Federal probe focus on Fox News payments

Investigation involves former chairman’s alleged mistress

Federal prosecutors are looking into whether Fox News Channel and its parent company tried to disguise a $3.15 million payment to a former employee who said she had a 20-year affair with the network’s former chairman, Roger Ailes, according to people involved with the investigation.

Investigators in the U.S. Attorney’s Office for the Southern District of New York have focused on a payment to Laurie Luhn, a former Fox booker and event planner who left the company in 2011 with the seven-figure severance package. Luhn later claimed that she had engaged in a consensual but mentally abusive relationship with Ailes and that several of his lieutenants facilitated the assignations and were aware of his alleged mistreatment of her.

Prosecutors have taken testimony from several witnesses, including Luhn, about her severance package and how it was recorded on Fox’s books, according to those familiar with the probe.

The size of the payout is of less concern to the investigation than the manner in which it was accounted for, those people said. Prosecutors are investigating whether Fox News Channel and its parent company, 21st Century Fox, improperly accounted for the payments to Luhn and other ex-employees to minimize their impact on Fox’s books.

In addition to Luhn, they have taken testimony from at least three other former Fox employees, including former chief financial officer Mark Kranz, former Fox media relations chief Brian Lewis and former host Juliet Huddy, over the past six weeks, according to people involved with the investigation.

Kranz, who retired from Fox in August, is seen as a potentially crucial witness for the prosecution; people close to the investigation have indicated that he has been offered immunity. Huddy received a $1.6 million settlement from Fox in January after alleging that former Fox host Bill O’Reilly had harassed her. Fox reportedly paid $8 million in 2013 to settle Lewis’ contract.

Luhn’s case is of particular interest to prosecutors because of the unusual nature of her severance. One of her settlement checks is signed by a corporate executive based in Los Angeles.