Gossip Columnist Acknowledges Page Six Payola

May 18, 2007 -- Richard Johnson, editor of Page Six and one of the most powerful gossip columnists in the media world, has admitted in today's New York Post to accepting a cash payment from New York restaurateur Nello Balan. Balan has been regularly mentioned in Page Six, the famed and widely read gossip page of the Post.

The Post reported that Jared Paul Stern, a former freelance writer for the newspaper, is threatening to sue the paper and sent a four-page litany of alleged ethical and legal violations by the gossip column. The Post reported that Stern's allegations by another Post staffer and self-proclaimed disgruntled employee, Ian Spiegelman, would be part of Stern's threatened lawsuit. A copy of the statement was obtained by ABC News' Law & Justice Unit. (Click HERE to read).

The document alleges that "accepting freebies, graft and other factors was not only condoned by the company, but encouraged as a way to decrease the newspaper's out-of-pocket expenses."

Friday's Page Six published those allegations, along with a point by point rebuttal in what observers call the longest Page Six article in history.

The one allegation Page Six admitted to was that of a $1,000 cash Christmas gift in 1997 from restaurateur Balan to Johnson. The Post's editor in chief admits the bribe was unethical.

"Richard Johnson made a grave mistake in accepting cash from Nello Balan," editor in chief Col Allan said Thursday, as quoted by the Post.

"[Johnson] was reprimanded, and policies were adopted that render such ethical lapses completely unacceptable."

Balan was featured in Page Six as recently as last week, when a May 12 item referred to him as a "restaurateur to the stars."

Neither Johnson nor Balan immediately returned calls for comment.

The allegations seem to have struck a nerve at the Post. Some of Johnson's normally chatty friends in the gossip circle declined to comment. But when Lloyd Grove, a former gossip columnist with the New York Daily News, was asked if he was surprised to hear about the cash transfer, he said, "It certainly doesn't look good."

Grove, who is currently a magazine writer, added: "In my experience, [this is ]pretty darn unique. Cash money pocketed for items -- that's just not done. It's hard to avoid getting the odd bottle of wine or the cheese basket, fruit basket. In New York everything is much looser, but not so loose that you could take money from people."

So how often do gossip columnists receive goodies and meals?

"It's a fairly frequent occurrence...it's just part of doing business," said Grove. "I don't feel ethically tainted because I've eaten something. Reporters all the time go to lunches and events. They often eat for free."

Stern himself was the subject of accusations that he tried to extort money from supermarket magnate Ron Burkle in exchange for favorable coverage. Federal law enforcement officials told ABC News last summer that they were looking into those allegations but they did not result in any criminal charges.

Spiegelman's statement seems to open a window onto the shadowy world of the gossip industry. In one of his claims, Speigelman suggests that favoritism factored into the newspaper's political coverage. News Corp., the parent company of the Post, is owned by conservative media mogul Rupert Murdoch.