David Letterman Reveals Extortion Plot and Confesses to Sex With Staffers Letterman details scandal to fans during taping of Thursday night broadcast.

Oct. 1, 2009  -- David Letterman told the audience of his late night talk show that he had sexual relationships with female members of his staff, adding that he'd forked over a bogus $2 million check as part of an extortion plot on the matter.

Letterman, 62, made the confessions to the audience during a taping of "The Late Show" for broadcast Thursday night, according to a statement by Worldwide Pants Inc., Letterman's production company.

"This morning, I did something I've never done in my life," Letterman told his audience. "I had to go downtown and testify before a grand jury."

Letterman revealed to the studio audience that he received a package three weeks ago containing a threat to reveal those indiscretions "if Letterman did not pay the individual a large sum of money" -- specified in a later communication as $2 million.

He said that the package contained a letter that said, " I know that you do some terrible terrible things and I can prove that you do these terrible things ... and sure enough what was contained in the package was proof that I do terrible, terrible things."

The audience, most likely waiting for the punchline that never came, laughed nervously along as he went on to describe how he called his attorney and then set up a meeting with his blackmailer.

The plotter told Letterman that he wanted to write a screenplay about him that included sordid details of the talk show host's life.

At a second meeting, Letterman, with the assistance of the Manhattan District Attorney's Office, handed the blackmailer a phony $2 million check. It was then that the extortionist revealed he also planned to write a book about Letterman's life, also revealing details of his past sexual infidelities.

"A companion piece to the screenplay," he riffed, weakly.

Letterman then acknowledged unspecified sexual relationships with female staff members to a silent audience.

"My response to that [allegation] is, 'Yes I have.' Would it be embarrassing if it were made public? Perhaps it would," Letterman said.

"Especially for the women," he managed to joke.

He went on to thank the the Special Prosecution Bureau of the Manhattan District Attorney's office for its assistance, which culminated in the individual's arrest early in the day Thursday.

Earlier this year, Letterman announced on his show his marriage to his longtime girlfriend, Regina Lasko, whom he began dating in the 1980s. The pair have a son, Harry Joseph Letterman, whose impending arrival Letterman announced on his show in 2003.

It's unclear from the Worldwide Pants statement when Letterman's sexual relations with his female staffers occurred.

"I feel like I need to protect these people. I need to certainly protect my family," he said.

He did not mention his wife specifically or any other details of these affairs.

CBS issued a statement late Thursday night regarding the investigation and Letterman's decision to speak out on his show:

"Mr. Letterman addressed the issue during the show's broadcast last night, and we believe his comments speak for themselves."

This is not the first extortion plot alleged to have targeted Letterman. In 2005, Kelly Frank, who worked as a handyman on Letterman's Rocky Mountain ranch in Montana, was arrested for allegedly plotting to kidnap Letterman's then-16-month-old son, Harry. Frank pleaded not guilty but got 10 years in jail for overcharging Letterman.

At the time, the comedian took it all in stride.

"I don't think I'll ever get tired of seeing my house on television while I'm in my house watching television," Letterman said on a March 2005 show.

Letterman Pointed Out Infidelities of Others

Letterman was a longtime bachelor after his first marriage ended in divorce in 1977.

He has had at least one relationship with a co-worker in the past. Merrill Markoe, a comedian and author who was his longtime writer, was his girlfriend in the 1980s.

Even so, Letterman has joked about others' infidelities. Numerous jokes and at least two of Letterman's famous Top 10 lists highlighted South Carolina Gov. Rick Sanford's extramarital affair. Letterman included the "Top 10 Surprising Facts About Mark Sanford" and the "Top 10 Gov. Mark Sanford Excuses" during the days after the governor admitted to having an affair this June.

Letterman has been a fixture on late night network television since 1982 after a short stint with a morning show on NBC. As host of "Late Night" on NBC and then "The Late Show" on CBS, he is second only to Johnny Carson as the longest-running late night host.

ABC News' Eileen Murphy and Emily Friedman contributed to this report.