Court finds ex-media mogul Conrad Black guilty of fraud

BY A CORRESPONDENT

15 July, 2007:

Conrad Black, 62, former media tycoon, has been convicted by a court in the United States of defrauding the Hollinger International newspaper empire.

He caused loss of millions of dollars to Hollinger International, thus becoming the latest in a series of disgraced corporate executives facing possible imprisonment for financial fraud.

Conrad Black, who once renounced his Canadian citizenship to become a member of the British House of Lords, has been found guilty by a federal jury on three counts of mail fraud and one count of obstruction of justice for whisking off documents out of his office in Toronto, Canada, in defiance of a court order.

Black was acquitted of nine other counts, ranging from tax fraud to the most serious charge – racketeering. He was also acquitted of fleecing shareholders of Hollinger International through such perks as taking the corporate jet on a two-week vacation to the island of Bora Bora.

Judge Amy St Eve set November 30, 2007 as sentencing date, confiscated Conrad 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 (€15-million) bond, partly secured by a seaside estate in Palm Beach, Florida.

Three other former executives of Hollinger – John Boultbee, 65, Peter Y Atkinson, 60, and Mark Kipnis, 59, were also convicted of fraud charges.

Hollinger International, based in Chicago, the United States, was once 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. The three-month trial had attracted international media attention, enhanced by the British lord’s ostentatious lifestyle and, at times, arrogant comments. When shareholders complained about the cost of the Bora Bora trip, Black wrote a memo saying: “I’m not prepared to re-enact the French revolutionary renunciation of the rights of the nobility.”

Prosecutors has requested the judge to have Black jailed immediately, saying that he could face approximately 15 years to 20 years in federal prison for the conviction. But defence attorneys said the actual sentence was likely to be much less.

In contrast to the $84 million (€61 million) in fraud that prosecutors blamed on Black when he was indicted two years ago, the jurors found him guilty of a fraction of that – defence attorneys put the amount at $3.5 million (€2.5 million).

At the centre of the charges against Black was the strategy he employed 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 executives of Hollinger received millions of dollars in payments from the companies that bought the community papers in return for promises that the sellers would not return to compete with the new owners.

Prosecutors alleged that the executives pocketed the money, which they said belonged to shareholders, without informing the board of directors of Hollinger International.

The government’s key witness at the trial was F David Radler, Black’s partner in building the Hollinger empire over three decades. Radler pleaded guilty to mail fraud and agreed to testify in exchange for a lenient 29-month sentence and a $250,000 (€181,000) fine.

Black had argued that he was busy with newspaper interests in Britain and eastern Canada and left most of the sales of community newspapers and non-compete arrangements to Radler. But Radler denied this, saying Black was well aware of how and why the money was being paid.