Federal probe of Fox News sex harassment payoffs heading to a grand jury

A federal grand jury will hear testimony on whether Fox News improperly handled financial settlements given to female employees who made sexual harassment claims against the company.

But the future of the investigation of Fox News — spurred by the sexual harassment allegations that led to the departure of its powerful former chairman Roger Ailes — remains unclear.

Whether the case will be pursued vigorously may depend on who is named to replace Preet Bharara, the former U.S. attorney who launched the investigation.

Bharara was fired Saturday by President Trump. His dismissal followed Trump’s request for the resignation of 46 U.S. attorneys, who are political appointees. Bharara, appointed by President Obama, did not comply with the request.

The move raises the question of whether the office will want to keep the legal heat on Fox in light of President Trump's long friendship with Ailes, who briefly advised him during the presidential campaign after he left the company in July.

Fox News has also been the president's favorite stop for press interviews. He is scheduled to sit down with the network’s Tucker Carlson on Wednesday and will appear on Jesse Watters’ program on Saturday. His last TV interview was with “Fox & Friends” on Feb. 27.

A 21st Century Fox representative referred to its previous statement when the news of the probe came to light last month in a court hearing on the sexual harassment case brought against the company by Fox News personality Andrea Tantaros.

“Neither Fox News nor [21st Century Fox] has received a subpoena, but we have been in communication with the U.S. attorney’s office for months — we have and will continue to cooperate on all inquiries with any interested authorities,” the company said.

The U.S. attorney’s office does not comment on the existence of any ongoing investigation.

One person briefed on the matter who is not authorized to discuss it publicly said the probe is focused on how the settlements were paid out and whether they were concealed from shareholders.

Mark Kranz, the former chief financial officer who worked under Ailes, is said to have been subpoenaed to appear before the grand jury. Kranz left the company shortly after Ailes’ departure in July.

Fox disclosed in regulatory filings last fall that it had spent about $35 million to settle sexual harassment claims — including $20 million to former Fox News anchor Gretchen Carlson, who filed a suit against Ailes — and “potential litigations” surrounding the executive.

But prosecutors are examining whether Fox properly disclosed previous payments. They are particularly interested in a $3.15-million payment made in 2011 to Laurie Luhn, a former Washington-based Fox News employee who lined up guests for the channel’s programs.

Companies are not required to report every settlement to investors, but they do have a legal obligation to disclose matters that would be material to investors.

Ailes has denied all sexual harassment claims made against him.

stephen.battaglio@latimes.com

Twitter: @SteveBattaglio

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