Audit Financial Journalism Ethics Quiz: Advanced Placement Final.

1. A newspaper that accurately quotes someone saying something that is almost certainly complete b.s. about a third party has:

A. Done its job.

B. Done a bad thing.

C. Earned an honorable mention from the American Stenographic Society.

D. Put itself in a spot where it might later have to clarify the record.

2. Accurately quoting the third party denying the thing said about it and claiming it knows nothing about the outfit that is talking about it:

A. Solves the newspaper’s problem.

B. Is an occasion for reflection.

C. Further enhances stenography credentials.

3. Running with the allegation after the sole source cannot be reached a second time and his organization leaves a message on an answering machine saying it has suspended operations due to an “extreme situation” is:

A. Wise.

B. Unwise.

C. Neither.

D. Both.

4. Declining to correct the record after a famous financial newspaper, which had run a similar story, publishes a correction on its story the size of a softball:

A. Is a sign of steadfastness.

B. Is a sign of stubbornness.

C. Is another occasion for reflection.

D. Is why all newspapers should be wiped from the face of the earth for all time.

This is not the biggest deal in the world, but the Ventura County Star, an E.W. Scripps Co. paper in Camarillo, California, ran a story under the headline “Madoff fallout cancels local folks’ D.C. trip,” reporting that residents had bought packages to the Obama inaugural from a Chicago charity, known as December Rain, but later learned that the charity had shut down and that they were out of luck.

The trouble is Madoff almost certainly had nothing to do with the local folks’ losing their tickets. The only support for the claim was the word of a person who was actually caught reneging on his promise to provide tickets and then disappeared.

The story starts this way:

At least four Ventura County residents and about two dozen others nationwide have lost out on inauguration packages in Washington, D.C.

The deals they purchased were supposed to include tickets to President-elect Barack Obama’s swearing-in ceremony and a chance to meet Obama.

Okay, so far (the text, anyway, not the headline, which we’ll get to). But before dropping out of sight, the Chicago charity told the Star that it was the victim of the Madoff scandal, specifically one of Madoff’s so-called feeder funds, which collected money from investors and invested with Madoff (the emphasis is mine).

But they have been snagged in a bizarre web involving a New York investment firm said to be reeling under the weight of the Bernard Madoff financial scandal and a Chicago-based children’s charity, which announced Friday it has temporarily shut down.

Then the feeder fund is named:

December Rain said it purchased the packages through Fairfield Greenwich Group, a New York investment firm that is said to have direct ties to Madoff’s securities firm. The Wall Street Journal has reported that Fairfield Greenwich appears to be the biggest casualty in Madoff’s alleged $50 billion Ponzi scheme

December Rain Executive Director Paul Saulnier was critical of Fairfield Greenwich in an interview earlier this week, saying he never received the promised ticket packages.

Hmm. In the next paragraph, Fairfield Greenwich is allowed this statement:

But when contacted for a response, Fairfield Greenwich said in a terse statement late Thursday that it “has never heard of this charity, nor have we ever worked with this charity. ”

A jump ball, you say? No way.

Think about it: That means anybody gets to say anything about anybody as long as the second party is quoted denying it. It requires the second party to prove a negative: how do you prove you did not offer to obtain tickets to the presidential inaugural on behalf of some charity? How do you prove you didn’t do a lot of things? There’s no alibi for this.

Besides, the next paragraph should make a newspaper nervous:

A call to Saulnier at his Chicago office Friday netted only a short recording: “December Rain has currently suspended operations while we address the extreme situation and matters that have arisen from the cancellation of planned events. We apologize for the temporary closure. December Rain will continue to resolve these issues and hopes to be back in operation shortly.”

Hmm. No call back from the source. Not liking that.

The story returns to quoting Saulnier talking about Fairfield Greenwich:

Saulnier, who was upset during the interview, added: “It’s like a house of cards over at Fairfield Greenwich. I can’t get phone calls returned. It’s been devastating.”

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.