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Ex-media mogul Black convicted of fraud

A federal jury convicted fallen media tycoon Conrad Black and three of his former executives at Hollinger International Inc. Friday of illegally pocketing millions of dollars that should have gone to stockholders.
/ Source: The Associated Press

Prosecutors told a federal jury a lot about media mogul Conrad Black’s grand lifestyle at the expense of shareholders in the Hollinger International media empire he once ran.

There was the $62,000 birthday party for his wife, with shareholders unknowingly picking up most of the tab. A swanky New York apartment on Park Avenue. And a trip to the island of Bora Bora aboard Hollinger International’s corporate jet.

In the end, jurors ignored the glittering lifestyle and convicted Black on Friday of siphoning millions of dollars out of the corporate till in a series of paper transactions prosecutors called a “bold money grab.”

“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,” U.S. Attorney Patrick J. Fitzgerald said after the verdict.

Defense attorneys had dreaded all talk of the birthday party for Barbara Amiel Black at New York’s fashionable restaurant La Grenouille.

They feared evidence about the apartment that Black occupied for years at shareholder expense and the vacation junket to Bora Bora in French Polynesia, claiming it appealed to “class prejudice” among the jurors.

But in the end, jurors acquitted Black of those charges as well as nine others ranging from tax fraud to the biggest one — racketeering.
Black, 62, who once renounced his Canadian citizenship to become a member of the British House of Lords, was found guilty 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.

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 Judge Amy St. Eve to jail Black immediately, saying he could face 15 years to nearly 20 years in federal prison on the conviction. Defense attorneys said the 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 — defense attorneys put the amount at $3.5 million.

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.

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 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 that made up three counts in 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.