In 1907, Barnette was accused of embezzling money from the Fairbanks bank he operated, and he was sued by the man who had funded the venture that led to the founding of Fairbanks. During the lawsuit, it was revealed that Barnette had been convicted of larceny in Oregon. As his legal bills added up, Barnette decided to lease the "Fairbanks Daily News" to a group of local businessmen. On June 15, 1908, Barnette ended the lease agreement by selling the newspaper to J. Harmon Caskey and Henry Roden. That same year, the campaign to elect Alaska's first delegate to Congress was under way, and one of the candidates, Jack Corson, purchased one-third of the newspaper. Corson's campaign manager promptly was named the editor of the "Daily News", and the paper switched to actively supporting Corson's candidacy.