Amazon CEO Jeff Bezos has a solid case against the National Enquirer and its parent company, American Media Inc., for alleged blackmail and extortion, management expert Jeffrey Sonnenfeld told CNBC on Monday.
AMI and the Enquirer's alleged actions were "pure extortion," the senior associate dean at the Yale School of Management said on "Squawk Box." This is the way "anybody in the court of law or Webster's dictionary defines extortion," he said. Extortion is the practice of making a threat in order to force someone to take an action or give up something valuable.
In a bombshell blog post Thursday, Bezos accused the Enquirer's publisher of threatening to post sexual pictures that the billionaire had texted to his mistress and news anchor, Lauren Sanchez. He accused AMI of blackmail and extortion but has yet to sue them.
Meanwhile, federal prosecutors are reviewing the Enquirer's handling of the story, a source told NBC News. They want to determine whether the tabloid violated an immunity agreement its parent company struck last year in the investigation into Michael Cohen, President Donald Trump's former personal lawyer. That deal required the company to agree to "commit no crimes whatsoever."
AMI denied Bezos' claims, saying in a statement on Friday, "American Media believes fervently that it acted lawfully in the reporting of the story of Mr. Bezos," but added that the board determined "it should promptly and thoroughly investigate the claims." A spokesman for AMI told CNBC on Monday the company — run by David Pecker, a longtime Trump friend — declined to comment beyond Friday's statement.
Elkan Abramowitz, attorney for Pecker, denies Bezos' allegations. "It absolutely is not extortion and not blackmail," Abramowitz said Sunday on ABC's "This Week." "The story was given to the National Enquirer by a reliable source that had been giving information to the National Enquirer for seven years prior to this story. It was a source that was well known to both Mr. Bezos and Miss Sanchez."
The Daily Beast, citing multiple sources, said Lauren Sanchez's brother, Michael, was the source of the texts. The news site said Michael Sanchez, a Trump supporter, declined to comment.
Some suspect the story may have been politically motivated, including Stu Zakim, a former spokesman for AMI who last week on CNBC questioned the wisdom of attempting to use leverage on the world's richest man. Jerry George, who spent 28 years at the tabloid, including as senior editor and Los Angeles bureau chief, said on CNBC on Friday, "I think American Media and David Pecker tried to make amends and brought this divorce story to the president as a means of kissing and making up."
Sonnenfeld, who views Bezos as a "victim" in this story, said the Amazon chief deserves a Pulitzer Prize in "courage" for making public AMI's actions. Sonnenfeld, an award-winning author, said some lawyers say Bezos could go for property damages in the Enquirer story. "Reputation is always considered property damage," he added. Last week, Sonnenfeld told CNBC the Enquirer saga is a "warning volley over the bow" to Amazon board to make a succession plan for Bezos.
Amazon was not available to respond to CNBC's request for comment.
— CNBC's Michelle Fox contributed to this report.