also knew of the alleged offense within the statutory period for action.