In early February 2019, Amazon CEO Jeff Bezos published an explosive blog post accusing the National Enquirer’s owner, American Media Inc. (AMI), of blackmailing him. Bezos’s accusations could have serious consequences for AMI. In September 2018, AMI signed a non-prosecution agreement with the US Attorney’s Office for the Southern District of New York.
As part of the non-prosecution agreement, AMI must cooperate with the government’s investigation of a hush-money payment made to Karen McDougal from President Donald Trump. The non-prosecution agreement also mandates that AMI “shall commit no crimes whatsoever” after its execution. If the government determines that AMI did blackmail or extort Bezos, then it may charge AMI “for any federal violation of which this Office has knowledge.” In other words, if this was a crime, then all bets are off and AMI no longer enjoys the protection of the non-prosecution agreement.
In addition to heading Amazon, Bezos owns The Washington Post, which has been critical of President Trump’s administration. AMI and its CEO, David Pecker, are closely linked to President Trump. After the National Enquirer published texts between Bezos and his girlfriend, Bezos hired private investigators to find out how the media group had obtained his texts.
In two e-mails quoted in Bezos’s post, AMI employees describe salacious photos of Bezos in its possession and offer not to publish additional intimate texts and these salacious photos in return for certain concessions by Bezos. The “proposed terms” of the agreement are outlined in an e-mail from AMI’s deputy general counsel. Central to the proposal is that AMI will not publish other texts and photos in return for
A public, mutually-agreed upon acknowledgment from the Bezos Parties, released through a mutually-agreeable news outlet, affirming that they have no knowledge or basis for suggesting that AM’s coverage was politically motivated or influenced by political forces, and an agreement that they will cease referring to such a possibility.
It is worth noting that the AMI proposal also includes some legal terms that one would not normally expect in a blackmail threat, such as a “full and complete mutual release of all claims” between AMI and Bezos, and the use of JAMS mediation to resolve any disputes.
Following Bezos’s public accusation, there have been media reports that the New York federal prosecutors are considering whether AMI broke the law with respect to its demands to Bezos. AMI’s conduct may have been questionable, but it is far from clear that federal law makes it a crime.
Blackmail and extortion are related, but different, crimes. Extortion is generally defined as using threats of force or fear to coerce someone to take action when the person has a legal right to take action. It also applies when a threat of force is used to coerce someone not to take action. Here is a classic example of extortion in the Mafia style: “If you don’t pay me $1,000 a month to protect your store, then we will kill you.”
The other side of the coin is blackmail. Blackmail is generally understood to be a threat to reveal embarrassing or damaging personal information about someone unless he or she complies with a demand. Blackmail usually does not involve the threat of physical force, only a demand for money. Here is a classic example of blackmail: “If you don’t pay me $1,000, then I will tell your wife that you are having an affair.”
There has been much academic commentary about the “blackmail paradox.” The so-called paradox is that although the two parts of blackmail are technically legal, their combination is a crime. There is nothing illegal about revealing true information about someone, even if it is extremely damaging, and there is nothing illegal about demanding money from someone. But if you demand money not to reveal damaging information, it is illegal. Despite this “paradox,” blackmail remains a crime on the federal and state books.
States have statutes prohibiting extortion and blackmail. For example, New York law provides that a “person obtains property by extortion when he compels or induces another person to deliver such property to himself or to a third person by means of instilling in him a fear that, if the property is not so delivered, the actor or another will” take certain action, including causing “physical injury to some person in the future,” causing “damage to property,” accusing the person of a crime, or “expos[ing] a secret or publiciz[ing] an asserted fact, whether true or false, tending to subject some person to hatred, contempt or ridicule.”
Many prosecutions for blackmail and extortion will be handled on the state level. The prosecutors handling the AMI matter will no doubt consider whether AMI violated state laws because under the terms of AMI’s non-prosecution letter, if AMI committed a state crime, that would be a breach of the agreement as well.
This article will focus on the federal statutes that prohibit blackmail and extortion and then analyze the Bezos situation in light of them. Some of the statutes have a broader reach, and others have a limited scope.
First is 18 U.S.C. § 872 (Extortion by Officers or Employees of the United States). This statute prohibits federal employees, or anyone representing himself to be a federal employee, from “commit[ting] or attempt[ing] an act of extortion.” “Extortion” is separately defined in 18 U.S.C. § 3559(c)(2)(C) as “the extraction of anything of value from another person by threatening or placing that person in fear of injury to any person or kidnapping of any person.” The penalty for violating § 872 depends on the amount of the extortion. If it is under $1,000, then it is only a misdemeanor. If the amount demanded is over $1,000, then it is a felony punishable with up to three years in prison.
Second is 18 U.S.C. § 873 (Blackmail). This statute is limited to threats to report someone for violating the law unless payment is made. It provides, “[w]hoever, under a threat of informing, or as a consideration for not informing, against any violation of any law of the United States, demands or receives any money or other valuable thing, shall be fined under this title or imprisoned not more than one year, or both.” The scope of the federal blackmail statute is very limited because it does not cover threats to reveal personal or embarrassing information, as in the Bezos matter.
Third is 18 U.S.C. § 874 (Kickbacks from Public Works Employees). On first glance, this statute appears quite limited in scope. It provides that “[w]hoever, by force, intimidation, or threat of procuring dismissal from employment” induces someone else who is “employed in the construction, prosecution, completion or repair of any public building, public work, or building or work financed in whole or in part by loans or grants from the United States” to give up part of the compensation for the work. Given the scope of federal grants, it is possible that this statute could be employed in a variety of contexts where federal grant money is used for public projects.
Fourth is the statute that prohibits transmitting extortion threats, 18 U.S.C. § 875 (Interstate Communications). This statute makes it a felony to send an interstate communication with the “intent to extort from any person, firm, association, or corporation any money or other thing of value” when the communication either includes a “threat to kidnap any person,” a “threat to injure the person of another,” or a “threat to injure the property or reputation of the addressee or of another or the reputation of a deceased person or any threat to accuse the addressee or any other person of a crime.”
Fifth is 18 U.S.C. § 876, which prohibits mailing threatening anonymous communications. It provides that anyone who sends “any communication with or without a name or designating mark subscribed thereto, addressed to any other person” that contains the type of threats contained in § 875 is guilty of a felony.
Sixth is 18 U.S.C. § 880, which prohibits anyone from “receiv[ing], possess[ing], conceal[ing], or dispos[ing] of any money or other property which was obtained from the commission of any offense under this chapter.” This statute covers the situation where extortion is “successful” and the victim makes the payment.
These statutes can be employed together to enlarge the scope of charges against a defendant. Imagine a government employee who sends an extortionate letter and then receives money in return. He could be charged with the underlying offense under § 872, with sending the threat under § 875, and with receiving the money under § 880. Used together, these statutes provide federal prosecutors with a powerful arsenal of charges.
Federal statutes also prohibit extortionate conduct in other specific contexts. For example, 18 U.S.C. § 152(6) prohibits this conduct in a bankruptcy proceeding. It provides that a person who “knowingly and fraudulently gives, offers, receives, or attempts to obtain any money or property, remuneration, compensation, reward, advantage, or promise thereof for acting or forbearing to act in any [Chapter 11] case” could face up to five years in prison.
There are two other statutes that can be used to charge an individual with extortionate conduct, the Hobbs Act and the Travel Act.
The Hobbs Act, 18 U.S.C. § 1951, prohibits interference with commerce by threats or violence. It provides for a maximum sentence of 20 years in prison. The key section is the following:
(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.
The Hobbs Act defines extortion as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.”
The Justice Manual (formerly the U.S. Attorney’s Manual) sets forth four questions that “must be answered affirmatively” to bring a Hobbs Act charge:
Although the Hobbs Act has most famously been used in the union context, federal prosecutors have also made use of it aggressively in cases involving both public officials and private citizens. Plus, under the statute’s express language, corporate entities may be charged as well as individuals.
Courts have interpreted the Hobbs Act broadly. For example, “property” has been defined as “any valuable right considered as a source of wealth.” This definition means that almost anything can be the focus of an extortion charge. Moreover, the defendant need not create the fear of injury or harm himself; he may merely exploit an existing fear of injury to induce the victim to give up property.
The Hobbs Act is a confusing statute, particularly when trying to determine what conduct by private individuals—not acting “under color of official right”—falls within its bounds. Some courts have divided it into three types of offenses: (1) extortion by public officials under color of official right, (2) extortion by private individuals by force, and (3) extortion by private individuals by nonviolent threat.
Courts have held that the use of economic threats may be “wrongful” under the statute if the defendant has no claim of right to that property. However, there are some limits to the Hobbs Act in private commercial settings, even according to the Department of Justice. The Justice Manual provides that
the payment of money in response to a commercial bribe solicitation, that is, under circumstances where the defendant does not threaten the victim with economic harm, but only offers economic assistance in return for payment to which the defendant is not entitled, is not sufficient to prove extortion by fear of economic loss.
The Hobbs Act has been analyzed in hundreds of court decisions and numerous academic articles, and its exact contours are well beyond the scope of this article. Nonetheless, it is important to keep in mind that this statute addresses extortion by private individuals even where the threat is of economic loss rather than of physical injury.
The Travel Act, 18 U.S.C. § 1952, is not as complicated as the Hobbs Act, but still has a powerful reach. It prohibits interstate or foreign travel that aids “racketeering enterprises.” Specifically, it provides that “[w]hoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce” with the intent to (among other things) “further any unlawful activity” is guilty of a crime.
The key point here is that the Travel Act’s definition of “unlawful activity” includes “extortion, bribery, or arson in violation of the laws of the State in which committed or of the United States.” Therefore, under this definition, a violation of a state extortion law could form the basis of a federal Travel Act charge.
The federal Sentencing Guidelines have three sections that cover extortion and blackmail. For extortion by force or threat of injury, § 2B3.2 applies. This section can include charges under the Hobbs Act or 18 U.S.C. § 875(b), 876, or 877. The base offense level is 18, with enhancements for the amount demanded by the defendant or the loss to the victim. That enhancement can add up to seven levels to the Guideline offense calculation. This Guideline section, however, is aimed at extortion that uses threats of force of physical harm.
For extortion and blackmail that does not include threats of force or injury, the appropriate section is § 2B3.3. According to the Guidelines, “[t]his section applies only to blackmail and similar forms of extortion where there clearly is no threat of violence to person or property.” It may be applied to convictions of the Hobbs Act, as well as 18 U.S.C. § 873 or §§ 875–877. Not surprisingly, the base offense level for these nonviolent offenses is 8, lower than the offenses included in § 2B3.2.
Finally, there are separate Guidelines sections for racketeering charges, which include Hobbs Act and Travel Act charges. Section 2E1.2 provides for a base offense level of 6 for a Travel Act violation. Section 2C1.1 covers Hobbs Act violations under color of right and provides for a base offense level of 14.
As with many criminal statutes, the Guidelines calculation will usually result in a far lower sentence than the maximum sentence in the statute. Consider the Hobbs Act, which contains a 20-year statutory maximum but could result in a Guidelines sentence of less than a year.
There is no doubt that Jeff Bezos understood AMI’s offer to be blackmail. It certainly had coercive elements and threatened to expose Bezos to embarrassment and ridicule. It is clear that AMI’s offer was not blackmail under the federal statute because it had nothing to do with coercing Bezos not to report AMI for any legal violation.
As for extortion, there are two potentially fatal roadblocks to finding an extortion violation here. First, the Department of Justice would need to conclude that AMI’s demand that Bezos’s team provide a public statement “affirming that they have no knowledge or basis for suggesting that AM[I]’s coverage was politically motivated or influenced by political forces, and an agreement that they will cease referring to such a possibility” was a demand for “property” or a “thing of value.”
Extracting this type of public statement is not within the commonsense understanding of “property” or a “thing of value” because most people’s public statements would have little effect. But Bezos is not a typical victim, and his public statements could have considerable influence. He is a powerful, wealthy owner of a major corporation and a major media outlet. Imagine the value of having Bezos make a public statement that a particular start-up company has a bright future. That statement is a “thing of value” to the start-up, perhaps helping it obtain venture capital funding. But is it a “thing of value” to Bezos? Arguably, it is valuable to him to have control over what public statements he makes and does not make.
This analysis, however, is highly theoretical. The federal prosecutors who negotiated the AMI non-prosecution agreement may have little desire to press a novel legal theory about what constitutes a “thing of value” or “property” in court. As result, even if there is a legal theory that AMI sought to extract a “thing of value” or “property” from Bezos under threat of releasing damaging photographs, it seems unlikely that the prosecutors would press this theory such that AMI would lose the benefit of its non-prosecution agreement.
Second, the Department of Justice would have to find that AMI’s “threat” was a threat to cause physical or economic harm. There was no hint of physical violence in the e-mails. Although releasing information that Bezos was engaged in an extramarital affair may conceivably cause economic harm if investors or business partners backed away from his company, that would be an attenuated theory of injury even under the Hobbs Act. Once again, federal prosecutors may be unwilling to press this theory in court.
If Bezos’s public statement is “property,” then AMI’s conduct may have violated the New York statute because AMI used a threat that it would “expose a secret or publicize an asserted fact, whether true or false, tending to subject [Bezos] to hatred, contempt or ridicule.” As mentioned above, violation of state law would also be a breach of the non-prosecution agreement. Even that theory is a stretch because some texts exposing Bezos’s affair had already been published and any ill effects likely already felt by him.
Even if AMI’s conduct is not extortion, the Department of Justice will be on high alert for future violations. It no doubt will continue to use these federal statutes to aggressively prosecute other defendants under more straightforward facts.
