Media mogul Black guilty of fraud
CHICAGO – Former media mogul Conrad Black was convicted Friday of swindling the far-flung Hollinger International newspaper empire he once ran out of millions of dollars, becoming the latest in a wave of disgraced corporate executives to face prison time for financial fraud.
Black, 62, who once renounced his Canadian citizenship to become a member of the British House of Lords, was found guilty by a federal jury of three counts of mail fraud and one count of obstruction of justice for spiriting documents out of his Toronto office in defiance of a court order.
Black was acquitted of nine other counts ranging from tax fraud to the most serious charge ó racketeering. He was also acquitted of fleecing Hollinger shareholders through such perks as taking the corporate jet on a two-week vacation to the island of Bora Bora.
The three-month trial drew international media attention, heightened by the silver-haired British lord’s posh lifestyle and sometimes haughty comments. When shareholders grumbled about the cost of the Bora Bora trip, he wrote a memo saying: “I’m not prepared to re-enact the French revolutionary renunciation of the rights of the nobility.”
Three other former Hollinger executives, John Boultbee, 65, of Victoria, British Columbia, Peter Y. Atkinson, 60, of Oakville, Ontario, and Mark Kipnis, 59, of Northbrook, Ill., were also convicted of fraud charges.
Prosecutors asked U.S. District Judge Amy St. Eve to have Black jailed immediately, saying he could face approximately 15 years to nearly 20 years in federal prison for the conviction. But defense attorneys said the actual sentence was likely to be much less.
In contrast to the $84 million in fraud prosecutors blamed on Black when he was indicted two years ago, the jurors found him guilty of a fraction of that ó defense attorneys put the amount at $3.5 million.
Still, U.S. Attorney Patrick Fitzgerald said the government was “gratified” by the verdict.
“We think the verdict vindicates the serious public interest in making sure that when insiders in a corporation deal with money entrusted to them by the shareholders, that they not engage in self-dealing, that they not break the law to benefit themselves instead of the shareholders,” Fitzgerald said.
St. Eve set a Nov. 30 sentencing date, confiscated Black’s passport and ordered him to remain in the Chicago area while she considers the government’s request that she revoke his $21 million bond, partly secured by a seaside estate in Palm Beach, Fla. A hearing on the bond issue is scheduled for Thursday.
Black defense attorney Edward M. Genson argued that Black had “wanted his day in court and now wants his day on appeal” and would not run away.
“He has had his day in court,” countered prosecutor Eric H. Sussman, “and now the question is whether he will have his day of sentencing.”
Black was stony faced as he handed over the passport. When St. Eve asked if he would appear for sentencing, he said: “Absolutely.”
Black avoided reporters’ questions as he left the courthouse Friday afternoon. Edward Greenspan, Black’s Canadian defense attorney, promised an appeal on “viable legal issues.”
“We came here to face 13 counts and an indictment. Conrad Black was acquitted of all the central charges. They have been dismissed,” Greenspan said, reading from a statement and refusing to answer questions.
“We vehemently disagree with the government’s position on sentencing,” he said, but did not offer what he believes is a proper sentencing range.
Hollinger International, based in Chicago, was at one time one of the world’s largest publisher of community newspapers as well as the Chicago Sun-Times, the Daily Telegraph of London and Israel’s Jerusalem Post.
At the core of the charges against Black was a strategy he arrived at starting in 1998 to sell off the bulk of the small community papers, which were published in smaller cities across the United States and Canada.
Black and other Hollinger executives received millions of dollars in payments from the companies that bought the community papers in return for promises that they would not return to compete with the new owners.
Prosecutors said the executives pocketed the money, which they said belonged to shareholders, without telling Hollinger’s board of directors.
In the end, jurors convicted Black in connection with two sets of noncompete payments.
One involved $2.6 million in such payments he received in exchange for a noncompete pledge made to the American Publishing Co. The company was a Hollinger subsidiary and thus Black and executives who also got such payments were effectively getting money not to compete with themselves.
The other were “supplemental payments” made in April 2001 after Hollinger executives realized there had been no non-competition money in sales of community newspapers to Horizon Publications Inc. in March 1999 and to Forum Communications Inc. in September 2000.
Realizing that no such non-competition money for them had been included in the deals, the executives ordered up “supplemental payments.” Black’s share of that money came to $285,000.
The American Publishing money and supplemental payments were covered in three counts of the indictment. The fourth count Black was convicted of involved the removal of documents from his Toronto offices after a court had ordered them frozen unless otherwise permitted by a court monitor.
The government’s star witness at the trial was F. David Radler, Black’s partner in building the Hollinger empire over three decades. He pleaded guilty to mail fraud and agreed to testify in exchange for a lenient 29-month sentence and a $250,000 fine.
Black had said that he was busy with newspaper interests in Britain and eastern Canada and left most of the sales of community newspapers and noncompete arrangements to Radler. But Radler said that Black was well aware of how and why the money was being paid.
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Associated Press Writers Don Babwin, Carla K. Johnson, Dave Carpenter and Dan Strumpf in Chicago contributed to this report.S. District Judge Amy St. Eve to have Black jailed immediately, saying he could face approximately 15 years to nearly 20 years in federal prison for the conviction. But defense attorneys said the actual sentence was likely to be much less.
In contrast to the $84 million in fraud prosecutors blamed on Black when he was indicted two years ago, the jurors found him guilty of a fraction of that ó defense attorneys put the amount at $3.5 million.
Still, U.S. Attorney Patrick Fitzgerald said the government was “gratified” by the verdict.
“We think the verdict vindicates the serious public interest in making sure that when insiders in a corporation deal with money entrusted to them by the shareholders, that they not engage in self-dealing, that they not break the law to benefit themselves instead of the shareholders,” Fitzgerald said.
St. Eve set a Nov. 30 sentencing date, confiscated Black’s passport and ordered him to remain in the Chicago area while she considers the government’s request that she revoke his $21 million bond, partly secured by a seaside estate in Palm Beach, Fla. A hearing on the bond issue is scheduled for Thursday.
Black defense attorney Edward M. Genson argued that Black had “wanted his day in court and now wants his day on appeal” and would not run away.
“He has had his day in court,” countered prosecutor Eric H. Sussman, “and now the question is whether he will have his day of sentencing.”
Black was stony faced as he handed over the passport. When St. Eve asked if he would appear for sentencing, he said: “Absolutely.”
Black avoided reporters’ questions as he left the courthouse Friday afternoon. Edward Greenspan, Black’s Canadian defense attorney, promised an appeal on “viable legal issues.”
“We came here to face 13 counts and an indictment. Conrad Black was acquitted of all the central charges. They have been dismissed,” Greenspan said, reading from a statement and refusing to answer questions.
“We vehemently disagree with the government’s position on sentencing,” he said, but did not offer what he believes is a proper sentencing range.
Hollinger International, based in Chicago, was at one time one of the world’s largest publisher of community newspapers as well as the Chicago Sun-Times, the Daily Telegraph of London and Israel’s Jerusalem Post.
At the core of the charges against Black was a strategy he arrived at starting in 1998 to sell off the bulk of the small community papers, which were published in smaller cities across the United States and Canada.
Black and other Hollinger executives received millions of dollars in payments from the companies that bought the community papers in return for promises that they would not return to compete with the new owners.
Prosecutors said the executives pocketed the money, which they said belonged to shareholders, without telling Hollinger’s board of directors.
In the end, jurors convicted Black in connection with two sets of noncompete payments.
One involved $2.6 million in such payments he received in exchange for a noncompete pledge made to the American Publishing Co. The company was a Hollinger subsidiary and thus Black and executives who also got such payments were effectively getting money not to compete with themselves.
The other were “supplemental payments” made in April 2001 after Hollinger executives realized there had been no non-competition money in sales of community newspapers to Horizon Publications Inc. in March 1999 and to Forum Communications Inc. in September 2000.
Realizing that no such non-competition money for them had been included in the deals, the executives ordered up “supplemental payments.” Black’s share of that money came to $285,000.
The American Publishing money and supplemental payments were covered in three counts of the indictment. The fourth count Black was convicted of involved the removal of documents from his Toronto offices after a court had ordered them frozen unless otherwise permitted by a court monitor.
The government’s star witness at the trial was F. David Radler, Black’s partner in building the Hollinger empire over three decades. He pleaded guilty to mail fraud and agreed to testify in exchange for a lenient 29-month sentence and a $250,000 fine.
Black had said that he was busy with newspaper interests in Britain and eastern Canada and left most of the sales of community newspapers and noncompete arrangements to Radler. But Radler said that Black was well aware of how and why the money was being paid.
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