Justice reward
FEDS | Fallen media baron -- and former Sun-Times owner -- Conrad Black is guaranteed a 'prince-to- pauper transformation' and time in prison after being found guilty on fraud and obstruction of justice charges
The lord is now a felon.
In a brutal downfall, former media tycoon Conrad Black will be moving from a Toronto mansion to an American jail cell after a jury convicted him of fraud and obstruction of justice as part of a scheme to rip off shareholders.
(Richard A. Chapman/Sun-Times)
(Sun-Times/AP)
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Black guilty
Black, 62, a British lord who once controlled the world's third-largest media empire, could face 15 to 20 years in prison as well as forfeit millions of dollars to the federal government.
"Given the lavish lifestyle Black and the others lived, it will be a prince-to-pauper transformation," said Steve Miller, a former federal prosecutor now at the law firm of Reed Smith Sachnoff & Weaver in Chicago.
Also convicted of mail fraud were former Hollinger International executives John Boultbee, 64, and Peter Atkinson, 60, both of Canada, and Mark Kipnis, 59, a Northbrook attorney.
Criminal defense attorneys familiar with federal sentencing guidelines say one issue both sides will fight over is the amount of money shareholders actually lost -- one of the key factors that will drive Black's prison sentence. The total loss could be around $30 million.
Edward Greenspan, a Black attorney, told reporters his client plans to appeal, saying there are "viable legal issues."
"We vehemently disagree with the government's position on sentencing," Greenspan said.
The case focused on millions of dollars in bogus "non-compete" payments to the defendants in connection with U.S. newspaper transactions. Non-competes are common in the newspaper business and usually are paid by the buyer to keep the seller from competing in the same market.
The prosecution claimed the non-competes in this case were a ploy to skim money.
One payment was for $5.5 million to Black, Boultbee, Atkinson and former Chicago Sun-Times publisher David Radler for agreeing not to compete with a subsidiary of Hollinger International -- in other words, an agreement not to compete with themselves. The subsidiary then owned just one small newspaper in California.
Another payment involved the sale of a newspaper in Jamestown, N.D. The buyer testified that he hadn't wanted a non-compete agreement because he didn't think anyone would want to start a rival daily in a town of 10,000 people.
The obstruction charge involved Black removing 13 boxes of documents from his Toronto office while he knew he was under investigation -- an act caught on videotape and shown to the jury.
The prosecution wants to revoke Black's $21 million bond. Black surrendered his passport to U.S. District Court Judge Amy St. Eve and signed a waiver saying he would not fight extradition from Canada, but prosecutors contend that even with that waiver, it could take years to get Black back if he were to flee to Canada.
St. Eve will hear more on the matter Thursday. Until then, Black is not to leave the Chicago area.
The defense tried to persuade the jury that the payments were legitimate and that the prosecution was using Black's wealth to prejudice the jury, including mention of heated towel racks and $320 bottles of champagne.
U.S. Attorney Patrick Fitzgerald disagreed. "A lot of the evidence about lifestyle was necessary because it explained what the conduct was, what the motive for the conduct was," Fitzgerald said. "That's not class prejudice -- that's proving your case."
Black was not convicted of the so-called "perks" counts, including use of a company plane to vacation in Bora Bora and the company's partial payment for a glitzy $62,000 birthday party for his wife. He escaped conviction on nine counts, including racketeering, the most serious count against him.
On Friday morning, before the verdict was announced, the judge and jury waited on Black, who arrived 10 minutes late. Dressed in a tan suit, blue shirt and blue-and-red tie, Black showed no emotion as the verdict was read. His wife, conservative columnist Barbara Amiel Black, and daughter Alana Black looked solemn.
The three left the federal building out a back exit without speaking to a horde of Canadian, British and American reporters shouting questions in the courthouse lobby.
Hollinger International once owned community papers across the United States and Canada, as well as the Chicago Sun-Times, the Toronto-based National Post, the Daily Telegraph of London and Israel's Jerusalem Post. The Sun-Times is the only large paper remaining. The name of the company has been changed to Sun-Times Media Group Inc.
"The verdict lifts a dark burden and an uncertainty from a long period in the company history," said Cyrus Freidheim Jr., chief executive officer of Sun-Times Media Group. The trial is one of several steps the company is pursuing in seeking restitution, he said. That includes a $500 million lawsuit against Black, his wife, who was a former Hollinger director, and others.
Radler, who pleaded guilty in the case and was a witness against Black, already has repaid the company $63.4 million.
Evasive and combative on the stand, Radler was called a self-serving liar by the defense. Jurors said they had trouble with Radler's testimony and relied on other evidence to convict the defendants.
Hugh Totten, a Chicago attorney with the law firm of Perkins Coie who observed the trial, called the jury "incredible."
"They did a remarkable job of sifting through a mountain of evidence and reaching a common-sense verdict," Totten said.
Contributing: David Roeder, Rummana Hussain, Janet Rausa Fuller and Mark Konkol