IBT Media sues Newsweek CEO, demanding he return the magazine

IBT Media is asking a New York court to void a 2018 deal in which Newsweek was set up as an independent company, claiming the deal was nothing more than a public relations stunt to shield the magazine from bad press.

IBT Media, founded by Etienne Uzac and Johnathan Davis, acquires Newsweek in 2013. Uzac sold his 50% stake in the magazine publisher to Dev Pragad in September 2018, separating IBT and Newsweek in a deal announced shortly before the Manhattan District Attorney charged Uzac and IBT in a money laundering investigation that targeted supporters of Korean American cleric David Jang. Uzac, IBT and several other members of Jang’s Olivet cult and businesses they controlled pleaded guilty to money laundering and fraud a few months later. Pragad, Newsweek’s chairman and CEO, was, like Davis, a member of Olivet at the time.

The dispute between Newsweek’s shareholders burst into public view in April when Pragad announced in a memo to all staff that he had left Olivet and wanted to protect the company and newsroom from Jang supporters. Davis, whose wife Tracy Davis is the former president of Jang’s Olivet University, accused Pragad of weaponizing the newsroom against him after Newsweek reported that Olivet University is in legal trouble again with federal agents searching its California campus as part of a new money laundering investigation.

IBT Media filed its lawsuit in New York state court on Thursday. On the same day, the New York Department of Education shut down operations at Olivet University in New York, accusing Tracy Davis and other top executives of mishandling and failing to clean up criminal activity after the conviction for fraud of 2018. Johnathan Davis is CEO of IBT Media.

Pragad became CEO of IBT Media in 2016 after the company ran into financial difficulties under Uzac and Davis. He was an employee at the time, not a shareholder.

The lawsuit alleges that Davis, Uzac and Pragad had privately agreed that Pragad would return his shares to Uzac as soon as the cloud created by the Manhattan prosecutor’s investigation lifted.

Pragad approached Uzac and Davis with a plan “to protect the Newsweek mark of the negative media attention resulting from the investigation,” the lawsuit states. “Pragad then proposed that IBT announce a transaction in which the ownership of Newsweek would be transferred to him. Pragad said he would continue to handle it the same way as before, but the public separation would isolate Newsweek away from the spotlight and avoid the brand suffering reputational damage as a result of the investigation.”

Uzac and Davis ultimately agreed to the proposal on the condition that Davis remain co-owners and that Pragad agree to “transfer Newsweek return to IBT, and thereby restore Uzac’s position in the ownership structure “when things calm down”, the lawsuit alleges. Lawyers involved in the deal were unaware of this deal, “which the three friends understood….[would occur] when Uzac determined he had resolved his legal issues and all associated complications and informed Pragad that he was ready to resume his role with the company,” according to the lawsuit.

IBT says the two companies continued to operate as one entity for years after the September 2018 separation and that the initial purchase price of $5,000 and subsequent installments totaling $1.5 million never been paid.

“That’s because the purchase price was totally made up – and, in fact, not a purchase price at all,” the lawsuit claimed.

Pragad started moving to exercise control over Newsweek and walking away from Olivet as Uzac neared the end of his community service for his fraud conviction, according to the lawsuit.

Newsweek contacted IBT Media, Newsweek, Johnathan Davis, Etienne Uzac and Dev Pragad for comment. IBT Media and Uzac did not respond.

“This case is about the rightful and legal ownership of Newsweek and the duplicity of Dev Pragad,” said attorney Michael C. Hefter of Hogan Lovells, on behalf of Davis. “As we claim, we will show that the purchase agreement devised by Dev Pragad is meant to transfer ownership of the Newsweek IBT’s remote assets was nothing more than a front. We will also show that the image cultivated by Dev Pragad, as the supposed owner of Newsweek and architect of its success, is a fiction.”

In the name of Pragad, Newsweek’s Attorney Robert Weigel of Gibson Dunn & Crutcher LLP responded, “IBT’s lawsuit against Newsweek and its CEO Dev Pragad goes against express written agreements. This is a desperate attempt by IBT to avoid its clear obligations and it is completely baseless. IBT sold Newsweek at NW Media Holdings nearly 4 years ago. Under the written contract, IBT must currently Newsweek over $30 million. In the face of calls to repay its obligations to NewsweekIBT has filed a baseless lawsuit seeking to claim proceeds from a company that since being released from the anchor of IBT’s admitted criminal conduct and its ties to Olivet University , has thrived under its new management team, including CEO Dev Pragad.”

Newsweek provided this statement: “As stated by corporate counsel Robert Weigel of Gibson Dunn & Crutcher LLP, this lawsuit is without merit. It was brought by a company convicted of fraud and money laundering. silver in 2020 and following Newsweek seeking to recover tens of millions of dollars from IBT Media. Simultaneously, IBT Media attempted to cancel Newsweek’s editorial independence. Protecting the division between editorial and management/ownership is essential to the effectiveness of any news organization and Mr. Pragad has championed this independence and integrity as CEO. NW Media Holding Corp. and Mr. Pragad are eager to get the story straight and will act to dismiss and vigorously defend themselves against the unsubstantiated allegations in the complaint.”

The lawsuit promises to draw more attention to the evangelical sect of David Jang and its followers, already under increasing pressure from authorities investigating their involvement in money laundering for criminals in the United States and China.

The history of the different Olivet entities dates back to 2000, according to their different websites. This was the year Jang founded Olivet Theological College and Seminary, later incorporated as Olivet University. Both Olivet Assembly USA and Olivet Assembly Europe say they started in 2000 as fellowships of churches by former seminary students. Olivet World Assembly, which also operates out of Dover, New York, says it started the same year. His website now lists more than 120 countries in which he says he has members.

While Jang’s supporters say their department is truly global, federal investigators are focusing on Olivet’s ties to China; the college brings many Chinese students to the United States. A former student, a pastor named JianGang “Frank” Lan, has been charged in North Carolina with possession of counterfeit products. A North Carolina judge ordered Lan’s arrest last week after he failed to appear in court and set his bail at $1 million. Lan is in China, his lawyer said. Newsweek discovered Lan’s connections to the Olivet Assembly before Olivet University confirmed that he had graduated from the university.

Three senior law enforcement officials said Newsweek on condition of anonymity that they suspected links between the Lan case and Chinese organized crime and drug cartels, which are turning to China to buy the chemical precursors needed to manufacture the powerful opioid fentanyl which has been causing a wave of fatal drug overdoses in the United States.

Investigators from the Department of Homeland Security searched the Olivet campus in Anza, California in April 2021 as part of an investigation into money laundering, visa fraud and labor trafficking work, Newsweek reported.

The New York Department of Education decided to close Olivet University’s operations in the state on May 17, weeks after the Newsweek report and at the end of a two-year review process.

Deputy Education Commissioner William P. Murphy wrote to Olivet on Thursday, rejecting the college’s appeal of the May 17 decision, saying the college had done far too little to clean up its act of criminal activity that led to the indictment of the Manhattan District Attorney. He specifically cited Tracy Davis’ leadership role as a factor and prevented Olivet from reapplying for certification to operate in New York. The ministry shared the letter with Newsweek and declined further comment. The decision took effect immediately on Thursday.

Update 7/3, 8:30 p.m.: A response from an attorney representing Johnathan Davis, received after this story was published, has been added.

Editor’s note: As Newsweek continues to report on its shareholders, it does so independently. Neither Chairman and CEO Dev Pragad nor Johnathan Davis, co-owners of Newsweek, sees stories before they are published, and neither has influence over coverage. The editorial staff operates independently, serving its readers and respecting its journalistic mission.

Nancy Cooper

Global Editor

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